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In the year since the introduction of new sentencing guidelines for health and safety breaches, the value of fines collected from the construction sector has doubled to a whopping total of almost £13m – an astonishing 83% rise.
Setting out tougher penalties for health and safety and corporate manslaughter offences, the new guidelines state that fines are to be “sufficiently substantial to have a real economic impact which will bring home to both management and shareholders the need to comply with health and safety legislation”. This means that for the first time, the scale of fines may be directly linked to a corporate defendant’s turnover.
This should cause companies serious concern. All breaches of health and safety law are now a threat to a company’s bottom line, and according to recent data, the construction sector in particular should take heed, as it currently ranks as the most costly sector for health and safety, with fines comprising 21% of the overall total cost collected by the HSE this year.
In the very worst cases involving corporate manslaughter, fines can now exceed £20m and larger companies with a turnover of more than £50m can now be hit with fines of up to £10m. In less serious cases, fines are now routinely hitting the £1m mark. In just this last year, there have been more fines exceeding £1m than in the last 15 years combined – in 2015 there were just two fines issued with a value over £1m, whereas last year there were 18.
In light of historic concerns that fines for health and safety breaches were too low, courts will now consider the size of the business and its turnover as well as culpability, seriousness and the likelihood of harm when imposing fines. As a result, the new legislation presents a real risk not just for medium sized firms, but also for larger contractors who have high turnovers but small profit margins.
A major example came when leading international infrastructure group Balfour Beatty received the construction sector’s highest fine yet at £2.6m following a worker’s death when a trench collapsed on an offshore wind farm. They have also faced a number of smaller, yet still significant, fines for other breaches of health and safety. They have since set aside up to £25m to cover potential H&S fines, in spite of the fact that its latest half year accounts revealed that the whole group made a profit of £7m during the first six months of last year.
The new guidelines are clearly having a financial impact, but only time can tell whether this will translate into a change in attitudes. In the meantime, it’s important that construction sector companies take note and make changes to ensure best practice going forward, such as robust auditing, proactive training and effective risk assessment.
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