New sentencing guidelines in January 2016 mean huge fines for public and private organisations

01 Jan 2018

Health and Social Care

Under new sentencing guidelines, entities could now find themselves subject to penalty fines of up to 100% of pre-tax profits.

In the recent case of R v Thames Water Utilities Limited (“TWU”) [2015] EWCA Crim 960, the Court of Appeal applied new sentencing guidelines for the calculation of fines for environmental offices committed very by large organisations.

In response to TWU’s appeal concerning a pollution fine of £250,000, the Court of Appeal referred to the guidelines, introduced 2014, which provide a structured process for calculating fines based on the size of the defendant company as well as the severity of the offence.

The guidance states that very large organisations should be recognised as a separate class and subject to proportionate sentences:

The Lord Chief Justice stated “Where a defendant company’s turnover or equivalent very greatly exceeds the threshold for large companies, it may be necessary to move outside the suggested range to achieve a proportionate sentence.”

For serious offences, the Court added: “This may well result in a fine equal to a substantial percentage, up to 100%, of the company’s pre-tax net profit.”… “Even if this results in fines in excess of £100 million.”

The Court of Appeal also recommended that the sentencing of very large organisations should be undertaken by a High Court Judge.

This case could have huge implications for forthcoming guidelines on health and safety and corporate manslaughter, due to be introduced in January 2016, following a period of consultation. The Sentencing Council has indicated that these guidelines will similarly look to include proportionate sentences by linking starting points for fines to the size of the organisation involved.

If the guidelines are adopted as in R v Thames Water Utilities Limited, public and private organisations could face fines potentially in excess of £100 million. This in turn could lead to an increase in contested trials (and Newton Hearings) as defendant organisations seek to avoid severe fines.

Gerard Forlin QC, who specialises in this work, is Vice Chair of the Health and Safety Lawyers Association and General Editor of “Corporate Liability: Work related Deaths and Criminal Prosecutions”.

Gerard has contributed to other articles on this topic in New Law Journal, Sweet and Maxwell Archbold Review, Health and Safety Network and Local Government Lawyer.

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