Increased corporate penalties on the horizon...

Increased corporate penalties on the horizon...

Published:

Author: Hayley Saunders

In May 2012 the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (also known as LASPO) came into force.

Section 85 of LASPO, which is yet to be enacted, sets out parliament's intention to give magistrates courts in England and Wales unlimited sentencing powers rather than being restricted to the current fixed limit of £5,000.

What that means

Level five fines (currently fixed at £5,000) are common place across legislation which impacts on businesses across all sectors, for example they appear within food labelling, health and safety, trading standards, road traffic, VOSA, and environmental legislation.

Once the new section 85 is enacted businesses may face substantial fines for what may be considered a minor offence. We envisage that magistrates will be given sentencing guidelines to be used when sentencing level five offences but, given the recent ruling in the leading health and safety case against Sellafield and Network Rail, businesses are likely to face hefty fines which are capable of bringing the message home to shareholders.

This means that businesses are no longer able to hide behind the safety net of £5,000 per offence. Importantly, the Ministry of Justice's (MOJ) reasoning for including the new powers is to encourage greater use of fines and to enable magistrates to impose more proportionate fines on 'wealthy or corporate offenders and organisations'.

When does this apply?

Don't panic just yet; although LASPO received royal assent over two years ago the new powers have not yet been enacted. However, it's clear from recent commencement orders that it will only be a matter of time before section 85 of LASPO is enacted.

Technically LASPO is already in force but we are still awaiting confirmation from the MOJ as to when section 85 will be implemented. It is important to note, however, that the enactment of this section will not be subject to any further parliamentary scrutiny.

With the above in mind it may be prudent for businesses to ensure they are fully compliant with all criminal legislation which impacts them before it's too late. Regulatory compliance should feature just as high on the board agenda as finance and production. Don't say you haven't been warned..