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Company directors and OHS obligations

Since the final report of Australia’s Review into Model OHS Law, discussion has been remarkably quiet. The ACTU was scheduled to meet for discussions on the report last Monday and no public statements have been made. Most of the labour law firms have been quiet also. It is fair to say that most are trying to digest the 480 page report.

But one employer group has provided an opinion piece in the business pages of The Age newspaper on March 2 2009. The article says little that is new but it is mischievous in some of its comments.

John Colvin, CEO of the Australian Institute of Company Directors, writes of his concerns about increased exposure for the Institute’s members. Colvin is concerned that upcoming OHS laws may be unprincipled and counterproductive.

The Model OHS Law report has said that it supports the statement of OHS principles as are already in place in the Victorian OHS legislation. According to WorkSafe Victoria

“The Act sets out the key principles, duties and rights in relation to occupational health and safety. The general nature of the duties imposed by the Act means that they cover a very wide variety of circumstances, do not readily date and provide considerable flexibility for a duty holder to determine what needs to be done to comply.”

These principles are

4. The principles of health and safety protection

(1)    The importance of health and safety requires that employees, other persons at work and members of the public be given the highest level of protection against risks to their health and safety that is reasonably practicable in the circumstances.

(2)    Persons who control or manage matters that give rise or may give rise to risks to health or safety are responsible for eliminating or reducing those risks so far as is reasonably practicable.

(3)    Employers and self-employed persons should be proactive, and take all reasonably practicable measures, to ensure health and safety at workplaces and in the conduct of undertakings.

(4)    Employers and employees should exchange information and ideas about risks to health and safety and measures that can be taken to eliminate or reduce those risks.

(5)    Employees are entitled, and should be encouraged, to be represented in relation to health and safety issues.

The article is mischievous in a number of areas. Colvin mentions how the current laws vary from state to state. He mentions that

“Some carry personal criminal liability for directors, even where they may not have had any personal involvement in a breach. In some states, they reverse the onus of proof, removing the presumption of innocence, and offer narrow legal defences and limited appeal rights.” (my emphasis)

Colvin is talking primarily about New South Wales, the State that everyone agrees has the OHS law that is most onerous for employers. However, the New South Wales union movement has been remarkably quiet and flexible on the issue of its OHS laws. There has been some rhetoric for the benefit of its members and to retain some ideological “face” but the union movement across Australia is coming to accept the reality of better OHS outcomes from nationally harmonised legislation.

Repeatedly the National OHS Law Review panel stated that it has based its decisions on the structure of the Victorian legislation as, for one reason, it has undergone the most recent legal review. Colvin’s focus on New South Wales OHS law is outdated, reflective, and unhelpful.

Colvin mentions a survey that found

“..more than 65 per cent said the risk of personal liability occasionally made them take an overly cautious approach in the boardroom and another 13 per cent said this happened frequently. Almost two-thirds felt this had inhibited an optimal business decision to a medium to high degree.”

This indicates that the risk of being prosecuted on OHS breaches is being discussed at board level – great result. Whether this translates to the board improving the OHS performance of their company is doubtful as Colvin’s article implies that directors are looking at ways of avoiding responsibility and liability rather than accepting the reality of their OHS obligations and working to improve them.

Colvin says that

“Directors should not be held criminally liable for a company’s misconduct simply because they are a director.”

Directors are not prosecuted for OHS breaches because of their status or position. They are prosecuted because of the decisions that they make and the ramifications of those decisions. If a director is dismissive of OHS issues and palms them off to someone else in the organisation and an incident occurs, should not the director be called to account for why they considered the safety of their workers to be unimportant, even when for over thirty years directors and executives have had responsibility for OHS compliance?

Colvin believes that holding directors accountable implies that directors have more control over the actions of their employers than they do. Current business and management theories promote the position that directors should be more in touch with what is happening on the shopfloor. The theories promote informed leadership and an increased awareness of how the company and its people work, they promote a level of engagement that creates a positive workplace culture and displays leadership. Colvin seems to be encouraging the opposite.

He ends his article with

“More fundamentally, it unfairly treats directors more harshly under the law than the rest of the community.”

He misunderstands the application and aims of OHS law. All people in a workplace have a responsibility to ensure a safe and healthy workplace for themselves, for employees and for members of public on and off their worksites. Directors have more detailed obligations, but not less, because they have control of production and benefit more from the success of the company than do the employees.

Ultimately, Colvin’s article reflects the misunderstanding of OHS that directors and companies have had for decades. Companies need to realise that the best performing companies in OHS, and those with the best productivity, are those that have embraced their obligations for safety and have incorporated the principles within their own culture.

The review into model OHS law has indicated the way of the future and company directors would be well-served to realise this and get on board. Being left behind will benefit no one, especially the shareholders.

Kevin Jones

Analysis of First Report of the National Model OHS Law Review

As more Australian OHS professional return to work after their Summer break, it will take several days to get through emails. Some of those emails are likely to include a mention of Australia’s review panel reports of model OHS law. The First Report has been out for over a month and the final report is due at the end of this month.

