Australia: Health and safety compliance is the personal responsibility of company officers

In brief – Failure to manage WHS risk may lead to convictions

Officers, directors and board members who fail to take preventative action to ensure the health and safety of their workers can be held personally liable for any acts or omissions by the company, its employees and contractors which have an effect on the health and safety of its workers. Officers should ensure that stringent safety practices and procedures are in place, as well as training all employees and contractors to ensure compliance.

Good risk management includes officer due diligence

Company officers who fail to manage their risk and comply with the harmonised work health and safety (WHS) laws face significant penalties, including the risk of jail time, if convicted. So, what should you as an officer, director or board member of an employer be doing to manage WHS risk?

A company's leadership must exercise due diligence to ensure that their organisation complies with its health and safety duties by:

  • continuously learning about and keeping up to date with WHS matters
  • having an understanding of the nature of the work the organisation does and being aware of the risks workers and volunteers may face when working for the organisation
  • ensuring that the organisation has available, and requires the use of, appropriate resources and processes to eliminate or minimise risks to health and safety
  • ensuring that the organisation has processes in place for communicating about safety risks and has the ability to manage that information and risk
  • verifying the organisation has, and implements, processes for complying with any duties and requirements under WHS law, including codes, guidelines and practice statements

Greater accountability among aims of WHS regulators

The stated aim of the WHS regulators is to promote accountability in WHS decision-making, by ensuring that those who make decisions about safety have "skin in the game". To promote this aim, WHS regulators across Australia have the power to prosectue directors personally. Such prosecutions are not always successful, but should give officers cause to pause and consider how they are discharging their duties.

One of the leading cases on the prosecution of directors is R v Denbo Pty Ltd & Anor [1994] VicSC 326. In this case, a truck driver, employed by a small business, died when the brakes of his truck failed. The director of the company, who operated the business, failed to ensure that the company implemented and monitored adequate safety systems. The director in fact knew about the faulty brakes. The director was convicted and fined $10,000 personally, whilst the company was convicted and fined $120,000.

In South Australia the director of Colbert Transport was jailed for 12 years, with a non-parole period of 10 years, for the manslaughter of an employee who was killed when the brakes on his truck failed. This was not a WHS prosecution, but demonstrates the extent of the risk directors personally have for WHS risk.

Proactive approach to safety may help directors and officers avoid conviction

However, a recent case demonstrates that conviction can be avoided where directors/officers ensure that appropriate safety systems are in place, and continually monitored and enforced. In SafeWork v Omega International and Shetty [2016] NSWDC 11, a director's plea of guilty was found proved and dismissed without conviction after it was determined that the company's failures "were not of a systemic nature" (at [32]).

In this case the NSW District Court found a workplace fire was caused by a worker's conduct "which was not condoned by any of the [safety] systems which [the director] had put in place" (at [43]).

The Court rejected SafeWork's claim that the director ought to be found vicariously liable for the worker's failure to follow instructions, because the company failed to assess or obviate the risks arising from its operations. Importantly, the Court found the director had exercised due diligence and was not liable because the company had (at the director's instigation):

  1. employed an industrial chemist with 30 years' experience in the paint manufacturing industry to assist in managing WHS risk
  2. engaged a consultant to prepare hazard analyses
  3. implemented a safety management system and a safety manual; these documents prescribed operating procedures for liquid transfers, including the mandatory attachment of static leads between host and recipient vessels
  4. provided workers with intensive training on the dangers of ignition sources, and employed another chemist who developed a risk assessment process for a number of work procedures, including decanting

This case provides hope for company officers and directors. If officers and directors have a proactive approach to safety, and lead a safety culture, they can successfully manage their personal WHS risk, while managing the risk to employees and the company.

Culture of safety lessons for officers

Directors who want to lead safety cultures should consider:

  • implementing an appropriate safety management system as a starting point. Directors then must ensure that the system is actively implemented in the workplace. This includes the implementation of strict performance management for non-compliance with safety requirements.
  • setting up systems and procedures to ensure that instructions are actively complied with by employees and contractors. This is not only achieved through training, but also supervision and compliance audits to ensure that everyone in the workplace complies with safe work practices.
  • how to incentivise management and supervisory staff to champion safety. Regular training is part of it. Training should emphasise that staff and contractors understand their responsibility for enforcing safety procedures. Appointing safety "champions", linking safety improvements to KPIs and rewarding safety conscious behaviour may also assist directors to drive WHS improvements which will, in time, help to protect workers and directors, officers and the company from safety risk.
  • how to measure outcomes so as to structure incentives for continuous safety improvements. A process of collating statistics to report to the board will assist boards to drive the safety agenda and to measure success.
  • checking your insurance. Does your D&O or other cover provide for directors' costs and investigation costs around WHS, as well as for the company? If not, check with your broker about increasing your cover.

Codes of practice remade as separate legislative instruments

In other news, 23 WHS codes of practice have been remade as separate legislative instruments. The codes came into effect on 30 March. Read our recent article about this: Work health and safety codes of practice revoked and remade as separate instruments.

Megan Kavanagh Sam McIvor
Work health and safety
Colin Biggers & Paisley

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.

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