Category: business

New approaches on OHS fines and penalties

At the moment Australian OHS professionals, lawyers and businesses are preparing submissions to the Government on the harmonisation of OHS laws.  One of the areas that the Government is seeking advice on is penalties.  The Discussion Paper asks the following

Q17. Are the range and levels of penalties proposed above appropriate, taking account of the levels set for breaches of duties of care by the WRMC?

Q18. What should the maximum penalty be for a contravention of the model regulations?

Q19. The intention is that all contraventions of the model Act be criminal offences. Is this appropriate or should some non-duty of care offences be subject to civil sanctions e.g. failure to display a list of HSRs at the workplace, offences relating to right of entry?

The amount of  any fixed financial penalty is not a big issue in my opinion.  There is an assumption that the threat of a large financial penalty imposed on one company will encourage other companies to improve safety.  Is anyone seriously saying that all of the financial penalties imposed over the decades are in some way responsible for an improving level of safety in workplaces?  The motivation to improve safety comes from elsewhere.

The threat of large financial penalties send companies to seek ways of insuring against having to pay a fine.  Often it is cheaper to pay an insurance premium on the slim chance of being prosecuted and fined.  I acknowledge that this has been a corporate and risk management approach primarily but there are cases where such options are being offered to small business.

Large financial penalties, such as the then record fine to Esso over its Longford gas explosion, are easily paid with little OHS improvement resulting from the fine.  It can be argued that the negative corporate exposure from the resulting Royal Commission, a reulting class action and the media coverage resulting from its unforgivable treatment of Jim Ward were stronger motivators for improvement.

In most Australian States, there is not a crime of industrial manslaughter.  This issue has faded from the political agenda but it remains very much alive in England.  On 27 October 2009, the Sentencing Guidelines Council wrote the following:

“Companies and organisations that cause death through gross breaches of care should face punitive and significant fines, a consultation guideline published by the Sentencing Guidelines Council proposes today.

Fines for organisations found guilty of the new offence of corporate manslaughter may be measured in millions of pounds and should seldom be below £500,000.

The new sanction of Publicity Orders forcing companies and organisations to make a statement about their conviction and fine introduced under the Corporate Manslaughter and Corporate Homicide Act should be imposed in virtually all cases.

The consultation guideline proposes that the publicity should be designed to ensure that the conviction becomes known to shareholders and customers in the case of companies and to local people in the case of public bodies, such as local authorities, hospital trusts and police forces.  Organisations may be made to put a statement on their websites.”

The Council recommends a minimum financial penalty and a publicity order that has teeth. More on the publicity order is below.

Council member Lord Justice Anthony Hughes clearly states the purpose of financial penalties and it is not preventative.  He said in a media statement

“Fines cannot and do not attempt to value a human life – compensation will be payable separately in these cases.  The fine is designed to punish and these are serious offences so the fines imposed should be punitive and significant to reflect that.”

Penalties as a Percentage of Turnover

Hughes says that the Council rejected a Sentencing Advisory Panel proposal that I believe should be floated in the current debate on penalties in Australia, even though it is likely to be similarly rejected.

The Panel recommended the following

“In order to achieve an equal economic impact on offending organisations of different sizes, the proposed starting points and ranges for offences of corporate manslaughter are expressed as percentages of the offending organisation’s average annual turnover during the three years prior to sentencing.  The relevant turnover is that of the company convicted of the offence or, where the offending organisation is a holding company, the consolidated turnover of the group of companies of which it is the holding company.”

Here is the penalty table

Manslaughter table

Lawyers argue extensively about the use of manslaughter in relation to deaths in workplace but the public jumps across the legalese by repeatedly asking how the death of their loved one is not manslaughter when the actions of a director or company led directly to the death?  No level of legal explanation is going to counter this need for accountability, some would say revenge.

Similarly the penalty rate listed in the table above is easier for the public to understand conceptually compared to a judge’s or lawyer’s explanation of why a financial penalty for a workplace death was less than the maximum.

Sentencing options are complex and SafetyAtWorkBlog has no legal contributors but on 30 October 2009 within a public discussion period on national OHS laws and at the end of Safe Work Australia Week, it seem thats penalties imposed from a percentage of turnover may be an attractive concept to many safety advocates and one that needs to be considered in the Australian context.

Publicity Orders

On the issue of publicity orders, many Australian jurisdictions have had this option for a while.  Indeed, the issue of enforceable undertakings is getting a broader hearing after some of the recent actions by Comcare against John  Holland Group and others.

It is always important to look at the most recent actions and decisions in OHS law and regulation from outside one’s own jurisdiction so that innovations are not overlooked.  It seems that the Sentencing Advisory Panel has looked at lots of  jurisdictions in making the following requirements.

The Sentencing Advisory Panel listed specific requirements of a publicity order to be applied within a specified timeframe:

  • a quarter-page advertisement in a local or regional newspaper, in the case of an organisation operating in one area; or
  • an eighth-page advertisement in three specified national daily newspapers, in the case of an organisation operating nationally; and
  • an eighth-page notice in a relevant trade publication; and
  • a prominent notice in the organisation’s annual report (also in electronic format where applicable); and
  • where applicable, a notice on the homepage of the organisation’s website for a minimum period of three months.

