A choice for change: Officer's safety obligations to avoid WHS failures24 June 2016
Officers of businesses in Australia hold serious health and safety responsibilities and must ensure the business is taking both proactive and reactive steps to meet its health and safety obligations as a PCBU. Meeting due diligence requirements for officers is critical to preventing personal liability for safety offences.
For corporations that do business in the "harmonised" jurisdictions of Queensland, New South Wales, the ACT and South Australia, officer obligations are found in s 27 of the Work Health and Safety Act 2011 (WHS Act) and requires that an officer exercise "due diligence".
Under s 27(5) of the WHS Act, to be due diligent, an officer must at a minimum:
- acquire and keep up-to-date knowledge
- understand the nature of operations and hazards/risks
- ensure availability and use of resources and processes
- ensure processes for receiving, considering and responding to information
- ensure processes for complying with obligations, and
- verify the provision/use of resources and processes.
In WA, the Occupational Safety and Health Act 1984 (OSH Act) imposes obligations on officers. Under s 55 of the OSH Act an officer of a corporation, including any director, may be liable for breaches of the OSH Act, committed by the company where the offence occurred with the consent, connivance of, or neglect by, that officer.
In Victoria, if a body corporate commits a contravention of the Occupational Health and Safety Act 2004 (Vic.) and the contravention is attributable to an officer of the body corporate "failing to take reasonable care", the officer may be guilty of the offence.
Who is an officer?
The Corporations Act 2011 (Cth) defines an "officer" as a director or secretary or a person who:
- makes, or participates in making, decisions that affect the whole, or a substantial part, of the business of the corporation, or
- has the capacity to significantly affect the corporation's financial standing, or
- in line with whose instructions or wishes the directors of the corporation are accustomed to act.
As a general guide, some factors that may determine whether a person is an officer include:
- What is the person's budget and their level of control over the budget?
- Does the person take part in board decision making?
- What is the size of the person's internal business unit?
- Who are the person's direct reports?
- To whom does the person report?
What failures are officers liable for?
Case law shows the Court's interpretation of the law and its expectations upon officers to exercise due diligence and to prevent contraventions. The decisions in Inspector Ken Kumar v David Aylmer Ritchie  NSWIRComm 323,WHS Qld v CX and AX  QIRC C/2010/33 and SafeWork (NSW) v Romanous Contractors; SafeWork (NSW) v John Allen Romanous  NSWDC 48 highlight that officers can be liable for failing to meet due diligence requirements, even if they don't have a hands-on role in operations. They may also be liable if their responses to risks are not timely.
Inspector Ken Kumar v David Aylmer Ritchie
Mr David Ritchie was the CEO of Owens Group and oversaw about 30 companies operating in Australia, New Zealand and Fiji. One division of the Group, the Container division, included Owens Container Services Australia Pty Ltd.
Owens Container Services was involved in the repair, cleaning and storage of shipping containers and tanks at its premises in Auburn. On 15 January 2003, an employee, Mr Howie, was using methyl ethyl ketone (MEK), a highly flammable substance to remove some resin in a tank. Mr Howie left the MEK for a period of about 20-30 minutes and then returned to use a high pressure water spray gun to try to remove the resin. There was an explosion in which Mr Howie suffered severe injuries that he died from.
Both Owens Container Services and another company director, John Julian Rose, entered guilty pleas in the NSW Industrial Court, while Mr Ritchie entered a plea of not guilty.
Ritchie argued that because he spent limited "hands on" time on Australian operations, he was in a too remote position to influence the conduct of Owens Container Services and that he had to rely on the divisional managers and site managers' expertise to deal with the finer details of WHS at the company.
Ritchie argued that he was unable to influence the conduct of Owens Container Services when it came to which products were used to clean the containers and other specific requirements. The Court said that Mr Ritchie relied on a "system of assumptions", rather than proactive management. Mr Ritchie was found guilty of a breach of the Act and ordered to pay a penalty of $22,500. The company was fined $160,000.
From this, it can be said that simply because a manager doesn't have a hands-on role in operations does not mean they are absolved of WHS obligations. Mr Ritchie had the authority to seek the implementation of health and safety policies, and so he should have done so.
WHS Qld v CX and AX
A 2010 Queensland decision shows the exposure that officers may have by failing to respond in a timely way to safety warnings. Due to legal reasons, the parties can't be identified.
Mr AX was a workshop manager for CX. On 5 June 2009, Mr AX received an email about an incident at a related company regarding the unsafe removal of a counterweight from a piling rig in another country. The email instructed management to put an amended procedure for assembling and disassembling the counterweights in place. Mr AX failed to act on this request. An incident resulting in a worker's death then occurred at the site under AX's supervision. The Industrial Magistrate found that Mr AX's failure to amend the safety procedure within three months of receiving the warning email was a breach of s 24 of the repealed Workplace Health and Safety Act 1995 (Qld). The penalties imposed were $200,000 for the company and $20,000 for the officer.
This case highlights that officers have a responsibility to act in a timely manner when they are made aware of a potential risk to the safety of employees.
SafeWork (NSW) v Romanous Contractors
In April this year, Romanous Contractors and its Director, Mr Allen Romanous, received the second largest WHS fine in NSW history following the death of a bricklayer at its construction site in 2014. Mr Romanous was found guilty in the District Court for a breach of s 27 of the WHS Act and fined $85,500 after the bricklayer died when he fell 5 m through a hole at the site. The Court found the company only had ad hoc safety systems in place, despite repeated warnings, and it was fined $425,000.
How officers can meet their obligations
Officers must ensure that their organisation has a proactive system of safety management, including:
- regular auditing by a person with qualifications and expertise
- follow-ups after audits, considering the auditor's recommendations
- incident reporting with corrective actions prioritised
- checks and processes to ensure that risk assessments are current and identify all hazards, with appropriate control measures introduced
- in the harmonised states, meetings to discuss the reasonably practicable options available to ensure safety, and
- ensure that, where work is contracted out, that appropriately qualified and safety-conscious contractors are engaged.