Sentencing Council confirms amendments to guidelines in England and Wales for very large organisations

The sentencing guidelines for health and safety, food safety, food hygiene and corporate manslaughter offences play a crucial role in determining the fines imposed on organisations based on their annual turnover. For large organisations, defined as those with a turnover of £50 million and over, the guidelines provide a structured approach to sentencing. However, for very large organisations (VLO), whose turnover greatly exceeds this threshold, the guidelines have historically allowed for flexibility in sentencing to ensure proportionality. 

Recent amendments proposed by the Sentencing Council aim to refine the approach to sentencing VLOs. Published in the response to the fourth annual consultation on miscellaneous amendments to the guidelines, these changes seek to codify existing case law and provide clearer direction for courts.

Determining fine ranges 

Step two of the sentencing guidelines – for health and safety, food safety and food hygiene,and corporate manslaughter – focuses on the annual turnover of an organisation to determine the starting point and range of a fine that would be applicable depending on the level of culpability and harm.

Large organisations are categorised as having a turnover of £50 million and over. Organisations with turnover very greatly exceeding £50 million are classified as VLOs. 

For VLOs, the existing sentencing guidelines confirm 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."

At present, the determination of whether an organisation is a VLO is based on case law, and it would be obvious to the judge if an organisation is or is not very large. The level of fines should be proportionate to the turnover of the VLO and decided on a case-by-case basis by the judge.

The consultation response

The response to the fourth annual consultation on miscellaneous amendments to the guidelines was published on 28 May by the Sentencing Council. A section of the response sets out the amendments to the sentencing for VLOs.

The amendments proposed in the consultation will adapt the wording in relation to VLOs to replace "it may be necessary to move outside the suggested range" with "courts should consider fines outside the range for large companies".

Additionally, the further amendments in bold below will also be included in the sentencing guidelines, and have the effect of codifying case law in this area: "In setting the level of fine for a very large organisation the court must consider the seriousness of the offence with reference to the culpability and harm factors above and the aggravating and mitigating factors below, 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 depending on the seriousness of the offence, and sufficient to bring home to the management and shareholders the need for regulatory compliance."

Osborne Clarke comment

The amendments to the wording in relation to VLOs do not introduce a threshold, specific mathematical formula or any further clarity on how to determine the starting point or range of fines for VLOs. The Sentencing Council has said that it is not appropriate to identify VLOs by reference to a fixed threshold for turnover.

The impact of the change to the wording is that rather than suggesting that a judge may go beyond the starting point and range for a large organisation, the judge should go beyond this range and starting point for VLOs. This may result in an increase in the fines faced by VLOs; however, we do not think that in practice the impact will be very different. It is unlikely that a judge would have started in the large organisation category in respect of VLOs prior to the change.

Therefore, sentencing for VLOs would have been considered outside the large organisation bracket previously, and the updated wording reflects what was already the position in practice. The impact is that the proportionality test in step three of the sentencing guidelines will be brought forward into step two for VLOs and, practically, there will not be a significant change to the sentences received by defendant organisations.

Charlotte D'Arcy, a trainee solicitor with Osborne Clarke, contributed to this Insight.