Recently the New Zealand Ministry of Business, Innovation and Employment in conjunction with the Institute of Directors released Good Governance Practice Guidelines to assist company directors to understand their roles in managing health and safety risks.
Given the similarities between New Zealand and Australian WHS laws, the Guidelines can offer some valuable insight for Australian company directors who have significant legal obligations under Australian WHS laws.
In particular, the Australian harmonised WHS legislation places significant focus on the obligations of officers of the company to exercise due diligence. The legislation prescribes that due diligence requires officers to:
- Acquire and keep up-to-date knowledge of work health and safety matters.
- Gain an understanding of the nature of the operations of the company and generally of the hazards and risks associated with those operations.
- Ensure that the company has available for use, and uses, appropriate resources and processes to eliminate or minimise risks to health and safety from work carried out.
- Ensure that the company has appropriate processes for receiving and considering information regarding incidents, hazards and risks and responding in a timely way to that information.
- Ensure that the company has, and implements, processes for complying with any duty or obligation of the company under the WHS legislation. These include reporting notifiable incidents, consulting with workers, ensuring compliance with notices issued under the WHS legislation, ensuing the provision of training and instruction to workers about health and safety and ensuring that health and safety representatives receive their entitlements to training.
The courts have interpreted the due diligence provisions broadly, and emphasised that company officers are required to be proactive and maintain knowledge of WHS procedures, and in particular, how these procedures are exercised in practice within their organisations.
Good governance practice guidelines
As a starting point the Guidelines note that company directors have a chief role to play in providing leadership and policy which determines how WHS is treated within their organisation. In particular, directors can facilitate worker participation in WHS strategies by holding management to account to ensure that workers are engaged and involved in WHS.
The guidelines also highlight four areas where company directors play a vital role:
- Policy and planning – determining the relevant structure for leading health and safety and the development of a high level health and safety policy. It also involves making clear that management will be held to account in implementing the strategy. Targets should be specified that will enable the company to track its performance and policy implementation.
- Delivery – the establishment of clear expectations for the company to have a fit-for-purpose health and safety management system, the exercise of due diligence in ensuring that system is properly implemented and incorporates best practice standards. It also involves ensuring that sufficient resources are allocated to the development, implementation and maintenance of the safety system.
- Monitoring – the monitoring of the company’s health and safety performance, including an outline of the expectations around what should be reported and the timeframes for reporting. It also involves the review of reports to determine whether any intervention is required and familiarisation with relevant processes such as audits, risk assessments and accident investigations to enable directors to properly evaluate the material presented to them. Where relevant it may also require the engagement of an independent expert to help advise the Board.
- Review – the periodic formal review of WHS systems to determine effectiveness and whether changes are required.
Lessons for Employers
Whilst expressed in different ways, the Guidelines can take officers a long way to meeting their obligations under Australian WHS legislation. They underline that officers must be highly active and adopt a collaborative approach to the development, implementation and review of WHS management systems. Failure to adopt these practices can result in harsh (and costly) treatment by the courts and regulatory bodies who in recent years have focused on enforcing officers’ compliance with their obligations under WHS legislation.