Scottish construction firms face bigger fines in 2018

Malcolm Gunnyeon

SCOTTISH construction firms could potentially face bigger fines for health and safety breaches than ever before in 2018.

That’s the view of Malcolm Gunnyeon, a partner in Dentons’ dispute resolution team.

He told Project Scotland that with affordability “now much further down the list of relevant considerations”, fines have already soared for serious breaches and will present a “considerable concern for businesses” operating in dangerous sectors such as construction.

“As a knock-on effect of a change in approach south of the border, 2017 saw more fines in excess of £1 million than were imposed in the previous 10 years combined,” Mr Gunnyeon explained.

“Fines for more serious offences ranged from £160,000 to £5 million – but that may just be the beginning.

“The arrival, in February 2016, of new health and safety Sentencing Guidelines in England and Wales linked, for the first time, the size of fines imposed on businesses committing offences to the turnover, not profit, of the offending organisations. The dramatic increase in fines was inevitable and arguably intended. Perhaps less clear is how the change has produced a similar trend for Scottish businesses with health and safety problems.“Against the background of a single legislative regime for health and safety across the UK, there are good legal reasons why a single piece of legislation should have a consistent approach to sentencing wherever it applies. And from a political perspective, it would be unthinkable for it to be ‘cheaper’ to injure an employee in Scotland than in England.

“The Scottish direction of travel towards significantly increased fines was eventually confirmed by the Scottish High Court in November 2016 in an appeal against sentence by Scottish Power.

“The Sheriff who first heard the case had arrived at the applicable fine by applying the English guidelines. Scottish Power appealed on the grounds that this was the incorrect approach but, in refusing the appeal, the High Court confirmed that Scottish judges should refer to the English guidelines as a “cross check” when sentencing.”

Mr Gunnyeon said an example of the impact of the new regime concerns a case involving a major oil firm.

He added, “In that case the HSE described the company as a “corporate behemoth”. In the year before the incident it had a turnover of £4.8 billion, and in the year before that, £8.9 billion. The case resulted in a £3 million fine following a gas leak on an offshore platform. Even though the leak did not cause any actual injury the court indicated that it felt this matter should be fined at such a level because there was “a high likelihood of serious injury or death being caused and a large number of workers were exposed to that risk”.

Mr Gunnyeon said that prior to the new guidelines, fines of this magnitude for non-fatal cases were “rare in the extreme”, even for larger companies.

“The impact of the new regime on high-turnover/high risk industries therefore cannot, and must not, be underestimated,” he added.

“One of the stated purposes of the Guidelines is that fines must 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”. For them to continue to do so, it seems inevitable that the level of fines will to increase as our economy develops.”

Mr Gunnyeon believes Brexit will “probably not” make a difference to health and safety matters, at least in the near future.

He said, “The Health and safety at Work etc. Act 1974, although introduced shortly after the UK first joined the EC, was not a creation of Europe and has been the mainstay of the UK’s health and safety regime for the last 40 years. It is virtually impossible to see Brexit causing that to change.

“Further, although the EU has been the source of a large number of our domestic regulations on health and safety, those regulations are now part of our law, and unlikely to change on exit day.

“In any event, for as long as we retain a single, UK-wide regime for health and safety, Scotland is likely to continue to follow the trend in England and Wales, and that means ever increasing fines for those business who don’t put employee safety at the top of the agenda.”