More safety indemnities offered but with similar limitations

In August-September 2012 a media release was circulated in Australia promoting an

“…an Australian industry first – leading construction & mining workplace safety provider RIS offers to indemnify operators against non compliance prosecution.”

This may be a first for RoofSafe Industrial Safety (RIS) but not for Australia.  SafetyAtWorkBlog has reported on a smaller but similar system that originated in the automotive repair industry.

RIS’ Syncron system has several steps to compliance

  • Safety Audit
  • Assessment and Priorities
  • Coordinated actions aimed at maximum cost savings
  • Indemnification
  • Ongoing Monitoring and Continuous Improvement

It seems to be popular in the mining sector, according to the RIS website and clearly, from the media release, RIS is expanding its application from its fallprotection base into construction.

Indemnification

There are lots of issues of concern in the media release, if not in the Syncron system itself.  The indemnification is of particular concern and although these sorts of safety management systems are apparently cleared through legal advisers they need a great deal of explanation in order for businesses to feel comfortable.

One of the potential traps of these systems is that indemnification only exists when the assessment and management system is followed absolutely, as highlighted below.  Although the advisory resources exist outside the customer’s business, checking and monitoring still comes from the customer and adequate resources are required.

The legalese through all Syncron brochures and statements needs forensic analysis.  For instance, according to the Syncron brochure, indemnity is much more limited than the media release implies:

“The Syncron process provides an indemnity to employers against statutory charges and penalties incurred for the non-compliance of a structure that has been certified as compliant as part of the Syncron process.”

Here it deals with plant but in specific circumstances. The media release states:

“for the first time in Australia – and perhaps the world – [RIS] offers to indemnify individual construction companies and mine operators against prosecution for non compliance irregularities emanating as part of its service offering.” (emphasis added)

This reinforces that Syncron only applies to those items listed or assessed through Syncron. It is unclear about non-Syncron covered matters.

Managing Director, Michael Bermejo says in the media release:

“What sets us apart is our offer to indemnify construction companies and mine operators against the recently introduced, even more onerous workplace safety risks and regulations associated with the employment of workers in what can be difficult and often dangerous projects and environments. We indemnify against statutory costs or penalties imposed for the non compliance of a structure or product which RIS has certified…

“The Syncron programme, when deployed in its entirety, saves operators both time and money by using the best available, cost-effective products and technologies, integrating services, maximising productivity and substantially reducing the financial exposure to plant operation. In addition, implementation of our ‘best practice’ co-ordination of processes reduces downtime, while the ongoing maintenance of a safer working environment can help extend plant and equipment life with positive flow on impact to the bottom line. The Syncron programme is easy to implement and provides the operators with the ultimate ‘peace of mind…” (emphasis added)

At times Syncron promises compliance on everything and at others is is limited to working at heights or confined spaces.

In the quote above, Bermejo makes a very broad general comment on safety regulations.  He says there are

“…even more onerous workplace safety risks and regulations associated with the employment of workers in what can be difficult and often dangerous projects and environments.”

If this is a reference to the partly-harmonised Work Health and Safety laws, he is not accurate or, at least, being too general.  There is similar uncertainty if referring to the evolving mine safety laws.

Customer “references”

All companies like testimonials from happy customers.  RIS’ media release lists a number of  “blue chip clients” implying satisfaction or involvement with the Syncron program, promotion of which is the purpose of the media release.  SafetyAtWorkBlog contacted several of the clients listed.

A spokesperson for the Melbourne Cricket Club that operates the Melbourne Cricket Ground advised SafetyAtWorkBlog that he understood :

“…the Syncron programme is a system used by ISS, which is the Melbourne Cricket Club’s cleaning contractor at the Melbourne Cricket Ground.  While ISS may use it at the MCG,  we (the MCC) don’t use it in any way.”

ISS is likely to refer to ISS Australia, a cleaning firm. ISS was not listed in the media release as a client.

A Stockland Group spokesperson advised that:

“…Our GM – Operational Risk has no knowledge of this supplier and has never heard of them. It is possible that one of our individual business units used them for a particular project, as up to 3 months ago, each of the business units managed their own safety requirements around hiring providers.”

The list of RIS clients on the media release is impressive however some of the relationships to Syncron are uncertain.

Insurance Background

SafetyAtWorkBlog sought additional clarification on the issue of the indemnity mentioned, as the matter of indemnity and liability has been discussed previously.  We asked:

  • Which insurance company or agent is providing the insurance backing for the RIS indemnity?
  • How does this differ from existing Directors and Officers liability insurance?

