Should higher penalties be applied to larger companies?
In the current edition of Safeguard magazine Grant Nicholson and Olivia Welsh assess the 2016
adopted in the UK.
They reckon courts should consider a defendant's turnover so that the largest companies could have their penalties increased.
Do you agree?
You can respond in public here on the Forum, or privately
via a Survey Monkey form.
An edited selection of responses will be published in the Sept/Oct edition, but with no names attached. One randomly selected person will receive a prize!
I'd have to say no. The sentences given out may be harmful to the business but its the workers who suffer in an attempt to balance the books, either through redundancy or budget cuts.
The Alternative Sentences and EU options make sure that there is a great mix between penalties that are both punitive and progressive.
I don't actually want the court to look at the turnover of NZ defendants and increase penalties (that would be bad for most of my clients!), but it is a valid option to consider if you believe the premise that larger fines will motivate changes to behaviour. I for one am doubtful about whether that premise is true, at least in a linear way. I agree with Chris that the court needs to have flexibility, and to not be constrained to just look at fines.
Whether size of fine promotes change in the defendant company is interesting, but the question at hand isn't about that.
The question is about the courts setting a starting point for a fine, and then looking at both mitigating
aggravating factors to reduce or increase the amount.
One aggravating factor which NZ courts don't seem to consider - but UK courts now do - is that a large company with ample funds should have the resourcing to do H&S well, and therefore should face an increased penalty (given the company can hardly argue lack of funds to pay).
The UK requires courts do consider this, in quite a structured way. Should NZ courts do something similar, even if not so structured?
Turnover is not a measure of business competence and it would be wrong to assume a large turnover provides ample funds for resourcing safety and other things.
Take Fonterror. For example. $20b or thereabouts in revenues. But this year will make a $675m loss. They don't have the funds to pay a dividend to their shareholders who have invested in the company and who carry subsequent risk/reward.
A fine would further punish shareholders / owners who have no statutory liability.
The fine should be targeted at the Directors. Nothing to stop a Director being done for a few $mil in damages. Ask Jenny Shipley after her role in the mismanagement of Mainzeal. She could be up for $6m
Theres also, broadly speaking, two types of company: large volume but low margin. Or low volume high margin. Arguably those with higher margin are better able to pay.
Just because you have high turnover does not necessarily mean you are operating a higher risk environment. Selling milk is relatively safe. Producing it isn't.
As an aside, I thought De Spa required the courts to take a defendants financial position into consideration. Something not mentioned in the Article.
And to answer the question: If a companies accounts are to be considered Fine should be based on net profit not Turnover. This way only owners are hurt. Taking it out of turnover means potential reduced money for paying expenses - things like wages.
I'm not sure that being a large company with ample funds (that should have the resourcing to do H&S well) is seen as an aggravating factor. This is the Reasonably Practicable argument that all companies, regardless of size or turnover, have to meet and upon which both the NZ and UK acts are based.
What the article fails to cover is that the fines are now risk based and not actual outcome based. Merely being exposed to the risk, such as a loose guard rail at height, can bring fines as large as the fatality that
have occurred had someone fallen through it. Also worth noting is the aggravating factor of number of people potentially exposed to the risk, which, in in theory, is the number of people who would have walked past that loose handrail. The higher the number, the higher the fine (or likelihood of jail time).
@Andrew: The Sentencing Act requires the court to take into account the financial capacity of the offender, whether it has the effect of increasing or reducing the amount of the fine. In reality though, it is usually a factor only considered to reduce the fine because the Sentencing Act also requires the court to take into account the "general desirability of consistency with appropriate sentencing levels".
Sign in or register to add a comment.
Add a Comment
Welcome to the Safeguard forum!
Launch a discussion
Calling for focus group participants - Companies who use labour hire / temporary work agencies
Cigarette companies and dairy operators
Clarification around imposing penalties to sub trades
Work-as-imagined vs work-as-done: examples
Terms of Service
Useful Hints and Tips
Created with PlushForums
© 2019 Safeguard Forum