Due Diligence prosecutions under WHS Legislation (and other fairy stories)

Due diligence was supposed to be the health and safety “boogie man“, hiding under the beds of boards and CEOs – keeping them awake at night and focusing their minds on health and safety. The truth is the due diligence provisions in WHS legislation have made no practical change to the legal regulation of health and safety management at an executive level (whatever their theoretical legal effect might be) and continue the long-running lack of interest in health and safety at a boardroom level that Australian regulators have evidenced for years.

I am happy to be corrected on numbers, but as far as I can tell, since introduction of WHS legislation in about January 2012, there have been 819 workplace fatalities according to Safe Work Australia’s figures. I do not know how many of those resulted in prosecutions – it is extraordinarily difficult to draw the disparate data of health and safety regulators together to create a meaningful picture. But what does seem fairly clear, is that there have only been a handful of prosecutions under the due diligence provisions of WHS legislation. Moreover, every one of those has been against a small business and the person prosecuted has some hands-on, day-to-day involvement with the work being performed. There is no example as far as I can tell of a “company officer” who is removed from the day-to-day operations of the business.

Presumably, all of the boards and chief executive officers of large organisations who have suffered workplace fatalities are exercising effective due diligence. I think it is far more likely that the question has not even been asked and this level of executive management has not been subject to any scrutiny whatsoever about their oversight of health and safety management. Again, I stand to be corrected.

None of this should come as a surprise to anybody who has an understanding of health and safety prosecutions in Australia over the years. Nearly every example of “management” prosecutions have been against managers of small businesses with day to day involvement in the operations of the business.

A 2005 paper by Neil Foster found:

In cases involving formally appointed directors, almost every case involved a director who was heavily involved in decisions or actions “on the ground” which led directly to the incident concern (page 114).

and

Almost all the companies concerned (as far as can be judged from the reports examined) were either effectively “one-person” companies or at least small family companies with limited assets. … The directors concerned were almost all likely to have high personal knowledge of workplace procedures and, as noted above, many were heavily involved in the particular incident concern. There are no examples in these cases of a large company where a member of the board was held liable for failure to exercise “due diligence” in addressing the issue of safety (page 116).

(Personal Liability of Company Officers for Corporate Occupational Health and Safety Breaches: Section 26 of the Occupational Health and Safety Act 2000 (NSW), (2005) 18 Australian Journal of Labour Law, 106)

Nothing, it seems has changed.

Welcome to the intellectual vacuum that is political comment on WHS

Today (29 October 2016) the ABC had an article on the ongoing coverage of the tragic loss of lives at Dreamworld in Queensland.

I have commented before about the disconnect between the loss of life in this workplace accident and the near weekly loss of life in Australian workplaces that the coverage of this incident highlights. That disconnect was underscored by a picture of the Federal Opposition Leader, Bill Shorten, laying flowers outside Dreamworld. I do not begrudge Mr Shorten the opportunity to express his condolences (or advance his political position depending on your level of cynicism), but I cannot recall too many times political leaders have given similar public displays of solidarity when people die at our construction, mining, agricultural or any other workplaces.

But what has prompted this article is the simplistic, reactive, leaderless response that politicians trot out in the face of these types of events.

The ABC Article reports Queensland Premier Annastacia Palaszczuk as saying:

“It is simply not enough for us to be compliant with our current laws, we need to be sure our laws keep pace with international research and new technologies,”

“The audit will also consider whether existing penalties are sufficient to act as deterrents, and whether these should be strengthened to contain provisions relating to gross negligence causing death.

“Because we all know how important workplace safety is and how important it is to have strong deterrents.

“That’s why Queensland has the best record in Australia at prosecuting employers for negligence – and we are now examining current regulations to see if there are any further measures we can take to discourage unsafe practices.”

The idea that we “should not be compliant with our current laws” is both a nonsense and a failure of policy makers to properly accept the findings of the Robens Report published in the mid-1970’s. The reason our laws cannot keep pace with “international research and new technologies”, is because governments continue to insist on producing highly prescriptive suites of regulation which in most cases are adopted by organisations as the benchmark for “reasonably practicable”.

For most businesses, particularly small and medium-sized businesses, technical compliance with regulation is the high-water mark of safety management – an approach reinforced by the “checkbox” compliance mentality of many regulators.

