Consultation Paper on sentencing for Corporate Manslaughter
THOMPSONS SOLICITORS’ RESPONSE - February 2008
Thompsons solicitors are uniquely placed to comment on this consultation paper from the perspective of victims, their families and their trades unions.
As a trades union firm we deal with many of the work place fatalities that take place each year as well as representing the families of many of the victims of occupational disease. We gave evidence to the home affairs / dwp select committee on the corporate manslaughter bill and monitored the passage of the bill through all the committee stages.
We have represented workers and families in nearly all the major disasters that have occurred over the years from Piper Alpha and Kings Cross to recent train crashes and the Avon Bridge accident. We represent victims and families at inquests and advise both unions and their members during criminal proceedings. We recently successfully judicially reviewed the CPS for not bringing manslaughter charges in a workplace accident.
We take a slightly different approach to that adopted in the consultation paper. Whilst we recognise there are deterrence and punishment issues which have a direct bearing on the penalty that should be imposed as well as public interest considerations, we start from the position that there should be objectives that overarch all sentencing.
In our view the overriding sentencing objectives should be to:
- Ensure that any penalty properly holds employers to account for the consequences of their failure
- Achieve a change in corporate culture that puts Health and Safety (H&S) at the heart of a company’s activities
- Reduce the number of deaths and injuries.
Question 1: Do you agree with the approach to the assessment of seriousness?
We agree with the general approach in respect of aggravating factors and mitigating factors. However, we consider that the approach is too narrow.
- It is well known and statistically proven that a workplace with a recognised trades union will be a safer environment with accident rates of on average 20% lower than non union workplaces;
- It is the case that where employees are involved in H&S implementation, safety improves in a workplace;
- We know from our own experience that many unions are very experienced in H&S issues, train their members to properly understand those issues and employ or consult with experts on the subject; and
- Some employers specifically seek to avoid engaging with a union representative(s) or to recognise a union specifically because the union will raise safety issues which will require expenditure by the company.
We are of the opinion that a court should enquire into the extent to which an organisation sought to involve workers and their representatives in consideration of Health and Safety and that failure to do so should be considered an aggravating factor.
We also consider that a poor safety record should be an aggravating factor and not just a mitigating factor. A court should specifically consider the safety record of the company, that is not just previous convictions but the number of reportable accidents and the type of accidents that have occurred over a period of, say, 5 years prior to the fatality resulting in the charges being brought.
Question 2: Is each of the above aggravating and mitigating factors relevant to sentencing for (a) an offence of corporate manslaughter and (b) an offence under the HSWA involving death? Are there any other factors which may aggravate or mitigate either or both of these types of offence?
Yes although we consider the court should also consider the following additional factors:
- worker consultation (or lack of it) – see above;
- previous accident record – see above;
- whether or not a company had employers / public liability insurance;
- whether the company operated a system of safety committees and if so if they did so properly; an
- whether they provided a proper H&S training programme for workers.
Question 3: What do you consider should be the main aim of sentencing an organisation for an offence of corporate manslaughter or an offence under the HSWA involving death. Should there be any differences between the two types of offence and if so why?
In general we agree with the analysis in the consultation paper. Victims families expect there to be a significant punishment element to both penalise and act as a deterrent. Where fines are the main punishment then they should be significant and certainly higher than current levels.
We also refer however to our approach in the introduction. From the perspective of society as a whole the ultimate and overriding objective must be to prevent future accidents and deaths and there should be no difference in aim (though inevitably there would be a difference in penalties) between offences under the CMCH Act as opposed to the H&SW Act.
Negligence in a prosecution under the H&SW Act is likely to be at a much lower level (and more compatible with the driving offence analogy referred to in the Consultation paper) than a prosecution under the CMCH Act following gross negligence and a death. Charges inevitably reflect different levels of guilt.
The penalties that can be imposed under the CMCH Act and H&SW Act are different. We consider the same range of penalties available under the CMCH Act should be available under the H&SW.
Question 4: Do you agree that the aims of the fine should be to ensure future safety and reflect serious concern at the unnecessary loss of life? Should there be any difference in aim when imposing a fine for corporate manslaughter or for an offence under the HSWA involving death.
Yes. The aims of the fine should be to ensure future safety and reflect serious concern at the unnecessary loss of life.
No. We do not consider there should be any difference in aim (or penalties available to the court) where a death has occurred.
