Occupational health and safety legislation in all states and territories in Australia imposes obligations on employers, directors, managers and employees to ensure that people (including visitors and members of the public) are not exposed to risks to their health and safety so far as is reasonably practicable.
Breaches of OHS legislation attract heavy penalties. In Victoria, an employer found guilty of a breach of the Occupational Health and Safety Act 2004 (Vic) ('OHS Act') faces a maximum penalty of over $1 million per offence.
The OHS Act encourages directors and officers to ensure their company complies with its OHS obligations by providing that an officer may be guilty of an offence in relation to company breaches of the OHS Act which are attributable to an officer's own failure to take reasonable care1. However, the company does not need to be convicted of the offence for the officer to be found guilty.
The definition of 'officer' in the OHS Act includes a director, secretary of the corporation or any person who makes decisions that affect a substantial part of the business; or who has capacity to affect significantly the corporation's financial standing; or a person whose instructions the directors normally follow2. This may include all management levels from the senior management team down to site managers.
The maximum penalty which may be imposed on an officer for breach of the OHS Act is a fine of up to $204,156 per offence. Where a person does not fall within the definition of an 'officer' of the corporation, they may still be prosecuted by WorkSafe Victoria for a breach of the duty owed as an employee under the OHS Act3. There have been several successful prosecutions by WorkSafe Victoria (and by OHS regulatory bodies in other states) of persons at the level of 'supervisor' and employee.
Several significant cases dealing with the liability of officers or directors of an organisation have been heard in New South Wales and may be persuasive in similar cases in Victoria. In New South Wales, directors and persons concerned in the management of a corporation are deemed to be personally liable in relation to offences committed by the corporation, subject to the statutory defences including, that the person was not in a position to influence the conduct of the corporation or that s/he used all due diligence to prevent the contravention by the corporation4.
In a 2007 NSW case, WorkCover Authority of NSW v James Denson5, an employee of JB Metal Roofing ('JBMR') lost his balance while laying metal roof sheets and suffered a fatal injury. Safety mesh had not been properly installed. James Denson, the sole director of JBMR, was charged as a director of the corporation under 26(1) of the Occupational Health and Safety Act 2000 (NSW) ('NSW OHS Act').
Mr Denson argued that the method of installing safety mesh was 'industry practice' and had been used for years. The Court said that being "unaware of safe work methods" in no way exculpated him and that his liability sprung from ignorance and inexperience. He was convicted and fined $20,000. JBMR was also convicted and fined $200,000.
In Inspector Wayne James v Sunny Ngai and Ors6 an employee suffered soft tissue and muscle injury after his arm was caught in an embossing roller machine while he was attempting to clean it. The company was charged with a breach of section 8 NSW OHS Act and four directors were also charged in their individual capacities under section 26 NSW OHS Act.
The Governing Director, who pleaded guilty, was convicted and charged. Two other directors pleaded not guilty and argued they were not in a position to influence the conduct of the company. They argued that they had discrete roles (one was involved in sales and marketing, the other responsible for the purchase of jumbo rolls of paper) in the company and were not involved in the general operation of the business.
The Court held that, in order for a director to be liable, it was necessary to establish the director was complicit in the contravention. Due to the limited powers, duties and responsibilities and defined roles of the two directors, neither of them was in a position to influence the conduct of the company and therefore they were found not guilty of the offence.
While the Victorian provision does not have a separate statutory 'defence', the nature of the offence is such that the prosecution must prove that the breach by the company was "attributable to" the officer's failure "to take reasonable care". When considering whether the officer has failed to take reasonable care, the court must consider:
- What the officer knew about the matter?
- The extent of the officer's ability to make decisions in relation to that matter, and
- Whether the contravention is also attributable to someone else7.
Establishing that a director or officer took 'reasonable care' and that any breach by the company was not attributable to the officer's failure, may depend on the implementation of robust procedures to ensure that the organisation's officers are informed of its OHS performance and have taken positive steps to ensure compliance. Management needs to be vigilant in systematically identifying and minimising risks in their workplaces and in supervising compliance with OHS policies and procedures. An officer and board compliance/ reporting framework and procedure can be of assistance in establishing information channels to officers and directors of the Board so that they are able to take 'reasonable care' in the exercise of their duties and functions.
1. Section 144 Occupational Health and Safety Act 2004 (Vic)
2. Section 5 Occupational Health and Safety Act 2004 (Vic) refers to section 9 Corporations Act 2001 (Cth)
3. See Section 25 Occupational Health and Safety Act 2004 (Vic) which states that, while at work, an employee must take reasonable care for his/her own health and safety; the health and safety of persons who may be affected by the employee's acts or omissions and co-operate with his/her employer regarding compliance with the OHS Act
4. See, for example, Section 26 Occupational Health and Safety Act 2000 (NSW) which states:
"If a corporation contravenes, whether by act or omission, any provision of this Act or the regulations, each director of the corporation, and each person concerned in the management of the corporation, is taken to have contravened the same provision unless the director or person satisfies the court that:
(a) he or she was not in a position to influence the conduct of the corporation in relation to its contravention of the provision, or
(b) he or she, being in such a position, used all due diligence to prevent the contravention by the corporation."
5.  NSWIRComm 119
6.  NSWIRComm 203
7. Section 144(3) Occupational Health and Safety Act 2004 (Vic)
The author would like to acknowledge the assistance provided by the Deacons NSW OHS team.
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.