In this edition we cover:
- Record $1 million fine for company in New South Wales
- Fines being increased on appeal
- First enforceable undertaking in New Zealand
- Safe Work Australia recommends lead and lag KPIs as part of wider report
- Victorian Government response to inquiry into labour-hire industry and new Regulation
- Entry by union officials to 'assist' HSRs
- Heavy Vehicle National Law
- Rail National Safety Law in QLD
Record $1 million fine for company in New South Wales
In May 2017, the District Court of New South Wales imposed a penalty of $1 million (from a maximum $1.5 million) against WGA Pty Limited (WGA) for breaches of sections 19(1) and 32 of the Work Health and Safety Act 2011 (NSW) (NSW Act).
The penalty related to an electric shock suffered by a subcontractor when he came into contact with high voltage powerlines at a development site that WGA managed and controlled.
In the weeks preceding the incident, a SafeWork NSW inspector had attended the site on more than one occasion and had raised concerns with WGA's sole director that scaffolding had been erected near live power lines. These site visits resulted in three prohibition notices being issued, followed by two improvement notices.
During the first site visit, the inspector told the director about what control measures were required under the 'Working Near Overhead Power Lines' code of practice to minimise WHS risks.
Despite this warning, WGA did not implement any control measures identified in the code of practice. Instead, WGA:
- 'pleaded' with the subcontractor to undertake some work on the outside of windows facing the powerlines because the work needed to be completed before the scaffolding was removed the following weekend.
- did not tell the subcontractor about the presence of live powerlines.
- did not direct the subcontractor not to go onto the window ledge unless the power had been isolated.
In determining the appropriate penalty, the Court noted that 'the gravity of the risk was significant' and 'the potential consequences were catastrophic', given that the electric shock was likely to cause death or at the very least serious injury.
It found that while WGA had 'actual knowledge' of the risk posed by the presence of the power lines near the scaffolding, it 'took none of the steps that it had been informed of to eliminate or minimise the risk'. The Court noted that controls such as tape and signage were not present near or around the window ledge and these were 'inexpensive measures' that would have minimised the risk.
The Court also found WGA's safety system was 'non-existent' and that through its inaction, WGA had blatantly disregarded its health and safety obligations.
In addition to the record fine, an order was made that WGA pay $50,406 to the prosecutor for their costs.
What you need to do
- It is essential to consider codes of practice relevant to the activities of your organisation in order to ensure compliance with the obligations under the NSW Act so far as is reasonably practicable. While they are not legally binding, courts will take compliance with codes of practice into account when assessing liable (see our Safety and Wellness Update in March 2016).
- While other organisations (and their workers) have an obligations under the NSW Act, you should not assume that they will be aware of WHS risks and hazards, particularly if you are engaging them to perform work for you. Your organisation should proactively identify and control all apparent WHS hazards before any worker (including workers of another organisation) perform work. A practical way to ensure that you are passing on this information to other organisations is to provide them with a copy of the hazard register for the particular the workplace.
Fines increased on appeal
On two occasions in the past few months, on appeal, a court has increased the fines ordered for contravening work health and safety legislation.
In the first case, Silver City Drilling (NSW) Pty Ltd (Silver City) was operating a drilling rig at the Ashton Coal Mine near Singleton. The prosecution arose out of an incident where a blooie line running underneath the platform experienced a sudden accumulation of pressure, forcing a hinged platform upwards, and subsequently crushing an employee. The employee suffered life threatening injuries and became a quadriplegic.
Silver City pleaded guilty to breaching the NSW Act by failing to meet its duty of care under section 19(1) of the NSW Act.
At first instance, Silver City was fined $112,000 from a maximum of $1.5 million, after a 25 percent discount for its guilty plea. On appeal, the Court of Appeal found the first instance judge mistook material facts and engaged in an erroneous process of reasoning, which led to an incorrect characterisation of the offence as minor and the incident as 'barely foreseeable'. The Court of Appeal was also critical of the 25 per cent discount afforded to Silver City because it only entered its guilty plea on the first day of the trial.
The Court of Appeal increased the fine to $212,500 after applying a 15 percent discount for the guilty plea.
