A recent decision of the ACT Industrial Court has found Kenoss Contractors, but not its project manager, Munir al-Hasani, guilty of breaching their duties under the ACT Work Health and Safety Act. Both were charged under section 32 of the Act, which creates an offence when a failure to comply with health and safety duties exposes an individual to a risk of death, serious injury or illness.
While the company was found guilty of breaching its principal work health and safety obligations, the charges against Mr al-Hasani were dismissed, as the Court found that his role did not rise to the level of an officer.
This case is the first example of a senior manager being charged and prosecuted as an "officer" in relation to the death of a worker under the new Australian harmonised work health and safety legislation.
In this eBulletin, we review the decision and the implications for businesses and managers.
In June 2014, the first prosecution of an "officer" under the new harmonised work health and safety (WHS) laws commenced in the Australian Capital Territory.
Kenoss Contractors Pty Ltd (in liquidation) and one of its senior employees were charged with WHS offences arising from an incident where a tip-truck driver was electrocuted while unloading gravel at a dumping station in March 2012. The driver made contact with power lines when he raised his tip-truck tray and later died in hospital.
What were the charges?
Both Kenoss and Mr al-Hasani were charged with category 2 offences under the ACT Work Health and Safety Act (WHS Act). Kennoss was charged with failing to provide a work environment without risks to health and safety, and failing to maintain a safe system of work. Mr al-Hasani, the project manager, was charged with failing to exercise due diligence as an officer of Kenoss. Accordingly, the company faced a maximum fine of $1,500,000 and Mr al-Hasani faced a maximum penalty of $300,000.
The fact that Kenoss was in liquidation did not prevent the organisation from being prosecuted, nor the prosecution against Mr al-Hasani being pursued.
Who is an officer under the WHS laws?
The WHS legislation adopts the definition of an "officer" contained in section 9 of the Corporations Act 2001 (Cth) (Corporations Act).
Under this definition, an officer of a company is a director, secretary, receiver, administrator, liquidator or a trustee administering a compromise or arrangement made between the corporation and someone else.
Additionally, the Corporations Act provides that the definition of an officer extends to someone who makes, or participates in making, decisions affecting the whole or a substantial part of the business or company, or someone who has the capacity to affect significantly the company's financial standing. The definition also includes a person whose instructions or wishes the directors of the company are likely to act upon.
Officers of an organisation have a duty to exercise due diligence in ensuring that the organisation complies with any duties or obligations imposed by the WHS laws. Due diligence requires officers to take various reasonable steps, as set out in section 27 of the WHS legislation, such as acquiring up-to-date knowledge of work health and safety matters.
Chief Magistrate Walker found it had not been established beyond reasonable doubt that Mr al-Hasani had a large enough level of control or influence to classify him as an "officer" of Kenoss. Accordingly, he did not have an obligation to exercise due diligence.
Extensive consideration was given to Mr al-Hasani's role within the company. Mr al-Hasani agreed that he was project manager for a $4.5 million project and when asked whether he made decisions about budgets, he replied "not really." The Chief Magistrate noted that Mr al-Hasani undertook all the work that one would expect of a project manager, including attending management meetings, communicating with customers, supervising the performance of the project team and monitoring the progress of various projects.
However, Mr al-Hasani did not have control or responsibility for the business or undertakings of the company. He had an "operational responsibility" for delivery of specific contracts which had already been entered into, and his role was to implement these projects.
The Chief Magistrate noted that Mr al-Hasani did not make, or participate in making, decisions which affected the whole or a substantial part of the business. He could identify potential employees, but he was not responsible for hiring and firing them. He did not have direction over the type, or the specific contracts, which were pursued by the company. Finally, he prepared tenders but did not sign off on them.
Although Mr al-Hasani sat "close to the top" of the corporate structure and participated in decisions that affected the company, his participation in the business process was operational and he did not make decisions or participate in making decisions that affected Kenoss' business.
Kenoss was found guilty of breaching its principal obligations under the WHS Act. It faces a maximum fine of $1,500,000 and will be sentenced at a later date.
Bottom line for businesses and officers
This case is an important benchmark as it is the first case to consider the scope of the officer provisions under the harmonised WHS laws. It demonstrates that officers can and will be prosecuted, regardless of whether there is a conviction or finding of guilt against the relevant company. The case also demonstrates that WHS regulators and investigators are prepared to prosecute individuals in senior management roles over breaches in workplace safety.
- Identify officersThe broad definition of an "officer" under the Corporations Act is to be taken into account. Employers should note that managers, supervisors and site foreman also have the potential to be classified as "officers".
Where it is unclear if a person is an officer, we recommend that legal advice be obtained.
Kenoss provides guidance around some of the types of decisions which will be indicative of a person being an officer, such as hiring and firing employees, determining what contracts are to be pursued by a company and signing off on tenders.
- Understand the duties and obligations of officersOfficers are required to acquire and keep up-to-date knowledge of work health and safety matters, gain an understanding of the nature of the organisation's business and the associated hazards and risks, and ensure that the organisation has access to resources and processes to eliminate or minimise health and safety risks.
Officers are also under a duty to ensure that the organisation has appropriate resources and processes for receiving and considering information regarding incidents, hazards and risks and ensuring that the organisation has - and implements - processes for complying with duties or obligations of the organisation under WHS laws.
Managers and supervisors who could be classified as officers under WHS laws should be provided with adequate training, so that they can discharge their duties and obligations.