The panel also closed a possible (out) for offending companies.

” The making of a publicity order does not justify a reduction in the level of fine imposed on an organisation for an offence of corporate manslaughter.”

The ads on home pages, local newspapers and trade publications (if there are any) seems very reasonable but the media option that may be most influential is the inclusion in the company’s annual report.  Acknowledging a workplace death and expressing regret in an annual report is admirable but “a prominent notice in the organisation’s annual report” goes straight to the shareholders who often have the ear of the corporation.  Just look at the influence being applied by them at the moment on executive salaries.

Now is the right time for Australia to consider alternative OHS penalty options.

Kevin Jones

Senator calls for Senate hearing on the safety of posties

Senator Steve Fielding is the head of the Family First Party, the smallest political party in Australia’s Parliament at the moment.  Fielding is one of the handful of senators who hold the balance of power in the parliament and therefore has more political influence than a party of the size of Family First usually has.

On 19 October 2009, as a result of evidence given at a Senate inquiry by a representative of Australia Post, Senator Fielding said, in a media statement:

“There are serious allegations staff have been forced back to work simply to sit in a room to watch television so managers can get their bonus for having lower lost injury time figures,” Senator Fielding said.  “This is outrageous and puts the health of workers at risk because of some greedy managers.

“No wonder Australia Post won an award last month for its rehabilitation of injured workers if it’s fudging the numbers.  There’s an obvious conflict of interest between InjuryNET, which looks after the doctors that Australia Post sends its workers too, and Australia Post itself.

“Dr David Milecki, who is a consultant to Australia Post’s return-to-work program, also runs InjuryNET.

“Australia Post even admitted that this contract did not go through an independent process – there was not even a tender process.

“We need a senate inquiry urgently to make sure Australia Post employees are being looked after and that they’re aren’t being taken advantage of by dodgy managers who are more interested in their bonuses.”

SafetyAtWorkBlog contacted Australia Post to gauge some reaction.  A spokesperson says that Australia Post will be cooperating fully with any Senate inquiry.

Every country has its fair share of eccentric politicians.  The current feeling is that Steve Fielding is Australia’s.  But regardless of character or competence, the Senator has authority and a responsibility to investigate the concerns listed above.

This is a developing story but one that may relate a little to issues raised in the recent SafetyAtWorkBlog about awards nights.

Kevin Jones

The demographic challenges facing OHS management

The best OHS advice, or rather innovative thinking, is frequently coming from those experts from outside the traditional OHS background.

A case in point could be a presentation made by prominent Australian demographer, Bernard Salt, at one of the many Safe Work Australia Week events in South Australia.   Salt provided enough information about population changes that OHS professionals and regulators became uneasy about many of the challenges that they will face in the next few decades.

Consider yourself how the following facts provided by Bernard Salt will affect the way you manage safety in your workplace:

  • A ‘demographic fault line’ occurs in Australia from 2011, when the baby boomers start retiring.
  • More older workers will be in a position to retire than there will be younger workers to replace them.
  • Older workers will stay at their jobs for longer rendering them susceptible to body stressing and similar injuries.
  • Many older workers will scale down their work to a few days or one day a week, and as a result may not be fully attuned to the workplace safety risks.
  • To top up the Australian workforce (and tax base) a substantial migrant intake will be required.
  • These prospective workers (and entrepreneurs) will need to be educated in the Australian OHS culture.

If the OHS profession is to truly be “proactive”, it is these sorts of forecasts that should be anticipated.

Kevin Jones

Australian AGMs mention workplace deaths

Australia’s corporations are busy releasing their annual reports in October 2009.  The outgoing managing director and CEO of Boral Limited, Rod Pearse, provided his comments on the company’s safety performance to shareholders on 28 October 2009.

“Since demerger [January 2000], Boral’s safety outcomes have delivered steady year-on-year improvements and compare well with both ASX100 and industry benchmarks. Employee lost time injury frequency rate of 1.8 and percent hours lost of 0.06 have both improved by 80% since 2000 and are better than those of our competitors in like industries and in the top quartile of companies in the ASX100.”

Boral is, according to the executive statements, “a resource based manufacturing company with low cost manufacturing operations.” Continue reading “Australian AGMs mention workplace deaths”

OHS – time to grow up or get locked in the attic

In OHS law in Australia, the employer/employee relationship is dead or, at least, coughing up blood.  OHS law is to be based on “people conducting a business or undertaking” (PCBUs have been discussed briefly elsewhere) and not a worker working in a workplace, even though the recently changed industrial law, the Fair Work Act, maintains this relationship.

This morning in a staff seminar at a large multinational business in Australia a regional CEO revealed a considerable level of financial detail to his employees, much more so than any of the staff had seen before.  His reason for this was that he was talking with “adults”.  He employs adults and expects his workers to act like adults.  He also said that he cannot understand why, for so long, employees have been treated as children or act like children.