In the second case, VH & MG Imports Pty Ltd (MG Imports), manufactured and assembled camper trailers, which it imported in bulk from China. The prosecution arose out of an incident where an employee was killed when a gas strut on a prototype boat rack for a camper trailer explosively detached and penetrated the employee's skull.
MG Imports was found to have breached the Work Health and Safety Act 2011 (Qld) (Qld Act) by failing to meet its duty of care under section 19(1) of the Qld Act.
At first instance, the Queensland Magistrates Court fined MG Imports $90,000 and did not record a conviction. The Magistrate held that but for the catastrophic failure of the strut, MG Imports' other failures would not have resulted in harm. Workplace Health and Safety Queensland (WHSQ) appealed the decision on the basis that the fine was inadequate. Justice Deardon held the strut explosion was the final step in a series of systemic safety failures on the part of MG Imports.
On appeal, the District Court also accepted that it should have regard to sentences and fines handed down in other jurisdictions with the harmonised safety legislation when determining penalties. Accordingly, Justice Dearden found MG Imports should have been fined about $250,000 in this instance but reduced that to $125,000 for a number of procedural reasons.
Implications for organisations in jurisdictions with the harmonised WHS laws (ie, all except Vic and WA)
These cases continue the trend of prosecutors seeking higher fines against organisations who contravene the harmonised WHS laws. As the case law under the harmonised WHS legislation continues to grow, we expect the courts will develop a more consistent approach to sentencing. We expect that process is likely to result in higher fines for safety contraventions than we have generally seen to date in the harmonised WHS jurisdictions.
First enforceable undertaking entered in New Zealand
On 5 April 2017, the St Kentigern Trust Board entered into an enforceable undertaking with WorkSafe New Zealand after two students of St Kentigern College involved in a production of the play Sweeney Todd were injured when they were simulating having their throats being cut.
This is New Zealand's first enforceable undertaking under the Health and Safety and Work Act 2015 (NZ) (NZ Act) and is an enforcement tool that is an alternative to prosecution.
WorkSafe alleged that the St Kentigern Trust Board breached the NZ Act by failing to:
- implement a system to adequately identify hazards that could give rise to reasonably foreseeable risks to health and safety arising out of the production.
- implement adequate control measures to eliminate or minimise the risks of sustaining injuries from razor blades used in the production, including an adequate system to inspect and track the razor blades.
- establish an effective incident and investigation reporting system for incidents arising out of the production.
- provide adequate training or instructions to students on the use of razor blades necessary to protect them from risks to their health and safety arising out of the production.
The St Kentingern Trust Board agreed to spend nearly $86,000 (AUD$79,266) on health and safety initiatives including:
- compiling, publishing and implementing a health and safety policy for the performing arts.
- designing an effective health and safety management in the schools training course and making it available online.
The St Kentingern Trust Board also agreed to spend a further NZ $8182 for WorkSafe's legal costs. The enforceable undertaking agreement can be found here.
Safe Work Australia recommends lead and lag KPIs as part of wider report
Safe Work Australia has released a report which highlights external and internal performance indicators to improve organisational level WHS reporting and assist directors and other officers discharge their due diligence duties under harmonised WHS laws. The recommendations provide a helpful set of benchmarks which can be used by organisations to identify gaps in their safety performance data and reporting and potential improvements.
Based on a review of academic and professional literature, interviews with key stakeholders including WHS practitioners, and workshops involving participants drawn from a cross section of industries across Australia, the report is aimed at officers and management of medium to large organisations and provides guidance on the type of information investors and other stakeholders are seeking in company annual reports.
Key performance indicators
To discharge an officer's due diligence obligations requires an understanding of WHS performance data, including WHS KPIs – the report identifies three categories of KPIs:
- information about how up-to-date an organisation’s WHS ‘risk picture’ is: this involves officers constantly refreshing their knowledge of general WHS concepts and practices and their understanding of the WHS risk associated with the business enterprise and its operations.
- data relating to WHS performance: understanding processes of hazard identification, prioritisation and risk control, and the outputs of the WHS performance management system.
