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Harmonisation of OH&S laws: New obligations placed on Directors

Harmonisation of OHS laws: Reduction of Red Tape BUT new obligations placed on Directors and other company officers

 

There are different OHS laws that operate in the various States and Territories.

In States like NSW, Queensland, and the ACT, employers must ensure workplace safety, which is beyond the common law standards of reasonable care. Other jurisdictions typically require employers to ensure the safety of workers so far as it is “reasonably practicable”.

Overall, the prescriptive regulations and procedures with different requirements impose a substantial compliance burden on employers operating across jurisdictions.

This will change with the introduction of the harmonised (except Western Australia), Workplace Health & Safety Act 2011 (NSW) (‘the Act), which will come into effect on 1 January 2012. However, under the new legislation, potential liabilities for directors and officers will be widened.

The Standard of the Duty of Care

In place of the strict obligation to ‘ensure safety’, employers will only need to ensure safety as ‘so far as is reasonably practicable’.

If the effect of this change is a move away from the concept of “strict liability” – that is, if an accident occurs in the workplace, the employer will have a liability for breach “no matter what” – it would be a welcome change.

What is ‘reasonably practicable’ is determined objectively. An employer must first consider ‘what can be done’ – that is, what is possible in the circumstances for ensuring health and safety. They must then consider whether it is ‘reasonable, in the circumstances’ to do all that is possible.

Section 18 of the Act expands on the factors which need to be considered, which include:

(a)  the likelihood of the hazard or the risk concerned occurring, and

(b)  the degree of harm that might result from the hazard or the risk, and

(c)  what the person concerned knows, or ought reasonably to know, about:

(i)  the hazard or the risk, and

(ii)  ways of eliminating or minimising the risk, and

(d)  the availability and suitability of ways to eliminate or minimise the risk.

Significantly for business, the cost associated with available ways of eliminating or minimising the risk, including whether the cost is grossly disproportionate to the risk, is relevant consideration in determining the standard. This means that what can be done, should be done unless it is reasonable in the circumstances for the employer to do something less.

Scope of Director’s Liability

An officer of a body corporate, as defined under the Corporations Act 2001, (let’s call them company directors) as well as other persons who have capacity to influence the decisions and management of the company, will have a positive obligation to conduct due diligence to ensure that that comply with occupational safety laws and standards.

To ensure compliance under section 27 of the Act, some practical and ‘reasonable steps’ that company officers and those in managerial positions can take include:

  • receiving and undertaking training in OH&S matters;
  • ensuring they receive minuted updates on safety matters at annual board meetings;
  • ensuring that they are aware of the budgets that are allocated to OH&S matters in their business;
  • ensure there are appropriate processes in place for reporting and responding to health and safety issues; and
  • ensuring that appropriate resources are allocated to OH&S.

The above provides reasonable guidance as to what is required to discharge the duty. Company directors and executives should be able to meet this standard, provided appropriate safety management systems are implemented.

Significantly, officers can be face fines of up to $600,000 and/or up to 5 years in prison if they are found to have recklessly breached their duty of care, resulting in serious harm to an employee.

For more information please contact Luke Mitchell – luke.mitchell@surrypartners.com.au