As early as next year negligence leading to death could result in significant fines for businesses, under draft UK sentencing guidelines on corporate manslaughter. However, businesses are likely to breathe a sigh of relief as plans for fines calculated as a percentage of turnover have been scrapped.
Companies found guilty of the new crime of corporate manslaughter, which came into effect in April 2008, can expect fines of millions of pounds. Fines are rarely likely to fall below £500,000 under the proposed guidelines. On top of the fines, the guilty business can also be compelled to publicise the conviction so that it becomes known to shareholders and customers. The publicity orders forcing companies to make their conviction known could take the form of a notice on its website or an advert in the trade press. The guidelines also set fines for health and safety violations that lead to death, with the minimum pegged at £100,000.
‘I suspect [the draft guidelines] will go down a lot better with the larger companies as it is not linked to turnover,’ says Alison Gray, a partner in the environment and safety team at Dickinson Dees. ‘They’re still large figures and the large companies are going to get large fines in any event, but at least it’s taking it away from looking at annual turnover and a percentage of it. I think where it will really hit home is the smaller companies.’
Gray says what the big companies, including their chemical clients, fear more than the fines is the negative publicity. ‘You may be ordered to put an advert into your trade press to say you’ve been found guilty of corporate manslaughter and that in itself could have as damaging effect as the fine.’
Smaller companies have more reason to fear the fines than larger companies as the minimum fines are bigger, for many, than even the previously considered maximum fine of 10% of annual turnover. These fines could potentially be big enough to bankrupt small business, Gray notes, particularly in the current economic climate. However, she does point out that bankruptcy is a relevant factor for the court to consider when levying a fine.
To date only one prosecution has been brought under the UK’s Corporate Manslaughter and Corporate Homicide Act 2007 and it is still going through the courts. Very little is known about the prosecution, but from what can be gleaned from court documents a geotechnical company is alleged to have caused the death of an employee when a trench that it was digging collapsed.