- information relating to oversight and assurance: the verification of legal compliance and of the implementation and effectiveness of managerial and resource allocation processes needed to eliminate or minimise risk. This reveals whether an organisation is driven by a focus on minimum compliance or achieving best practice.
The report is critical of relying purely on KPIs underpinned by one-dimensional injury data, such as lost-time injury frequency rates (LTIFR), as an overarching measure of “success”. In contrast, it recommends a multi-dimensional framework for identifying critical risks and monitoring measures of implementation (lead KPIs) and effectiveness (lag KPIs) of relevant controls. To that end, the report identifies and describes a number of examples of lead and lag WHS KPIs.
What you need to do
Not every KPI suggested in the report should necessarily be adopted by all organisations – this is acknowledged in the report. Rather, we recommend that you review the recommendations in the report and identify potential gaps and areas where your organisation can improve its current use of WHS performance data and reporting, including in particular:
- review the suggested lead and lag KPIs against the KPIs currently used.
- where there are gaps, consider whether the suggested lead and lag KPIs would be useful and relevant given the particular WHS challenges and issues your organisation faces.
- if so, tailor the KPIs to the organisation’s particular context and decision-needs and include them in the relevant report.
- review the report's template WHS Board report against its current Board report template and identify any areas which provide officers with more relevant and useful WHS performance data.
A link to the report can be found here.
Victorian Government response to inquiry into labour-hire industry and new Regulation
Labour hire inquiry
The Victorian Government has agreed in principle to adopt the harmonised WHS laws' approach to the identification of duty holders. This means that the same WHS duties may soon be owed by all 'persons conducting a business or undertaking' (or PCBU), instead of different duties being owed by 'employers' and other categories of duty holder in Victoria (as is currently the position). The PCBU framework would also see a new definition of 'worker' adopted in Victoria, instead of the existing terminology which differentiates between employees and other staff who may be at a workplace. The PCBU terminology is already used in all other Australian jurisdictions (except WA), but has not been used to date in Victoria. The change in terminology was recommended by a 2016 inquiry into the labour-hire sector.
The Victorian Government has also announced its intention to establish a licensing scheme and develop a code of conduct to regulate labour-hire operators, to make it unlawful for employers in regulated industries to use unlicensed labour-hire firms, and to increase safety requirements and regulation of accommodation standards.
The Victorian Government indicated that consultation with key stakeholders will take place before any amendments to the Occupational Health and Safety Act 2004 (Vic) (Vic Act) are made.
Occupational Health and Safety Regulations 2017
On 18 June 2017, Victoria's new Occupational Health and Safety Regulations 2017 (2017 Regulations) came into operation replacing the 2007 Regulations.
The most significant changes include:
- Hazard identification: the 2007 Regulations require an employer to identify so far as reasonably practicable any 'task' undertaken by an employee involving hazardous manual handling. The 2017 Regulations remove all references to 'task' to reduce confusion over its definition. Employers will now be required to identify any 'hazardous manual handling' undertaken by an employee, to encourage employers to focus on all types of work undertaken that have the characteristic of 'hazardous manual handling'.
- Prevention of falls: a note has been added to the 2017 Regulations to clarify that duty holders are required to eliminate and reduce any risk of falls from two metres or less, as well as those above that height, so far as reasonably practicable. This amendment was regarded as necessary because the 2007 Regulations have to date focussed upon the controlling risks of a fall from heights of greater than two metres.
- Hazardous substances: the 2017 Regulations have been recast to the Globally Harmonized System of Classification and Labelling of Chemicals (GHS) terminology. This will bring Victoria into line with other jurisdictions which have already adopted the GHS labelling terminology.
- Recognition of other labelling systems: the 2017 Regulations now exempt hazardous substances labelled in accordance with the Poisons Standards from the GHS labelling requirements where it is reasonably foreseeable that the substance will be used in a workplace in a quantity and a way which is consistent with household use, and in a way that is incidental to the nature of the work.
- Asbestos: the 2007 Regulations have only applied where there is fixed and installed asbestos present at a workplace. The 2017 Regulations will apply to all forms of asbestos, whether fixed, installed or otherwise, to ensure that all asbestos in the workplace is identified and the associated risks are managed.