Question 5: Do you agree that a fine imposed for an offence of corporate manslaughter or an offence under the HSWA involving death should aim to eliminate any financial benefit resulting from the offence? If so, what information would be necessary, how could this be obtained?
We agree that a fine imposed for an offence of corporate manslaughter or an offence under the HSWA involving death should aim to eliminate any financial benefit resulting from the offence.
We recognise however the difficulty in evaluating financial benefit. Companies can benefit in ways that are not financial: by securing a place in a market; by excluding a competitor; by getting their foot in the door for future contracts. We note that after the Balfour Beatty fine of £7.5 million pounds imposed after the 2000 rail crash, referred to in the consultation paper, the company was within weeks of the fine awarded another massive multi million pound contract in the same industry.
We consider the court should be:
- asking for company accounts for a period of 5 years prior to the accident;
- asking for company accounts for the period between the offence and trial date.
- where a company is one of a number of associated companies or part of a holding company, the accounts of the associated/owner company should be considered.
- in appropriate cases the court should seek independent financial advice on the profitability, trading performance and liquidity of a company. Where this is necessary as a result of poor accountancy or obstruction by the company, the cost of such advice should be borne by the company itself;
- seeking representations from relevant trades unions and also the victim’s family. Trades unions, in particular will often have views on and be able to explain company structure, history, performance and issues relating to commercial contracts; and
- the court should be open to submissions from interested parties and organisations that can show they have specific knowledge relevant to the court’s considerations.
Question 6: Do you agree with the Panel’s proposed starting points and ranges for (a) offences of corporate manslaughter and (b) offences under the HSWA involving death? If not, what alternative approach would you suggest for the fining of organisations for these offences?
In our view the court needs to consider the maximum financial penalty that having regard to all the factors indicated in the consultation paper (with the exception of impact upon shareholders).
In CMH Act cases the fine should be at the upper end of the penalty range.
We consider 2.5%-10% of turnover to be too low. In our opinion it should be between 5-25%. Allowing for all the factors set out in the consultation paper e.g. size of company, impact of penalty etc.
We consider that the upper threshold should be 25% to ensure the court has maximum flexibility in putting together a package of penalties to achieve the sentencing objectives.
We consider that financial penalties should be routinely seen as available in addition to the other penalties that can be imposed e.g. publicity orders and remedial orders. The Court should aim to put a package together that it considers will both punish and deter but which will also result in changes to the way in which the company is run or operated to improve safety.
There should be available to the court the option of staggering financial penalties. For example a fine could be imposed tied to a company’s future turnover.
The cost of publicity orders and the cost of implementing the remedial order should be borne by the company and an option should be to defer some of the fine subject to satisfactorily complying with a remedial order?
The victims family should be consulted and invited to make their own representations on suitable penalties which the court should be required to take into account.
Question 7: Do you agree that it is for the prosecution and defence to raise issues of profitability and liquidity? What impact should these factors have on the calculation of the fine?
We agree. However, in addition, we consider that the victims’ family and relevant trades unions should be informed about what is to be raised by the prosecution and the defence and invited to raise any other issues they may have on profitability and liquidity.
Ability to pay is key but the court needs to be wise to companies that may try to hide their true profitability. Workers and their representatives often know if funds are being hidden perhaps through being part of a group of companies. The court should also have the option of calling in expertise to advise them on company structures, again at the companies expense, if there is any evidence that they have not been entirely open.
Where trade unions are consulted their concern will on the one hand to achieve the maximum fine but at the same time they will not want it to be such as to threaten the employees jobs and terms and conditions. Those with knowledge of the company and the industry will be concerned to punish but equally to ensure there are health and safety reforms and lessons learned.
Question 8: Do you consider that there should be a minimum fine for (a) offences of corporate manslaughter and (b) offences under the HSWA involving death? If so, what amount do you think would be appropriate?
No, We do not think minimum fines work. We think the court has to look at all factors and put together a package to both punish and reform.
Question 9: Do you consider that a report on each offender should be prepared for the court with full details of financial status and if so, how would this be provided?
Yes there should be a report on each offender prepared for the court with full details of financial status.
There are a number of options for how this could be provided. Independent financial or legal experts could be commissioned by the court. Equally as part of their preparation for the case the HSE could be commissioned to prepare a report drawing on appropriate financial or other expert advice to do so.
The cost of any such reports should be borne by the Defendant.
