Leadership for contractor management

By now, all principals should be aware of the requirement in section 46 of the Work Health and Safety Act 2011 for parties with concurrent safety duties to consult, cooperate, and coordinate activities. How does that obligation affect what it means to be a leader when it comes to the safety aspects of contractor management?

On one view, it might be thought that the new legislative obligation makes leadership on safety less important than it once was. If contractors are now obliged by law to engage with the principal, and with other parties, it might be thought that there is no longer any need for the principal to take a leading role in the process.

The truth, however, is that leadership is more important than ever. The consultation obligations in the WHS Act enshrine the importance of leadership and, in particular, the best form of leadership - leadership by example. A principal which has its own safety obligations in order will be better able to identify what its contractors know, and don’t know, about the safety obligations which arise from the contractors’ work. Once any gaps in knowledge are identified and filled, a principal which has its own house in order will also be able to encourage continuing compliance by the example of its own compliance.

Equally, although safety leadership by a principal is not a certain guarantee that contractors will follow that lead, it is all but certain that a want of leadership from a principal will result in safety failings on a project. The principal’s interest should extend beyond its own safety obligations because quite apart from the fact that the failure of leadership may see the principal prosecuted, stoppages of work (and injuries to the principal’s employees) can occur as a result of failings further down the contractual line.

So what are prudent principals doing in order to show safety leadership in managing contractors? Here are some of the practical steps which you can consider.

Start at the very beginning (or even before)

Before a principal has contractors to manage, there has to be a decision on the part of the principal as to who it is that the principal wishes to engage to do the work. Sometimes this decision will be the result of a formal tender process; in other cases, it might be the result of nothing more formal than a telephone conversation or an exchange of emails.

However, regardless of how formal or informal the process is, the purpose should be the same - to obtain the information necessary to enable the principal to decide whether this contractor is the one the principal wishes to engage. At the most basic level, the principal will want to know things like whether the contractor has the necessary skills and how much the contractor is going to charge. In this process, the principal should also gather information about the contractor’s understanding of the contractor’s safety obligations and what the contractor does to comply with them.

Just as the basis for the collection of financial information can be formal or informal, so can the collection of safety information. In a tender for a large contract, it will be quite common to have a detailed questionnaire, and to ask the prospective tenderer to provide copies of documents which evidence their safety systems. (It shouldn’t be thought that such requirements are confined to tenders in high-hazard industries such as mining or construction - law firms are increasingly being asked to provide information about their work health and safety systems when they tender for work.) For smaller contracts, simpler requirements may be imposed, but it is always a good idea to get an understanding of what the contractor knows about safety before making the decision to engage them.

The safety information should then form part of the decision-making process in relation to the engagement of contractors. Of course, the fact that a contractor does not have a good understanding of safety obligations may not automatically rule that contractor out of contention, but it may mean that the principal will need to pay particular attention to the work of such a contractor to ensure that naïveté does not translate to non-compliance.

Get it in writing

Once the contractor has been selected, it’s time to get down to the process of documenting the agreement to get the work done. It’s always a good idea to include some provisions dealing with the respective safety obligations of the parties beyond the generic “each party should comply with all relevant laws”. These provisions do not need to be lengthy, but they should provide some content to the duty to consult, and should ideally identify any particular issues arising out of the contract work (for example, in a contract for the design of registrable plant, the particular obligations of designers under Part 5.2 of the WHS Regulation).

There are at least three good reasons why the contract should include provisions dealing with safety matters. The first is that it establishes, from the outset, the principal’s expectations in relation to safety. The second is that if concerns about safety arise during the performance of the contract, the words used and agreed at the outset provide a useful objective reminder of what the contractor has signed up to do. The third, and arguably most important reason, relates to the discharge by the principal of its obligation to ensure safety “as far as is reasonably practicable”, where the question is likely to be, “Did the principal do all that was reasonably necessary to ensure safety compliance by the contractor?”

It is conceivable that there will be some situations (albeit very few) in which the obligation of reasonable practicability will be discharged by simply engaging competent contractors and letting them get on with it. In most cases, however, more than this will be required, because it will be reasonably practicable for the principal to supervise the work of contractors to some extent. An express contractual provision enables the principal to show that the principal has turned its mind to this question.The principal should consider both the extent of supervision and how that supervision will work in practice. It will be a rare case in which the principal will be required, in order to discharge its obligations, to minutely scrutinise all “safety homework” done by the contractor - however, the principal may well need to establish some basis for assuring itself that the contractor’s homework is actually being done.

Of course, the principal cannot contract out of any safety obligations that the principal has, but evidence that principal and contractor have discussed and considered their respective obligations, and reduced the result of those discussions to formal contractual language, will be very useful evidence by which the principal can show that it has taken the leading role in doing all the things that it was reasonably practicable for the principal to do.

What if the principal does not have all the answers?

Finally, leaders should also be listeners, and safety leadership means recognising that there will be situations in which the principal can learn from the contractor. Although the assumption will usually be that the principal is the most knowledgeable and competent when it comes to safety, this may not always be the case, and if the principal does not attend to its obligations, those failings may affect the contractor.

This is illustrated by a recent New Zealand prosecution. A contractor hired mine machinery to a principal on the basis that the principal was obliged to maintain the machinery. The principal failed to perform the maintenance and, in so doing, exposed the contractor’s employees to a risk to their health and safety. The contractor pleaded guilty to charges which alleged that the contractor had failed to do all that was reasonably practicable to keep its employees safe. As the contractor accepted, even though the contractor was not obliged to maintain the machinery, it could have turned the machinery off until the maintenance was done. This emphasises that a process of consultation, cooperation and coordination will not work if the principal treats the process as a one-way street.

Conclusion

Safety leadership should always be one of the key aspects of being a leader of industry; and although it is one thing to aspire to safety leadership, it is another thing to put that aspiration into practice. The key lesson, however, is that safety leadership is best achieved when it is treated as being an integral part of getting the job done, so that the safety performance of contractors is considered at the same time as their financial performance, and the safety clauses of the contract are considered at the same time as the clauses dealing with payment and performance. When it comes to the contracting process, leaders see the safety aspects as built-ins, not add-ons.