DUE DILIGENCE & OHS – WHAT THE COURTS EXPECT

By David McIvor on March 13, 2014 in HSR Training
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Health and Safety Duties

The terms of Occupational and/or Work Health and Safety (OHS/WHS) legislation in Australia[1] are such that the duty of the employer (or the Person Conducting a Business or Undertaking – PCBU) has a duty of care – so far as is reasonably practicable – to secure the safety of an employee/worker.  This means all workers, whether they be diligent, or careless, or newly trained, whether they be young, old and/or experienced hands.  The duty on that employer is to ensure the safety of all of these employees.

In addition to the duties on the employer, safety legislation also imposes duties on employees, to:

  • take reasonable care for their own health and safety and for the health and safety of anyone else who may be affected by their acts or omissions at the workplace
  • co-operate with their employer
  • not wilfully or recklessly interfere with or misuse safety equipment provided
  • not wilfully put at risk the health and safety of others.

Managers and supervisors are themselves workers or employees.  But whilst all employees have duties of care, managers have a greater legal responsibility for health and safety than do subordinate employees.  Further, they carry a personal liability for health and safety failures.  As senior managers also are the legal agents of the employer, they have legal (and corporate) responsibilities to ensure the employer’s duties are met. 

The current penalties for breaches of O/WHS legislation – against both employers/PCBUs and workers, are far more severe than in the past.  Corporations face maximum penalties of $3Million (for the most serious offences); officers (including directors and members of boards) can be fined up to $600,000 and/or up to 5 years imprisonment.

The courts may also have the power to order the organisation to advertise that it has been convicted (including details of the conviction) and to perform certain acts including establishing projects in the public benefit.

Company “officers” can be prosecuted and held liable for offences even if their organisation is not!

Although an officer is defined according to the Australian Corporations Act, precedent allows an officer also not only be a director, secretary or executive officer; but may also be a person on whose directions or instructions directors of the organisation are accustomed to act; or may be a person (not a director or secretary but) who is “concerned in the management” of the organisation, or a “person able to influence relevant decisions”.

[The question of who may be “concerned in the management” of a corporation is not clear, but court cases suggest that it will include a person who is in the “higher echelon of persons serving the body corporate” or more broadly, someone who is ‘part of the controlling mind, not merely the hands” of the organisation.]

The Answer – Due Diligence

It is important that the employer be able to show the exercise of due diligence in attempting to meet health and safety obligations.  At it’s simplest, due diligence means “taking care”.  In the workplace, it means taking every precaution reasonable in the circumstances to protect the health, safety and welfare of all employees – and being able to demonstrate that you have done so.

Due diligence requires the employer to identify risks to the health, safety and welfare of employees (and others) in its workplace.  The more harmful or serious the potential dangers, the more the employer must guard against them to prevent workplace injuries and illnesses.  Once identified, due diligence requires that the employer address these risks through a properly functioning and documented health and safety system.

A director cannot say that he or she had no knowledge of the offence.  In other words, ignorance is no excuse.  Increasingly therefore, a director will be put in a position where he / she has to show that he / she exercised all due diligence to prevent the contravention.

How can a manager / director show he or she has exercised due diligence?

In the workplace, “taking care” means taking every precaution reasonable in the circumstances to protect the health, safety and welfare of all workers.  The more harmful or serious the potential dangers, the more you must guard against them to prevent workplace injuries and illnesses.

Due diligence requires you to identify risks to the safety, health and welfare of employees (and others) in your workplace.  Once identified, due diligence requires that you address these risks through a properly functioning and documented health and safety system.

The courts have said that a director must meet the standard of care that a ‘reasonable’ director would exercise!  To show personal due diligence, a company officer/director will need to demonstrate initiatives such as the following:

  • OHS obligations have been identified
  • The manager / director is aware of OHS standards in similar industries
  • Responsibilities have been allocated
  • Management properly addresses OHS issues that are brought to its attention?
  • Expertise of everyone involved has been verified
  • Adequate resources have been provided for health and safety (having regard to the definition of “reasonably practicable” in the OHS Act)
  • An appropriate OHS Management system is in place
  • Priorities have been identified, timetables established and responsibilities allocated
  • Company management has been instructed to set up a compliance system
  • There is adequate reporting back of compliance (or non-compliance) throughout the company so that all relevant people are aware of what is, or is not, happening
  • There is regular auditing for compliance and follow-up on non-compliances
  • There is good documentation of risk assessments and reasons for making particular decisions
  • The manager / director immediately and personally reacts when he/she receives notice that the compliance system has failed?

[1] In Australia, “Work” Health and Safety (WHS) Acts define the duties and responsibilities; viz Queensland, New South Wales, Tasmania, South Australia, ACT, Northern Territory and the Commonwealth.  The WHS Acts refer to “Person Conducting a Business or Undertaking” (PCBU) rather than employer.  Employees are referred to as “workers”.  At this stage, Victoria (OHS Act) and Western Australia (OSH Act) refer to the more traditional terms of “employer” and “employee”.

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David McIvorView all posts by David McIvor