New era for Work Health and Safety legislation in Australia

The Workplace Relations Ministers’ Council has approved model provisions that will be adopted throughout Australia from 1 January 2012 as the Work Health and Safety Act. There have been a number of significant changes to the model Act since the draft was first released for public comment.

Companies should commence steps now to ensure their business and officers will comply with the new Work Health and Safety Act when it commences. The details of the model provisions are now known and will be adopted, so companies can proceed with confidence in transitioning towards them. Reasons for starting now include:

• Contracts are being entered into now that will operate under the new Act. The contracts and supporting documents can be significant tools for ensuring compliance and also more effective health and safety management under the new Act;
• Key elements such as due diligence and consultation are structural in nature and can now be developed, with only minor modification (if any) required by relevant regulations relating to consultation;
• It is important that the structural and policy modifications are undertaken and embedded before the technical detail of the regulations is confronted, or those key enabling aspects may be overlooked; and
• It typically takes 18 months to two years to undertake and embed organisational and policy change of the significance that will be required by the model laws.

Prepare now

There are seven steps that every business needs to undertake to prepare for this new legislation:

1. Legal risk analysis - the new primary duty has broader application than its predecessor. Businesses must undertake a legal risk analysis of their operations to ascertain the extent of their duties.
2. Review contracts to insert duty-holder consultation arrangements and enabling provisions to allow them to discharge their duties. This is critical with long-term contracts entered into over the next few months which will remain in place long after the commencement of the legislation.
3. Implement interface coordination plans as a practical solution to the new duty to consult other duty holders.
4. Develop robust consultation processes, given the expanded application of the duty to consult to cover workers, including contractors and subcontractors.
5. Develop dispute-resolution processes to minimise the need for regulatory involvement in the workplace.
6. Develop processes on right-of-entry and regulatory rights and obligations to ensure compliance.
7. Develop an OHS Corporate Governance Statement for the board and senior management to ensure compliance with their due diligence duty.

Definitions

The Work Health and Safety Act will introduce a number of new definitions:

Officer

The definition of ‘officer’ has been adopted from the Corporations Act. This restricts the categories of persons caught by the officer duty to the senior echelon of the company or organisation.

Due diligence

‘Due diligence’ is now comprehensively defined to mean:

• To acquire and keep up-to-date knowledge of work health and safety matters;
• To gain an understanding of the nature of the operations of the business or undertaking of the body;
• To gain an understanding of the nature of the operations of the hazards and risks within those operations;
• Has available for use appropriate resources and processes to enable hazards associated with the operations of the business or undertaking of the body to be identified and risks associated with those hazards to be eliminated or minimised;
• To ensure that the body uses those resources and processes;
• To ensure that the body has appropriate processes for receiving and considering information regarding incidents, hazards and risks and responding in a timely way to that information;
• To ensure that the body has and implements processes for complying with any duty or obligations of the body under the Act; and
• Verifying the provision and use of the resources and processes referred to above.

This is a welcomed amendment, as it provides certainty to officers in relation to the extent of their duty to exercise due diligence. Practically, the duty requires the development of board and senior management level protocols for verifying due diligence in the organisation. This should be set out in an OHS Corporate Governance Statement and supporting procedures.

Consultation

A new duty will exist for the persons conducting a business or undertaking (PCBU) to consult with workers directly affected by the health and safety matter, along with other duty holders who have a duty in relation to the same matter. Organisations should consider carefully how they will seek to discharge this obligation in practice. It is recommended that the consultation process be systematic and recorded. One option is to adopt Interface Coordination Plans, widely used in the transport industry. Such plans would record the areas of overlap and record the agreement as to the manner in which the respective duties will be discharged.

Reasonably practicable

The definition of ‘reasonably practicable’ has been modified to make clearer the relevance of cost, including consideration of the cost of various control options and whether the cost is grossly disproportionate to the risk.

Changes to the Act

Other changes to the Act include:

• Excluding workers and officers from the definition of PCBU to the extent that they are not conducting a business or undertaking in their own right;
• Making clear that volunteers and local government councillors are not subject to liability as a PCBU or an officer, but not excluding them from the duty to take reasonable care as a worker or other person at a workplace;
• Modifying the duty-of-care of a worker to require compliance with any reasonable policy or procedure of the PCBU of which the worker is aware, in addition to complying with reasonable instructions given by the PCBU;
• Making clear that supply occurs at the time of passing of physical possession of the relevant object;
• The exclusion of financiers from the obligations of a supplier has been changed to cover a broader range of commercial transactions where the financier does not take possession (eg, sale and lease-back arrangements);
• Requiring PCBUs to provide training to HSRs within three months of a request for training;
• Allowing PCBUs to refuse entry on ‘reasonable grounds’ to persons chosen by the HSR to provide assistance, if no relevant assistance could be provided by the nominated person;
• Removal of requirements for union right of entry, which are already prescribed under the Fair Work Act 2009 and providing for the involvement of an inspector to resolve a right-of-entry dispute;
• Including provisions recommended by the panel extending prohibitions against antidiscrimination to include commercial transactions and prohibiting coercion;
• Allowing regulators to vary or cancel notices;
• Providing for an automatic stay on internal review of decisions of an inspector, other than for prohibition notices and non-disturbance notices, and a continuation of a stay on application being brought for external review of a decision made on internal review:
• Confirming that civil liability will not be affected by proceedings brought under the Act;
• Restructuring of the most serious category of offence to a ‘reckless-endangerment’ offence when a duty-holder’s conduct has exposed a person to a risk of death or serious injury;
• Removal of compensation orders as a sentencing option;
• Monetary penalties, not penalty units, used to ensure consistency between jurisdictions;
• Providing for penalties for the non duty-of-care offences for corporations, ranging from a maximum of $500,000 for serious breaches to a maximum of $10,000 for minor administrative breaches; and
• Contraventions of the Act being subject to a criminal penalty regime, except in relation to right-of-entry offences in Part 7, which would be subject to a civil-penalty regime, consistent with that in the Fair Work Act 2009. A framework will need to be established for civil penalties.

Norton Rose Australia

www.nortonrose.com