Company officers now have a positive duty to exercise due diligence to ensure the company meets its safety obligation under the new proposed model of OHS laws. There are significant penalties, including imprisonment for officers who fail to discharge this duty, even if an employee is not injured. The positive duty is likely be a massive burden on the time, skill and resources of a company. As a result, it highlights the importance of implementing best practice OSH safety management systems, appropriate reporting, and reviewing OSH issues at board level.
Model OSH laws
The Model Work Health and Safety Bill 2009 was recently agreed by the Commonwealth and State/Territory governments, except WA (which has noted objections to aspects of the legislation). The intention is to harmonise OSH laws by implementing uniform legislation in each State and Territory. The model laws are intended to be implemented by December 2011, with commencement on 1 January 2012.
Note - whether the model laws proceed at all, or if they proceed within the stated time frame, may be impacted by the positions taken by the WA government and, more recently, the NSW government, who objected to aspects of the proposed model Act.
Section 27 of the model OSH laws provides that 'officers' or persons conducting a business or undertaking (ie a company) that have a duty or obligation under the model OSH laws, must exercise 'due diligence' to ensure the person conducting the business or undertaking complies with that duty or obligation.
'Officers' under the model OSH laws is defined by reference to the Corporations Act 2001 (Cth). The duty therefore extends (but is not limited) to: directors and secretaries; persons who make, or participate in making decisions that affect the whole or a substantial part of the business of the corporation; and, persons who have the capacity to significantly affect the financial standing of the corporation. This broad definition may include senior managers.
'Due diligence' is defined as taking reasonable steps to:
- acquire and keep up-to-date knowledge of work, health and safety matters
- gain an understanding of the nature of the operations of the business or undertaking of the person conducting the business or undertaking, and generally, of the hazards and risks associated with those operations
- ensure the person conducting the business or undertaking has appropriate resources and processes available for use, and uses these to eliminate or minimise risks to health and safety from work carried out as part of the conduct of the business or undertaking
- ensure the person conducting the business or undertaking has appropriate processes for receiving and considering information regarding incidents, hazards and risks, and responding to the information in a timely way
- ensure the person conducting the business or undertaking has, and implements, processes for complying with any duty or obligation of the person conducting the business or undertaking under the model OSH Act; and
- verify the provision and use of the resources and processes referred to in (c) to (e).
By way of example, the model Act specifies that exercising 'due diligence' under paragraph (e) may include: reporting notifiable incidents; consulting with workers; ensuring compliance with issued notices; ensuring the provision of training and instruction to employees about work health and safety; and ensuring that health and safety representatives receive their entitlements to training.
An officer who is in contravention of this duty commits an offence and is liable for a penalty. The model OSH laws provide for significant monetary penalties, above and beyond the penalties that currently exist in any Australian jurisdiction (up to $600,000), as well as imprisonment for up to five years for the most serious breaches. There are also a range of remedial orders available, including adverse publicity orders and community service orders.
The imposition of a positive duty of due diligence on company officers will be a key change for all jurisdictions.
Only OSH legislation in South Australia and Queensland currently place a positive duty on company officers to ensure the corporation complies with State occupational health and safety laws. The model OSH laws significantly expand upon this obligation.
What should you do?
If the model OSH laws are passed, company officers must implement systems and procedures that can be relied upon to demonstrate due diligence for all safety matters within their control. A failure to take proactive steps to ensure OSH compliance, even if an employee is not injured, can result in significant penalties for a company officer, including imprisonment.
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