Firms convicted of corporate manslaughter to face minimum £500,000 fines

Companies and organisations that cause death through gross breaches of care should face punitive and significant fines of at least £500,000, the Sentencing Guidelines Council has proposed.

The Sentencing Guidelines Council aims to ensure consistency of sentencing in all courts in England and Wales, supporting judges and magistrates in their decision-making. It is an independent body with both judicial and non-judicial members, chaired by the Lord Chief Justice.

It believes fines for organisations found guilty of the new offence of corporate manslaughter may be measured in millions of pounds and should seldom be below £500,000.

It added that the new sanction of Publicity Orders forcing companies and organisations to make a statement about their conviction and fine introduced under the Corporate Manslaughter and Corporate Homicide Act should be imposed in virtually all cases.

The Council’s consultation guideline proposes that the publicity should be designed to ensure that the conviction becomes known to shareholders and customers in the case of companies and to local people in the case of public bodies, such as local authorities, hospital trusts and police forces. Organisations may be made to put a statement on their websites.

The guideline also deals with health and safety offences in the workplace that cause death. Fines in these cases should seldom be less than £100,000 and may be measured in hundreds of thousands of pounds or more, the Council proposes.

In deciding the level of fine, the Council said that a court should not be influenced by the impact on shareholders and directors but the effect on the employment of the innocent may be relevant.

Also, the effect on provision of services to the public should be considered. Public organisations and commercial companies should be treated the same in relation to the standards of behaviour expected, and punitive fines for breach will follow although a different approach to determining the level of fine may be justified the guideline says.

Factors increasing the seriousness of the offence identified by the Council include how foreseeable was serious injury, how common is the kind of breach of care in the organisation and how far up the organisation did the responsibility for the breach go. Other factors that aggravate the offence and may attract a larger fine include the number of deaths and serious injury caused, failure to heed warnings, cost-cutting or deliberate failure to obtain or comply with relevant licences.

Council member and vice president of the Court of Appeal (Criminal Division) Lord Justice Anthony Hughes said: “Fines cannot and do not attempt to value a human life - compensation will be payable separately in these cases.

“The fine is designed to punish and these are serious offences so the fines imposed should be punitive and significant to reflect that.

“The Council considered very carefully the approach suggested by the Sentencing Advisory Panel of a fixed correlation between the amount of the fine and a company’s turnover or profit, but decided this was not appropriate in view of the different financial structures and circumstances of organisations within the private, public and third sectors.”

Alison Gray, a specialist in health and safety law at solicitors Dickinson Dees, said the changes would significantly increase the fines faced by companies.

“Whilst the proposals fixing fines to a percentage of turnover have been dropped, which will be welcomed by larger companies, the draft guidance is clear that fines imposed by the Court must be punitive and must have an impact on the defendant. They will particularly have a dramatic effect on smaller businesses.

“Minimum fines of £500,000 for corporate manslaughter offences and £100,000 for health and safety offences are proposed but it is unlikely that fines will be kept near the minimum.  Factors such as the effect of the fine on directors and shareholders can no longer be taken into account, nor the fact that prices may have to increase as a result. 

“This is particularly significant for smaller companies as the changes could force them to pay significantly higher fines than at present.  With larger fines being spread over a long period of time, SMEs will potentially feel the burden of a sentence for a very long period of time. 

“By contrast, larger companies should welcome the departure from a fixed correlation between a fine and turnover as the revised guidelines will not necessarily result in fines anywhere near the 10% of turnover originally proposed. However, fines will inevitably significantly increase and we expect to see fines in terms of millions becoming the norm. 

“In addition to financial penalties, the guidance suggests that Publicity Orders should ordinarily be imposed in all corporate manslaughter cases which will name and shame businesses. In reality this could have just as much, if not more, impact on a business than a financial penalty.”

Contractor Balfour Beatty was handed a record £10M fine for for its part in the 2000 Hatfield rail crash which killed four people, although this was reduced to £7.5M after the firm appealed. In that case corporate manslaughter charges were dropped and the conviction was secured against the health & safety at work act.

Balfour Beatty’s financial penalty was five times the previous English record; a £2M fine imposed on Thames Trains for its part in the Paddington train crash in 1999.

Network Rail, also found guilty of health and safety breaches during the Hatfield trial, was fined £3.5M.

The first case under the new, 2007, corporate manslaughter act began this summer against

Peter Eaton and his company Cotswold Geotechnical Holdings. They are being jointly charged under the 2007 act following the death of one of the firm’s junior geologists.