Application of the Sentencing Guideline for ‘very large organisations’

Whirlpool UK Appliances Limited v R [20.12.2017]

Since the introduction of the Definitive Sentencing Guideline for Health and Safety Offences (the Guideline) on 1 February 2016, the sentences imposed for health and safety offences have increased dramatically. In assessing an appropriate fine, the Guideline requires the courts to follow a nine-step process to assess factors such as the level of culpability of the offender and the likelihood of harm and to fix the fine within a range linked to an organisation’s turnover.

The Guideline permits the courts to move outside the relevant range where the organisation being sentenced is deemed a “very large organisation” in order to achieve a proportionate sentence. This is defined in the Guideline as an organisation whose “turnover very greatly exceeds the threshold for large organisations”, the threshold being £50 million. The Court of Appeal has recently considered the appropriate level of fines in these instances.

Calculation of fines

On 21 March 2017, Whirlpool UK Appliances Limited (Whirlpool) was sentenced in Bristol Crown Court to a fine of £700,000 for a breach of Section 3(1) of the Health and Safety at Work etc. Act 1974. The incident arose when a self-employed alarm and telecommunications contractor was fatally injured at Whirlpool’s premises. He was knocked from a mobile elevated working platform by an overhead conveyor that was operated by one of Whirlpool’s employees. 

The sentencing Judge found that Whirlpool’s offending was of low culpability as they had not fallen far short of the appropriate standard. Essentially, a job specific risk assessment and method statement had not been completed and the permit to work could have been more detailed. The Judge identified that the risk of harm included death or serious injury but that there was a low likelihood of this eventuating and therefore placed Whirlpool into a fine banding of £10,000 to £140,000 with a starting point of £35,000 - if he accepted that Whirlpool was a large organisation. 

However, having identified that Whirlpool had an annual turnover of £500 million he deemed it to be a “very large organisation” for the purpose of the Guideline. Accordingly, the Judge then increased the starting point to £1.2 million. 

Finally, acknowledging Whirlpool’s low culpability, significant mitigation and lack of aggravating features present in the case, he reduced the fine by £150,000 before applying a one third discount to account for Whirlpool’s early guilty plea, thereby arriving at a fine of £700,000.

The appeal

Whirlpool appealed the fine to the Court of Appeal on the basis that the starting point for the fine (£1.2 million) was too high by comparison with the starting point for “large organisations” and that the Judge had failed to consider Whirlpool’s very low profit ratio against turnover. 

The Court of Appeal, led by a new Lord Chief Justice, made two key decisions in its consideration of the appeal:

  1. It indicated that the fact that a death had occurred justified a move up from what would otherwise have been the appropriate fine range in the Guideline to the top of the range above. 
  2. Having found that Whirlpool in fact had a turnover closer to £700 million, it was correct to have identified Whirlpool as a “very large organisation”. 

Rather than move outside the Guideline ranges, however, or to indulge in the kind of “mechanistic extrapolation” criticised in a previous case, the Court of Appeal in effect simply moved up to the mid-point of the  category range above to arrive at a starting point of £500,000, before applying a 10% reduction for mitigating features. Applying the one third reduction for its early guilty plea, Whirlpool was left with a reduced fine of £300,000 and a successful appeal. 

Comment 

Among other things, this judgment reinforces the message that “no two health and safety cases are the same and that any fine imposed should reflect the particular culpability, likelihood of harm and turnover specific to each organisation and case. 

However, there is now clearer guidance to the courts on how to approach the sentencing of cases involving death, and we are moving closer to a situation in which there is a firmer understanding of what the Guideline means by “very large organisations”, and how it should be applied to them. Also, after a string of bruising encounters for larger organisations in the Court of Appeal, the arrival of a new Lord Chief Justice may herald a more balanced approach to this type of case.

Read other items in the Health, Safety and Environment Brief - April 2018