FINANCIAL INSTITUTIONS ENERGY INFRASTRUCTURE, MINING AND COMMODITIES TRANSPORT TECHNOLOGY AND INNOVATION PHARMACEUTICALS AND LIFE SCIENCES The Safety Show The New Work Health and Safety Laws Corporate Liability and Personal Liability for Directors & Senior Managers Siobhan Flores- Walsh , Partner Occupational Health and Safety 25 October 2012
Key Issues Today FINANCIAL INSTITUTIONS ENERGY INFRASTRUCTURE, MINING AND COMMODITIES TRANSPORT TECHNOLOGY AND INNOVATION PHARMACEUTICALS AND LIFE SCIENCES Legal Obligations: Corporate & Individual Consequences of breach:Penalities & insurance Practical Guidance: Legal and Management Strategies Special Note About “Horizontal Consultation”
Current status of Model Law Adoption Jurisdiction Status Australian Introduced 1 January 2012 FINANCIAL INSTITUTIONS ENERGY Capital Territory INFRASTRUCTURE, MINING AND COMMODITIES TRANSPORT TECHNOLOGY AND INNOVATION Commonwealth Introduced 1 January 2012 PHARMACEUTICALS AND LIFE SCIENCES New South Wales Introduced 1 January 2012 Northern Territory Introduced 1 January 2012 Queensland Introduced 1 January 2012 South Australia WHS Bill currently before parliament. Bill was introduced and then withdrawn on the first occasion. Commencing 1 January 2013 Tasmania WHS Bill first reading in Legislative Assembly on 18 October 2011. Commencing 1 January 2013 Victoria WHS Bill has not yet been introduced into parliament. Will probably adopt the WHS laws in their current form later Western Australia WHS Bill has not yet been introduced into parliament. Will probably adopt the WHS laws in their current form but timing is not clear
Changes in snapshot Old regime New regime Primary duty holder Employer PCBU Positive, personal Directors & managers Deemed liability & criminal liability Jurisdiction Quasi-criminal Criminal Penalties Max $550K Max: $3m and gaol , Implied Concurrent Duty Holders Express
The New Primary Duties of Care Your personal liability The arises here Duty Who has the duty? Relevant Standard The governed activity Person conducting the business or Operation of the business or undertaking Reasonably practicable undertaking (PCBU) Organisational decision Officers ’ Duty of Care Due diligence making and governance Work activities ( including Workers ’ Duty of Care Reasonable care supervision) Others ’ Duty of Care Circumstantial attendance at Reasonable care the workplace (i.e. visitors) (i.e. at a workplace)
This is a criminal regime (for primary duties) Category Description Maximum penalty Corporation : $3 M Category 1 Most serious cases Officers: $600,000 Breach of the primary duty involving recklessness Gaol up to 5 yrs and serious harm to a person or risk of such Workers & harm. other persons : $300,000 Gaol up to 5yrs Breach of the primary duty where serious harm or Corporation : $1.5 M Category 2 the risk of it without the element of recklessness. Officers: $300,000 Workers & other persons : $150,000 Breach of the duty that does not involve high risk Corporation : $500,000 Category 3 of serious harm. Officers: $100,000 Workers & other persons : $50,000
Who and what is a PCBU? • A person (corporate, individual or public authority) who conducts a business or undertaking. Who? • The PCBU must take all steps reasonable practicable to ensure the health and safety of workers and Duty? others affected by the business . • ‘Workers’ include volunteers, contractors, students on placement • ‘Others’ include the public – NOT Scope limited to the workplace 7
Reasonable practicability Control is relevant to what can be done & if it is reasonable to do it
What is the officer’s duty of care? PCBU Officer must exercise Due Diligence to ensure that the PCBU complies with that duty or obligation Duty or obligation 9
Who is an officer? Director Trustee of a compromise Company or other Secretary arrangement Officer Makes, or participates in, Administrator, decisions affecting Liquidator, the whole or a received or substantial part of receiver business manager Shadow Affects directors - financial instructions or wishes standing accustomed to act
Identifying the officers Consider Directors Company Secretaries Certain members of Senior Management Shadow Directors (individuals & corporations)
Due diligence includes taking reasonable steps to… Monitor information Provide and use on incidents, appropriate hazards and risks resources & and respond in a processes to timely way to that minimise WHS risks information Gain an understanding of the Ensure work health nature, hazards & risks associated with and safety & legal the operations of the compliance PCBU. Acquire and keep Verify the use of up-to-date these resources and knowledge of WHS Due Diligence processes matters These six elements fall into two categories: 1. Knowledge and understanding and 2. Management action
First Element - To Know Monitor Resources OHS and Processes Activity Understand Legal Business & compliance Hazards Taking reasonable steps Knowledge Due Diligence Verification OHS to acquire and keep up-to-date knowledge of work health and safety matters. • Requires a knowledge management system • Need a baseline, up-skill as required & maintain • Knowledge includes, safety leadership, officers’ & organisational legal obligations, risk management, incident investigation and auditing.
