Better safe than sorry

Thursday, 01 September 2022

Zilla Efrat

    The pandemic impact has been tricky for boards to navigate on the work, health and safety front, but the challenges keep coming. These are some of the issues boards need to be across.

    Australian workplaces continue to grapple with the work health and safety (WHS) implications of COVID-19. “Our experience over the past three years shows that the ongoing risk of this virus won’t disappear any time soon,” says Joanne Farrell MAICD, chair of Safe Work Australia (SWA). “The COVID-19 pandemic has put WHS in the spotlight and heightened directors’ awareness of the need to keep workers safe. The intersection between public health and WHS has certainly been tested in a way that’s never happened before. Hopefully, this has led to a greater awareness of why there should be more discussion at the board level about WHS risks.”

    Farrell adds that COVID-19 has shown that boards need to be prepared for the unexpected and to be able to stand up crisis management response teams capable of making immediate operational decisions. “On a practical level, COVID-19 has encouraged directors to keep on top of WHS risks in a more hands-on way, including the legislative requirement to consult with workers,” she says. “This includes providing rigorous oversight and engaging with management and workers in making decisions about safety and in the safe design of work practices. For example, asking them what makes them feel unsafe and asking what they think the best solution is. Workers are most acquainted with what’s happening on the floor and where safety systems may be starting to unravel and could be improved.”

    Expanded federal WHS agenda

    The federal Labor government has committed to several WHS changes that will substantially change the landscape for directors and officers. One is the refinancing and enhancement of Safe Work Australia to make it a tripartite regulator with greater enforcement powers to ensure genuine consultation with workers.

    Another would enable unions and workers affected by workplace incidents, or their families, to initiate work health and safety prosecutions.

    Also on Labor’s agenda is a commitment to legislate for a nationally consistent reverse-onus that would require those who conduct business and their officers to prove they have taken reasonably practicable measures to prevent the occurrence of a WHS offence. Currently, this onus is borne by the prosecution in WHS cases.

    The government has plans to introduce harmonised industrial manslaughter laws across the country and to implement all 34 recommendations from the 2018 Boland review of Australia’s model WHS laws. The review — which was conducted by former executive director of SafeWork SA Marie Boland — found the laws were largely operating as intended, but some changes were needed to provide clarity and to drive greater consistency in the application and enforcement of the laws across various jurisdictions.

    The Labor government has also committed to implementing all recommendations from the 2020 Respect@Work report by Sex Discrimination Commissioner Kate Jenkins GAICD. Jenkins noted that since the Sex Discrimination Act 1984 (Cth) specifically prohibited sexual harassment at work, successive Sex Discrimination Commissioners had identified the elimination of workplace sexual harassment as a key priority. Its periodic surveys had shown that one in three people had experienced sexual harassment at work in the past five years — and revealed the gendered and intersectional nature of workplace sexual harassment.

    Jenkins noted at the time that, 35 years on, Australia lagged behind other countries in preventing and responding to sexual harassment. The report recommended a regulatory model that recognises that the right of workers to be free from sexual harassment is a human right, a workplace right and a safety right. It argued for a new model that improved the coordination, consistency and clarity between the anti-discrimination, employment and work health and safety legislative schemes. The report’s 55 recommendations include legislating a positive duty for employers to take reasonable and proportionate measures to eliminate sex discrimination, sexual harassment and victimisation, as far as possible.

    Regulatory alignment

    Kathryn Dent GAICD, a partner at HWL Ebsworth Lawyers, says there has been further harmonisation of WHS laws during the past 12 months, with Western Australia passing its model laws to bring it in line with all states and territories, bar Victoria — making it easier for directors of national organisations to ensure compliance. The Work Health and Safety Act 2020 (WA), which came into effect in March, recognises modern work relationships such as subcontractors and gig economy workers. It means that anyone engaging a WA worker has a duty to protect their health and safety.

    Industrial manslaughter laws were also introduced in WA, carrying a maximum penalty of 20 years’ imprisonment and a $5m fine for an individual, and a maximum $10m fine for a company. These penalties will be paid by those running the business and will no longer be covered by insurance (legal fees will still be covered).

