Liability for directors and senior executives of organisations continues to mount in the Work, Health, and Safety (WHS) space.
In June 2024, New South Wales became one of the last states to implement an industrial manslaughter offence in its WHS legislation. The offence includes the largest fines in the country for body corporates (up to $20 million) and potential life imprisonment for an officer (directors and the like) where there is a death on the worksite caused by a serious failure of a person(s) to meet the relevant WHS laws. The ‘failure’ in NSW must amount to ‘gross negligence’ but the standard changes slightly between states.
With the exception of Tasmania, all other states in the country now have a similar offence as part of their WHS legislation. Furthermore, in most states, WHS fines are not insurable – so if an officer gets fined, they may not be able to turn to their organisation or insurance policies for coverage.
However, it’s not all bad news. Recent case law in New South Wales and Queensland has shown that where an officer ensures their organisation has and applies the right resources and systems and takes an active interest in WHS, they can protect themselves from personal liability under the relevant WHS legislation.
Specifically, there have been two cases in the last 6 months where officers of medium sized enterprises have successfully defended prosecutions for breaches of their ‘due diligence’ obligations under the relevant WHS laws. The defences were successful for a few key reasons.
Firstly, the officers took an active interest in the WHS compliance of their organisation. This was reflected in the organisation’s paper trail, where board and management meeting minutes showed that the officers were discussing the organisations’ WHS compliance, identifying key WHS hazards and risks in the organisation, giving the right authority and direction to key personnel to address those issues and then following up at the next meeting(s) to ensure the right action was taken.
The above steps were possible because the officers had competent managers with the right qualifications and experience to manage the organisation’s WHS compliance. The regulators in the cases did not (or could not) produce any evidence to suggest otherwise. That manager was considered the primary process or resource the organisation used to ensure its compliance with the WHS legislation.
Secondly, the officers were able to produce evidence that the managers were equipped with the right resources to meet the WHS obligations. Essentially, there was no budgetary constraint for the managers when the organisation needed to incur costs to eliminate or minimise risk to WHS (including accessing external advisors, consultants and the like).
The courts in each state recognise that an officer of a medium sized enterprise is entitled to delegate matters of WHS to an appropriate manager as the officer could not be across every aspect of the organisations’ operations at all times.
It is now more important than ever for officers to understand their obligations and liabilities under WHS laws. In the worst case, where there is a death on the worksite, officers can face prison time.
As a starting point, we recommend that officers audit their organisation for the following:
- The resources officers make available to the organisation/managers and the like to meet the organisation’s obligations under the WHS legislation – Are there any budgetary constraints? Has your organisation grown to a point where you need to bring in more personnel to manage your WHS compliance?
- The relevant manager’s performance – Have you got the right people in the right roles? How rigorous are your recruitment processes? Have you got any reason to question your manager’s performance as it relates to matters of WHS?
- Key delegations for managers under their contracts and policies as it relates to WHS – Are your managers clear on what they are and are not responsible for? Are they trying to do too much, and do you need to start delegating more?
- The level of reporting between managers and officers about WHS matters – remember, if it’s not written down it’s hard to prove it ever happened. Think about how your conversations are translated into management meeting minutes and board meeting minutes.
- How officers keep themselves appraised of WHS matters (including WHS legislation and the specific WHS hazards and risks to their organisation).
By Alexandra Beal, Associate, and Helen Sexton, Senior Associate, Workplace Relations, Employment and Safety, Hicksons Lawyers
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