WHS legislation is a leading example of this failure of policy, in so far as it increased the number of regulations in most of the jurisdictions where it has been implemented.

Flexible, innovative safety management requires a regulatory framework that promotes it, not limits or discourages it.  How can a regulator have any credibility when it calls on industry to keep pace with “international research”, when it continues to define safety performance through the publication of lost time and other lag injury rates?

Ms Palaszczuk then adopts the standard “tough on safety” call to arms, without taking the time to recognise inherent contradictions in what she is saying. She boasts that “Queensland has the best record in Australia at prosecuting employers for negligence”, but hints at tougher penalties still.

If the considerable penalties under the WHS Legislation and the “best record” of prosecuting employers are not a sufficient deterrent, why would “tougher” and “better” be any different?

I have written about these types of matters before, and would just ask that before policymakers go charging off in pursuit of higher penalties and more prosecutions, we stop and take the time to see if this tragedy can provide the opportunity lost during harmonisation and introduction of WHS legislation.

That lost opportunity was a chance to stop and consider the way that we regulate and manage health and safety in this country.

And can we start with the question of whether criminalising health and safety breaches and managing safety through a culture of fear driven by high fines and penalties is the best way to achieve the safety outcomes we want?

What is the evidence proving high penalties and prosecutions improve safety outcomes?

Are there ways that we can regulate safety to provide significant deterrents and consequences for people who disregard health and safety in the workplace, but at the same time foster a culture of openness, sharing and a willingness to learn and improve?

Can we redirect the time, money, expertise and resources that are poured into enforcement, prosecution and defending legal proceedings in a way that adds genuine value as opposed to headline value?

This is a chance to stop and think. This is a chance for the health and safety industry to stand up, intervene and take a leadership role in health and safety.

If we do not, the intellectual vacuum will continue to be filled by the historical approaches that have brought us to where we are today.

Reflections on Safety: Reasonably Practicable

In August 2016, I wrote a WHS Update about the High Court decision, Deal v Father Pius Kodakkathanath [2016] HCA 31 which considered the legal test of Reasonably Practicable in the context of Australian health and safety legislation. Shortly after that, one of my connections on Linkedin posted an article about Reasonably Practicable. The article offered an engineering perspective on “As Low as Reasonably Practicable” (ALARP), stating:

… recent developments in Australian workplace health and safety law place proactive responsibilities on senior personnel in organisations, so they must be fully informed to make proper decisions

This sentiment seemed similar to an earlier engineering publication which argued that ALARP and “So Far as is Reasonably Practicable” (SFARP) were different and that this difference was, in part a least as result of “harmonised”, WHS legislation.

In both cases, I believed the articles were misaligned with the legal construct of Reasonably Practicable and misrepresented that there had been a change in the legal test of Reasonably Practicable prompted by changes to WHS legislation.

This background caused me to reflect again on the notion of Reasonably Practicable and what it means in the context of legal obligations for health and safety.

To start, I do take issue with the suggestion that changes to WHS legislation have resulted in a shift in what Reasonably Practicable means. The basis of this idea seems to be an apparent change in terminology from ALARP to SFARP.

The term SFARP was in place in health and safety legislation before the introduction of WHS and jurisdictions that have not adopted WHS legislation still use the term. For example, the primary obligations under the Victorian Occupational Health and Safety Act 2004 are set out in section 20, and state:

To avoid doubt, a duty imposed on a person by this Part or the regulations to ensure, so far as is reasonably practicable, health and safety requires the person …

Indeed, the architects of WHS legislation[1] specifically retained the term Reasonably Practicable because it was a common and well-understood term in the context of Australian health and safety legislation:

5.51 Reasonably practicable is currently defined or explained in a number of jurisdictions. The definitions are generally consistent, with some containing more matters to be considered than others. The definitions ‘are consistent with the long settled interpretation by courts, ‘in Australia and elsewhere.

5.52 The provision of the Vic Act relating to reasonably practicable was often referred to in submissions (including those of governments) and consultations as either a preferred approach or a basis for a definition of reasonably practicable.

5.53 We recommend that a definition or section explaining the application of reasonably practicable be modelled on the Victorian provision. We consider that, with some modification, it most closely conforms to what would be suitable for the model Act.  [My emphasis added]

In my view, it is unarguable that the concept of Reasonably Practicable has been well-settled in Australian law for a considerable period, and the concept has not changed with the introduction of WHS legislation.

