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Go to jail or pay out?

What’s a better deterrent to get employers to ensure workplace safety?
Fines are a big part of safety violations. Shutterstock

By Jeffrey R. Smith

How important is safety in a workplace? It’s not really a stretch to say it’s very important. Making a workplace as safe is possible is good for employee health, employer productivity — and well, it’s the law.

In all jurisdictions in Canada, health and safety legislation requires employers to pretty much to everything that’s reasonably possible to ensure the safety of employees. But if an employer fails to meet that requirement, what’s the best way to deal with it?

Fines are a big part of safety violations. They provide a form of punishment when employees are put in danger and, depending on the level of the infraction, it can amount to a lot of money that can also make other employers take notice. On a deterrence level, fines can help do the trick, but when it comes to large employers with a lot of money, maybe it’s not quite enough.

Companies aren’t just faceless entities — decisions are made by people in management positions. Sometimes when companies are fined for safety violations — whether discovered by an inspection or following a workplace accident — the money just comes out of the company’s account and the individual people who made decisions that led to the safety violation don’t face direct consequences. This is where charges against individuals who made the decisions or even owners or directors who hold ultimate responsibility can come into play, and these individuals can not only face fines, but also actual jail time.

Serious jail time for individuals responsible for safety violations leading to accidents became a potential concern for employers when Bill C-45 — the “corporate killing law” that allowed organizations and individual members of management to be charged with criminal negligence — came into effect in 2004. Though it took awhile for anything to happen under C-45, there now have been some such convictions. But jail time remains a scarcity for workplace safety violations, for the most part.

A couple of years ago, a small company with 12 employees that operated a furniture warehouse in Ontario was charged with negligence after an employee fell off a 12-foot-high picker machine and died. Two directors of the company were also charged as they were held ultimately responsible for the unsafe conditions that contributed to the fall. The company and two directors pleaded guilty, with both directors receiving jail sentences and the company fined $500,000.

However, they appealed and a court overturned the sentences, finding that the fine was too high for a small business that wasn’t financially secure — previous fines against large companies were around $250,000 — and the jail sentences weren’t necessary to achieve deterrence — which should be the “cardinal principle” of health and safety penalties, said the appeal court. The appeal court determined a $50,000 fine was more appropriate for the company and the two directors should have to pay $15,000 each instead of going to jail.

The Ontario Ministry of Labour sought to have the original fine and the jail sentences reinstated, but the Ontario Court of Appeal found that “the sentence should constitute the minimum necessary intervention that is adequate in the particular circumstances.” Further, the Court of Appeal noted that jail time shouldn’t be necessary if “less restrictive sanctions may be appropriate.”

Interestingly, the Court of Appeal felt the jail sentences for the directors were suitable punishment and would have been better than the relatively modest fines awarded in the first appeal, but the trial court’s reason for ordering the jail time was faulty — that any fines would be too burdensome on the directors. The court chose not to reinstate the jail sentences or overturn the fines.

The above case shows a difference of opinion even amongst different levels of courts in the effectiveness of jail time for individuals responsible for safety violations that cause serious accidents. Would such a sentence be more appropriate if the individuals are unlikely to be able to pay a serious fine? Is jail time for individual representatives more effective than large fines against a whole company?

© Copyright Canadian HR Reporter, HAB Press. All rights reserved.

Jeffrey R. Smith

Jeffrey R. Smith is the editor of Canadian Employment Law Today, a publication that looks at workplace law from a business perspective.
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