Up to a point, the fine ranges are clear. Depending of course on any aggravating and mitigating factors in relation to the harm caused and the blameworthiness of the organisation, according to the Sentencing Council’s guidelines, the size categories of organisations relative to the guideline level of fine to be imposed are defined as follows:
- a ‘micro’ organisation is one with a turnover of no more than £2m
- a ‘small’ organisation is one with a turnover of between £2m and £10m
- a ‘medium’ organisation is one with a turnover of between £10m and £50m
- a ‘large’ organisation is one with a turnover of £50m and over.
What, then, is a ‘very large’ organisation? The guidelines (rather vaguely) state that a very
large organisation is one where:
“an offending organisation’s turnover or equivalent very greatly exceeds the threshold for large organisations, it may be necessary to move outside the suggested range to achieve a proportionate sentence.”
Whilst it is understood that the Court must always consider proportionality and whether the fine is sufficiently substantial to have a real economic impact, to enable the importance of health and safety compliance to be felt by the organisation, what is not clear from the guidelines is what turnover amounts to “very greatly” more than £50m. With the highest fine for a large organisation already being £10m, how far outside of the suggested range the Court is likely to go?
A recent decision in the Court of Appeal (R v Places for People Homes  EWCA Crim 410) has shed some light on this question. Here, the willingness of the Court to consider an organisation to be very large and to impose a significantly increased fine (in this instance doubling the starting point for the fine) to ensure that the sentence remains proportionate, was evident.
In this case the Court of Appeal was asked to consider the sentencing guidelines for health and safety offences in relation to a fine imposed on the appellant, a not-for-profit community benefit society that provided and managed affordable housing, and which was found to have failed to ensure the health, safety and welfare of its employees in relation to the risks associated with the use of vibrating tools and equipment.
Whilst the appeal was allowed and the fine imposed was reduced from £600,000 to £400,000 (due to the extent of the mitigating circumstances), what is interesting is that the trial judge was not criticised for either considering Places for People to be a very large organisation, or for making an uplift from £1m to £2m as the starting point for the fine imposed. The Court of Appeal considered that:
“The assets, turnover and operating surplus from the appellant’s core activities put it squarely within the very large organisation category. The judge could not be criticised for making an uplift from £1m to £2m in order to make the fine proportionate to the appellant’s means and for the statutory sentencing purposes before applying aggravating and mitigating factors.”
It is not insignificant that the Court considered this to be correct, notwithstanding that Places for People was a not-for-profit organisation. On considering what is meant by a very large organisation, the Court of Appeal considered that the extent to which any increase was required would depend on the particular circumstances of each individual case and was not something for “mechanistic extrapolation” given that there was “no bright dividing line between large and very large organisations”.
Whilst the Court of Appeal has, perhaps, missed an opportunity to give some definitive guidance on the definition of a very large organisation, this case does serve as a stark reminder to businesses that the courts are very willing to consider an organisation as very large and the effect on the fine could be significant indeed.
Whilst the Court considered that definitive guideline figures were not appropriate, what is clear is the Court’s reluctance to put any form of cap on the level of fine that could be imposed on a very large organisation. Perhaps then, and as is always the case, it is better to remain safe than sorry.
If you would like to know more about how Birketts can help you with your individual health and safety matters, please contact Francesca Reason or a member of the Health and Safety Team.
The content of this article is for general information only. It is not, and should not be taken as, legal advice. If you require any further information in relation to this article please contact the author in the first instance. Law covered as at June 2021.