1. Private & Confidential. Not for distribution. ©DWF LLP 2014 www.dwf.co.uk Go further Title needs degree sign (°) added from the “Insert/Symbol” menu. This needs to be added at 28pt compared to the 24pt title. Sentencing Guidelines° Steffan Groch 12 January 2016

2. Private & Confidential. Not for distribution. ©DWF LLP 2014 www.dwf.co.uk Chronology and background to the Change February 2010 – Sentencing Council Guidelines for Corporate Manslaughter & Health and Safety Offences Causing (our emphasis) Death 2012 - Section 85 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 January 2014 - R v Sellafield and Network Rail July 2014 – Updated Environmental Sentencing Guidelines in force – in particular see the guidance issued to the EA November 2014 – Current guidelines consultation opens (closed 18 February 2015) There is a piecemeal and often inconsistent approach to sentencing for these offences Background to the Proposals 2

3. Private & Confidential. Not for distribution. ©DWF LLP 2014 www.dwf.co.uk Health and Safety Offences 2013 Sentences: 273 – against organisations 146 – against (adult) individuals 2013 Fines: £46,009 – average fine for organisations 50% of organisations received fines of less than £8,000 5% of organisations received fines of more than £225,000 £4,325 – average fine for individuals Statistics – Health and Safety Offences 3

4. Private & Confidential. Not for distribution. ©DWF LLP 2014 www.dwf.co.uk Food and Hygiene Offences 2013 Sentences: 56 – against organisations 222 – against (adult) individuals 2013 Fines: £1,785 – mean fine for organisations 5% of organisations were fined more than £5,000 £810 – average fine for individuals 50% of individuals were fined less than £500 5% of individuals were fined more than £2,500 Statistics – Food Safety and Hygiene Offences 4

5. Private & Confidential. Not for distribution. ©DWF LLP 2014 www.dwf.co.uk Punishment and Deterrence Low Fines – although it is accepted that not all cases are treated too leniently Focus on large organisations and the most serious offences Economic impact on management and shareholders R v Southern Water Ensuring consistency Lack of guidance Aims/Overarching Issues 5

6. Private & Confidential. Not for distribution. ©DWF LLP 2014 www.dwf.co.uk Title needs degree sign (°) added from the “Insert/Symbol” menu. This needs to be added at 28pt compared to the 24pt title. The Guidelines °

7. Private & Confidential. Not for distribution. ©DWF LLP 2014 www.dwf.co.uk Similar approach to Sentencing Guidelines for Environmental offences Guidelines set out for: –Health and Safety Offences: Organisations and Individuals –Corporate Manslaughter –Food Safety and Hygiene Offences: Organisations and Individuals Multi-stage approach to reach the appropriate level – in effect, a tariff based approach So what are the stages…. Structure of Guidelines - Corporates 7

8. Private & Confidential. Not for distribution. ©DWF LLP 2014 www.dwf.co.uk Structure of Guidelines - Corporates 8 1.Determining the offence category 2.Starting point and category range 3. Is the fine proportionate to the means? 4. “Other factors” to warrant adjustment 5. Reduction for Assistance 6. Reduction for Guilty Plea 7. Compensation and Ancillary Orders 8. Totality Principle 9. Reasons

9. Private & Confidential. Not for distribution. ©DWF LLP 2014 www.dwf.co.uk Stage 1 - Determining the offence category: Culpability Structure of Guidelines - Corporates 9 a The extent to which the offender failed to meet the standards required of them. How far short of the relevant standards did the organisation fall, e.g: What measures were put in place to? To what extent did failures run through different levels of the organisation? Were there any warning signs indicating a risk to health and safety?

10. Private & Confidential. Not for distribution. ©DWF LLP 2014 www.dwf.co.uk Stage 1 - Determining the offence category: Harm (H&S offences) Structure of Guidelines - Corporates 10 a - H&S offences do not require harm; offence is the creation of risk/failure to make activity safe - In line with this approach, the guidelines also focus upon the risk of harm - Two stage approach proposed

11. Private & Confidential. Not for distribution. ©DWF LLP 2014 www.dwf.co.uk Determining the offence category: Harm (FSH offences) Structure of Guidelines - Corporates 11 a - Review of range of cases in order to define relevant harms to human health - Two stage approach for both actual harm and risk of harm - Also consider offences that are more procedural in nature; undermine regulator and undercut competition

12. Private & Confidential. Not for distribution. ©DWF LLP 2014 www.dwf.co.uk Starting Point and Category Range Categorisation based upon turnover: –Large £50m plus –Medium£10m – 50m –Small £2m – 10m –Micro£0 – 2m Size + Culpability + Harm = Starting Point and Range Aggravating/mitigating factors – nothing new New starting points vs sentencing trends to date: –Health and Safety offences –Food Safety & Hygiene offences Structure of Guidelines - Corporates 12

