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    16 Jan, 2018|

    An update on sentencing guidelines and the fines we’re seeing

    We last wrote about the new sentencing guidelines in October 2017, when we talked about cases involving Merlin Entertainment and the retailer Iceland.  We now want to share another example with you, this time involving Whirlpool.

    The Case

    Whirlpool UK Appliances Ltd v (HSE)
    2017 EWCA Crim 2186

    The Issue

    Level of HSE fine to be applied to ‘Very Large Organisations’ under the 2016 Sentencing Guidelines (which imposed significantly higher fines for HSE/Environmental offences). The guidelines are a tariff of fines based on ‘culpability’ and ‘harm’. Fines take account of the turnover of the offender, however the guidance stops at a figure of £50m, leaving fines for what is termed ‘Very Large Organisations’ in the hands of the judiciary.

    The Facts

    A self-employed contractor was working on electrical systems whilst on a mobile elevated working platform in close proximity to an overhead conveyor system. The contractor knew that Whirlpool would be carrying out maintenance on the conveyor at the same time. It was explained to the contractor that the maintenance team work would take priority. It was agreed that the contractor would liaise with the maintenance team to ensure that power to the conveyor was not activated whilst the contractor was working. A permit to work system was in operation.

    However, despite this, the contractor failed to communicate appropriately with the maintenance team (and was out of vision of them) as a result of which the conveyor was activated, knocking the platform to the floor and fatally injuring the contractor.

    In the High court, the judge decided on a fine of £700,000 on the basis of Whirlpool being a ‘Very Large Organisation’. Whirlpool appealed on the level of fine, although they did not dispute the judgement finding them guilty.

    The Arguments

    The argument by Whirlpool was that the level of fine was disproportionate compared to fines for smaller turnover organisations, and also that they were not a historically profitable organisation. In addition, they had an acknowledged exemplary health and safety record with no previous convictions.

    The judge summarised the range of safety systems and procedures in place, all of which tended to demonstrate the excellent commitment to health and safety. Whirlpool had also taken steps to ensure that the contractor was aware of the risks and had established that he was a competent contractor. In 2015, Whirlpool made a loss of £165m because they had to make a provision of £179m in respect of costs incurred in dealing with recall/repair of tumble dryers allegedly causing fires.

    The counter argument was that a fine had to be set at a limit to bring home to organisations the importance of H&S issues and that profitability was not necessarily a factor to be taken into account when assessing the level of fine. Moreover, in 2017 two ‘Very Large Organisations’ (Thames Water and Tata) with turnover measured in billions of pounds, received fines of several million pounds for H&S and environmental offences.

    By comparison, Whirlpool turnover of circa £700m meant that they were not in the same league as these others. Based on these arguments, the Court of Appeal thought that the level of fine levied was too high and reduced it from £700,000 to £300,000.

    Significance

    This decision will probably ensure that High Court decisions on HSE fines for ‘Very Large Organisations’ will differentiate between companies who are outside the £50m bracket but are not massive companies and will ensure that fines are more proportionate to those applied to smaller companies. Very large organisations like Thames Water and Tata will continue to have fines levied in the millions of pounds.

    Some might argue that this decision will reduce the impact of HSE and environmental fines on many organisations in terms of their attention to risk management. To do so would be a mistake. We would argue that this view does not acknowledge the fact of low culpability and harm and an excellent approach to health and safety that Whirlpool were able to demonstrate in mitigation. Poor profits as a factor in the level of fine has not been proven.

    Organisations need to have confidence that their approach to H&S and environmental issues will withstand regulatory challenge. The value of effective risk management driven from the boardroom remains as critical as it ever was.

    Risk management service

    Risk management advice is a key part of the service provided by Anthony Jones. Together with DAC Beachcroft, we work closely with all our clients to identify health and safety issues to ensure the safety of all their employees while at work. If you have any concerns about risk management within your own business, please get in touch with our team today. Alternatively, speak to Sally Roff, who is head of Safety Health and Environment at DAC Beachcroft Claims:

    Email: sroff@dacbeachcroft.com

    Tel: 01633 657780