The UK could soon have greater clarity over how ‘very large organisations’ (VLOs) are penalised for health and safety breaches following the Sentencing Guidelines’ 2024 consultation on miscellaneous amendments. Despite increasingly seeing corporate fines imposed in excess of £1 million, recent proposals to formally recognise VLOs in sentencing guidelines could lead to much higher fines for businesses, prompting renewed legal compliance considerations.
The Consultation
When approaching the level of financial penalty to impose, the Sentencing Guidelines not only consider the level of harm caused as a result of the breach(es) of health and safety legislation and the level of culpability involved, they also look at a company’s turnover, with fines increasing in proportion to its financial size. Currently, the top band is for ‘large’ companies and includes any business with a turnover exceeding £50 million. There is however no clear category for the largest players whose turnover may considerably exceed this figure by varying multipliers.
The reason for the Consultation
The purpose of a fine for organisations found to have breached health and safety law is to ensure the company and its shareholders take accountability for what has happened and do not gain financially as a result of unsafe practices. The financial impact must be meaningful both in terms of penalising the organisation and providing incentive to improve safety practices and deter future breaches. The level of fine is linked to the size of the company, however concerns first raised by the Environment Agency suggest that the courts need clearer guidance when dealing with VLOs and very high levels of turnover. Although courts have a discretion to go above the bands when imposing fines in respect of VLOs, there has been no formal structure, attracting concerns that the fining system is being inconsistently applied in courtrooms across the country. That however may be set to change.
In its 2024 consultation, the Sentencing Council proposed codifying a fifth category for VLOs which would create greater consistency however it may also pave the way for significantly higher fines for companies with substantial resources that have been found to fall short of their regulatory obligations. The consultation applies to both the Environmental Offences Definitive Guideline and the Definitive Guideline for Sentencing Health and Safety Offences, corporate manslaughter and food safety and hygiene offences, as well as to retail organisations unlawfully selling knives to persons under 18.
What This Means for VLOs
It remains to be seen at what figure an organisation’s turnover will position it as a VLO. However, for those whose turnover exceeds £50 million, they may be caught in the crosshairs and see an increase in the level of fines that could be imposed.
Clearly, this doesn’t just affect the bottom line; it could influence shareholder and investor confidence, reputation, insurability and tendering competitiveness. With greater risk comes greater regulatory scrutiny – the larger the organisation, the more likely it will make the headlines. Organisations must be able to demonstrate not just that they have health and safety policies and procedures but that these are embedded in practice and that there is a palpable health and safety culture that is audited regularly and leads to real-world risk reduction.
Practical Steps to Consider
1. Review health and safety governance
- Ensure board-level involvement in health and safety.
- Revisit whether the current governance scales with the organisation’s size and workforce.
2. Routine audits
- Review safety protocols to ensure specific, up-to-date and understood.
- Regularly audit compliance and positive safety culture.
3. Prepare financially
- Set aside provision for health and safety investment.
- Review insurance to identify provisions for regulatory intervention.
4. Review incident response protocols
- Review the incident response to ensure effective.
- Following regulatory intervention, early strategic and legal advice will make a big difference in the final outcome.
5. Training
- Train all personnel in relation to their legal duties under Health and Safety legislation.
- Make employees and senior management aware of their own personal liabilities, in particular, Sections 7 and 37 of the HSWA.
Looking ahead
The consultation underscores a clear message: those with the resources to do better will not escape the scrutiny of the courts. A proactive, well-invested and transparent approach to health and safety is of paramount importance. The cost of falling short is only going to increase.
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Disclaimer: This post is for information purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given. Please contact us for specific advice on your circumstances.