At a glance
- New sentencing guidelines mark the biggest change to health and safety enforcement in almost 50 years
- The changes introduce greater fines and increase the possibility of custodial sentences
- The new guidelines offer an opportunity to strengthen relationships with customers by helping them to reinforce their risk management procedures
On 1 February 2016, new sentencing guidelines came into force for health and safety, corporate manslaughter, food safety and hygiene offences.
The new guidelines mark the most dramatic changes in health and safety enforcement since 1974, altering both the courts’ approach to sentencing and the penalties they will be asked to apply.
The shift in approach presents an opportunity for brokers to discuss the changes with their customers and help them to strengthen their risk management procedures.
Directed at decision makers
The new guidelines set out a nine-step methodology for sentencing decisions. They ask courts to determine levels of culpability and the risk of harm, and fines are dependent on an organisation’s size and financial means.
A mobile crane’s brakes fail, killing the driver in a collision. The brakes are later found to be inoperable, worn and contaminated. The employer is found guilty of corporate manslaughter and failures to ensure the safety of employees and others.
If sentenced on 22 December 2015, prior to the new sentencing guidelines, the company may have been fined £900,000 (41% of its 2014 profit).
If sentenced after 1 February 2016, the new sentencing guidelines would apply. With a turnover of £19.4m, the company would have faced a likely fine of between £1.8m and £7.5m for the same offence (more than 300% of its 2014 profit).
Importantly, the guidelines instruct the courts to choose a penalty that will have real economic impact, and bring home to management and shareholders the need to comply with health and safety legislation. They also lower thresholds for awarding custodial sentences to directors, managers and employees who breach their duties.
“These new guidelines are going to send shockwaves right to the top of organisations,” says John McMullen, Chief Engineer at Zurich. “The regulators are clearly trying to make decision makers more aware of their duties and take greater responsibility for fulfilling them.
“Also, be mindful that D&O insurance will not cover fines from the HSE, so it is vital that management meet their health and safety responsibilities and are able to evidence this.”
Easier to be found culpable
The first step under the new guidelines is for the courts to determine the level of culpability, ranging from ‘low’ to ‘very high’. To enter the ‘very high’ category, there needs to have been a “deliberate breach of, or flagrant disregard for, the law.”
The types of offences that come under the guidelines are varied, from lack of machinery maintenance, to insufficient training of staff. Therefore, if employers are aware that they are falling short of accepted standards, instances such as these could be considered a deliberate breach.
No need to cause harm
Crucially, the new guidelines mark a clear shift from an outcomes-based approach (where the level of harm caused would strongly influence the ultimate penalty) to a risk-based approach (with focus now on the potential for harm, regardless of whether any harm actually occurred).
10 steps to reinforce H&S risk management:
- Make Health and Safety a board level issue.
- Be systematic in your approach to H&S.
- Consult with competent third parties – such as Zurich – and the workforce.
- Identify the H&S responsibilities of all members of the organisation.
- Ensure everybody understands their H&S roles and those of others.
- Devise clear H&S policies and standards.
- Actively challenge unsafe behaviour.
- Monitor and measure compliance to check whether policies are being implemented, controls are working, and to learn from any mistakes.
- Ensure appropriate documentation is created, readily available, organised and relevant.
- Regularly review and adjust risk management strategies.
Under the new guidelines, nothing needs to actually happen for a severe penalty to be awarded. So exposing employees to a severe risk of death, for example, could now warrant a similar penalty to that if a fatality were to actually occur.
“In the past, we have seen some relatively small fines awarded for quite considerable breaches of the law, but where no one was seriously injured,” says John. “But now, the courts are no longer focussing on what happened, but instead looking at the potential.”
Greater penalties across the board
A key reason for the new guidelines was to address concerns that larger organisations were not receiving severe enough penalties for their offences.
The Sentencing Council disputes that the new guidelines will increase penalties across the board. However, many commentators fear this will be the inevitable result, as the courts work through the new nine-step approach.
“I think it is a reasonable prediction that this will increase fines across the board, not just for the larger organisations,” says John. “But only time will tell.
“What is clear, however, is that the regulators are serious about tackling non-compliance with health and safety legislation, and organisations need to take note.”
How to help customers respond to these changes
You can advise customers of these changes and take the opportunity to strengthen relationships by helping them to improve their risk management procedures.
“It is all about evidence,” says John. “Evidence that customers are doing the right thing and complying with the law. If an organisation is under scrutiny, it needs to be able to prove it was doing all it could to minimise risk.”
One strategy for businesses to manage health and safety risk is to ensure that any equipment and machinery is regularly inspected in advance of the item’s inspection deadline, by a qualified engineer.
Zurich’s Engineering Inspection team has more than 500 experts across the UK who can certify equipment as safe for uses well as offering a number of additional benefits to businesses.
For more information please contact your local Zurich branch.