Other than a couple of statements by labour lawyers, the analysis has been relatively quiet, which makes the analysis by Professor Richard Johnstone a good way to remind us of the issues raised and the timetables for the review process.

In December 2008 The National Research Centre for OHS Regulation of the Australian National University released a Working Paper by Professor Johnstone entitled “Harmonising Occupational Health and Safety Regulation in Australia: the First Report of the National OHS Review”. Johnstone identified several important changes suggested by the review panel

“…..These two recommendations are operationalised by arguably the most important proposals in the First Report. These are the recommendations that the model Act impose a “primary” general duty upon a “person conducting a business or an undertaking” and owed to “workers” broadly defined and “others”; and that beneath this primary duty sits a series of specific classes of duty holders with more detailed duties which “flesh out” the primary duty of care, without excluding or limiting the primary duty. ” (page 17)

This concept has originated from Queensland and New South Wales but expanded by the panel and sets up a structure that underpins other elements, such as the duties of “corporate officers”.

In discussing the duties of officers, Professor Johnstone writes

“I urge the Panel to ensure that the definition of “corporate officers” is broad enough to include “shadow directors”, so that responsibility for contraventions by corporations of the general duties in the model Act can be sheeted home to entities such as holding companies and franchisors.” (page 32)

It has to be remembered that the review panel is focusing on law and not necessarily the practical safety management that operates from the legal obligations and is structured on compliance.

In terms of prosecutions Professor Johnstone identifies the following as one of the most important elements of the panel’s First Report

“There should be three categories of offences for each type of duty of care

a)      Category 1 for the most serious breaches, where there was a high level of risk of serious harm and the duty holder was reckless or grossly negligent;

b)      Category 2 for circumstances where there was a high level of risk of serious harm but without recklessness or gross negligence; and

c)       Category 3 for a breach of the duty without the aggravating factors present in the first two categories with maximum penalties that:

d)      relate to the seriousness of the breach in terms of risk and the offender’s culpability;

e)      strengthen the deterrent effect of the offences; and

f)       allow the courts to impose more meaningful penalties, where that is appropriate.”

The panel, or the government, will need to be careful in proposing this categorisation as there are already in Australia OHS professionals advocating a three-stage categorisation of personal damage. As George Robotham has listed the classes, developed by Geoff MacDonald :

“CLASS 1-Damage that permanently alters a persons life e.g. death, paraplegia, amputation of a leg, severe psychological damage.

CLASS 2- Damage that temporarily alters a person’s life e.g. fractured leg that repairs with no lasting impediment, deep laceration that has no underlying tissue damage and repairs without significant scarring

CLASS 3 – Inconveniences a person’s life.”

These are categorisations in very different contexts but may unnecessarily confuse the management of safety depending on which way the review panel goes and how the government responds to these concepts.

Johnstone’s paper is the best analysis currently available and should whet the appetites of safety professionals who should probably gird themselves for the more expansive Second Report due shortly.

Kevin Jones

OHS Podcast with Andrew Douglas

One of the services that Workplace Safety Services (the company behind SafetyAtWorkBlog) provides to its clients are podcasts.

The Safety Institute of Australia had a podcast produced principally to promote its Safety In Action Conference, which is in Melbourne Australia on 31 March to 2 April 2009, that includes an interview with Andrew Douglas. Andrew is speaking at the SIA09 conference and is a director of Douglas Workplace and Litigation Lawyers.

In the podcast he discusses making OHS a core business function, the OHS role in small business and the not-for-profit sector, and how important it was for him personally and professionally to be involved with the Safety In Action conference.

The podcast is a short promotional one but you may find Andrew’s comments of interest and use.

The Challenge for Australia’s OHS Law Review

Everyone is eagerly anticipating the issues paper of Australia’s review into model OHS law but talking with many people at the SIA08 conference this week, it seems that people are anticipating more from the review than the review was established. The review will be looking at OHS law and law establishes the parameters for managing workplace safety. However, OHS law is what underpins safety management and it is easy to focus on the law to the detriment of managing safety in workplaces.

Employers don’t need to be familiar with the intricacies of OHS law. They need to understand their legal obligations. Legal advice is usually sought if something goes wrong. So how will the current OHS law review change how we manage safety? I asked Tracey Browne of the Australian Industry Group for her opinion. Tracey said the review “has the potential to be revolutionary but everyone needs to realise that changing the law is not going to change anything on its own.”

To progress OHS law many of the issues that have come to dominate discussion over the last 30 years will need to be put aside. Of all the participants in the review process, Tracy believes that the OHS regulators may have the hardest time in achieving this position.
Cathy Butcher of the Victorian Trades Hall agrees that there are considerable agreements on OHS law but she identified some substantial sticking points. In a panel discussion at the Safety In Action Conference she listed the following big differences:

The removal of “reasonably practicable”
The union right to prosecute
The reintroduction of “risk assessment” into the Victorian regulations and OHS Act
Compliance Codes to “go the way of the dodo”

Whether this is an ambit claim will be seen soon through the OHS Law Review process.

Tag: law

Company directors and OHS obligations

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Analysis of First Report of the National Model OHS Law Review

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The Challenge for Australia’s OHS Law Review

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