Last reviewed 5 March 2019
In the case of R v Whirlpool Appliances Ltd (2018), the Court of Appeal gave detailed analysis and guidance in relation to the sentencing of very large organisations.
The facts, in summary, were that in March 2015, D, a self-employed fire alarm and telecoms contractor, was working at W Ltd’s Indesit factory in Yate, near Bristol. He was working on fire and heat detector systems from a mobile elevated working platform between hanging baskets on an overhead conveyor system. A basket struck the platform and D fell. He suffered multiple injuries and died 10 days later. D was aware of the risks of working at height.
The initial decision
W Ltd was convicted of an offence under s.3 of the Health and Safety at Work, etc Act 1974. It had not required D to prepare a job-specific risk assessment and method statement for his work and had not prepared a detailed permit to work which would have identified the potential risk posed by a working platform being used near the overhead conveyor and the required control measures.
The judge at first instance made the following points.
The defendant company had a culture of commitment to safe systems and improvements in which all employees were engaged.
The company had an exemplary health and safety record with no previous convictions. None of the aggravating features sometimes found in health and safety cases, eg deliberate cost cutting or calculated risk taking to enhance profit, was present.
For the purpose of the Definitive Guideline on Health and Safety Offences, Corporate Manslaughter and Food Safety and Hygiene Offences, the company’s breach of duty was one of low culpability.
W Ltd was fined £700,000. The company appealed to the Court of Appeal on the basis that the sentence had been manifestly excessive.
The Court of Appeal set out a detailed analysis of the Sentencing Guideline. It made the following points.
The Guideline provides a structure within which to sentence for breaches of health and safety legislation.
At Step One, the court decides the category of the offence. The categories are very high, high, medium and low. The conduct related to the assessment of culpability ranges from deliberate breach of or flagrant disregard for the law, to “offender did not fall far short of the appropriate standard”. The court is required to determine both the seriousness of the harm risked and the likelihood of that harm arising.
The Guideline then requires the court to consider whether the offence exposed a number of workers or members of the public to risk.
Step Two focuses on turnover:
large organisations have a turnover of £50 million or more
medium have a turnover of £10–£50 million
small have a turnover of £2–£10 million
micro have a turnover of up to £2 million.
The Guideline sets out a table of relevant fines for each category.
Very large organisations are those whose turnover very greatly exceeds the threshold for large organisations. It may be necessary to move outside the suggested range of fines to achieve a proportionate sentence.
The Guideline includes a non-exhaustive list of factors both increasing and reducing seriousness or reflecting mitigation. It explains that recent relevant previous convictions should result in a substantial upward adjustment.
Step Three requires the court to check whether the proposed fine based on turnover is proportionate to the overall means of the offender. A fine must:
take account of the financial circumstances of the offender
meet in a proportionate way the objectives of punishment, deterrence and removal of gain
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.
The court has to consider the economic realities, applying the following factors:
any quantifiable benefit derived from the offence
whether the fine would put the offender out of business.
Step Four requires the court to consider matters which include whether the fine will impair the offender’s ability to make necessary improvements to systems, make restitution to victims or adversely affect the economic interests of others.
Step Five deals with formal assistance to prosecuting authorities.
Step Six concerns reduction for guilty pleas.
The company’s turnover for 2014, in round figures, was £672 million; for 2015 it was £710 million.
There was no question of exposing other workers or members of the public to harm; however, the systemic failings were the cause of the most serious harm.
A consistent feature of sentencing policy had been to treat the fact of death as something which substantially increased a sentence.
Large commercial entities in many areas of business are vulnerable to very substantial penalties for regulatory failings. The same was true for breaches of health and safety or environmental law in appropriate cases. A fine of the amount imposed by the judge in this case would only have been appropriate if the factors weighing in the balance for the purposes had been different.
An organisation with a consistent recent history of losses was likely to be treated differently from one with consistent profitability.
An organisation where directors and senior management were very handsomely paid, when compared to turnover, was likely to attract a higher penalty than one where the converse was the case.
W Ltd was a “very large organisation” with a turnover of several multiples of £50 million. The starting point for the fine should be £500,000. Having regard to the underlying culpability, risk of harm, actual harm and turnover, a starting point of £450,000 was sufficient to have a real economic impact which would bring home to the management and shareholders the need to comply with health and safety management, but was also proportionate to the company’s overall means.
Taking into account the guilty plea, the appropriate fine was £300,000, applying the Guideline of reduction of a third.