Construction firms should act now to minimise their exposure to proposed sentencing guidelines for health and safety breaches, says Steffan Groch of law firm DWF.
Late last year the Sentencing Council for England and Wales consulted on its proposed guidelines for sentencing health and safety, corporate manslaughter and food safety and hygiene offences, with fines likely to increase as a result.
Although the UK construction sector’s safety record has shown substantial improvements over time, the nature of the work involved means that it remains at particular risk from these changes. But what exactly is being proposed and how can the industry mitigate its potential impacts?
The Council set out with the belief that the level of fines being handed out to businesses at present is not high enough, and although discussions are continuing it does not look like it has been convinced otherwise. In fact we have already seen evidence of this in recent cases, with Network Rail and recycling firm Sterecycle receiving fines in the region of £500,000.
Although firms of all sizes and sectors would be affected by the proposals, as currently drafted they will hit bigger firms the hardest both in terms of the value of the fine and the additional legal costs likely to be incurred. The guidelines set out a series of nine steps that a court should follow to reach a fine, starting with assessments of harm risked and the culpability of the offender to determine the seriousness of the offence to identify a starting point and a range for the fine.
"Although firms of all sizes and sectors would be affected by the proposals, as currently drafted they will hit bigger firms the hardest both in terms of the value of the fine and the additional legal costs likely to be incurred."
Steffan Groch
There are then different tables depending upon the size of the turnover of the defendant, and finally adjustments are made to ensure it is proportionate to the means of the offender and to reflect any aggravating and mitigating factors and/or other factors such as a guilty plea.
We do not know exactly how the new guidelines will be implemented in practice, but by applying the process they set out we have a good idea of what to expect. We analysed a recent case (anonymised) involving a fatality caused by a fork lift truck unloading. The firm involved had a turnover of £4bn and was found to have a low to medium level of culpability. The actual fine issued in June 2014 was £175,000, but we anticipate that the starting point for a fine under the new proposals would be £300,000, an increase of over 70%.
This new regime could come into force before the end of the year. Businesses should therefore act sooner rather than later to ensure that they minimise their exposure. Clearly, the first step has to be preventing incidents happening in the first place. This means reviewing existing health and safety procedures and, where appropriate, updating staff guidance and providing additional training. It might even be prudent to conduct a full health and safety audit of your premises and operations to identify areas where risk can be reduced.
Unfortunately, accidents will happen and how you react to these becomes even more important. Every company should have an incident response plan and an appointed senior member of staff responsible for disseminating it to the workforce and for keeping it up to date. The plan should detail roles and responsibilities in the event of an incident, how the incident should be recorded and reported and the investigation process that should subsequently follow.
Conducting a thorough investigation is vital not just for establishing cause, liability and whether any disciplinary action is needed, but also for establishing the lessons that should be learnt and applied to prevent a reoccurrence.
Finally, firms should not hesitate to seek independent legal advice where necessary. As we have already touched upon, where the sentencing guidelines specifically are concerned there are still a lot of questions to be addressed (particularly around how the “seriousness of harm” is determined) and it is likely that a number of test cases will have to reach their conclusion before the full implications of the changes become evident. During the initial period of uncertainty, legal interpretation of what the guidelines will mean in practice can help businesses to better understand what they need to do to protect themselves.
Even if the outstanding issues are resolved, it is difficult to see how fines will do anything other than dramatically increase, and this could happen sooner rather than later. Construction businesses should be prepared or they may ultimately end up paying a higher price.
Steffan Groch is head of regulatory at law firm DWF
Problem with all H&S fines is that the level of fine will only deter firms if it virtually bankrupts them. However, courts are instructed to balance fines against future viability of the company, as ordinary staff will lose their jobs when management failings are usually the cause of the offence.