On Wednesday 5 November 2008, the Workplace Relations Ministers Council released the first report into the national review of model Occupational Health and Safety laws.
Harmonisation of occupational health and safety (OHS) regulation is, almost universally, considered to be a positive development for Australian employers, and in particular multi-state employers. The recommendations in this report provide a strong basis for the development of nationally consistent OHS laws in Australia.
The report was prepared by the three-person panel appointed by the Federal Government, which includes Mr Barry Sherriff, the lead partner of Freehills’ National OHS practice.
What does the report do?
The report addresses the ‘priority matters’ identified by the Workplace Relations Ministers Council, including:
- providing recommendations on model duties of care
- identifying duty holders and discussing the scope and limits of the duties they should hold under model OHS legislation, and
- commenting on the nature and structure of offences and penalties under a model OHS Act.
The 180 page report draws on extensive consultation from stakeholders across the spectrum of parties interested in workplace safety, including industry, employee representatives, governments and other interest groups.
This is the first report which the panel will release, with a further report due at the end of January 2009.
Key issues
Duties of care
Rather than focusing on the employer/employee relationship as giving rise to obligations to ensure safety, the report proposes a duty of care owed:
- by: a person or entity conducting of a business or undertaking, and
- to: any person who carries out work in that business or undertaking.
This new, simpler, approach to defining the central duty under the model OHS Act will be welcomed by many employers and employee organisations as providing certainty over the application of duties under a model OHS Act.
Redefining the duty in this way provides a pragmatic basis for ensuring that the law applies to all those who can direct or influence the conduct of work. By broadening the coverage beyond employment, emphasis is placed on the practical measures which can be taken to ensure safety by those who can best control it (rather than there being a focus on who is a duty holder and whose safety the duty holder must protect).
In addition and concurrently, the model OHS Act would place obligations on other specific classes of duty holders who have the ability to impact on safety. These include:
- those with management or control of workplace areas
- designers of plant, substances and structures
- manufacturers of plant, substances and structures
- builders, erectors and installers of structures
- suppliers and importers of plant, substances and structures
- OHS service providers
- officers
- workers, and
- other persons at the workplace.
A uniform standard of compliance
Consistent with the approach in the majority of Australian states and territories, the report proposes that all duties under the model OHS Act be subject to the test of what is ‘reasonably practicable’.
This will not represent a change in the legal standard for employers and other duty holders. Having the standard as part of the duty would, however, change the burden of proof for duty holders with operations in New South Wales and Queensland, who may currently be guilty of an offence until they prove innocence by demonstrating they have met the standard.
Personal liability
The report also proposes that individuals continue to have potential personal liabilities for breaches of the model OHS Act.
However, in a change to the current approach to officer’s duties, the model OHS Act proposes the inclusion of a positive duty on directors and others with management and control of a corporation. That is, rather than having a corporate breach of the law ‘attributed’ to the director, the officer will have a positive duty that is to be drafted in clearer terms.
This duty would require that an officer be proactive and exercise all due diligence to ensure ‘compliance’ by the entity of which they are an officer. The due diligence approach is well known by directors and senior management. Having this as a positive duty is consistent with the significant role of the officer in achieving company compliance and it would only make officers liable for their own failings rather than those of others, making them ‘masters of their own destiny’.
In the event that the prosecuting regulator believes that there has been a failure by the director to meet these obligations, the onus of proving that failure to exercise due diligence will rest with the prosecution.
Importantly, this proposed change would remove the ‘reverse onus’ which has been the subject of much criticism, particularly in New South Wales and Queensland.
This positive duty is a significant change to officer’s liability in all jurisdictions and should be seen as a progressive development providing clarity and certainty, and removing potentially confusing (and perceived as unfair) concepts of attribution and consequential liability.
The report also recommends a positive duty be placed on employees to look after their own safety, and the safety of others.
Penalties and enforcement
On one hand, the report proposes clearer obligations for duty holders and does not recommend the onus of proving innocence be placed on directors or other duty holders. In this way, it may be seen to advocate a fair enforcement regime for duty holders.
On the other, it recommends higher levels of potential penalties, maintaining the power of the courts to impose custodial sentences (prison) on individuals in the most serious cases involving recklessness.
The report proposes that penalties for breaching the various duties under the model OHS Act be broken down into three categories. These categories are not determined by the outcome of an OHS incident (and hence dispose with ‘workplace deaths’ type offences), but rather impose penalties based on the level of risk and the degree of culpability of the offending corporation or individual.
Those three levels of offence are divided into categories:
- Category 1 would relate to the most serious cases of non-compliance, involving recklessness or gross negligence and serious harm (fatality or serious injury) to a person or a risk of such harm.
(Potential penalties—up to $3 million for a corporation and up to $600k for an individual and up to five years imprisonment).
- Category 2 would deal with serious harm or the risk of it without recklessness or negligence.
(Potential penalties—up to $1.5 million for a corporation and up to $300k for an individual).
- Category 3 would apply to other breaches.
(Potential penalties—up to $500k for a corporation and up to $100k for an individual and up to five years imprisonment).
Categorisation of offences in this way would align OHS law with general criminal prosecution processes. However, where an individual or corporation commits an offence with a high degree of culpability (for example, by engaging in reckless conduct or gross negligence) severe penalties can be imposed.
Given the increased scope of the penalty range, the report does not propose that there be any increase to these potential maximum offences for ‘repeat offenders’. Rather, this will be a matter left to a sentencing judge.
Right to a jury in certain circumstances
As is currently the case in Victoria and South Australia, the report proposes that the two most serious categories of offences should be ‘indictable offences’.
The practical impact of this will be to confirm the seriousness of these offences, demonstrating that they are clearly criminal in nature, while providing for trial of the offender before a judge and jury in these most serious cases.
Again, while the penalties and sanctions available to the court are high, the process by which those sanctions will be imposed will more closely reflect established criminal processes.
In a welcome development, the report specifically recommends that rights of appeal, ultimately to the High Court, be enshrined in the model OHS Act.
What will happen next?
The Workplace Relations Ministers Council will now consider the recommendations in the report and will meet to confirm which recommendations can be agreed on, and which may be the subject of further negotiation.
The panel will prepare its final report by the end of January 2009. This will deal with other aspects of the model OHS Act and the enforcement regime which is to underpin it.
Freehills will be conducting client briefings on the report, and clients will be advised of those dates shortly.
This article was written by Steve Bell, Solicitor, Sydney.
More information
For information regarding possible implications for your business, contact a member of the OHS team.