13. Private & Confidential. Not for distribution. ©DWF LLP 2014 www.dwf.co.uk Is fine proportionate to means? Flexibility to adjust the fine to the offender’s particular circumstances Court must also consider the principles of sentencing If it finds reason for doing so, the sentencing court can move outside the ranges proposed at step two Steps 4 to 9 Further reflection upon fine and possible means of adjustment Structure of Guidelines - Corporates 13

14. Private & Confidential. Not for distribution. ©DWF LLP 2014 www.dwf.co.uk -Range of sentencing options available -Guidelines include specific guidance on fining individuals Points to note Culpability classed as either Deliberate, Reckless, Negligent or Low Penalties and interaction with other sentencing options Fines ranging from 25% to 700% of weekly income; –Manager on £60,000 pa found guilty of a reckless health and safety breach resulting in long term physical impairment could receive fine of £8,000 –Manager on £60,000 pa found guilty of a negligent food safety breach resulting in a serious adverse effect on human health could also receive fine of £8,000 Structure of Guidelines - Individuals 14

15. Private & Confidential. Not for distribution. ©DWF LLP 2014 www.dwf.co.uk -Guideline currently in force for Corporate Manslaughter (“CM”) and Health and Safety Offences resulting in fatality – to be replaced -Changes to sentencing of HS offences require change to CM offences -Step 1 – assessment of Seriousness -Step 2 – Financial assessment and Starting Points -Steps 3 to 9 – largely similar to those outlined above Corporate Manslaughter 15

16. Private & Confidential. Not for distribution. ©DWF LLP 2014 www.dwf.co.uk Corporate Manslaughter 16

17. Private & Confidential. Not for distribution. ©DWF LLP 2014 www.dwf.co.uk Health and Safety offences R v Network Rail Turnover of £6.2 billion and profit of £780,000,000 – although a ‘not for dividend’ company Serious accident at a level crossing – poor visibility and no telephone 10 year-old son of the driver suffered life-changing brain damage The company pleaded guilty and was fined £500,000 Guidelines Assessment: Large, High Level Culpability, Category 1 Harm Starting point: £2,400,000 (albeit reduced at stage 3) Case Studies: How cases would be treated under the new regime 17

18. Private & Confidential. Not for distribution. ©DWF LLP 2014 www.dwf.co.uk R v X Company turnover of c.£7,000,000, although part of a group structure Serious physical and psychological injuries after exposure to chemical substances – death was foreseeable Systematic failures; absence of any risk assessment for activities The Company pleaded guilty and was fined £10,000 plus costs of c. £700 Guidelines Assessment: Small, Medium Level Culpability, Category 2 Harm Starting Point £54,000 Case Studies: How cases would be treated under the new regime 18

19. Private & Confidential. Not for distribution. ©DWF LLP 2014 www.dwf.co.uk Title needs degree sign (°) added from the “Insert/Symbol” menu. This needs to be added at 28pt compared to the 24pt title. Moving Forwards °

20. Private & Confidential. Not for distribution. ©DWF LLP 2014 www.dwf.co.uk What practical lessons can be learnt from the guidelines/discussions today: Safety and Food Safety & Hygiene, as it already is within your respective organisations, is a key concern. Potential fines for health and safety/food safety & hygiene offences will increasingly move them up the boardroom agenda. Particularly for ‘large’ organisations under the guidelines, potential levels of fine for these and CM offences change the nature previous fines: What needs to be taken away from day? 1.Reappraisal of risk register and implications: –Level of reserve and financial planning – banking covenants, lending and credit worthiness, shareholder scrutiny etc; –Impact upon EL/PL Insurance and premiums: greater need to demonstrate risk management systems and work collaboratively with Insurer/Brokers – Insurer funding models? –Consideration of organisational structure; sufficient concern to justify creation of separate entities to contain risk? Considerations for the Future 20

21. Private & Confidential. Not for distribution. ©DWF LLP 2014 www.dwf.co.uk 2.Greater focus upon issues of corporate governance –Initiated by judgments in Sellafield and Network Rail, but necessitated by culpability assessment in guidelines; need for demonstrable board level involvement 3.Continued need to ensure individuals are aware of their duties; both individually and as a key element of organisational compliance 4.Increased need for robust incident management procedures –Greater financial exposure at ‘lower end’ of spectrum (and implications for future culpability assessment) necessitates coherent company approach –Change in appetite to defend cases? Implications for the approach to internal investigation from outset –Fee for Intervention invoices for H&S offences, or challenging Improvement Notices etc; be wary –Appetite to defend cases / Newton hearings Considerations for the Future 21

22. DWF is the business law firm with industry insight. Our legal experts combine real commercial understanding and deep sector knowledge to help clients anticipate issues, create opportunities and get the outcomes they need. We’ll deliver the results that help you go in the right direction – wherever you are. www.dwf.co.uk Go further ° ©DWF LLP 2014 DWF LLP is a limited partnership registered in England and Wales with registered number OC328794. The content of the Regulatory and Licensing Insert does not constitute legal advice and should not be relied on as such. Specific advice should be sought about your specific circumstances.