- Self-employed persons: the provision in the 2007 Regulations, which specified that self-employed persons have the same duties as an employer, has been removed in the 2017 Regulations. 'Self-employed person' will now be specifically referenced in any regulation where they have a duty and where such a duty is required to be compliant with the Vic Act.
What you need to do
If you have operations in Victoria, consider whether you need to update any of your policies or procedures to take into account the 2017 Regulations. In terms of the changes to the duties under the Vic Act, it's a "watch this space". We will keep you up to date about any changes.
Entry by union officials to ‘assist’ HSRs
In the Full Federal Court held that a union official must hold a right of entry permit under the Fair Work Act 2009 (Cth) (FW Act) when attending sites for the purposes of providing assistance to elected Health and Safety Representatives (HSRs).
Background to the case
The FWBC (which has since become the ABCC) brought proceedings against a CFMEU official (Mick Powell) under s 494 of the FW Act. That provision states that ‘an official of an organisation must not exercise a State or Territory OHS right unless the official is a permit holder.’ At the time, Powell did not hold an FW Act right of entry permit.
In ABCC v Powell  FCAFC 89 his defence, Powell claimed that he sought the entry under ss 58 and 70 of the OHS Act for the purposes of assisting a health and safety representative (HSR) carry out their role. Section 58 of the OHS Act provides for the powers of HSRs, which include that they may ‘whenever necessary seek the assistance of any person’. Section 70 of the OHS Act is a related provision, which requires an employer to allow entry on to site of any person assisting a HSR.
Outcome of the case
The Full Federal Court upheld the ABCC’s appeal of Justice Bromberg’s decision at first instance in unanimously holding that:
- legislative provisions relating to rights of entry should be construed ‘practically and with an eye to commonsense so that they can be implemented in a clear way on a day-to-day basis at work sites’.
- section 494 of the FW Act ‘needs to work in a practical way at the work site, and if at all possible not be productive of fine distinctions concerning the characterisation of entry on to a site’.
- the ‘entitlement or authorisation’ granted to persons assisting HSRs ‘can be legitimately described as a right to enter and be on … premises’.
- the ‘plain purpose’ of s 494 is to regulate ‘by permit the lawful’ entry onto site of union officials in respect of work health and safety matters.
- though s 494 of the FW Act relates to union officials’ ‘representational rights’, limiting its operation so that it did not apply to entries to assist HSRs would ‘lead to practical confusion’, which ‘would tend to reduce the utility’ of the FW Act’s right of entry provisions.
The CFMEU has flagged appealing the matter to the High Court. WorkSafe Victoria has also foreshadowed that it is ‘considering its options’ because it believes that the ‘decision has a serious impact on [a] critical element of the Victoria OHS system’.
However, from a practical perspective, there is some doubt as to how the requirement that a union official has a valid entry permit before they can enter site to assist HSRs can undermine the capacity of HSRs to exercise their powers. This is particularly so because the vast majority of CFMEU officials and organisers continue to have valid entry permits.
The Full Federal Court’s decision will have equal application to all jurisdictions that have adopted the national model work health and safety law (ie, all jurisdictions except WA and Victoria).
What happens if the decision is overturned by the High Court?
Under s 70 of the OHS Act, Victorian employers only have a very limited basis to refuse the entry of a person to assist a HSR (such refusal is only allowed where the employer considers that the person is not suitable to assist the HSR because they have insufficient knowledge of occupational health and safety).
However, the model WHS laws provide broader grounds to support a refusal to allow entry to HSR assistants:
- section 71(4) of the model WHS law provides that HSR assistants may be refused entry while their State or Territory work health and safety permit is revoked or suspended.
- section 71(5) of the model WHS law provides that a PCBU ‘may refuse on reasonable grounds to grant access to the workplace to a person assisting a [HSR]’. Based on the explanatory memorandum to the national model law, reasonable grounds would include where a person has a proven record of not complying with right of entry requirements (including where they have had their FW Act right of entry permit revoked, suspended or not renewed).