If we accept that Reasonably Practicable has been consistently applied in Australia for some time, the next question is, what does it mean?

Reasonably Practicable is a defined term in most health and safety legislation in Australia.  Section 20(2) of the Victorian Occupational Health and Safety Act 2004, for example, states:

(2) To avoid doubt, for the purposes of this Part and the regulations, regard must be had to the following matters in determining what is (or was at a particular time) reasonably practicable in relation to ensuring health and safety—

 (a) the likelihood of the hazard or risk concerned eventuating; 

 (b) the degree of harm that would result if the hazard or risk eventuated; 

 (c) what the person concerned knows, or ought reasonably to know, about the hazard or risk and any ways of eliminating or reducing the hazard or risk; 

 (d) the availability and suitability of ways to eliminate or reduce the hazard or risk; 

 (e) the cost of eliminating or reducing the hazard or risk.

In the High Court decision, Slivak v Lurgi (Australia) Pty Ltd [2001] HCA 6, Justice Gaudron described Reasonably Practicable as follows:

The words “reasonably practicable” have, somewhat surprisingly, been the subject of much judicial consideration. It is surprising because the words “reasonably practicable” are ordinary words bearing their ordinary meaning. And the question whether a measure is or is not reasonably practicable is one which requires no more than the making of a value judgment in the light of all the facts. Nevertheless, three general propositions are to be discerned from the decided cases:

  • the phrase “reasonably practicable” means something narrower than “physically possible” or “feasible”;
  • what is “reasonably practicable” is to be judged on the basis of what was known at the relevant time;
  • to determine what is “reasonably practicable” it is necessary to balance the likelihood of the risk occurring against the cost, time and trouble necessary to avert that risk.[2] [my emphasis added]

Another High Court decision, Baiada Poultry Pty Ltd v The Queen [2012] HCA 14, emphasised similar ideas.

The case concerned that the death of a subcontracted worker during forklift operations.  Baiada was the Principal who had engaged the various contractors to perform the operations and in an earlier decision the court had concluded:

it was entirely practicable for [Baiada] to required contractors to put loading and unloading safety measures in place and to check whether those safety managers were being observed from time to time ((2011) 203 IR 396 at 410)

On appeal, the High Court framed this finding differently.  They observed:

As the reasons of the majority in the Court of Appeal reveal by their reference to Baiada checking compliance with directions it gave to [the contractors], the question presented by the statutory duty “so far as is reasonably practicable” to provide and maintain a safe working environment could not be determined by reference only to Baiada having a legal right to issue instructions to its subcontractors. Showing that Baiada had the legal right to issue instructions showed only that it was possible for Baiada to take that step. It did not show that this was a step that was reasonably practicable to achieve the relevant result of providing and maintaining a safe working environment. That question required consideration not only of what steps Baiada could have taken to secure compliance but also, and critically, whether Baiada’s obligation “so far as is reasonably practicable” to provide and maintain a safe working environment obliged it: (a) to give safety instructions to its (apparently skilled and experienced) subcontractors; (b) to check whether its instructions were followed; (c) to take some step to require compliance with its instructions; or (d) to do some combination of these things or even something altogether different. These were questions which the jury would have had to decide in light of all of the evidence that had been given at trial about how the work of catching, caging, loading and transporting the chickens was done.[3] [my emphasis added]

In light of these, and other decided cases it is possible to form a practical test to consider what is Reasonably Practicable.  In my view, it is necessary for an organisation to demonstrate that they:

  • Have “Proper Systems” to manage the health and safety risks in their business; and
  • Exercise “Adequate Supervision” to ensure that the Proper Systems are implemented and effective to manage the risks.

What constitutes Proper Systems and Adequate Supervision is a judgement call that needs to be determined with regard to the risks.  It requires an organisation to balance the risk against the cost, time and trouble of managing it.[4]

It is also worth noting at this point, that Reasonably Practicable is, generally speaking, an organisational obligation.  It is not an individual,[5] and in particular, it is not an employee obligation.

I often see, when working with clients, safety documents required be signed by employees that the state that risks have been controlled to “ALARP”.  This is not the employee’s responsibility and the extent to which an employee does or does not control the risk to ALARP does not affect an employer’s obligations.

In broad terms, it is the organisation’s (PCBU or employer) obligation to manage risks as low as, or so far as is, Reasonably Practicable.  The employee obligation is to do everything “reasonable”.  This includes complying with the organisation’s systems.