Past occupational health and safety law seems to reflect this relationship.  Employees have expected someone else to fix a problem because the employer has the principal responsibility for everyone’s safety.  The employee has had a legislative responsibility to look after their own safety and that of others for decades but it was rarely emphasised and only occasionally did it appear as a reason for a prosecution.

To be simplistic for a moment, parents set the house rules for when children are in the  house.  As children grow, the rules are amended and new rules are created as the child becomes more mobile, curious and intelligent.  In many circumstances, the children are given a fair degree of flexibility in meeting the house rules but every so often the rules need to be enforced and children reminded of them.  A penalty of some sort is applied.

At a WorkSafe seminar on 26 October 2009 in relation to the proposed Safe Work Bill, there was a tone to the panelists’ comments that seemed to be calling for a new “maturity” in OHS management.  It was as if the last thirty years has been the learning phase where the house rules have been clearly established and the children have reached a point where the house rules are to be self-policed.  It could also be put that the children are expected to extend these rules to any guests to the house.  But the analogy of a house as a workplace and business should stop there before it becomes silly.

What the new/proposed OHS laws are looking for is a responsible approach to staying safe.  The emphasis on “reasonably practicable” in the legislation is a plea and an expectation for people in a workplace to behave reasonably.  The impression is that if the test in law is to be of a “reasonable person” then the OHS law should be encouraging people in a workplace, whatever their status, to act reasonably.

In short, the Australian Government is asking businesses and workers to “grow up”.  The test will be who chooses to be sitting at the family meal table and who becomes the mad uncle locked in the attic that everyone feels embarrassed by.

Kevin Jones

Australian Standards and OHS harmonisation

This morning in Melbourne, WorkSafe Victoria conducted a three-hour seminar on the harmonisation of Australia’s OHS laws.  The speakers and panelists were John Merritt of WorkSafe, Tracey Browne of the Australian Industry Group and Cathy Butcher of the Victorian Trades Hall.  Tripartism at its best.

The large auditorium was filled with hundreds of attendees, very few were the familiar faces of the OHS professionals who can often dominate such events.

A question was asked to the panel about the application of the Australian Standard for Plant.  The question was, basically, will the Australian Standards be referred to within the upcoming OHS regulations?  The panel unanimously said no.

This was the clearest indication yet that the rumour about Australian Standards not being given legislative legitimacy through legislation is correct.  Tracey Browne however provided the rationale.  She said

“The important thing is that as soon as we incorporate an Australian Standard in a regulation, we create a whole different legislative status of something that was never designed to be a safety regulation….

This doesn’t change the fact, though, that it is the “state of knowledge” and when you look at what you are doing in relation to what is reasonably practicable, you need to take into account all the things you know or ought to know.  So if you are [for instance] bringing plant into Australia, and that is your business, then you need to know what the Australian Standards are and make sure that’s part of your consideration.”

Standards Australia is undergoing a considerable rethink due to a big loss of funds and in response to the changing regulatory structure in all sorts of industry and financial sectors.  The challenge is acknowledged by the CEO of Standards Australia, John Tucker ,when he discusses a “new way of operating“.

Kevin Jones

Asbestos and corruption as a case study

Australia has been a major supplier of asbestos to the world for decades.  It has also been a major corporate beneficiary of the revenue for the sale of this poisonous material.

The latest situation in Melbourne is a good example of all that is wrong with asbestos and worker exposure.  According to reports in The Age newspapers in late October 2009, a property developer has allegedly offered $A57,000 to a safety officer on a hospital redevelopment project, allegedly, in order to turn a blind eye to the issue of asbestos at the site.  According to the newspaper reports, some in the industry have described this payment as a bribe.

In February 2006, the developer received a report from an independent consultant advising that asbestos be removed prior to demolition.  The developer removed most but not all.  It is in this patch of remaining asbestos that two workers dug through the concrete with a jack hammer and concrete saw, generating considerable dust from the concrete and the asbestos.  The workers were not wearing any protective masks.

Australia is dealing with the corporate immorality of James Hardie Industries, although there is much more that can be down.  Wittenoom is closed and has almost disappeared.  Companies are required to have an asbestos register for their properties.  Tasmania is to become free of asbestos by 2020.  There is a lot of activity, so much that the control of this poisonous material should not be handled in an ad hoc manner.  Governmental vision is required to commit to the removal of asbestos and the clean-up of contaminated sites.

It is an easy moral call for governments – the toxicity of asbestos is indisputable, the public health risks are known.  But it will cost.  Governments are in a similar bind as with climate change policy – decades of prosperity at the same time as not considering the health legacy of that wealth.

There is no such thing as an emissions trading scheme for asbestos.  It is suspected that, if at all, the government will need to apply surcharges or tax incentives for companies to support any initiative.  This always flows back to the consumers paying ultimately.  Anti-asbestos advocates can rightly feel angry at the fact that companies have benefited greatly from knowingly selling a toxic material, and  the same companies are likely to benefit again through the clean-up.  This may simply be the price we must pay for living in a society based on capitalism.  God help the new “capitalist” nations like China.

Kevin Jones

SafetyAtWorkBlog hopes to finalise a podcast with journalist and author, Matt Peacock, by the end of this week.  Peacock is the author of Killer Company

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