workplace law

Pendlebury Workplace Law is a specialist workplace relations and employment law legal practice based in Sydney.

Directors and Managers Liable under Work Health Safety Legislation NSW

In New South Wales, directors and managers have onerous obligations and personal liability under work, health and safety laws. In New South Wales the obligation of an employer is to ensure the safety of the work environment

In fact, individuals who are concerned in the management of the corporation, managers, officers or directors of corporate bodies are personally liable to prosecution for breaches of work safety obligations by the corporation with which they are associated. 

In New South Wales, the approach is one of strict liability across the country. Liability is established if it is proved that:

(a) there is a corporation;
(b) the corporation has, by an act or omission, contravened any provision of the WHS Act, or the regulations made under it; and
(c) the person charged is a director of the corporation or concerned in the management of the corporation.

In order for a person so charged to avoid conviction personally for the offence committed by the corporation, he or she is required to prove either:

(a) s/he was not in a position to influence the conduct of the corporation in relation to the contravention; or
(b) s/he being in such a position, used all due diligence to prevent the contravention.

It is not necessary that the corporation be prosecuted and convicted for the contravention before any director, or manager, is proceeded against.

Significantly, the Courts in New South Wales have adopted a very broad approach that by reason only of holding the office of director, the person charged is in a position to influence the conduct of the corporation – see Inspector Wayne James v Ngai & Ors [2007] NSWIRComm 20.

There is a requirement to demonstrate, in defence, that all due diligence was undertaken by the individual officer or director.  There is no statutory definition of “due diligence”.  The case law suggests that the notion of due diligence involves an absence of negligence or fault – see Australian Iron and Steel Pty Ltd v Environment Protection Authority (1992) 29 NSWLR 497.

The potential for personal liability for directors and persons involved in the management of a corporation to ensure the safety of the work environment is particularly onerous and more so, given broad legislative interpretation by the Courts in NSW raising the bar of an available defence in the event of prosecution.

Directors and officers now have a positive duty to be proactive in ensuring that their own personal obligations under the WHS Act are being met.  

The decision in Inspector James v Paul (No 2) [2011] NSWIRComm 117 serves as a timely reminder that the role of a director involves a greater degree of responsibility (and possible liability) than many people contemplate when accepting the position. This case concerned the liability of a director for the death of an employee of Dekorform Pty Ltd (Dekorform), who died of serious injuries sustained after a machine he had been operating malfunctioned. The director, Mr Robert Paul, who was not involved in the day to day operations of Dekorform, was found guilty of breaching sections 8(1) and 26 of the Occupational Health and Safety Act 2000 (NSW).

The definition of ‘officer’ under the WHS Act reflects the definition of ‘officer’ in the Corporations Act 2001 (Cth).  The definition of ‘officer‘ includes directors and board members but does not include, for instance, supervisors and middle management.

Officers are required to exercise ‘due diligence’ to ensure that the company is meeting its obligations under the WHS Act. This positive duty requires officers to:

  1. acquire and keep up-to-date knowledge of work health and safety matters;
  2. gain an understanding of the nature of the operations of the business and the hazards and risks associated with those operations;
  3. ensure that the person conducting the business uses appropriate resources and processes to eliminate or minimise risks to health and safety from work carried out as part of the conduct of the business; and
  4. ensure that the person conducting the business has appropriate processes for receiving and considering information regarding incidents, hazards and risks and responding in a timely way to that information.

Officers who breach their duties under the WHS Act expose themselves to significant penalties that include fines ranging up to $600,000.00 and five (5) years’ jail where the breach of the obligation recklessly exposes a person to risk of death or serious injury or illness. Given that the obligation is to exercise ‘due diligence’, an incident causing injury or death need not occur before an officer is exposed to risk of prosecution under the WHS Act.

Directors need to keep themselves informed about the company’s affairs and supervise the management and their business practices.  Importantly, this duty will not necessarily be satisfied simply by attending board meetings; if an event occurs which a director had not inquired about, but which could have been prevented had proper inquiry occurred, the director may be found liable for not discharging their duty under the Corporations Act.

To avoid being found liable for failure to discharge your duties under the WHS Act and the Corporations Act, current directors ought to:

  • regularly incorporate work, health and safety recognition into board meetings;
  • ensure that worksites are financially equipped to provide adequate safety equipment and training for those the WH&S Act is intended to protect;
  • systematically consider and respond to work health and safety complaints swiftly; and
  • get ‘hands on’ in the company, where appropriate – talk to ‘front line’ employees and find out about the day to day running of the business and other matters not usually discussed in board meetings.

Furthermore, effective 1 January 2014, new anti-bullying legislation shall commence operation.  As a result of this legislation, a worker shall have a right, if they believe they are being bullied at work, to apply to the Fair Work Commission (FWC) for an order to stop the bullying.   A worker is bullied at work if an individual or a group of individuals repeatedly behaves unreasonably toward the worker, and the behaviour creates a risk to health and safety.  The definition of ‘bullying’ is expressly stated not to apply to reasonable management action carried out in a reasonable manner.  

 Be aware that the definition of ‘worker’ is broader than ‘employee’ and includes contractors, outworkers, apprentices, trainees, work experience students and volunteers.

When the FWC receives an application for an order to stop bullying, it must be dealt with within 14 days.  In considering whether an order should be made, the FWC must take into account any matters the FWC considers relevant, including the:

•           outcomes of any investigation into the matter at a workplace level, whether undertaken by the workplace, or another person;

•           procedures available to the worker to resolve grievances or disputes; and

•           outcomes arising out of any procedure available to the worker to resolve grievances or disputes.

If the FWC makes an order to stop bullying and that order is breached, civil penalty provisions will apply.

Brooke Pendlebury
Friday, October 18, 2013