Australia: How employment contracts can help companies comply with Chain of Responsibility obligations

Last Updated: 25 January 2018
Article by Geoff Farnsworth
Most Read Contributor in Australia, March 2019

In the context of the upcoming Heavy Vehicle National Law (HVNL) changes and significantly increased penalties, parties in the Chain of Responsibility (CoR) should be considering how to utilise all of the tools in their company's toolbox to ensure compliance. Contracts are an essential conduit for bringing CoR obligations into relationships between parties in the chain. Under the amended HVNL, parties in the chain are required to ensure the safety of their business practices, including human resource and contract management. In this article we consider how to use employment contracts to ensure employees are aware of their CoR obligations, and discuss a case study demonstrating what to look out for when safety and compliance issues lead to dismissal of an employee.

Generally speaking, there are two ways to incorporate CoR obligations into employment contracts:

  1. Requiring the employee to comply with all company policies, including CoR policies
  2. Adding a clause setting out express obligations to comply with CoR legislation.

It is important to note that employers must provide appropriate and adequate training and resources so that employees are equipped to understand and comply with their CoR obligations.

General company policy compliance clause example:

You are required to observe and comply with any written policy, practice or procedure of the Company. However, nothing in the Company's policies, practices or procedures give rise to a legal right enforceable by you and they do not form part of your contract of employment.

For this clause to be effective for CoR compliance purposes, the employer must have comprehensive CoR policies and procedures already in place. While such a clause is legally adequate for the purpose of disciplining employees who do not comply with company policies, it misses an opportunity to bring CoR obligations to the forefront of the employment relationship if such policies are not actually in place.

Express CoR obligations clause example:

Chain of Responsibility

You acknowledge and agree that compliance with Chain of Responsibility laws and regulations is important and that you will:

  1. comply with all Chain of Responsibility laws and regulations;
  2. ensure the safety of any transport activities that you conduct as part of your employment (for example loading/unloading, packing, scheduling etc);
  3. ensure that you are aware of and understand your obligations under Chain of Responsibility legislation and regulations (set out in the Company's Chain of Responsibility policy attached);
  4. comply with the Company's Chain of Responsibility practices and procedures and that if you do not, you will face disciplinary action, which could include the possible termination of your employment; and
  5. immediately report to management any accidents, 'near misses', incidents or hazards arising in the course of your employment.

Chain of Responsibility laws and regulations should be defined in the contract and any CoR policy to include the Heavy Vehicle National Law and Regulations, Road Traffic (Administration) Act 2008 (WA) and Road Traffic (Vehicles) Act 2012 (WA) and any other similar laws in any State/Territory (or any replacement or modification thereof).

This clause is modelled on common Work Health and Safety clauses and is preferable because it gives clear notice to the employee that disciplinary action may arise from breaches of CoR policies and procedures by the employee.

Case study: unfair dismissal

In a recent decision of the Fair Work Commission, Tomlinson v BHP Coal Pty Ltd [2017] FWC 2627, a worker was awarded damages for unfair dismissal. The dismissal related to the worker's involvement in two safety incidents which the employer believed to be breaches of their Code of Business Conduct and Standard Work Instructions.

The first incident related to the worker's alleged failure to properly report a potential breach of safety procedure after he witnessed a contractor back into a pallet. The worker was given a written warning as the incident was said to be a deliberate breach of procedure, which he denied. The Commission found that the written warning was excessive and therefore did not warrant the significant weight that was attached to it in support of the subsequent decision to terminate the worker's employment.

The second incident related to an injury to a driver's hand which was caused by the worker's failure to follow loading procedure and ensure the driver was out of the 'red zone' during loading. The worker was dismissed on the basis that (inter alia) the second incident was a deliberate breach and occurred while the worker was under the written warning for the first incident. The Commission found that while the second incident was an unsafe decision, it was not a deliberate or knowing breach of the Standard Work Instruction, and was not of a nature that would warrant termination.

The Commission held that BHP did have a valid reason for termination due to the worker's unsafe decision during loading, however a number of factors were taken into account in finding the dismissal procedurally unfair. One of these was that the Standard Work Instruction was ambiguous, and training in relation to it and hazard reporting was not provided.

The Commission noted that "it is appropriate for BHP to adopt a very strict approach to safety in the dangerous work environment that is a coal mine. But for BHP to be entitled to fairly apply a strict approach it must have clear procedures."

This case demonstrates that companies must be careful to ensure that:

  • Safety and CoR procedures are clear and training provided to employees
  • Any disciplinary action taken for safety/CoR breaches is reasonable and proportionate.

This publication does not deal with every important topic or change in law and is not intended to be relied upon as a substitute for legal or other advice that may be relevant to the reader's specific circumstances. If you have found this publication of interest and would like to know more or wish to obtain legal advice relevant to your circumstances please contact one of the named individuals listed.

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Geoff Farnsworth
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