Work Health and Safety Update: Prosecutions of Officers

Recent cases have shown a clear trend towards harsher penalties for individuals and companies who fail to comply with their duties under workplace health and safety (WHS) laws. To date, the national harmonisation process has led to the Model WHS Act being implemented in all jurisdictions except Victoria and Western Australia. Are you aware of your duty under these laws to eliminate or minimise WHS risks?

Your duties under WHS Laws – PCBUs and officers

Under the Work Health and Safety Act 2011 (Cth) (WHS Act), a person conducting a business or undertaking (PCBU) has a duty to eliminate or minimise workplace health and safety risks. A PCBU may be a corporation, partnership, unincorporated association, a self-employed person or a sole trader. A PCBU must ensure, so far as is reasonably practicable, the health and safety of workers while they are at work.

The WHS Act also imposes a duty on individual “officers”. An officer of a PCBU must exercise due diligence in ensuring that the PCBU meets its obligations. An officer’s duty of due diligence is very broad – it relates to any obligation that the PCBU may have under the either the WHS Act or the Work Health and Safety Regulations 2011 (Cth) (WHS Regulations). Officers are required to actively monitor and evaluate WHS management. The officers’ duty of due diligence may be breached whether or not there is a contravention of WHS obligations by the company.

Who is an “officer”?

An “officer” is a person who has the capacity to significantly affect the financial standing of the relevant business, such as a company director or secretary, a CFO, a senior manager or a senior advisor. The definition of “officer” also includes a person who makes or participates in making decisions that affect the whole, or a substantial part, of the business.

What “reasonable steps” should officers take?

Officers must take “reasonable steps” to ensure that the PCBU meets its obligations. Some examples of “reasonable steps” are provided in section 27(5) of the WHS Act. For example, an officer should:

• maintain up-to-date knowledge of WHS issues,

• understand the nature of the PCBU’s business and the associated hazards and risks,

• use appropriate resources and processes to eliminate or minimise WHS risks,

• establish processes to manage WHS risks and incidents, and

• provide WHS training to workers.

However, taking these actions will not necessarily guarantee compliance with the officer’s duty of due diligence in all cases.

What about employees who are not “officers”?

If you are an employee but not an officer, you still have a duty, while at work, to take reasonable care for your own health and safety. You must also take reasonable care that your acts or omissions do not adversely affect the health and safety of others. You are obliged to co-operate with any reasonable WHS policy or procedure of which the company has given you notice.

Severe consequences

If you are an officer and you fail to exercise due diligence, you can be held personally liable. This is a non-delegable duty. Courts treat breaches of WHS laws very seriously and can order financial penalties and prison sentences. Set out below are a number of recent cases which demonstrate an increasing trend towards harsher penalties for WHS breaches.

Peter Carroll v Karingal Inc: Micromanagement and Bullying

In the case of Peter Carroll v Karingal Inc, the FWC upheld the dismissal of a manager who micromanaged and bullied other employees. He second-guessed his employees’ decisions and restricted their access to vital information. His aggressive, controlling manner negatively impacted other employees’ health. The manager honestly believed that he was acting in the employees’ best interests. However, this did not constitute grounds for an unfair dismissal claim. The FWC held that the cumulative effect of his behaviour was significant and systematic micromanaging. This should serve as a prompt to reflect on your own management style.

Mathews v Winslow Constructors: Damages of $1.3 million

A former employee who had been abused, bullied and sexually harassed by her colleagues was awarded damages amounting to a total of over $1.3 million. The employer had failed to provide a safe working environment and was vicariously liable for its employees’ actions. The company had to pay $380,000 in general damages, $283,942 for past economic loss and $696,085 for loss of earning capacity.

Plumbwizard Ltd: Company and Sole Director Fined

In this case, Plumbwizard Pty Ltd and Mr Georges, its sole director and shareholder, were found guilty of a Category 2 breach. Mr Georges had failed to provide any safety training to a young, inexperienced worker. The worker fell 3 metres through a penetration in a balcony which was not properly secured. The company was fined $60,000 and the director was fined $8,500. Both were ordered to pay the prosecutor’s costs of $35,000. In practical terms, as the sole director, Mr Georges was responsible for paying both the company penalty and the officer penalty. However, the Court held that this was not a reason to reduce the fines imposed. Rather, it was the actions taken after the incident which mitigated the penalties. The company showed genuine remorse and took measures to prevent further accidents, including hiring a safety officer.

WGA Pty Ltd: Company Fined $1 Million

In a landmark 2017 decision, a window glass company was fined $1 million, the highest penalty ever imposed in NSW under the WHS Act. The breach involved an incident where a subcontractor sustained an electric shock while working on a window ledge and suffered burns to 30 per cent of his body. The company had failed to take the necessary steps to protect the worker and ignored advice provided by a SafeWork NSW inspector and Sydney Trains.

Williamson: Fine Increased on Appeal

A $90,000 fine imposed at first instance was increased to $125,000 on appeal to the Queensland District Court. Significantly, the Court had regard to the penalties imposed by other states and territories under the harmonised laws.

What should you do? Lessons for employers

Be proactive. You must take action to prevent health and safety risks in your workplace. You must also train your workers. Ensure you have robust systems and ways to minimise hazard risks. Have a clear zero tolerance policy regarding bullying and harassment. WHS compliance requires ongoing scrutiny. You should conduct audits or inspections to verify that your company’s WHS resources and processes are being used effectively. Failing to take a proactive approach to WHS issues can be very costly. Henry William Lawyers can assist with comprehensive advice, training and procedures to improve WHS management in your workplace.