Guidance issued in February 2016 stipulates that when considering sentencing in non-fatal health and safety offences and food safety offences, that as well as considering the risk of harm resulting from the offence and culpability, the size of the organisation also needs to be considered, the aim being that any fine imposed is fair and proportionate to the seriousness of the offence and means of the offender(s).
More specifically the guidance stipulates that turnover of an organisation should be used as the starting point. While turnover may generally be seen as a fair basis to measure the size of the business , there may be other factors, both non-financial and financial that need to be considered and the Court is required to ‘step back’ and take into account any additional relevant financial information. Examples include: profit before tax; impact of potential fine on employees and other ‘stakeholders’, and existing financial commitments.
We can be instructed on behalf of the prosecution or defendant to report on the overall financial position of a business and its ability to pay a potential fine.
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We were instructed to consider the Company’s finances and to present these with clarity in a report for use in sentencing. In addition to turnover, we were asked to consider profit margins and other relevant factors which may be relevant in the amount the company would be fined. Whilst the company was a well-run business it was trading in a difficult climate. We were able to show that the Group was susceptible to any factor(s) that reduced the availability of working capital, such as a decline in sales, profitability and/or external ‘shocks’. This led to a significantly lower fine and also the Company was allowed to pay in 12 monthly instalments.
We were instructed to consider other financial factors over and above turnover in the sentencing of a car dealership. Modest gross profit compared to companies of a similar size, volatile working capital with cash being key to the business, pension liabilities and associated commitments, and modest directors’ remuneration were amongst the factors the Judge considered as pertinent issues. Our review led to a lower fine and a longer payment period.
We have also worked alongside HSE in considering the accounts and financial information provided to them in order to assess the resources of companies being prosecuted and their ability to pay fines.