It is the organisation’s obligation to identify the relevant health and safety risks and define how they will be controlled, ensuring that the level of control is “Reasonably Practicable.  It is the employee’s obligation to comply with the organisation’s requirements.

So, what might Reasonably Practicable look like in practice?

I recently defended a case that involved a worker who was seriously injured at work.  Although the injury did not result from a fall from height, the prosecution case against my client was based on failure to meet its obligations about working at heights.

My client had, on any measure, a Proper System for managing the risk of work at heights.  They had a documented working at height Standard and Procedure both of which were consistent with industry best practice and regulator guidance material.  All work at height above 1.8 m required a permit to work and a JHA.  The documented procedures prescribed appropriate levels of supervision and training.

In the three years before the relevant incident, my client had not had a working at height incident of any sort nor had they had a health and safety incident at all.  Based on all of our investigations as part of preparing the case, there was nothing to suggest that the incident information was not legitimate.

The activity which was being performed at the time of the incident was conducted routinely, at least weekly, at the workplace.

In looking to construct a Reasonably Practicable argument to defend the case what would we be trying to do?  In essence, I would be trying to establish that the incident was an aberration, a “one off departure” from an otherwise well understood, consistently applied system of work that was wholly appropriate to manage the risk of working at heights.

In practice, that would mean:

  • Producing statements from all of the workers who performed this task describing how it was performed in practice, and demonstrating that their understanding of the way the work was performed in practice was consistent with the requirements of the organisation’s documented systems;
  • Producing completed documentation from when the job had been performed previously, and demonstrating that the documentation was consistent with the organisation’s requirements, and completed correctly;
  • Producing statements from supervisors who approved the documentation and oversaw the performance of the work and demonstrating that their understanding of the way that the work was performed in practice was consistent with the requirements of the organisation’s documented systems;
  • Producing completed documentation from when the injured worker had performed the work previously and demonstrating that the documentation was consistent with the organisation’s requirements and completed correctly.

There may be other information that we would seek, but in broad terms, the information outlined above helps to build a case that there was a proper system that was effectively implemented and that:

  • All the workers understood the system,
  • All the workers understood how it ought to have been applied, and
  • It was applied in practice.

What happened?

Rather than be able to demonstrate that the incident was a one-off departure from an otherwise effective system, the evidence revealed a complete systemic failure.  While the documented system was a Proper System and complied with all relevant industry standards and guidelines, it was not implemented in practice.

Most compelling was the fact that, despite this being a weekly task, there was not a single instance of the working at height Standard and Procedure been complied with.  We could not produce a single example where either the injured worker or indeed any worker who had performed the task had done so under an approved permit to work with an authorised JHA.

All of the workers gave evidence that the primary risk control tool on site was a Take 5.  The Take 5 is a preliminary risk assessment tool, and only if that risk assessment scored 22 or above was a JHA required.  The task in question was always assessed as 21.  The requirement for a JHA, in the minds of the workforce, was never triggered and none of them understood the requirements of the Standard or Procedure.

To me, this case is entirely indicative of the fundamental failure of Reasonably Practicable in most workplaces.  In the vast majority of cases that I have been involved in the last 25 years, organisations have systems that would classify as Proper Systems.  They are appropriate to manage the risk that they were designed to manage.

Equally, organisations cannot demonstrate Adequate Supervision.  While there may be audits, inspections, checking and checklists – there is no targeted process specifically designed to test and understand whether the systems in place to manage health and safety risks in the business are in fact implemented and are effective to manage those risks.

In my experience, most organisations spend far too much time trying to devise the “perfect” Proper System.  We spend far too little time understanding what needs to be done to confirm that the System works, and then leading the confirmation process.

Reasonably Practicable has not changed.

Reasonably Practicable is not a numeric equation.

Reasonably Practicable changes over time.

Reasonably Practicable is an intellectual exercise and a judgement call to decide how an organisation will manage the health and safety risks in its business.

Reasonably Practicable requires an organisation to demonstrate that they:

  • Have “Proper Systems” to manage the health and safety risks in their business; and
  • Exercise “Adequate Supervision” to ensure that the Proper Systems are implemented and effective to manage the risks.

What constitutes Proper Systems and Adequate Supervision is a judgement call that needs to be determined with regard to the risks.  It requires an organisation to balance the risk against the cost, time and trouble of managing it.