Vincent Perrot, “one of the original team leaders who put the Syncron Indemnity offer together”, responded:

  1. “RIS carries comprehensive insurances with reputable insurance companies, mainly Lumley insurance, covering all commercial risks including professional indemnity, product liability and directors and officers insurance. However what is being offered in the indemnity that forms part of the Syncron offering is a contractual commitment that should a client suffer statutory costs and penalties as a result of RIS issuing a certification of compliance for an area or product which is subsequently found to be non compliant it will reimburse our client the amount of those costs and penalties. It is offered to provide a level of goodwill and comfort to our clients who are catagorised (sic) as “persons conducting a business undertaking” (PCBU) as defined by the regulations, that certifications are carried out by a “competent person” as is also defined by the regulations and that proper process has been followed. It also contrasts RIS with the multitude of other contractors who use people eg Riggers. Fitters etc who are not appropriately qualified nor experienced to carry out certifications in accordance with the requirements of the regulations and thus who expose their clients to penalties.
  2. Please refer to point 1 above. We emphasise that we are entering into a contractual commitment which is not totally based on the company’s insurance cover. Directors and Officers Insurance normally only covers individual not corporate liability and normally requires the demonstration of an element of negligence that was known to or should have been known by the insured party.” (link added)

Compliance and Competence

As a non-lawyer, this seems generally reasonable but the issuing of a “certificate of compliance” by a non-regulatory body seems peculiar.  This process also does not avoid a potential OHS prosecution and only reimburses the client for any costs and penalties. It seems to minimise the risk but not eliminate it. There can be considerable reputational damage from any prosecution for which a monetary payment will not improve.

There is also a traditional OHS and engineering tone dominating RIS’ statements where only physical hazards are addressed.   Perrot mentions the competent person who, according to the Work Health and Safety Regulations pertaining to high risk work:

“a) is, or is qualified to be, a member of Engineers Australia with the status of Chartered Professional Engineer or entered on the National Professional Engineers Register administered by the Institution of Engineers Australia, and

(b) has experience in inspecting or designing cranes.”

It is unclear how applicable the Syncron service would be for psychosocial incidents that also occur in the mining and construction sectors such as bullying, fatigue and job stress.

Technology

RIS also appears to have applied a digital layer to Syncron through “smart data”, a combination of online and offline capability, PC, tablet and smartphone compatibility and the ability to generate automated SMS and email capacity.  Whether this technology is a boon or an impediment to safety management in reality remains to be seen, and not only in reference to Syncron.

Taking up the offer of such a safety management system requires a great detail of analysis, consideration and discussion.  It may be that this type of program is the future of OHS – a type of outsourced regulatory compliance – but it would require an endorsement by existing regulatory bodies or, at least, a “watching brief” statement.  Such a system would require a massive rewrite for it to apply outside the mining and construction sectors and there remain serious questions about its applicability to the non-physical hazards found in the mining and construction sectors, particularly given increasing concern over the OHS of fly-in, fly-out work structures.

Managing Director Bermejo describes RIS as “…truly .. a complete solutions provider”. Perhaps in certain industries and with certain work activities but not for everything or everyone, and therefore, not really “complete”.

Kevin Jones

4 thoughts on “More safety indemnities offered but with similar limitations”

  1. There are a number of issues with this advertising campaign.

    An organization or individual cannot by law contract out of their WHS obligations. This is unenforceable. It\’s likely to lead those who aren\’t across the detail of the legislation into a false sense of security, that they have satifsifed their obligations. All that they would have done is relinquished control to an unknown and unproven service.

    This legislation has jail terms of up to 5 years for individuals. How do they propose to indemnify their clients against jail terms? Does Mr Bermejo propose to show up in court, and to offer to serve time in jail in the place of the officers , managers, contractors or workers of a convicted organisation?

    A company\’s ability to deliver equipment, documentation and procedure and to demonstrate an understanding of the legislation governing an industry mitigates an organizations risk. The brochure doesn\’t demonstrate any understanding of the space within which they operate..

    This campaign will be seen for what it is : – a very gimicky marketing ploy to capture the attention of those who don\’t know any better.

      1. Hi Kevin,
        Does that mean they\’ll cover the legal costs only, but not the fines of up to $3 million for organizations, not $600,000 for individuals and not jail terms?

  2. Thanks for this interesting item, Kevin, and thanks for mentioning my article on directors\’ insurance policies. I must say, without having seen all the details here, that from the description you provide and the quotes you have given I would myself have some doubts about the validity of the contractual promise being made here. As noted in my recent article, as a matter of public policy the courts will not enforce a contract the effect of which would be to transfer responsibility for a criminal penalty, where there is any aspect of \”fault\” involved in the offence. In my view all offences under the WHSA and WHSR now involve such an element, as none can be made out without the prosecution showing that something else could have been done to ensure safety which was \”reasonably practicable\”. Hence it seems likely that a contractual promise to re-imburse someone for a criminal penalty imposed under the legislation would not be enforcable. In addition, as you note, it would be not much comfort to get a fine repaid, as if found guilty you would still have a conviction against your record.
    It is also an interesting question as to whether, if a consultant designs a system for you which proves to be non-compliant (eg it leads to foreseeable harm to a worker), the consultant company themselves can be prosecuted. I suspect an offence under s 19(2) WHSA would be committed (\”other persons\” being put at risk by the way the consultant had conducted their business or undertaking.)

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