Every now and then something happens to create a new paradigm and it’s no exaggeration to say that 2016 was the year that brought about the most dramatic changes to health and safety enforcement and sentencing in the past fifty years. By any standards, the new guidelines introduced last year are pretty tough and they affect all companies, including those in the manufacturing and industrial sectors. One of the main differences is in the potential size of the fine that employers face if found to be in breach of health and safety regulations.
Under the new guideline, fines are now to be calculated on the company’s turnover and can rise to a maximum penalty of £10 million. This climbs to a maximum fine of £20m where corporate manslaughter is proven against the company. Meanwhile, the maximum fine for serious breaches of food safety and hygiene is now set at £3 million. These are pretty staggering sums. In light of the changes, company directors everywhere need to evaluate their present level of liability cover and judge whether they have adequate insurance in place.
Size doesn’t matter
Of course, it’s not only large companies that will face potentially huge penalties if adjudged to have failed in ensuring the health and safety of their employees. Even SMEs who have a turnover of under £2 million can be fined as much as £450,000. With fines amounting to 25% of the annual turnover, it’s fair to say some companies in this bracket simply won’t be able to survive. The pain doesn’t end there, however, as legal costs will also have to be borne. On top of that, if found to be at fault, company directors are likely to be disqualified from holding a directorship in future and could be handed a custodial sentence of up to two years, depending on the severity of the case.
Simply put, the new guidelines mean courts are being encouraged to take a far harder line on health and safety breaches and it’s safe to assume those companies affected will face harsher fines than in previous years. Responsible company directors understand the importance of adhering strictly to health and safety rules, but may not fully appreciate the full implications of the new guidelines. This is where our expertise can help to ensure you have the right level of protection in place for the type and size of company you run. For more information, please contact the team at LWOOD Insurance Brokers today.