[1] See the National Review into Model Occupational Health and Safety Laws: First Report, October 2008.

[2] Slivak v Lurgi (Australia) Pty Ltd [2001] HCA 6 [53].

[3] Baiada Poultry Pty Ltd v The Queen [2012] HCA 14 [33].

[4] See also: Safe Work NSW v Wollongong Glass P/L [2016] NSWDC 58 and Collins v State Rail Authority of New South Wales (1986) 5 NSWLR 209.

[5] There are some exceptions to this where an individual, usually a manager or statutory officeholder will be required to undertake some action that is Reasonably Practicable.

This article is a general discussion about Reasonably Practicable and related concepts. it should not be relied on, and is not intended to be specific  legal advice.

The logic of safety penalties and prosecutions

Recently, the Victorian Government made some noise about increasing  penalties for breaches of health and safety legislation, with maximum fines increasing to $3M. This is consistent with most jurisdiction in Australia, and the drive for significant personal and corporate penalties for breaches of health and safety legislation has always been a feature of the safety industry in Australia.

Recently I wrote about the value of safety prosecutions ($450,000 is this what we want from safety prosecutions), and argued for an alternative model:

What if, rather than prosecutions, organisations who have had accidents could opt in to a safety learning program. In this case, for example, a detailed investigation and research project to understand all of the factors influencing the incident. Not just the role of the employers and workers, but also the regulator, the way safety information is made available and the best ways to help small and medium sized businesses implement a safety program.

  • The project would be paid for by the employer – so there is still a financial penalty.
  • Both the incident and the research could be highly publicised to add to the deterrent value.
  • Valuable lessons would be available within months, as opposed to meaningless factual statements after years.

Prosecutions can, and should still be reserved for the worst classes of offence but these would be very limited. [my emphasis added]

It has been reported by the ABC today (9 July 2016) that a Queensland electrical contractor has been charged with manslaughter following a fatality at a building site.

Leaving aside the merits of the individual case, this action does beg the question, why all the fuss about penalties in health and safety legislation if they are not used for the most serious offences? What does it say about health and safety legislation as an avenue for legitimate criminal prosecutions?

More importantly, would health and safety legislation be a better tool for improving health and safety in workplaces if it was not based on prosecution and fear, but had legitimate mechanisms for the promotion and sharing of lessons about workplace safety?

Is there an argument that says health and safety legislation should focus on workplace health and safety, and it should be left to the criminal law processes to deal with serious failures of workplace safety? Alternatively, if health and safety legislation is an appropriate tool to punish individuals and organisations, shouldn’t it be used when the opportunity arises?

If not, then what was all that harmonisation fear mongering about?

 

 

 

WHS reform in WA “delayed” again

The latest minutes from the Western Australian Ministerial Advisory Panel on Safety Legislation Reform have confirmed what probably comes as no surprise to anyone anymore – that the proposed Work Health and Safety (Resources) Bill has been delayed yet again, this time by about 6 months.

The minutes of the meeting record:

Work Health and Safety (Resources) Bill

Parliamentary Counsel’s Office (PCO) commenced drafting the Bill during February 2016 and is continuing to liaise with DMP during the drafting process. 

However, due to delays in this drafting process, the Department has obtained approval from the Minister to postpone implementation of the legislation to 1 July 2017. An updated timeline has been provided to MAP members as Attachment 3.

It is expected that the Bill will be ready for introduction to Parliament in August 2016.

Given that a State election is pencilled in for March 2017, I would not be rushing to adjust my safety management processes on the basis of legislative changes anytime soon.

Due diligence master class

On 6 April 2016 I will be facilitating a due diligence masterclass in conjunction with IFAP from 8.00am until 3.00pm at the Esplanade Hotel in Fremantle, Western Australia.

The program is suitable for all industries and size of business.

Drawing on legal precedents and major accident investigations from all around the world, I will consider due diligence in the context of health and safety legislation including harmonised, WHS legislation and “accessorial liability” provisions  in Western Australia, Victoria and the offshore oil and gas industry.

The program will focus on the practical and legal expectations on mangers to control health and safety risks in their business, and what day-to-day application of those principles might look like.

Places are limited and the program is already 50% subscribed.

You can access information about the program here, book here, or contact me – gws@nexuslawyers.com.au if you would like to know more.