New era for Work Health and Safety Regulation in Australia
11 December 2009

Key changes

There have been a number of significant changes to the Model Act since the draft was released for public comment including a new definition of officer and due diligence and a consultation obligation between duty-holders.

Officer definition

The definition of officer was the subject of much debate with a number of commentators raising concerns about the expansion of categories of persons caught by the proposed definition. The final model provisions adopt the definition in the Corporation Act. This restricts the categories of persons caught by the officer duty to the senior echelon of the company or organisation.

Due diligence definition

The most significant concession in the final provision was the insertion of a definition of due diligence.

Due diligence is defined to mean:

• to acquire and keep up to date knowledge of work health and safety matters
• to gain an understanding of the nature of the operations of the business or undertaking of the body
• to gain an understanding of the nature of the operations of the hazards and risks within those operations
• has available for use appropriate resources and processes to enable hazards associated with the operations of the business or undertaking of the body to be identified and risks associated with those hazards to be eliminated or minimised
• to ensure that the body uses those resources and processes
• to ensure that the body has appropriate processes for receiving and considering information regarding incidents, hazards and risks and responding in a timely way to that information
• to ensure that the body has and implements processes for complying with any duty or obligations of the body under the Act
• verifying the provision and use of the resources and processes referred to above.

This is a welcomed amendment as it provides certainty to officers in relation to the extent of their duty to exercise due diligence.

Practically, what the duty requires is the development of Board and Senior Management level protocols for verifying due diligence in the organisation. This should be set out in an OHS Corporate Governance Statement and supporting procedures.

Consultation obligations

The final provisions create a new duty on the PCBU to consult not only with workers directly affected by the health and safety matter, but with other duty holders who have a duty in relation to the same matter. Organisations should consider carefully how they will seek to discharge this obligation in practice. It is recommended that the consultation process be systematic and recorded. One option is to adopt Interface Coordination Plans, widely used in the transport industry. Such plans would record the areas of overlap and record the agreement as to the manner in which the respective duties will be discharged.

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Other changes

• modifying the definition of ‘reasonably practicable’ to make clearer the relevance of cost, including consideration of the cost of various control options and whether the cost is grossly disproportionate to the risk
• modifying the primary duty of care to require persons conducting a business or undertaking (PCBU) to ensure specific matters (e.g. provision and maintenance of safe plant and systems of work) rather than requiring each PCBU to take the provide them, thereby avoiding unnecessary duplication and confusion
• to exclude workers and officers from the definition of PCBU to the extent that they are not conducting a business or undertaking in their own right
• making clear that volunteers and local government councillors are not subject to liability as a PCBU or an officer, but not excluding them from the duty to take reasonable care as a worker or other person at a workplace
• modifying the duty of care of a worker to require compliance with any reasonable policy or procedure of the PCBU of which the worker is aware, in addition to complying with reasonable instructions given by the PCBU
• making clear that supply occurs at the time of passing of physical possession of the relevant object
• the exclusion of financiers from the obligations of a supplier has been changed to cover a broader range of commercial transactions where the financier does not take possession (e.g. sale and lease back arrangements)
• allowing the parties to seek assistance from an inspector to resolve a dispute as to the establishment of workgroups for the election of health and safety representatives (HSRs)
• providing a requirement for a PCBU to provide training to a HSR within three months of a request for training
• allowing a PCBU to refuse entry on ‘reasonable grounds’ to a person chosen by the HSR to provide assistance, if no relevant assistance could be provided by the nominated person
• removal of requirements for union right of entry which are already prescribed under the Fair Work Act 2009 and providing for the involvement of an inspector to resolve a right of entry dispute
• including provisions recommended by the panel extending prohibitions against anti-discrimination to include commercial transactions and prohibiting coercion
• providing added flexibility by allowing the regulator to vary or cancel notices
• providing for an automatic stay on internal review of decisions of an inspector, other than for prohibition notices and non-disturbance notices, and a continuation of a stay on application being brought for external review of a decision made on internal review
• a provision confirming that civil liability will not be affected by proceedings brought under the Act
• restructuring of the most serious category of offence to a reckless endangerment offence when a duty holders’ conduct has exposed a person to a risk of death or serious injury of another person
• removal of compensation orders as a sentencing option
• monetary penalties, not penalty units, used to ensure consistency between jurisdictions
• contraventions of the Act being subject to a criminal penalty regime, except in relation to right of entry offences in Part 7. Right of entry offences in Part 7 would be subject to a civil penalty regime consistent with that in the Fair Work Act 2009. A framework will need to be established for civil penalties, and
• providing for penalties for the non-duty of care offences for corporations, ranging from a maximum of $500 000 for serious breaches to a maximum of $10 000 for minor administrative breaches.

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Outstanding issues

While the model provisions improve significantly on the consultation draft there remains a number of areas of ongoing concern. These include:

• provisions allowing the copying of documents obtained by a union exercising right of entry
• the lack of a “reasonable excuse” qualifier to the offence of coercion, as recommended by the Review panel, given the potentially broad application of that section
• the absence of a defence of “reasonable precautions” where the conduct or intent of an employee or agent is attributed to a PCBU resulting in an offence of unlawful discrimination
• very extensive powers of questioning of inspectors, including a lack of appropriate procedures surrounding the use of evidence that would otherwise be subject to legal professional privilege, to protect individual rights
• investigative powers of the regulator, including to require a person (even a passer by) to attend at a place and time nominated by the regulator to be interviewed
• a potential incentive for inspectors to not provide the required warning by not making clear that evidence obtained in the absence of the warning should not be admissible – leaving this issue to the discretion of the court
• the prohibition against discrimination applies to entering into or terminating a commercial contract, but does not refer to the terms offered for a contract
• the removal from Category 2 offences of the qualifier of a ‘high risk’ of death or serious injury, which will effectively allow almost all breaches to be Category 2 offences, not Category 3

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What you should now be doing to prepare

You should commence steps now to ensure that your business and officers will comply with the laws upon commencement. The detail of the model provisions are now known and will now be adopted, so you can proceed with confidence in transitioning towards them.

Reasons for starting now include:

1. Contracts are being entered into now that will operate under the model laws. The contracts and supporting documents can be significant tools for ensuring compliance and also more effective health and safety management under the model laws;
2. Key elements such as due diligence and consultation are structural in nature and can now be developed, with only minor modification (if any) required by relevant regulations relating to consultation;
3. It is important that the structural and policy modifications are undertaken and embedded before the technical detail of the regulations is confronted, or those key enabling aspects may be overlooked;
4. It typically takes 18 months to 2 years to undertake and embed organisational and policy change of the significance that will be required by the model laws.

There are 7 steps that every business needs to undertake to prepare for this new era in Work Health and Safety regulation:

• Legal risk analysis – the new primary duty has broader application than its predecessor. Businesses must undertake a legal risk analysis of their operations to ascertain the extent of their duties
• Review contracts to insert duty holder consultation arrangements and enabling provisions to allow you to discharge your duties. This is critical with long term contracts entered into over the next few months which will remain in place long after the commencement of the legislation.
• Implement interface coordination plans as a practical solution to the new duty to consult other duty holders
• Develop robust consultation processes given the expanded application of the duty to consult to cover workers including contractors and subcontractors
• Develop dispute resolution processes to minimise the need for regulatory involvement in your workplace
• Develop processes on right of entry and regulatory rights and obligations to ensure compliance with the new obligations
• Develop an OHS Corporate Governance Statement for the Board and Senior management to ensure compliance with their due diligence duty.

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