Nythan Smith on the impact of the health and safety offences sentencing guidelines on the health and social care sector
Just a little over a year ago on 1 February 2016 the sentencing guidelines for Health and Safety Offences were introduced. They are of wide reaching impact for the health and social care sector in particular in relation to breaches, alleged or actual, of health and safety law.
The guidelines were brought in to provide certainty for practitioners and offenders in the process and application of sentences in relation to breaches of health and safety law. They have, in fact, significantly increased the average level of fine passed down in relation to breaches of health and safety law across the health and social care sector.
The requirement to fine organisations based on their turnover is a crude method of beginning the assessment of the penalty that an organisation should be charged with
The average fine passed down for those found guilty of health and safety breaches in 2016 was £115,440 and the total amount of fines passed down last year topped £32m. These figures fail to identify the disproportionate effect that large fines have on the average figures which are passed down to larger organisations.
In 2014-15 the total amount of fines as a result of health and safety activity totalled £19.3m. From the introduction of the guidelines to 18 January 2017, 16 companies were fined in excess of £1m and eight of those were fined over £2m. These figures highlight the shift in approach by the judiciary to the application of fines and should further focus the mind of organisations to the health and safety risks that prevail within their organisation.
The guidelines state that: – ”The fine must be sufficiently substantial to have a real economic impact which will bring home to both management and shareholders the need to comply with health and safety legislation.” It would appear that not only is this an unrealistic ambition to fulfil; but the way that the bandings of fines have been formulated disproportionately affect companies with “significant turnover” in excess of £10m.
Specifically within the care home sector to meet this threshold you need only own a small number of locations. Further the requirement to fine organisations based on their turnover is a crude method of beginning the assessment of the penalty that an organisation should be charged with.
The organisation subject to any proceedings is given the opportunity to properly present its financial position during sentencing which affords the organisation the opportunity to properly set out its financial stall; however, with fines ranging up to £10 million for those found at the highest level of culpability this new regime has seen fines which may be seen as excessively punitive.
The sentencing guidelines are of particular relevance to public bodies including trusts who may find themselves falling foul of health and safety legislation. Almost every trust, foundation or otherwise, will find themselves falling into the “large organisation” threshold which could result in multimillion pound fines in the future.
The guidelines direct the court to ”substantially reduce” the fine to public bodies if it can be shown that it would have a ”significant impact” on the provision of its services. This assertion was challenged recently in the courts who argued that a substantial reduction should equate to 50 per cent off the fine imposed.
This was rejected out of hand by the court and public bodies should be mindful to the increased level of fines that may be imposed by the courts in the light of this guidance.
It will be interesting to see how these guidelines are interpreted when embattled trusts who are significantly in deficit are in the dock and especially those who are subject to financial special measures. When in special measures trusts are offered loans to cover working capital which are at a higher rate of interest than those that are not subject to the same restrictive measures.
This effectively could see the cost of the fine costing significantly more than the fine passed down by the court. The courts’ resolve has yet to be tested in these cases but one case is currently working its way through the courts which would see the prosecution of a trust with a turnover similar to that of Merlin Entertainments (The Alton Towers owner was fined £5m in admittedly different circumstances).
The courts have made it clear that whilst fines may be lower where the burden might impact on public service provision this should not lead to an expectation that fines would be set at former levels. Health and Safety Offences are serious crimes and to be regarded as such in sentencing. That aside the idea of charging a trust in deficit for a health and safety failing, under special measures or otherwise, would seem to be a misplacement of public funds.
Providers of any size need to ensure that they engage with Care Quality Commission and Health and Safety Executive and other regulatory bodies at the earliest possible stage to allow them to put forward an accurate account of activity surrounding the issue in question. This will also provide them with a good basis from which to build the case to successfully mitigate any fine that flows from the charge.
It is unlikely that a charge of a health and safety failing will be defended successfully since many of the charges that are brought are effectively strict liability in all but name
In cases where a failing has been identified and actions have been put in place to prevent said failing causing any further harm what purpose does fining to such a high level have on the organisation and the industry? Surely a better use of a fine would not be one which serves only to reduce the bottom line of the organisation but instead goes directly into helping to prevent said failing both within the organisation and the sector more broadly.
It is unlikely that a charge of a health and safety failing will be defended successfully since many of the charges that are brought are effectively strict liability in all but name. With fines at such high levels defendants will have to have a steely resolve to forgo the 33 per cent discount which is given if an early plea is entered.
Organisations will inevitably still need to embrace lawyers to provide an accurate account of their position and ensure that the level of fine starts off at the lowest realistic level, as it is from this point that any discount will be granted.
The disproportionate emphasis on the turnover of an organisation fails to properly acknowledge the need to prevent incidents occurring again. This approach seems to exist solely to provide an example to others in the sector and further afield. The focus on compliance with health and safety law should not be on financially penalising the organisation but in ensuring that the industry learns from its mistakes.
In extreme circumstances the case for a significant financial penalty will be justified but this should not be the primary method of holding organisations accountable. Financially penalising organisations of any size arguably does little to change attitudes within the organisation in question and those in the sector. It is also a rather blunt way of viewing organisations which may have a significant turnover but, especially within the healthcare sector, fail to make a sustainable profit.
It appears as well, that the guidelines, or judges’ interpretation of the guidelines, lend themselves to the thinking that any organisation that has turnover in excess of £50m is “large”; and that applies to the organisation with exactly £50m turnover all the way up to those organisations whose turnover is measured in the several £100ms. Discretion is permitted for judges to step outside of the guidelines but judges have so far been reluctant to do so.
Compliance with health and safety law is integral to the success of any organisation; it would be remiss of anyone to suggest anything less. The goal of the new sentencing guidelines should be to increase compliance with health and safety law and consequently drive up standards of health and safety throughout the UK: But the inherent deterrent element of the guidelines and the over-reliance on turnover in determining such fines render these guidelines unhelpful in the pursuit of better compliance with health and safety law.
The guidelines are being followed by the courts with a formulaic efficiency and as such healthcare organisations should continue to invest heavily in compliance with health and safety law. Should your healthcare organisation find itself charged with a breach of health and safety law, Ridouts is well placed to provide a robust effective defence.
Nythan Smith, trainee solicitor, Ridouts Professional Services PLC