Implications for employers
The key immediate implication of these changes is the new positive due diligence obligation for officers. This presents a new compliance challenge for directors and executive management.
This will require officers to establish, as a minimum, that:
- they are generally aware of the key safety risks in the business;
- they can be reasonably satisfied there is a comprehensive safety system in place which meets appropriate standards; and
- the company’s safety system is subject to regular monitoring and verification by management.
All organisations should immediately review their safety policies and management systems to ensure their officers are in a position to say they are discharging their due diligence obligations. Companies should ensure that officers (including non-executive directors) are aware of these new requirements.
Update - harmonisation of work health and safety laws in New South Wales
The proposed harmonisation of work health and safety laws in Australia is well underway in New South Wales. The NSW Government has already enacted the Work Health and Safety Act 2011 (NSW) (WHS Act) which is consistent with the Federal Model Act (save in respect of union prosecution rights). The WHS Act will commence on 1 January 2012. The WHS Act will repeal the Occupational Health & Safety Act 2000 (NSW) (OHS Act).
The New South Wales’ Parliament also passed the Occupational Health and Safety Amendment Act 2011 (OHS Amendment Act), which accelerated key aspects of the Federal Model Act and made immediate amendments to the OHS Act. These amendments to the OHS Act took effect on 7 June 2011.
Significantly, this means the changes to the individual liability provisions, including the introduction of the new due diligence obligation for officers, and the reversal of the onus of proof are now law having commenced on 7 June 2011. The main changes are set out below.
Reversing the onus of proof on employers
The duties under the OHS Act to ensure health and safety were previously expressed in unqualified terms. This meant that an employer was required to ensure safety subject only to a limited defence that it was not reasonably practicable for the employer to prevent the alleged contravention of the OHS Act. Amendments to a number of sections of the OHS Act qualify these duties and the health and safety duties under the corresponding regulations so that the onus on the employer is to ensure the health and safety of its workforce so far as reasonably practicable. The effect of this amendment is the onus is now on WorkCover to establish the employer did not take reasonably practicable measures to ensure safety, reversing the previous onus which was on the employer to show it did all things reasonably practicable as a defence to a prosecution.
Helpfully, the amended OHS Act provides a definition of “reasonably practicable”. The term “reasonable practicable” is defined to mean that which is, or was at a particular time, reasonably able to be done in relation to ensuring health or safety, taking into account and weighing up all relevant matters including:
- the likelihood of the hazard or risk occurring;
- the seriousness of the risk;
- what the person concerned knows, or ought reasonably to know, about the hazard or the risk, and ways of eliminating or minimising the risk; and
- the availability and suitability of ways to eliminate or minimise the risk; and
- after assessing the extent of the risk and the available ways of eliminating or minimising the risk, the cost associated with available ways of eliminating or minimising the risk, including whether the cost is grossly disproportionate to the risk.
Liability of officers of corporations
Section 26 of the OHS Act previously provided that a director or person concerned in the management of a corporation was also deemed liable for any contravention of the OHS Act or regulations by the corporation unless that person:
- used all due diligence to prevent the contravention by the corporation - due diligence was not defined; or
- was not in a position to influence the conduct of the corporation in relation to its contravention of the provision.
The OHS Amendment Act has substituted a new section 26, replacing the current provision with a new provision that imposes a positive obligation on “officers” of a corporation to exercise due diligence to ensure that the corporation complies with its occupational health and safety duties. “Officer” has the same meaning as under the Corporations Act 2001 (Cth) (ie: a person who has capacity to influence the decisions and management of the company). “Officer” includes directors. No distinction is made between executive and non-executive directors.
The new section 26 of the amended OHS Act replaces the former deemed liability provisions. Liability is no longer be automatically attributed to directors and managers. Instead, the new section 26 provides that if a corporation has a duty or obligation under a “relevant provision”, an officer of that corporation must exercise due diligence to ensure that the body complies with that duty or obligation. “Relevant provisions” are defined to include (amongst others) the general duties relating to health, safety and welfare at work.
Due diligence is also now defined to “include taking reasonable steps”:
- to acquire and keep up to date knowledge of work, health and safety matters;
- to gain an understanding of the nature of the operations of the business or undertaking of the body and generally of the hazards and risk associated with those operations;
- to ensure that the body has available for use, and uses, appropriate resources and processes to enable hazards associated with the operations of the business or undertaking of the body to be identified and risks associated with those hazards to be eliminated or minimised;
- to ensure that the body has appropriate processes for receiving and considering information regarding incidents, hazards and risk and responding in a timely way to that information;
- to ensure that the body has, and implements, processes for complying with any duty or obligation of the body under the OHS Act;
- to verify the provision and use of the resources and processes referred above.
The new laws only apply to acts or omissions occurring on or after 7 June 2011 of the OHS Amendment Act.