Sentencing VLOs in health and safety cases — is change on the horizon?

There is no dispute that since the guideline for sentencing health and safety offences, corporate manslaughter and food safety and hygiene offences, (the Definitive Guideline), came into effect on 1 February 2016, there has been a very clear upward trajectory in the level of fines being imposed. Whereas in the days prior to the Definitive Guideline it was unusual to see a sentence of seven figures, we now regularly see fines in excess of £1 million.

The Definitive Guideline was introduced in response to public pressure arising from dissatisfaction that the sentences passed down for the most serious of these types of offences were considered to be too low, and to introduce consistency. A stepped approach to sentencing was established, and key steps in the sentencing exercise include a determination of the level of harm and culpability and also the size of the organisation based upon its turnover or equivalent.

However, there has been growing disquiet with how the Definitive Guideline deals with “very large organisations” (VLOs) and calls for further guidance to be developed for this category of defendant. The distinction between a large organisation and a VLO can be significant, leading to a multiplication of the fine by three or four times. The question of whether a defendant is a VLO or not is therefore of crucial importance to organisations with a turnover that exceeds £50 million.

Now change might be afoot as this year’s miscellaneous amendments to sentencing guidelines: consultation 2024, (the Consultation), which opened on 5 September 2024 and runs until 27 November 2024, seeks views on this very issue.

Size of the organisation

The Definitive Guideline bands organisations as follows:

• Micro — turnover or equivalent not more than £2 million
• Small — turnover or equivalent between £2 million and £10 million
• Medium — turnover or equivalent between £10 million and £50 million
• Large — turnover or equivalent over £50 million.

It is then stated that 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.

There is no further guidance in the Definitive Guideline as to what amounts to “greatly exceeding the threshold for large organisations”, and so what amounts to a VLO. In the case of R v Places for People Homes Ltd [2021] EWCA Crim 410 the Court of Appeal stated that it would be obvious when an organisation is large as opposed to very large, and stated there is not and should not be a bright dividing line between the categories.

Looking at the case law since then it is evident that the courts do not consider an organisation with a turnover of less than £300 million to be a VLO and, generally speaking, it is organisations with a turnover of at least £400 million.

The Consultation

The Consultation sets out a number of matters it is seeking views on which includes “Sentencing very large organisations: adding some guidance on sentencing very large organisations to relevant guidelines”.

In the explanatory notes it is stated that the Environment Agency raised this issue in last year’s consultation, (which sought views on proposed changes to the environmental guidelines for individuals). Whilst consideration of the issue was initiated by reference to environmental cases, the Consultation makes clear that, if adopted, any change would also apply to the Definitive Guideline.

The proposal is to expand what is currently stated to the following:

“Where an offending 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.

There is no precise level of turnover at which an organisation becomes "very large". In the case of most organisations it will be obvious if it either is or is not very large.

In the case of very large organisations the appropriate sentence cannot be reached by merely applying a mathematical formula to the starting points and ranges for large organisations.

In setting the level of fine for a very large organisation the court must consider the seriousness of the offence, the purposes of sentencing (including punishment and deterrence) and the financial circumstances of the offending organisation. Regard should be had to the principles set out under “General principles in setting a fine” above and at steps 5 to 7 below.

Particular regard should be had to making the fine proportionate to the means of the organisation, sufficiently large to constitute appropriate punishment, and sufficient to bring home to the management and shareholders the need for regulatory compliance.”

A second point raised by the Environment Agency is that most of the cases it deals with involving VLOs are now dealt with in the Magistrates Court rather than the Crown Court, and a view was expressed that it might be preferable for some of these to be committed to the Crown Court.

In the Consultation it is noted that this is outside the remit of the Sentencing Council.

Concluding comments

Whilst the Consultation invites views on whether guidance should be added for sentencing VLOs, if the proposed wording is adopted it seems that, in reality, very little will change. The proposed wording does not provide the much sought after clarity given that it still does not identify at which point an organisation becomes a VLO.

The Consultation effectively accepts as much by stating “As the proposed change to guidelines reflects the current case law, the impact of the change is likely to be minimal. However, it is possible that the change could result in higher fines in a small number of cases.”