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Corporate manslaughter fines 'should not be linked to turnover'

28 October 2009

Corporate manslaughter fines should not be linked to an organisation's turnover, according to sentencing experts.

Shoosmiths partner and regulatory specialist Ron Reid agrees, while at the same time warning organisations not to be complacent or believe it will never happen to them.

Those fined under the Corporate Manslaughter Act could be forced out of business.  

The Sentencing Advisory Panel (SAP) proposed fines for corporate manslaughter and health and safety offences leading to death be linked to turnover.

But the Sentencing Guidance Council (SGC) – in a consultation paper published this week – disagrees.

It says a ’fixed correlation between the fine and either turnover or profit is not appropriate’.

The SGC suggests instead that courts not only look at both turnover and profit, but also at assets. It also believes courts should consider the financial effect of the consequences of a fine ‘on the employment of the innocent’.

It says courts should not consider the effect on shareholders or directors, but should consider whether the level of fine would put the defendant out of business. The SGC says that in some cases ‘this may be an acceptable consequence’.

Appropriate fines, it believes would seldom be less than £500,000, and may be measured in £millions.

And for Health and Safety at Work Act offences that are shown to have caused death, the appropriate range is between £100,000 and ‘hundreds of thousands of pounds or more’.

Reid said: “Whatever the final outcome of the consultation process, levels of fines for offences involving death will be much larger than those seen in recent years.

"Any organisation yet to consider the substantial risk posed by this legislation to its financial wellbeing – and very existence – must sit up and act immediately.

"There really is no room for complacency. Shoosmiths has represented many organisations investigated following fatal incidents, and they all have one thing in common: none believed such a tragedy could happen to them."

And he warned: “It should not be forgotten that corporate manslaughter prosecutions can be for failings other than those in the field of health and safety.

“Product liability is an obvious area, but any breach of a duty of care where there is a commercial activity leading to death is likely to trigger an investigation.”

For further information please contact:
Name: Alastair Gray
Phone: 03700 864096
Email: Alastair.Gray@shoosmiths.co.uk

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