Boards face the rap for safety breaches

Thursday, 01 May 2014


    John Melluish and Nick Haslam outline changes to work health safety legislation that directors need to understand.

    Many Australian businesses are unaware of new work safety provisions and could be exposed to personal risk in their daily dealings.


    The Work Health Safety Act (WHS Act) was introduced on 1 January 2012 in all states apart from South Australia and Tasmania (where it was introduced on 1 January 2013). These Acts harmonise the existing state occupational health and safety legislation in order to provide a nationally consistent set of laws and regulations covering WHS in the workplace. Moving to a harmonised regime necessitated a transitional period in the states. However, two years after the introduction of each WHS Act, most of these transitional arrangements have now expired.

    The new legislation brings about a number of changes that affect employers, persons conducting a business or undertaking (PCBUs) and employees. They place additional responsibilities on PCBUs to ensure the business meets its duty of care requirements.

    Specifically, directors and PCBUs are now required to exercise a greater range of due diligence, including obligations to: (i) acquire and update their knowledge of WHS matters; (ii) understand the operations carried out by the PCBU in which they are employed, as well as the hazards and risks associated with the operations; (iii) monitor information on incidents, hazards and risks; (iv) ensure the PCBU has, and uses, appropriate resources and processes to eliminate or minimise WHS risks arising from work being done; (v) verify the use of processes and resources to minimise risks to WHS; (vi) ensure WHS and legal compliance; (vii) facilitate consultation on WHS issues; and (viii) ensure the PCBU has, and uses, processes for complying with duties or obligations under the WHS Act.

    The expanded PCBU obligations also expose directors to a broader range of potential breaches with respect to the definition of a worker. This definition has been amended to include contractors and any other individuals, including volunteers, who carry out work in any capacity, further expanding the area of necessary cover.

    A recent case Baiada Poultry Pty Ltd v The Queen [2012] HCA 14 involving the death of a contractor’s employee saw the principal prosecuted and initially found liable for the incident. The decision was later overturned by the High Court of Australia as it was deemed that the work was carried out by experienced professionals, who themselves determined how to safely perform it. But the case highlighted that the use of contractors does not automatically absolve directors from their WHS obligations as it is still necessary to exercise “reasonable and practicable” steps to mitigate WHS risks.

    Compliance with the new Act is important, not only for the purpose of maintaining an appropriate duty of care for employees, but also because the penalties associated with non-compliance can be severe. The highest level of penalty carries a $3 million fine for a body corporate or $600,000 and/or five year imprisonment term for a PCBU.

    The most common WHS problem encountered by professionals reviewing corporate safety is a disconnect between what directors believe to be occurring and the truth of what is actually taking place at the “coalface”. While appropriate safety measures may be implemented by those who are closest to the action, for the purposes of directors’ duties and obligations, the directors themselves must be fully informed about the process. Directors must have a solid communication link with the safety processes under their command and it is not enough to rely on the fact that there is a “safety system” in place in circumstances where those processes are not being adhered to.

    Practically, this means directors must be aware of the indicators for measuring performance and form a view as to whether the system is effective or not. There must be regular reporting by management on safety and performance, and directors must be satisfied that the information provided is valid and they are comfortable with the safety status of the organisation. To achieve this high standard of due diligence requires persistent care and examination. The following is the WHS checklist for directors:

    • Maintain an adequate and current knowledge base.
    • Respond to potential hazards in a timely manner.
    • Ensure there is an effective WHS management system in place.
    • Set goals to improve WHS performance and review them regularly.
    • Have metrics (measurable data) in place to monitor performance.
    • Demonstrate active and visible leadership in WHS management.
    • Be familiar with your top WHS risks.
    • Make WHS the first item on the board’s agenda.
    • Request WHS reports from unit managers.
    • Include WHS as a KPI in all position descriptions and performance reviews.
    • Include WHS in strategy and budget processes.
    • Ensure that the business is adequately resourced to manage WHS.

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