Second Element – To Understand Monitor Resources OHS and Processes Activity Understand Legal Business & compliance Hazards Taking reasonable steps to gain an Knowledge understanding of Due Diligence Verification OHS • the nature of the operations of the PCBU and • generally of the hazards and risks 1. An officer must be able to accurately list the associated with those critical risks in their business and have operations. insights into how they arise and how they are managed. 2. Safety observations give first hand understanding.
Third Element – Ensure Resources and Processes Monitor Resources OHS and Processes Activity Understand Legal Business & compliance Hazards Taking reasonable steps to ensure that the PCBU Knowledge Due Diligence Verification OHS has available for use, and actually uses, appropriate processes and resources to eliminate or minimise 1. Reasonable steps to ensure that risks to health and safety adequate processes are in place (e.g. from work carried out by accreditation to AS/NZS 4801) the PCBU. 2. Assess the safety impact of every resource decision.
Fourth Element – To Monitor Monitor Resources OHS and Processes Activity Understand Legal Business & compliance Hazards Taking reasonable steps Knowledge to ensure that the PCBU Due Diligence Verification OHS has appropriate processes for receiving and considering information regarding incidents, hazards and 1. Requires appropriate processes for: risks and responding in - Receiving; a timely way to that - Considering; and information. - Responding in a timely way to information about incidents, hazards and risks. 2. Requires the balanced use of lead and lag indicators.
Fifth Element - To Comply Monitor Resources OHS and Processes Activity Understand Legal Business & compliance Hazards Taking reasonable steps Knowledge Due Diligence Verification OHS to ensure that the PCBU has, and implements, processes for complying with the PCBU ’ s duty 1. Cost/benefit analysis about whether to comply under the WHS Act. = breach. 2. Requires a culture of legal compliance. 3. Requires a process for legal compliance audits. 4. Reviews must be conducted by competent persons. 5. Reviews are required at reasonable intervals.
Sixth Element – To Verify Monitor Resources OHS and Processes Activity Understand Legal Business & compliance Hazards Taking reasonable steps to verify that there are Knowledge Due Diligence Verification reasonable steps are in OHS in place and being used to ensure : • Adequate Processes 1. Verify that there are reasonable steps in place, and being used, to ensure: • Adequate Resources 1. Adequate processes 2. Adequate resources 2. Verify (typically) through: 1. Accreditation against a credible standard 2. Monitoring lead and lag indicators 3. Reviewing the expertise and numbers of relevant personnel. 4. (and sometimes) safety observations
Practical Compliance In essence – The officer’s duty requires the officers of a corporation to put in place a WHS Governance Programme that is designed to ensure that officers interrogate their company’s work health and safety management system ( WHSMS ) This means - An officer can breach the duty merely by failing to implement an effective WHS Governance Programme, even though there may not have been a work health and safety incident at the officer’s company.
Relationship between a WHS Governance Programme & Work Health and Safety System The Due Diligence System facilitates compliance with the Officer’s Duty 1. The Work Health and Safety System facilitates compliance with the PCBU’s 2. duty. ______________________________________________________ WHS Governance System The Due Diligence System Interrogates the WHSS to Ensure PCBU compliance Work Health and Safety System
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