Does your contractor management system measure up?14 March 2017
The importance of ensuring appropriate safety management systems are in place to manage contractors in the workplace has taken a sharper focus since the introduction of the model Work Health and Safety laws (the model laws). The definition of "worker" under the model laws captures a broad range of persons, including employees, volunteers, contractors and subcontractors as well as their employees. Failing to manage the risks associated with engaging workers may place the person conducting a business or undertaking (PCBU) at risk of prosecution by the relevant safety regulator. In determining whether a PCBU has discharged its primary duty of care under the model laws, employers should consider the impact that the engagement of contractors will have on this duty, for example, the level of control the PCBU will have over the work and what expertise the work will require. This article discusses the legal framework of contractor management and practical measures that a PCBU can take to ensure, so far as reasonably practicable, the health and safety of their workers.
Overview of the legislation
The model laws impose a general duty on a PCBU to provide and maintain a working environment that is safe and without risks to health for all workers.
The general duty is breached if a PCBU fails to:
- provide and maintain a work environment without risks to health and safety
- provide and maintain safe plant and structures
- provide and maintain safe systems of work
- make arrangements for the safe use, handling and storage of plant, structures and substances
- provide adequate facilities for the welfare of workers while at work
- provide any information, training, instruction or supervision that is necessary to protect all persons from risks to their health and safety while work is carried out as part of the conduct of the business or undertaking, and
- monitor the health of workers and the conditions of the workplace for the purpose of preventing illness or injury.
To meet these obligations a PCBU must do all that is reasonably practicable in the circumstances. In determining this, the model laws require a PCBU to take into account the:
- likelihood of the hazard or risk occurring
- degree of harm arising from the hazard or risk
- knowledge of ways to eliminate or minimise the hazard or risk
- availability and suitability of ways to eliminate or minimise the risk, and
- the cost of doing so.
Whether it is reasonable to expect a PCBU to take one action over another to address a hazard or risk is largely determined by the seriousness of the harm that may occur and the likelihood of the risk eventuating. What is reasonably practicable will depend on a careful analysis of what could have been done, what was done and what the PCBU ought to have known at the time the risk eventuated.
The duty to provide and maintain a safe working environment extends to all workers, including contractors, subcontractors and their employees. This means that where a PCBU engages a contractor to do work, it must ensure there are systems in place to protect all workers. If not managed carefully, contractors can be wildcards, posing serious financial, reputational and, most importantly, safety risks to the PCBU and those who interact with it. Careful and considered planning can reduce these risks.
Golden rules of contractor management
For a PCBU to meet their obligations and duties under the model laws it should ensure that a rigorous procedure for engaging contractors and subcontractors is followed. There are three critical factors that should be followed when engaging contractors, otherwise known as the three golden rules of contractor management—selection, engagement and monitoring.
Before selecting a contractor, a PCBU should be satisfied that the contractor has the relevant skills and expertise to fulfil the work requirements. Also, contractors should be selected based on whether or not they have a proven history of providing a safe working environment. Selection ultimately comes down to a due diligence process, which ensures that the right contractor has been chosen for that job. For example, the PCBU should consider the contractors' safety systems, training and safety records, qualifications and previous work history. It is important that PCBUs are able to demonstrate that the contractor was selected based on reasonable enquiries made by it regarding the contractor's suitability for the job, from both an expertise and safety perspective.
A PCBU should ensure there is some form of written instrument of engagement between it and the contractor. The engagement can take the form of a one page agreement, a purchase order, quote, or a short or long contract. The form of the engagement is not as crucial as the matters contained within it, with the detail of the document determined by the nature of the risk related to the work to be conducted by the contractor.
As a minimum, the engagement should set out:
- a clear scope of work
- that workers conducting the work are appropriately qualified and trained to do so
- that workers will be supervised by an appropriately qualified person
- hazards and risks to be identified and appropriate risk control measures implemented before commencing work
- processes for assessing risk in the event of change of scope or work conditions
- that workers are appropriately competent, trained and licensed to operate the plant safely
- that the plant used to conduct the work be maintained and in a safe condition
- the manner in which the contractor will monitor its safety compliance, and
- rights of inspection—auditing and access to records by the PCBU at any reasonable time.
Further, the engagement should clearly set out the boundaries for matters over which control can be exercised and the practical limitations on control. While a PCBU cannot contract out of its obligations under the model laws, it can rely on the practical limits that are imposed from the nature and circumstances of the engagement. In circumstances where a PCBU has a lesser degree of control based on the practical limits in the contract or, for example, due to the particular expertise of the contractor being expertise the PCBU does not possess, it will need to find a way to ensure the contractor is doing the work as proposed in the manner agreed upon.
Once a contractor has been engaged, it is essential to monitor and supervise the activities undertaken as required by the model laws. A PCBU should regularly monitor, supervise and audit a contractor's safety compliance. In determining compliance, a PCBU should audit the contractor's systems of work, their qualifications and expertise for work, instruction, training and supervising of their employees. Where a PCBU is unable to physically monitor and supervise the work of the contractor, due to the particular expertise of the contractor or physical remoteness, it should check and verify that the contractor is doing what they said they would safety-wise. It is important to note that although a contractor must have their own safety systems in place, a PCBU must also ensure that contractors receive all appropriate information regarding any risks or hazards known to the PCBU, to enable the contractor to determine if or how these risks may affect their ability to do the job safely.
PCBU's duty to contractors limited by reasonable practicability
A PCBU's duty under the model laws extends only to what is reasonable practicable. While the engagement of contractors cannot be used by a PCBU to relinquish duties owed under the model laws, a PCBU can facilitate its own compliance through the contractor by seeking to rely on the contractor's expertise as a reasonably practicable measure of ensuring a safe workplace. This may be the case where a PCBU engages an appropriately qualified contractor to complete particular works that the PCBU has no experience or expertise in.
In R v ACR Roofing Pty Ltd  VSCA 215, ACR Roofing engaged a contractor to complete crane work. The Victorian Court of Appeal found that ACR Roofing maintained control over the way in which crane works were completed, however, the exercise of control was limited to the factors that the employer could have known or did. The court found that as ACR Roofing was not an expert in the operation of cranes, it was reasonable for it to rely on the purported expertise of the contractor in creating a safe system of work in conducting operations involving the crane.
A similar limitation based on reasonable practicability was articulated by the High Court of Australia whereby it considered that in determining practicability, the fact that something could have been done and was not, does not amount to liability. The court went further to say that the mere fact that an action was possible, does not mean in the particular circumstances it was a reasonably practicable measure that should have been taken to obviate the relevant risk to health and safety.
Recommendations for a contractor management safety system
The following measures may be incorporated into a contractor management system:
- Pre-tender—determine what activities will require a contractor and what the associated risks will be.
- Tender—obtain all relevant information from potential contractors, including safety systems, qualifications and licences, safety records and training documents.
- Pre-commencement of works—ensure all necessary induction training, risk assessments, work procedures, instructions, work permits, provision of experience/skilled employees and any other necessary steps are taken to meet the site safety requirements.
- During works—monitor, supervise and audit as necessary to ensure compliance with the safety system, including completing an audit on the contractor's system of work, qualifications, expertise and instruction.
This article was first published in the National Safety (March 2017) magazine and has been republished with permission from NSCA Foundation and Westwick-Farrow Media.