New sentencing guidelines for health safety breaches, which came into force in February 2016, have seen a sharp increase in fines.
Data from the Health and Safety Executive (HSE) and more than 300 local authorities shows that the total value of fines imposed on businesses increased from £36.2m to £76.7m in the first year of the new regime.
The guidance increased penalties for health and safety and corporate manslaughter offences.
The scale varies according to the turnover of the company but can exceed £20m for the worst cases involving corporate manslaughter, and potentially more for the largest companies.
Research by the global law firm Clyde & Co reveals that fines by collected by the HSE jumped by 74% from £35.5m to £61.6m, and the total collected by local authorities showed a 1,870% increase from £0.8m to £15.2m.
The HSE oversees enforcement in higher-risk areas such as construction and manufacturing while local authorities are responsible for lower-risk sectors such as retail, leisure, hospitality, care, catering, warehousing and offices.
Rhian Greaves, head of compliance and strategic support in Clyde & Co’s safety, health and environment team, said: “Thanks to the new sentencing guidelines, health and safety is now a top priority for the boardroom.
“Our research confirms what we have been seeing in practice – the new sentencing guidelines are biting hard.”
She added: “Good health and safety management is morally right. It also makes good business sense.
“When the potential reputational damage is added to the cost of the fine, it’s clear that health and safety failures are now a major business risks.”
Clyde & Co says that the manufacturing and construction sectors have paid the most in fines as a result of health and safety breaches. Fines paid by the sector reached £13m in the first 12 months of the new guidelines, compared with £7m in the previous year, an increase of 83%.
Fines are now routinely hitting the £1m mark, even in apparently less serious cases meaning that all breaches of health and safety law are now a serious threat to a company’s bottom line.
The highest penalty, of £2.6m, was imposed on Balfour Beatty Utility Solutions following the death of an employee in Heysham, Lancashire, when the trench he was working in collapsed.
The value of fines collected from manufacturing businesses doubled from £11.4m to £22.8m. The highest, £3m, was imposed on Cristal Pigment UK following two incidents in which toxic vapour escaped from a titanium dioxide plant in Lincolnshire, killing one worker and seriously injuring another.
Rhian said: “The floodgates are open with more fines exceeding £1m this year than in the previous 15 years combined.
“Companies should be concerned that fines are now routinely hitting the £1m mark, even in apparently less serious cases meaning that all breaches of health and safety law are now a serious threat to a company’s bottom line.”
Clyde & Co says that the logistics sector has suffered the most from local authority enforcement.
Rhian added: “The myriad of risks presented by distribution centres places them at the top of the local authorities’ agendas as they seek to regulate arguably the highest risk industry within their jurisdiction.
“The logistics sector represents the most challenging risk for the local authority to manage. The public’s growing preference for internet shopping has seen huge distribution centres spring up nationwide. With high level racking, mechanical handling equipment and large numbers of employees, agency and gig economy workers, the area presents something of a perfect storm.”
There are things that businesses can do to minimise the chances of falling fould of health and safety legislation.
Good practice includes having an effective risk assessment and risk management system in place, up-to-date and relevant health and safety policies that are communicated and enforced, and a consistent approach across all locations where businesses operate from more than one site.
The Institute of Occupational Safety and Health IOSH has provided specifics on how businesses can prevent and reduce the cost of a fine.
It says that factors increasing the seriousness of an offence include:
- Cost-cutting at the expense of safety
- Deliberate concealment of illegal activity
- Breaching a court order
- Obstruction of justice
- A poor health and safety record – it’s worse if there was a previous conviction
Factors helping to reduce the seriousness of an offence:
- Effective health and safety procedures in place
- Evidence of steps taken voluntarily to remedy a problem
- High level of cooperation with the investigation
- A good health and safety record – and having no previous convictions