The value of fines collected for breaches of the Health and Safety at Work Act by the Health and Safety Executive (HSE) and local authorities has doubled in a year, according to a research report from global law firm Clyde & Co.
Data obtained directly from the Health and Safety Executive (HSE) and over 300 local authorities shows that the total value of fines collected from businesses increased to £76.7m in the first year of the new sentencing guideline (year end 31 January 2017), up from £36.2m in the previous 12 months.
New sentencing guidance introduced on the 1st of February 2016 toughened penalties for health and safety and corporate manslaughter offences. Under the new approach, the scale of fines varies according to the turnover of the company but can exceed £20m for the very worst cases involving corporate manslaughter, and potentially more for the largest companies.
The amount collected in fines by the HSE increased by 74% during the first year of the new sentencing guideline, to £61.6m up from £35.5m.
The total sum collected by local authorities showed an even greater increase of 1,870% over the same time period. Fines collected by local authorities in the last year rose to £15.2m, up from £0.8m in the previous 12 months.
Clyde & Co explains that the HSE has enforcement oversight of 'higher risk sectors' including construction and manufacturing. While local authorities are responsible for the enforcement of 'lower risk sectors', such as retail, leisure, hospitality, care, catering, warehousing and office space.
Rhian Greaves, Head of Compliance & Strategic Support in Clyde & Co's Safety, Health & Environment team, comments: "Thanks to the new sentencing guidelines health & safety is now a top priority for the boardroom. Our research confirms what we have been seeing in practice - the new sentencing guidelines are biting hard."
"Good health and safety management is morally right. It also makes good business sense. When the potential reputational damage is added to the cost of the fine, it's clear that health and safety failures are now a major business risks."
Manufacturing and construction bear the brunt of the new regime
Clyde & Co says that the manufacturing and construction sectors have paid the most in fines as a result of health and safety breaches, which is perhaps unsurprising given that these are deemed amongst the most risky sectors by the HSE.
However, the rate at which fines have increased is significant. Fines paid by the construction sector reached £13m in the first 12 months of the new sentencing guidelines, compared to £7m in the previous year, an increase of 83%.
Fines against the construction sector represented 21% of the overall total collected by the HSE this year. The highest fine imposed on the sector was £2.6m, ordered to be paid by Balfour Beatty.
The manufacturing sector paid an even higher sum for health and safety failings, with the value of fines collected from the sector hitting £22.8m in 2016/17, up from £11.4m in the previous year – a 99% rise.
The highest fine imposed on the manufacturing sector was £3m ordered to be paid by Cristal Pigment UK Limited following two separate incidents in which toxic gas clouds were released. Total fines paid by the manufacturing sector represented 37% of the overall total collected by the HSE this year.
Rhian Greaves says: "The floodgates are open with more fines exceeding £1m this year than in the previous 15 years combined. Companies should be concerned that fines are now routinely hitting the £1 million mark, even in apparently less serious cases meaning that all breaches of health and safety law are now a serious threat to a company's bottom line."
Local Authority enforcement picks up pace
Rhian Greaves says: "The percentage increase in fines in the local authority enforced sectors is staggering. Whilst relatively few prosecutions have been pursued in the first year of the Guideline, the cases that have passed through the Courts have reinforced the dramatic effect the new sentencing regime is having on defendant organisations."
Clyde & Co says that the logistics sector has suffered the most from local authority enforcement in the first year of the new sentencing guideline, with warehousing organisations paying out six times as much as the total figure for all local authority cases in the previous year.
Rhian Greaves adds: "The myriad of risks presented by distribution centres places them at the top of the local authorities' agendas as they seek to regulate arguably the highest risk industry within their jurisdiction."
"The logistics sector represents the most challenging risk for the local authority to manage. The public's growing preference for internet shopping has seen huge distribution centres spring up nationwide. With high level racking, mechanical handling equipment and large numbers of employees, agency and gig economy workers, the area presents something of a perfect storm. "
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.