October 2006

A flexible and innovative alternative to imprisonment and fines

The Corporate Manslaughter and Corporate Homicide Bill currently before Parliament provides for two types of penalty only. An unlimited fine and remedial Orders.

The Health and Safety Executive already has the power to make remedial Orders. Therefore, the key penalty arising from the Bill is the unlimited fine.

Fines are a very limited and inadequate form of penalty for many reasons.

• often the level of fine imposed by the court is inadequate
• once paid that is the end of the matter
• fines rarely affect the profitability of a company and the payment of dividends so shareholders are unlikely to be affected
• some companies, which make limited profit or are facing difficult financial circumstances may be tempted to cut back on safety improvements in order to pay the fine which is therefore counter productive
• there is no evidence indicating that fines lead to improved safety

If the purpose to this legislation is to reduce the number of deaths and serious injuries at work and to the public, then alternative, more flexible and innovative penalties need to be considered. For the purpose of this submission we consider that corporate probation is most likely to achieve this objective.


What is Corporate Probation?

It is a supervision Order imposed by the court on a company that has committed a criminal offence. You cannot, of course, send a company to prison and fines are often ineffective, so a corporate probation or remedial Order is the most effective means whereby a court can require a company and its officers and directors to alter their conduct in a particular way.

For example, in the case where a company has been found guilty of gross negligence and been convicted of corporate manslaughter, the court will want to impose penalties which penalise the company for the offence, which will deter future offences and which will instigate a change in culture, procedure, organisation or activity so that such future deaths or injuries do not or are unlikely to occur.

If a company is fined, say, one million pounds, the fine is paid and that is the end of the matter.

However under a corporate probation or remedial Order, a company will be placed under supervision of the court. Half the fine could, for example, be suspended pending satisfactory completion of the probationary period. The court may need to appoint an expert or body to supervise the probation.

The terms of the probation Order might be that the company has to review its safety policy, its safety procedures, initiate a training programme for directors and senior management or others, require a reduction in accidents etc….; if after completion of the probationary period the company has satisfied the terms of the Order that is the end of the matter. If the company fails to co-operate or comply, the suspended sentence could be invoked and further penalties could be imposed, including, if felt desirable, the disqualification of directors.

To carry out the Order the court will probably (but not necessarily in all cases) appoint an expert or body such as the HSE to supervise the company and report back to the court. The Order and other penalties would also be recorded at Companies House, on the company’s records.

The attraction of this type of Order is that it gives the court the power to set terms which will suit the companies own situation and achieve a positive change in the way in which the company operates. It provides a flexibility which other penalties do not and has as its objective, achieving a positive and long term change in company behaviour.


Where has Corporate Probation been introduced?

The United States of America and Canada are the main countries to introduce this sentencing option.

In the USA corporate probation can be imposed on corporations that commit criminal offences. The main objective in the USA seems to be aimed forcing companies to pay restitution, preventing them from hiding assets or subverting payment of restitution; but it is clear that the US Sentencing Council also envisaged other types of corporate criminal offence by giving courts the power to introduce “any probationary conditions related to the nature and circumstances of the entire case and the purposes of sentencing”

In Canada the purpose of corporate probation Orders is aimed at improving occupational safety. The introduction of such Orders came about as a result of the 1992 Westray Mine Disaster in which 26 persons lost their lives. Prosecution of the company failed because of the need to identify a controlling mind or directing mind, similar to problems faced in similar UK prosecutions.

This led to all party support for a new bill which had similar objectives to the Corporate Manslaughter Bill currently before the House of Commons.

However, in the lead up to the Canadian Bill, considerable thought was given to alternative sentencing options.

The new Canadian law created a criminal code duty on “every one who undertakes, or has the authority, to direct how another person does work or performs a task… to take reasonable steps to prevent bodily harm to that person, or any other person, arising from that work or task”

The Canadian law provides for probation Orders which could be useful in directly influencing the future conduct of organizations convicted of offences.

Among the optional probation conditions available are:

• making restitution
• establishing policies, standards, and procedures to reduce the likelihood of subsequent offences (however, the court must first consider whether it would be more appropriate for another regulatory body to supervise the development of implementation of such policies, standards and procedures)
• communication those policies, standards, and procedures to its representatives
• reporting to the court on the implementation of those policies, standards and procedures
• identifying the senior officer responsible for compliance with those policies standards and procedures
• providing, in the manner specified by the court, the following information to the public, (i) the offence of which the organization was convicted, (ii) the sentence imposed, and (iii) any measures taken by the organization to reduce the likelihood of its committing further offences, and (iv) complying with any other reasonable conditions considered desirable by the court in preventing subsequent offences by the organization or to remedy the harm caused by the offence.