Australia: Employer Inherits Poor Safety Standards And Criminal Conviction

The Industrial Relations Court of South Australia recently upheld the conviction of an employer who had taken over a business less than three months before a workplace accident which resulted in an employee being injured. A conviction was recorded against the employer despite the fact that upon purchasing the business the employer had conducted a full safety audit of the business's premises and equipment and had put in place a comprehensive process for updating and improving safety.

The decision followed an appeal by Diversified Industrial Services Pty Ltd from a decision of the Industrial Magistrate who had recorded a conviction and imposed a fine of $17,500.

The employer's appeal was limited to the fact that the Magistrate had erred in recording a conviction. In support of the appeal, the employer argued that the Magistrate had failed to adequately take into account the extenuating circumstances surrounding the new employer's recent purchase of the business.

The employer had taken over the business in November 2002 and it was agreed that the employer had, as part of its due diligence process, undertaken a comprehensive safety audit and found that safety procedures and standards were inadequate. The employer had put in place a process of updating safety at the site, but before that process was implemented an accident occurred on 29 January 2003. The accident involved the use of a high pressure hydrojet gun which had been repaired using a non-standard weld. Over time the weld weakened and then eventually failed due to the high pressure of the gun, resulting in an employee suffering a puncture wound.

On appeal the employer argued that the Magistrate failed to have sufficient regard to the extenuating circumstances when considering whether a good reason existed for not recording a conviction. In particular the employer argued that the Magistrate should have given greater consideration to the fact that the employer, as part of its due diligence process, had undertaken a comprehensive safety audit and was in the process of resolving and improving safety issues at the site. The employer argued that by recording a conviction the Industrial Magistrate was effectively imposing a punishment on the new employer for the failures of the previous employer and to do so was "unfair and unjust".

On appeal the Judge took the view that the Industrial Magistrate had properly taken into account the evidence when determining what penalty would be appropriate. Further, the Judge was of the view that the Industrial Magistrate had been correct in exercising his discretion to record a conviction and stated that:

"A change in ownership and management, and a simultaneous improvement in attention to safety issues did not provide a good reasons for not recording a conviction".

It is clear from this case that courts will expect new employers to immediately implement safety improvements if needed. It is also clear that implementing a proposal to improve safety standards while not simultaneously improving safety standards will not provide a good enough excuse for companies to avoid convictions under health and safety laws.

Therefore, when an employer is considering purchasing a company it is critical to conduct a thorough due diligence to identify any unsafe systems of work or unsafe equipment and to take steps to have the vendor make any improvements prior to purchase.

Also, the new transmission of business laws under Work Choices mean that incoming employers should take account of any specific OHS provisions contained in transmitted awards or workplace agreements to which they become bound (additional to any State OHS laws which will continue to apply).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.