Australia: Australia: start preparing now for new health and safety laws

Emerging Business, Innovation and Tax for 2010

The Work Health & Safety Act ('the model Act'), approved on 11 December 2009, will require changes to be made to business operations and the governance of organisations. Steps should be taken now to ensure compliance upon commencement of the new laws. The model Act, regulations and codes of practice will commence no later than 1 January 2012.

A fundamental shift away from connection with the employment relationship

The most significant change will be removal of the employment relationship as the primary basis for determining workplace health and safety (WHS) duties of care, rights and other obligations. A 'person conducting a business or undertaking' (PCBU) will be in place of the employer throughout the model Act. 'Employees' will be replaced by 'workers', being any persons who carry out work in any capacity (e.g. as an employee, contractor, volunteer, trainee) for a PCBU.

This will make it clear that all involved in work being undertaken will owe duties and other obligations for the health and safety of all who work in their business, or are affected by work.

A positive duty of care for officers to exercise due diligence

Officers will owe a positive duty of care to exercise due diligence to ensure WHS compliance by the organisation. The definition of 'officer' in s9 of the Corporations Act 2001 (Cwth) is adopted in the model Act.

What is meant by due diligence will be defined, for the first time in relation to WHS, to provide clear guidance on what is required for proper corporate governance.

Broadening workplace participation and protections

Business operators will be required to consult the broader range of workers on safety matters. A new obligation will be placed on PCBUs to 'consult, co-operate and co-ordinate activities with' any other person who has a duty of care in relation to the same matter (e.g. contractors, suppliers, labour hirers).

Union right of entry permit holders will have more opportunities to enter a workplace for WHS, including to consult with and advise 'eligible' workers. Those rights will be significantly aligned to the right of entry provisions of the Fair Work Act 2009.

Current WHS laws protecting employees and health and safety representatives will be extended to better protect a wider class of workers and prohibit similarly based discrimination in commercial transactions. The model Act will prohibit coercing a person to act or not act in a particular way in relation to health or safety.

Graduated enforcement leading to increased penalties

The model Act will promote graduated enforcement - through advice, directions and notices before prosecution. Courts will have a greater range of sentencing options, instead of or as well as fines.

The level of fines, where warranted, will be significantly increased - to a maximum fine of $3m for a company guilty of recklessly exposing a person to a risk of death or serious injury or illness. The maximum fine for a breach of a duty resulting in a risk of death or serious injury will be $1.5m for a company. Maximum penalties for an officer will be up to $600,000 and five years jail and up to $300,000 and five years jail for a worker.

What businesses should do to prepare for the new laws

Achieving compliance with the model Act may require significant changes to be made to current WHS management policies and procedures.

There are a number of steps that every business should take to prepare for this new era in WHS regulation. Briefly summarised, the 'top 10' activities should be:

  1. Legal risk analysis - to ascertain the extent of their duties and the ways in which the model Act will interact with other legislation, particularly the Fair Work Act 2009.
  2. Undertake a gap analysis to determine what changes will need to be made to achieve compliance.
  3. Review, revise and supplement current policies and procedures to provide for compliance.
  4. Implement changes, undertake training and review and revise as necessary.
  5. Review contracts to include duty holder consultation arrangements and other enabling provisions to allow you to discharge your duties.
  6. Implement interface coordination plans as a practical solution to the new duty to consult other duty holders.
  7. Develop robust consultation processes given the expanded application of the duty to consult to cover all relevant workers, including contractors and subcontractors.
  8. Develop dispute resolution processes to minimise the need for regulatory involvement in your workplace.
  9. Develop processes to effectively manage right of entry and regulatory rights and obligations to ensure compliance with the new obligations.
  10. Review and revise current corporate governance structures and processes. This may include developing an OHS Corporate Governance Statement for the Board and senior management, amendments to committee charters and position descriptions and responsibilities, and changes to communication requirements and processes.

This will require leadership, senior management drive and expert legal advice and assistance.

The benefits of starting now

Businesses should commence steps now to ensure compliance with the laws upon commencement.

The detail of the model provisions are now known and will now be adopted, so you can proceed with confidence in transitioning towards them.

Reasons for starting now include:

  • Contracts are being entered into now that will operate under the model laws and can be significant tools for ensuring compliance and effective health and safety management.
  • Key elements such as due diligence and consultation are structural in nature and can now be developed.
  • It is important that the structural and policy modifications are embedded before the technical detail of the regulations is confronted.
  • It typically takes 18 months to two years to embed organisational and policy change of the significance that will be required by the model Act.

Norton Rose Australia partner, Barry Sherriff, was a member of the government panel on whose recommendations the model Act is based. He is working with a number of organisations in preparing for the model laws.

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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