    Dent says there have also been developments in other jurisdictions that indicate a tougher stance on more serious reckless conduct and industrial manslaughter offences. The Australian Capital Territory, for example, is moving industrial manslaughter offences from its Crimes Act 1900 (ACT) to its WHS Act 2011 (ACT), with an increased maximum fine and broader circumstances where industrial manslaughter charges can be laid.

    She notes there have also been numerous charges and convictions that could lead to record levels of fines for reckless conduct in the Northern Territory, and industrial manslaughter in Queensland. Since early 2022, industrial manslaughter laws have been in effect in Queensland, Victoria, WA, the NT and ACT. There is anticipation that SA will follow suit.

    In addition, the national model WHS laws were amended in June to take account of various matters, including some of the Boland review recommendations. Safe Work Australia has implemented 20 of these, including adding gross negligence as a fault element to the category 1 reckless conduct offence and prohibiting insurance against WHS penalties.

    Several jurisdictions have already adopted some of the amendments and more are expected to do so in the coming months.

    According to Brisbane law firm Cooper Grace Ward, the changes make it clear that employers will need to take active steps to manage psychosocial hazards in order to discharge their WHS duties. The firm says this is more far-reaching than simply managing bullying and wellbeing within a workplace. It extends to considering the very nature of how work is designed and performed, in addition to managing workplace interactions and behaviours.

    Despite there being more harmonisation, Louise Howard MAICD — deputy executive director of health and safety at Sydney Metro and on the board of the Australian Institute of Health and Safety — notes that she’s seen an increase in state/territory- specific regulation and guidance in response to key issues like COVID-19 and psychosocial hazards.

    “This can be beneficial as it helps businesses understand how to manage these risks,” she says. “But it also creates more disparity as it moves away from the harmonised national model, which can be a challenge for businesses that operate nationally, due to the lack of consistency.”

    So, how should boards be dealing with these changes?

    “While directors shouldn’t need to be in the weeds trying to keep up to date with every public health order or change in legislation, they should be getting a summary update from management on key changes and how the business is responding to them,” says Kate Cole OAM GAICD, director of Sydney Metro’s health and safety strategy and program, and a director of consultancy Cole Health.

    “Some of the more surprising cases to boards relating to COVID-19 are likely to be from companies that confuse public health advice with their WHS obligations. We have seen companies that have failed to understand their WHS obligations start to be heavily penalised. For example, WorkSafe Victoria has charged two separate residential aged care facilities for failing to train staff in relation to personal protective equipment. Charges have also been laid against a business that failed to have a COVID-19 safe plan. It is likely that this is just the beginning,” adds Cole.

    Courts get tougher

    Following the regulators, the courts are also taking a tougher stance on breaches. Queensland’s first industrial manslaughter sentence was handed down in June 2020 for the death of a worker at an auto recycling yard in 2019. Both the company (Brisbane Auto Recycling) and its two directors were prosecuted. The company was fined $3m and the directors sentenced to 10 months’ imprisonment, with the sentence suspended for 20 months.

    In March, Gympie businessman Jeffrey Owen, became the first person to serve jail time under Queensland’s industrial manslaughter laws, introduced in 2017. The court facts were that on 3 July 2019, Owen (the owner of Owen’s Electric Motor Rewinds in Gympie) was using a forklift to remove a generator from the back of a truck. A friend assisting him was killed when the generator fell and crushed him.

    “The decision found that the forklift was operated negligently and identified various fundamental WHS failures, including a lack of documented safety policies and procedures,” says Dent. “Given that the deceased was acting in a voluntary capacity, it also highlighted the broad definition of ‘worker’ found in most of the WHS laws across the jurisdictions.”

    Chris Molnar FAICD, a partner at Kennedys Law, warns that it is the sole directors of small businesses, who are directly engaged in operations, who are often exposed to prosecutions, because if there is a safety failure by the business, they will often have been involved in that failure.

