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Can you afford it?

The introduction of the sentencing guidelines for health and safety, food safety and corporate manslaughter offences last year has resulted in previously unseen increases in fines handed down by the Courts for those in breach. These sentences are likely to become the norm, rather than the exception.

The guidelines, which create a nine-step process for Courts in deciding on sentences, now clearly and directly relate an organisation’s turnover or individual’s income to the level of fine to be imposed.

By way of example, organisations with a turnover of £50 million per year or over can potentially be exposed to £10 million fine or greater, in relation to corporate manslaughter. Even smaller organisations, where turnover does not exceed £2 million per year, can still be exposed to fines measured in £100,000s.

Anyone watching or reading the news in the past year cannot fail to have seen fines handed down by the Courts to significant businesses in the leisure industry, such as £5 million to Merlin Entertainment for the accident at Alton Towers. When preparing this article, I noticed reports of several small operators being fined over £100,000 as a punishment for offences.

The introduction of the guidelines has produced some troubling statistics for those who may face a regulatory prosecution. In the last 12 months, businesses within the leisure sector alone have paid fines of over £7 million.

Health and safety prosecutions in 2015, prior to the introduction of the guidance, showed an average fine of just under £70,000 per case, whilst the figure for 2016, when the guidelines became applicable, shows an average fine of just under £250,000.

Financial penalties for a business are not the only redress available to the Courts, and for individuals prosecuted under the same legislation, imprisonment, together with financial penalties and other sentencing options, are available. There has been a number of cases with those persons involved in health and safety failings being imprisoned since the introduction of the guidelines, and this undoubtedly is set to continue.

The message is clear: the introduction of the guidelines has made the direct costs of a prosecution so great that the viability of some businesses and the liberty of those involved in the management of them might well be affected. It is an area of your operations that you cannot afford to ignore, quite literally at your cost.

I can only recommend that if facing any regulatory investigation it is imperative to seek specialist advice at the earliest opportunity. We can often assist in ensuring that an investigation is dealt with in such away to avoid prosecution. If this can not be avoided we can help to prepare a robust defence to any subsequent prosecution. In the worse case scenario we can help to ensure that a structured mitigation is put in place to reduce the impact of these increases in sentencing powers.

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