Directors OHS Responsibilities

As the nation moves to adopt the Work Health and Safety Act, commencing 1 January 2012, senior management and directors should start to look closely at their responsibilities for all occupational health and safety issues. By JOHN SMITH of VECCI and SEAN MILLARD of CCI Lawyers.

THE new legislation will broaden the primary duty of care for the provision of a safe workplace and work practices from employers to all persons involved in the conduct of a business or business related undertaking.

Another important reform, which is one of immediate significance for senior management and directors, is that they will now be directly responsible for failing to provide a safe working environment.

In Victoria to date, senior management and directors have been personally exposed to liability when they’ve failed to take reasonable care to prevent an infringement of occupational health and safety obligations Infringements arise when the director or manager has knowledge of a risk and the ability to take required action to prevent the risk, but fails to prevent or minimise said risk.

The change demonstrates movement away from senior management and directors potentially being able to avoid liability by showing they had done all that was within their control to prevent or reduce a risk to health and safety in the workplace.

The new duty will place a positive obligation on senior management and directors to exercise due diligence to ensure their company complies with its various obligations.

Due diligence will include taking reasonable steps to:

a) Acquire and keep up to date with knowledge of work health and safety matters.

b) Gain an understanding of the nature of business operations and the hazards and risks associated with those operations.

c) Ensure the business has appropriate resources available to eliminate or minimise risk to health and safety.

d) Ensure the business has access to appropriate information regarding hazards and risks and that it responds in a timely way to that information.

e) Ensure the business has in place processes for compliance with legislative obligations; this includes consulting with workers and the provision of training and instruction.

f) Verify the provision and use of the resources referred to above.

So what does it mean for busy CEOs on days when they must deal with shareholders, board members, financiers, suppliers, distributors, customers and the demands of a multi-divisional business?

Here is a hypothetical example:

The CEO might be comforted in the knowledge that his or her business has a health and safety system that:

• Is managed nationally by a group OHS manager
• Delivers information on work health and safety issues as part of monthly reports from divisional heads to the Executive Management Committee
• Is subject to external audits that confirm the health and safety system is compliant with Australian and international standards and benchmarks
• Is producing low and stable ‘loss time’ through injury statistics. However, the CEO has noted but not taken any action to investigate:
• A report from the human resources department (HR) documenting a recent spike in the level of sick leave being taken by employees
• An increase in the number of resignations of employees.

While aware of media reports that bullying and harassment claims are on the increase in the community, the CEO does not believe it is an issue within the business.

Then the HR department advises the CEO of a young female employee who has made allegations against her manager of sexual and general harassment and bullying, and that a WorkCover claim for stress has been lodged. The initial investigation into the allegations reveals the manager seemed to have raised performance issues with this particular employee.

The CEO starts to question the HR department about the circumstances in which the allegations took place. The responses provided are not encouraging. The recent resignations were by employees from within the area managed by the accused manager and they appear to have been due to employees feeling uncomfortable with his style of management and the amount of work allocated. The complaints made by the young female employee appear consistent with the manager’s conduct over an extended period.

Further to this, while there is a policy on sexual harassment, there is no policy specifically addressing bullying and harassment. The CEO is now wondering about the prospect of the employee going to lawyers and the media.

Under both the new legislation and existing occupational health and safety legislation in Victoria, employers are required to consult with employees about the identification of hazards or risks to health and safety in a workplace, and the measures that might betaken to address such risks.

Among all the issues the CEO will have to deal with, he or she learns there has been no consultation with the workforce, nor any training or awareness programs conducted about the issue of bullying and harassment. Then, a WorkSafe Inspector knocks on the door.

This example highlights the underlying policy direction of the new legislative provisions dealing with the liability of senior managers and directors.

Along with the ever increasing focus on the need for business to implement measures to support workplace health and address issues related to an ageing workforce, senior management and directors will need to show leadership in ensuring a safe work environment is established and maintained.

Senior managers and directors will need to focus their attention on their exposure to a substantially increased penalty of up to$600,000 and/or five years imprisonment for serious contraventions of the Work Health and Safety Act.

However, that attention should not be diverted from also acting to prevent less obvious contraventions of legislative obligations, for example, consulting with a workforce on health and safety issues, such as bullying and harassment.

It will no longer be sufficient to ensure occupational health and safety systems are compliant with international and Australian standards and best practice. Only having the documentation in place and ticking all the boxes during audits will no longer satisfy a senior manager or director’s obligation to act proactively under the Work Health & Safety Act.

Leading up to the implementation of the new laws, senior managers and directors need to ask themselves;

1. Are we fully aware of the new laws?
2. Do we have resources and systems in place that would satisfy the due diligence test?
3. Do we have an emergency strategy in place that would establish the best possible defence for officers if an unfortunate event occurs?
4. Under what circumstances would the organisation assist a senior manager or director under investigation or subject to prosecution?
5. Where an organisation will assist, what assistance would be made available to the manager or director?

It is becoming harder to attract good directors to boards because of personal liability issues. Having good systems in place that protect all employees, and the organisation, will provide a level of assurance to those potential board members and directors.

Sean Millard is Principal of CCI Lawyers, specialising in all areas of employment law. The late John Smith who passed away last month was VECCI’s OHS Products and Onsite Training Consultant.

This article first appeared in (Vol 3, No 4 Summer 2011) VECCI Magazine, Business Excellence

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