    “Directors engaged in operations need to understand that as directors they have an additional layer of WHS duties placed on them that must be complied with,” he says.

    Skills shortages

    Farrell says the current labour shortage adds extra complexity to WHS. “Mixed with increased demands on productivity and general burnout, this can lead to complacency, rushing, fatigue and general risk-taking behaviour,” she says.

    “Keeping the same pace with the same priorities, with less time and fewer people, is a recipe for disaster,” adds Cole.

    “In light of the increasing constraints in the market, boards should review their strategic plans and help reprioritise efforts. Perhaps that business plan with hundreds of line items is no longer feasible or realistic. Consult with management to understand the existing and future constraints, and bring it back to the core of why the business is successful. Be realistic about what goals and objectives can be safely achieved this year.”

    Boardroom workloads

    According to Dent, the boardroom workload around WHS grew as a result of the pandemic, largely due to responses to risks being implemented in a vacuum of scientific and medical knowledge at the beginning and the seriousness of the issues faced. “With information, vaccination, antiviral medication and greater compliance and understanding by workers, this workload may now ease in relation to COVID-19 issues,” she says. “But WHS should always feature as an agenda item.”

    Farrell agrees. “While it may be appropriate to use a board subcommittee — either audit and risk, or environmental, social and governance — to review WHS management systems and processes as well as WHS performance and metrics, responsibility cannot be delegated to these committees. WHS should be a standing agenda item for the full board.”

    Howard adds that dedicating serious time to WHS is part of effective risk management.

    “Healthy people in a safe and supportive work environment equals a productive workforce,” she says. “Boards can prioritise by reviewing their corporate plans and risk profiles, and making certain they’re spending their efforts to ensure management is well supported to effectively manage these risks.”

    WHS best practice?

    Work health and safety best practice hasn’t changed much since COVID-19 arrived. These experts say WHS should be an integral part of a much broader workplace strategy — with a bigger focus on the “health” component.

    Safe Work Australia’s Joanne Farrell MAICD says that over the past three years, best practice for COVID-19 was to follow the health advice provided by the relevant health authorities and to understand that COVID-19 was a WHS risk that must be managed along with all the other WHS risks.

    “What we are seeing now is a change in the national COVID-19 response — from one framed around responding to a national emergency and managing outbreaks to one that manages the ongoing risks in the same way as other communicable diseases,” she says.

    Nonetheless, Farrell believes WHS “best practice” is a bit of a misnomer. “The model WHS laws require a constant appraisal of risks to safety, tailored to the unique attributes of the business and the work performed,” she says. “There is no golden standard. Managing WHS risks is an ongoing process that needs attention over time, particularly when any changes affect work. Ideally, we want to see businesses reach beyond compliance and explore innovative ways of working, consulting with workers and their health and safety representatives, and asking what else can be done to protect them.”

    HWL Ebsworth Lawyers’ Kathryn Dent GAICD agrees that best WHS practice hasn’t radically changed since COVID-19 emerged. It’s still the case that organisations and their boards must understand what their WHS risks are, where they lie and ensure they are eliminated or controlled as much as possible. That includes risks created by other parties in the workplace such as contractors and subcontractors, she says.

    Boards must also comply with specific WHS obligations in both the legislation and associated regulations and ensure the workers do so as well. In addition, they must enforce WHS obligations and expectations by promoting a compliance and safety culture — starting with the board. Dent adds that it’s vital to allow workers to agitate WHS concerns early and without fear of retribution — and to regularly review WHS measures and update them.

    Sydney Metro’s Louise Howard recommends that boards ensure strategic WHS plans are developed and integrated across their businesses, with performance metrics that go beyond lag indicators — for example, lost time injury frequency rates and total recordable injury frequency rates. They should also focus on how the business integrates WHS risks into the broader organisational context.

    “WHS shouldn’t be positioned or operate as an ‘island’ in your business,” says Howard. “Attention must remain on the ‘health’ part of WHS, as this is where COVID-19 really caught a lot of businesses out. A balanced view, investment and planning across both health and safety must continue in order for businesses to meet the entirety of their WHS obligations.”

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