Directors in Western Australia should be aware of a critical development in the work health and safety landscape, with the recent passing of the Work Health and Safety Bill 2019 (WA) (Bill).
The Bill’s passing on 3 November 2020 marks a watershed moment for WA – being the last jurisdiction in Australia to adopt aspects of the national model WHS laws, including a number of recommendations coming out of Safe Work Australia’s review by independent expert, Marie Boland (Boland Review). Significantly, the Bill also replaces the existing Occupational Safety and Health Act 1984 (WA) (OSH Act) and Mines Safety and Inspection Act 1994 (WA) (MSI Act) and imports familiar concepts under the legacy legislation into new consolidated laws.
Notable changes introduced by the Bill include:
- a new concept of a ‘person conducting a business or undertaking’ (PCBU) will replace the concept of an ‘employer’;
- a positive duty of due diligence for officers of a PCBU;
- a new industrial manslaughter offence requiring the prosecution to prove that a PCBU (or officer of a PCBU) actually knew the conduct was likely to cause death (effectively a test of ‘recklessness’) - carrying a maximum penalty of 20 years’ imprisonment and $5 million fine for an individual and $10 million fine for bodies corporate;
- a Category 1 offence requiring the prosecution to prove a PCBU (or officer of a PCBU) has breached their duty of care according to what is reasonably practicable (effectively a test of ‘negligence’) – this departs from the Boland Review recommendation and now sets the lowest bar in Australia for this category of offence;
- an increase in penalties for Categories 1 to 3 offences (offences for failing to comply with a health and safety duty causing serious harm or death); and
- a blanket prohibition on individuals and corporations from entering into insurance policies that seek to cover WHS fines imposed under the WHS Act.
The Bill now awaits royal assent and is expected to come into effect in late 2021.
We take a closer look at the key aspects of the new legislation below.
PCBU liability and due diligence
The concept of ‘employer’ in existing WA legislation will be replaced with a broader concept of a ‘person carrying on a business or undertaking’ (PCBU) – mirroring the approach adopted in the model WHS laws. A PCBU can be an individual (including a sole trader and partners in a partnership), but will ordinarily capture companies and other entities such as charities, government departments and public authorities.
The Bill provides that an officer of a PCBU must ensure that the PCBU complies with its duties and obligations under the legislation. ‘Officers’ may include directors, senior management, company secretaries, and any person who has capacity to affect the company’s financial standing or who makes or participates in decisions affecting the whole or a substantial party of the business.
An officer’s duty will be a ‘positive and continuous’ duty, requiring individuals to exercise proactive due diligence in ensuring compliance. Critically, this duty is cast differently than that under the existing OSH Act where evidence of due diligence could typically constitute a defence. Under the new legislation, an officer may be found to have breached their duty even if there is no breach by the relevant PCBU or in the absence of an actual incident (i.e. a ‘near-miss’).
The Bill introduces a new ‘industrial manslaughter – crime offence’ which provides that a PCBU may commit a crime if:
- they engage in conduct in breach of their WHS duty;
- with a knowing disregard that it is likely to cause the death of, or serious harm, to an individual; and
- their conduct results in the death of an individual.
An officer of a PCBU may also be liable for a crime of industrial manslaughter if:
- the conduct of a PCBU was attributable to the neglect, consent or connivance of the officer; and
- the officer knew that their conduct was likely to cause serious harm or death, and they disregarded that risk.
The new offence will be prosecuted by the Director of Public Prosecutions (DPP) and heard in the District Court - carrying a maximum penalty of 20 years’ imprisonment and a $5 million fine for an individual and $10 million fine for a body corporate.
Significantly, this final provision was modified from what was originally proposed in the Bill. Unlike its counterparts in other States and Territories, the Bill had initially proposed two industrial manslaughter offences: (1) a ‘crime’ offence (as outlined above) and (2) a ‘simple’ offence requiring a low fault element of ‘negligence’ on the part of an officer of a PCBU – with the latter being subject to intense parliamentary and public debate.
As part of the AICD’s ongoing consultation with this legislative inquiry, we advocated for a single industrial manslaughter offence and were pleased to see the WA Parliament remove the proposed ‘simple’ offence requiring a low fault threshold of ‘negligence’.
The offence of ‘industrial manslaughter’ currently exists in the Australian Capital Territory, Queensland and more recently, the Northern Territory and Victoria. Each require a threshold of ‘gross negligence’ broadly consistent with the Boland Review recommendation. For a reminder on the relevant WHS duties across other jurisdictions in Australia, see AICD article here.
Although consistent with the fault threshold required of a level 3 offence under the OSH Act and MSI Act, the AICD continues to hold concerns about the ‘negligence’ threshold now required for a Category 1 offence (causing serious harm or death) under the Bill. This departs from the Boland Review recommendation for a test of ‘gross negligence’ and now sets the lowest bar in Australia for this category of offence.
Prohibition on insurance
In line with a Boland Review recommendation for the model WHS laws, the Bill also creates a new offence of entering into an insurance policy that would indemnify a person in relation to the payment of monetary penalties imposed under the new legislation. A breach of this prohibition will attract a $55,000 fine for individuals and $285,000 for bodies corporate.
Currently, New South Wales is the only other jurisdiction to have adopted the Boland Review recommendation for a prohibition on insurance in its WHS laws.
Questions for directors
These reforms are an important reminder for boards of the important oversight obligations which boards play with respect to WHS. With multiple States and Territories now strengthening WHS obligations of PCBUs and officers, now is a good time to review the adequacy of existing arrangements.
Some questions for boards to consider include:
- When was the last time our organisation’s WHS frameworks were independently assessed?
- What evidence can directors and senior management produce to illustrate they are meeting their due diligence obligations? Are officers receiving adequate training and support to meet the due diligence requirement?
- How often do WHS matters feature on the board agenda and does that need to increase?
- What evidence do we have to demonstrate a sound workplace safety culture? Is the frequency and quality of reporting to the board adequate?
- What specific safeguards are in place to ensure that employees; contractors/subcontractors; labour hire company employees; apprentices; work experience students and volunteers are protected by existing WHS frameworks?
- How does the organisation plan to meet its ongoing consultation obligations with its workers in relation to how health and safety is managed in the workplace? How will the feedback the subject of these consultations be recorded and reported on?
- Do we have insurance policies or deeds of indemnity to cover legal costs associated with WHS breaches? Have they been reviewed given recent legislative changes?