The victims family and any trades union should be invited to make representations or to comment on any report and the court should take those representations into account.
Question 10: Do you agree with the Panel’s approach to the impact of the fine on the offender , its employees, customers and shareholders? If not why not?
We agree with the approach to the impact of the fine in respect of the offender and employees. We do not consider that impact upon customers should be a factor.
Considering the impact of the fine on customers would be extremely difficult to gauge. It should not be a concern for the court as it would lead it away from hard facts and into guesswork. There would be a risk that the impact on customers would be used to justify a lack of spending on safety.
If, as we propose, a court has full flexibility as to how to deal with a guilty company – including requiring them to advertise their conviction and steps they have taken to address the problem identified – customers could be assured the company is still operating and rather than just hearing about a death and a conviction would know what was being done to prevent a recurrence.
The impact upon shareholders is irrelevant. Shareholders own the company, nominally control it and benefit from its profitability (in fact may profit more if there are shortcuts made on safety). Shareholders must, it follows, take the risk of losing out if the company they invested in takes a hit on its profits for whatever reason including failing to deal adequately with the issue of safety.
Companies need investment which makes the shareholder a key driver in achieving corporate change. If shareholders know that they will be affected by the way a company is run and by the way the company implements safety, they will learn to demand that safety is not skimped.
Question 11: Do you agree that the court should treat offenders consistently , whether or not they are publicly funded or providing a public service? If not, how do you think that considerations specific to public bodies should be reflected?
In principle we consider the law should be applied equally.
As a firm we have regularly faced complaints from self insuring local authorities and health trusts or those with large insurance excesses that a claim we are pursuing will ‘cost’ them a vital piece of equipment. Our answer, on behalf of the injured for whom the case is their only chance of compensation for the injury and loss they have suffered, is very simple – if you don’t injure your employees you have nothing to fear.
It may be however that a court, knowing that there will be a separate claim for compensation for the victim and their family, and faced with compelling evidence that a very substantial fine on a local authority could impact on vulnerable members of society such as care home residents or children in care, could decide that on public policy grounds it was undesirable that vulnerable members of society should be made to suffer for the failings of the funder as employee.
The use of publicity, tracked remedial orders and penalties staggered over a period of years, (part of which might be suspended subject to the organisation satisfying the court that it had made necessary and significant changes to the way it operates and implements safety) may be alternatives favoured by the court.
The same penalty options should be available in respect of offences under both acts. This necessitates the abolition of crown immunity under the H&SW Act.
Question 12: Do you agree that, when sentencing an organisation for an offence of corporate manslaughter, the court should impose a publicity order?
We believe that there should be a presumption in favour of the court imposing a publicity order on sentencing an organisation for an offence of corporate manslaughter. However, we believe the court should not be tied to such an order.
There may be circumstances in which a publicity order is not appropriate and may be self defeating.
However in our opinion in all cases, the shareholders of the company should be informed of the conviction. All convictions should carry with them the requirement for a notice of conviction to be placed in the companies annual report both that sent to shareholders and that lodged at Companies House.
Question 13: What should the extent of the publicity be and how, if at all, will this differ between cases of corporate manslaughter?
The purpose of a publicity order should, in our opinion, be viewed by the court as being a vehicle not just to name and shame the company but also in every case to communicate what action the company is taking to remedy its failings. How that is best communicated and to whom will vary but where there is to be publicity we would suggest that the following should be a minimum in all cases:
(i) Any notice must state what the company is doing to remedy its failings;
(ii) notices should be given to shareholders in the annual report;
(iii) notices should be lodged at companies house; and
(iv) notices should be displayed prominently in the workplace;
The variety of companies that may come before the court means that the court needs to be flexible as to what level of publicity is both appropriate and fair. For a small local company it may be adverts in local newspapers and trade magazines. For national companies the adverts may be in national newspapers and even on television. For international companies, consideration should be given to advertising at an international level and at international workplaces.
Each case will have to be considered on its own facts.
Question 14: Do you agree that the making of a publicity order should not lead to a reduction in the level of fine imposed on an organisation for an offence of corporate manslaughter?
In general we agree however see our answer to Question 11 in respect of local authorities.
Question 15:Do you agree that the making or a remedial order should not lead to a reduction in the level of fine imposed on an organisation for an offence of corporate manslaughter or an offence under the HSWA involving death?
See our answer to Question 14.