Australia: Workplace Relations Update - May 2007

Last Updated: 21 May 2007


  • Guilty until proven innocent – make occupational health and safety your first priority
  • New OH&S regulations for Victoria
Guilty Until Proven Innocent – Make Occupational Health And Safety Your First Priority

The Occupational Health and Safety Act 2000 (NSW) (the Act) provides that directors and managers are automatically liable where an employer company is guilty of an occupational health and safety breach. This exposes these directors and managers to a maximum penalty of $55,000 penalty for a first offence. The defences that can be relied on are that the director/manager used all due diligence to prevent the breach or the director/manager was not in a position to influence the conduct of the employer company.

Two recent cases have considered the ambit of this.

Inspector Ken Kumar v David Aylmer Ritchie [2006] NSW IRComm 323;325

The first case is that of Owens Containers Services Australian Pty Limited (Company). The Company was engaged in repairing, cleaning and storing shipping containers and tanks. An employee was cleaning a tank using a highly combustible solvent and was fatally injured when the tank he was cleaning exploded.

WorkCover charged the Company as well as its division general manager and the CEO of the group of companies which the Company was a part of.

The Company and division general manager pleaded guilty (and were subsequently fined $160,000 and $18,500 respectively), but the CEO defended his charge.

CEO's Defence

The CEO, in defending the charge, claimed he was not involved in the day to day operations of the group of companies which operated globally and that he relied on the expertise of divisional managers and site managers to deal with occupational health and safety. The CEO lived and worked in New Zealand.

The CEO raised two alternative defences:

  1. that he was too remote to influence the Company arguing he was "not in a position to influence the conduct of the corporation in relation to its contravention". He submitted that directors of small companies with a hands-on role were able to exercise real and practical influence over a corporation, but some directors such as those with nominal or non-executive roles, would have no real or practical influence
  2. he had used all due diligence to prevent the contravention.

Court's Findings

Justice Haylen rejected the CEO's defences and in respect of the first defence held that the director had the status to influence the Company's conduct and had done so in the past. There was no "preliminary test of hands-on involvement and participation in safety matters to delineate the class of director or person involved in the management of the corporation that is caught by the section" and that "the section operates so that each director of the corporation and each person concerned in the management of the corporation is taken to have contravened the same provision that was contravened by the corporation". He held that by virtue of his position as a director, he had the authority to influence the conduct of the corporation and that leaving health and safety matters primarily in the hands of others was not a defence.

Justice Haylen was also critical of the way the CEO ran his defence, namely to plead the defence in point one above and call evidence to demonstrate that as a director he was not in a position to influence the conduct of the Company and then present alternate evidence to rely on the other available defence to show that as a director he had, by all due diligence, acted to prevent the Company's contravention if the other defence failed. The prevailing view in this judgment is that these two limbs are not "consistent" with each other leaving open the possibility that by relying on one you prejudice your ability to rely on the other.

The CEO was sentenced with a $22,500 fine.

Newcastle Wallsend Coal Company Pty Limited v Inspector McMartin [2006] NSW IRComm 529

The Courts came to a different conclusion in an appeal late last year in relation to the prosecution that resulted from the Gretley mine disaster where two of the individuals fined were both able to demonstrate that they weren’t persons "concerned in the management of a company" and so escaped liability from the initial $30,000 fines that were imposed upon them.

It was found that the mine surveyor who was prosecuted, was not a person "concerned in the management of" the companies and while he was clearly in a position to ensure the objects of the Act were met, that was not sufficient to bring him within the scope of the Act as his role, "was not managerial but rather was more akin to that of an advisor or consultant to mine management".

It was found that the former mine manager who was also prosecuted had ceased in his role before the time that any risk had existed at the mine. The question then became whether his activity or conduct eventually led to the contravention by the companies. While the Court did find that he was a person concerned in the management of one of the companies at the time particular failures occurred, and that he had not used all due diligence to prevent the contraventions of that company, (that is that some of the charges were proven) no conviction was recorded due to the application of s10 of the Crimes (Sentencing Procedure) Act. A number of factors were considered including errors made in his sentencing and his otherwise unblemished record however "not without some real misgivings". Applications under this section are rarely successful in OHS matters which was noted by the Court.

What Does This Mmean for Directors/Managers?

Managers/directors must make occupational health and safety a priority, it should be on an agenda of every board meeting. It should have impact on the day to day running of the company, and managers/directors should ensure or make certain that someone else ensures that there is training, supervision and information given to workers to enable them to work safely and without risk to health.
Article by Kathryn Dent and Nicole Linton

New OH&S Regulations For Victoria

WorkSafe Victoria has released new draft regulations proposing to consolidate all OHS Regulations into a single streamlined document.

It is proposed that the majority of the new regulations will commence operation on 1 July 2007 and the remainder, by 30 June 2008.

The objective of the consolidated regulations is to make it easier for employers and workers to understand their safety obligations, cut through red tape and compliance costs and ensure greater consistency by bringing the Victorian OHS regulatory framework into line with other states. However, the Regulations impose some significant new obligations on employers across different industries. This article highlights some of the issues that employers should be aware of arising from the Regulations:

New Consultative Requirements

The new Regulations propose new consultative requirements and extensive powers for Health and Safety Representatives (HSRs). Employers will be required to provide HSRs with extensive levels of information regarding changes that may impact on health and safety of employees. An employer must invite the HSRs to meet for consultation about the matter, give the HSR a reasonable opportunity to express their views about the matter and finally take into account the HSRs views on the matter.

The Regulations also include prescriptive issue resolution procedures. These procedures specifically provide the right of a party to seek the assistance of external organisations (such as unions) to assist in the resolution of the issue in dispute.

Employers may be required to set out in writing the details of the issue and how it has been resolved to the satisfaction of all parties.

In certain industries, these new Regulations are likely to increase the role of unions in OHS matters and possibly give unions an enhanced right of entry as compared with their rights under the Federal Workplace Relations Act 1996.

Construction Listed as a 'Hazardous Industry'

The Regulation contains new prescriptive obligations for 'Hazardous Industries'. Construction is now specified as a 'Hazardous Industry'. Construction work is broadly defined, beyond what is normally considered to be construction work, to include installation, maintenance and repair work performed in connection with construction, alteration, conversion, fitting out, renovation, or refurbishment of any structure or any similar activity. It also includes the installation and maintenance of gas, water, sewerage, electricity or telecommunications services in any structure.

'High risk construction work' is also broadly defined to include construction work where: there is a risk of a person falling more than two metres; work on or adjacent to roadways or railways used by road or rail traffic; at workplaces where there is any movement of mobile plant; or over, or adjacent to, water or other liquids where there is a risk of drowning.

The Regulations impose prescriptive requirements in relation to high-risk construction work. For example, employers must have safe work method statements prepared prior to performing high-risk construction work and systems for ensuring compliance with the safe work method statements.

HSRs in the construction industry also have enhanced powers in relation to controlling safety risks on sites. This is also likely to enhance union power on construction sites.

Principal Contractors

The Regulations make provision for the appointment of Principal Contractors for construction projects exceeding $250,000. This mirrors similar regulations that apply in NSW and QLD and assist in clarifying who is in control of construction work.

Prescriptive Compliance Requirements

The proposed Regulations impose new prescriptive compliance regimes that must be followed by employers so as not to breach the Occupational Health and Safety Act 2004 (Vic). The previous regulations gave employers greater discretion to develop their own safety systems, underpinned by hazard identification and risk assessment processes. The new Regulations are more prescriptive and less discretionary, making it more important that employers fully comply with the Regulations.
Article by Dan Feldman and Michael Flynn



Kathryn Dent

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