Company directors and committee members of incorporated and unincorporated associations (Directors) have a range of duties, including duties regarding an organisation’s workplace health and safety systems and processes. Directors can demonstrate compliance with these duties by establishing governance frameworks that ensure organisations maintain safe working environments without risks to health.

This article is the second part of a two-part series concerning the duties and expectations of Directors as they relate to staff. The first part of this series, which explores the options available to manage conflicts between Directors and staff, can be found here.

General duties of Directors of registered charities

Registered charities must comply with a set of core, minimum standards imposed by the Australian Charities and Not-for-profits Commission (ACNC) known as the ACNC Governance Standards. Under Governance Standard 5, registered charities must take reasonable steps to ensure that Directors comply with the duties of Responsible People. Those duties include acting with reasonable care and diligence, acting honestly in the best interests of the charity and for its purposes and not misusing their position or information obtained by virtue of their position.

Duties relating to health and safety

In addition to the general duties listed above, Directors are subject to a range of duties to ensure the health and safety of workers. These duties apply not only to Directors but to ‘officers’ within the meaning of the Corporations Act 2001 (Cth).

All jurisdictions except Victoria have enacted workplace health and safety legislation that mirrors the provisions of the Work Health and Safety Act 2011 (Cth) (Model Legislation).

In Victoria, the principal legislation governing workplace health and safety is the Occupational Health and Safety Act 2004 (Vic) (OH&S Act).

The Model Legislation and OH&S Act are largely consistent with one another and embody the non-delegable common law duty to ensure workplace health and safety.

Model Legislation (all jurisdictions except Victoria)

Under the Model Legislation, a person conducting a business or undertaking (including a company, an incorporated association or an unincorporated association) has the primary duty to ensure, so far as is reasonably practicable, the health and safety of workers while they are at work. Additionally, persons with “management or control” of a workplace must ensure, so far as is reasonably practicable, that the workplace is without risks to the health and safety of any person.

Under section 27 of the Model Legislation, Directors must exercise “due diligence” to ensure that these persons comply with their duties. Due diligence includes taking reasonable steps to:

  • acquire and keep up-to-date knowledge of work health and safety matters;
  • gain an understanding of the nature of an organisation’s operations; and
  • ensure that appropriate resources and processes are used to:
    • eliminate or minimise risks to health and safety;
    • receive and consider information regarding incidents, hazards and risks; and
    • comply with all duties and obligations under the Model Legislation.

OH&S Act (Victoria only)

Under the OH&S Act, employers are subject to a range of duties relating to the health and safety of their “workers”. This is a broad group that includes employees and others engaged by an employer in the course of the employer’s undertaking. Additionally, any person who “manages or controls” a workplace must ensure so far as is reasonably practicable that the workplace is safe and without risks to health.

There is a common misconception that those duties fall squarely on the management function rather than the governance body of the employer. In fact, a Director of a body corporate (including a company, an incorporated association or an unincorporated association) may be guilty of an offence and liable to a fine under the OH&S Act if:

  • the body corporate contravenes a duty under the OH&S Act; and
  • the contravention is attributable to the Director failing to take reasonable care.

The Courts will look at the circumstances of a safety breach to assess liability. Liability can be found against the “employer” (that is, the legal entity) as well as individuals (including Directors).

The duty of Directors is different to those with day to day operational management but is nevertheless significant. In determining whether a Director is guilty of an offence under the OH&S Act, regard must be had to the Director’s knowledge of the matter concerned and the extent of their ability to make decisions relating to the matter concerned. In light of this, a Director may be found to have failed to take reasonable care if they make (or participate in the making of) a decision that leads a body corporate to contravene any of the duties under the OH&S Act.

What steps can Directors take?

Given the broad duties imposed on Directors in relation to workplace safety, it is prudent for Directors to take steps to mitigate risks of being personally liable for a safety breach of the organisation for which they serve. Directors should ensure they actively turn their mind to workplace health and safety matters, including by:

  • communicating with management and staff about risks to health and safety in order to understand those risks and “nip them in the bud” before they surface;
  • adopting policies and procedures that clearly identify what steps must be taken to manage risks to health and safety as and when they arise;
  • ensuring policies and procedures are implemented;
  • embedding a culture of workplace safety and compliance in their organisation;
  • ensuring they are appropriately informed about their organisation’s operations and any particular risks posed by those operations;
  • ensuring there is adequate reporting to the board on incidents, hazards and risks; and
  • seeking external assistance to investigate and respond to risks to health and safety as and when they arise.