Impact of the sentencing guideline on salaries

Is the Health and Safety sentencing guideline increasing health & safety directors' salaries?

(Blog first published with Health and Safety at Work Magazine)

The recent salary survey released by Health and Safety at Work showed a somewhat surprising statistic. Although salaries for health and safety directors at the top end of the market are rising, those in middle-ranking and junior positions have seen their salaries remain stagnant. The evidence I have seen in the market echoes this. For example, a senior health and safety adviser in the South East’s construction sector rarely budges from £45,000.

I have never seen the health and safety employment market as busy as it is now for middle and junior ranking posts. Demand for candidates from adviser to manager levels is ferocious. However, salaries are just not moving. As a result, rather than clients competing on salary, they often just compete on speed, which results in many candidates being snapped up in a matter of days.

This absence of salary rises is unexpected as there is a free market. This should dictate that at times of high demand for new staff, the laws of supply and demand work their wizardry and proportionately increase salaries. The caveat to this of course is that if there is a matched increase in the supply of candidates, then wage rises remain sluggish, and perhaps this is the case now. With the oil price currently depressed, there is certainly an increase in candidates from the oil and gas industry looking for employment in other sectors, and often at lower salaries than they previously received.

In addition to those from oil and gas, I am seeing candidates come into the middle and lower level candidate pool from a range of sources, including those “from the tools”, other related disciplines such as environmental management, and an increased graduate recruitment.   

Could this increase in the supply of candidates into middle and entry level roles be the reason for stagnation? Or could the health and safety industry have broken Adam Smith’s "invisible hand of the market"? Perhaps the “sticky” wages at middle and lower levels are being caused by some other factor. It may be that wage growth in previous years was out of line with how the market values this level of role, and as a result this lack of salary growth at the junior and middle level is simply the market balancing itself out.

The question remains, though: why are salaries rising at senior levels?

Despite the fact that we are seeing an increase in market activity for senior posts, it is very difficult to increase the supply of candidates at these levels compared to those at the junior and middle ranks. Although occasionally we do see professionals come from other functions within an organisation to lead on safety, this is typically not the case. As a result, the uptick in market activity and demand has increased upward pressure on salaries and caused increases at this level.

In addition to the market activity, perhaps the answer to the question of why salaries at this level have changed is also due to the new sentencing guideline. The guideline, which came into effect in 1 February 2016, has led to a large increase in actual and potential fines for health and safety offences.

When setting penalties, the guideline now asks judges to base fines on the size of the organisation, the harm risked and the organisation’s culpability. According to the recent joint report by IOSH and law firm Osborne Clarke, Health and safety sentencing guidelines one year on, “aggravating factors, such as obstructing an investigation or cost cutting at the expense of safety, will push the penalty up the scale from the starting point.” In addition, factors likely to lower fines include “mitigating circumstances, such as a good safety record and an early guilty plea”.

Also mentioned in the report is the fact that “the new guideline makes it increasingly likely that a director could go to prison, not only where breaches are intentional but also where there is a flagrant disregard or a ‘blind-eye’ mentality shown by directors”.

Could these two factors – an increased fine and increased likelihood of directors going to prison – be leading boardrooms to more keenly assess their options to ensure that they are not in the firing line? Are they concluding that the best way to approach this is to open the purse strings and pay more for a director of safety with the intention of securing a higher calibre professional? It is still the early days of the guideline, however I would expect this trend to continue and salaries to increase at a higher rate for health and safety directors as the impact of the guideline continues to make headlines.

It would be interesting to see the impact on salaries if judges, when making their decisions on fines, explicitly consider the salaries paid to the health and safety team, alongside factors such as early guilty plea, cooperation, and other mitigating and aggravating factors. All of this raises a good question: “Are salary levels a true reflection of how a company values its safety team?”

James Irwin is the founder and director of Irwin & Colton, a UK based, specialist health and safety recruitment company www.irwinandcolton.com Contact james.irwin@irwinandcolton.com

 

Posted on Wednesday Jun 14