- in addition, reasonable grounds under s 71(5) would also include where any assistant who is allowed access but subsequently acts improperly while they are on site. If such circumstances arise, the PCBU could reasonably state that further access is refused (and any continued misconduct can be treated as a breach of the ordinary right of entry requirements).
Accordingly, even if the Full Court’s decision is overturned by the High Court, PCBUs in Queensland, New South Wales, the ACT, Tasmania, South Australia and the Northern Territory (as well as those operating under the Commonwealth Act) will have greater scope than is the case in Victoria to insist that union officials have a valid FW Act entry permit before allowing entry for any purpose.
Heavy Vehicle National Law
Changes to chain of responsibility provisions
In mid-2018, changes to the Heavy Vehicle National Law (HVNL) will commence in all jurisdictions except Western Australia and the Northern Territory. The changes are significant, particularly for officers of companies involved in the supply chain which will have a positive duty to exercise due diligence regarding heavy vehicle safety, aligned to the harmonised WHS laws.
The amendments relate to the 'chain of responsibility' (CoR) provisions (which extend liability in relation to the safe operation of freight services beyond typical transport operators and to any party with influence or control in the chain) and will align the HVNL with the model WHS laws by imposing duties on all parties that influence or control on-road behaviour. The key changes are as follows:
- the obligations on all CoR participants will reflect the model WHS laws and apply a positive duty to care of ensure the safety of transport activities "so far as reasonably practicable".
- penalties will be introduced for breaches of the primary duty of care, similar to the model WHS laws, set at:
- a maximum fine of $3 million for a corporation
- $300,000 or five-years imprisonment, or both, for a person.
- enforceable undertakings will be available as an alternative to prosecution and improvement notices in some cases.
- officers of supply chain participants will have a positive duty to exercise due diligence to ensure the safety of transport activities.
Further changes expected
To support these amendments, in June 2017 transport ministers agreed to implement a series of further changes to 'give teeth' to the CoR amendments. These changes will include providing police and other authorised officers with additional powers to investigate breaches of the HVNL and, where appropriate, impose sanctions. The key amendments are likely to be:
- broader powers to investigate accidents and consider the root cause.
- the ability to issue prohibition notices like the model WHS laws.
- the ability to direct the inspection of vehicles if they have a reasonable suspicion of systemic maintenance or defect issues.
- power for courts to issue injunctions.
- allowing the National Heavy Vehicle Regulator to publish the outcomes of prosecutions.
A draft bill dealing with these matters is in the process of being developed and will be submitted to transport Ministers for consideration in November 2017.
It also appears that further changes are on the horizon in relation to the positive obligation on an officer to ensure that their businesses complies with the HVNL.
What you need to do
Any business involved in the transport of goods via heavy vehicles, even only as an unloader or loader of goods, should review the obligations it will have under the HVNL come mid-2018 and provide its workers with the education required to discharge the duty.
Most importantly, officers of organisations in the supply chain should ensure that they understand the HVNL and how the changes will impact what positive steps they need to take in relation to heavy vehicle safety.
Rail Safety National Law in QLD
Effective from 1 July 2017, Queensland adopted the Rail Safety National Law (RSNL). It was the last Australian jurisdiction to adopt the regime, with the effect that now rail safety is truly harmonised across the country.
In terms of how this impacts rail transport operators in Queensland:
- the key regulatory body is now the Office of the National Rail Safety Regulator (the previous local regulator, the Department of Transport and Main Roads will effectively become a branch of the ONRSR).
- the Australian Transport Safety Bureau will take on the role of investigator in Queensland.
- all current accreditations under the Transport Rail Safety Act 2010 (Qld) (TRSA) have been transferred to the National Rail Safety Register. However, after two years, those existing accredited operators will be required to comply with the conditions of accreditation under the RSNL.
- the obligations on officers to exercise due diligence to ensure that the rail transport operator complies with its rail safety duties in now codified in the RSNL. Previously the TRSA did not contain an express due diligence obligation. However, in practical terms the reasonable steps required of officers to exercise due diligence remain the same given the obligation has existed in the mainstream safety laws since 1 January 2011.
- many of the penalties in the RSNL are significant higher than the previous penalties in the TRSA. However, the penalties have been aligned with the harmonised mainstream health and safety regime.