Is this really what due diligence was designed for?

On 24 February 2016 findings were handed down in the prosecution of another company officer under the due diligence provisions of the WHS legislation.

In WorkCover Authority of NSW (Inspector Moore) E&T Bricklaying Pty Ltd [2015] NSWDC 369, Mr Kose, a company officer and on site representative of E&T Bricklaying was prosecuted for failing to exercise due diligence in breach of the New South Wales WHS Act.

It is not clear in what “capacity” Mr Kose was a company officer, whether he was a director, CEO or performed some other role. It also seems implicit in the judgement that Mr Kose was involved in the day-to-day work. At paragraph 10, the judgement states:

There were five personnel involved in the laying of the blocks. They were Mr Kose, Mr Rahimi …..

There is nothing particularly instructive about the case, and it certainly does not add anything to the body of knowledge about who is or is not a “company officer”. However, the case does raise an interesting question about whether these were the sorts of cases that changes under WHS legislation to create positive obligations of due diligence on company offices were designed to address.

It appears clear that in whatever capacity Mr Kose was acting, he was a hands-on company officer involved in the day-to-day operations of the business. A typical, small business working director.

Safety and health legislation around Australia has always had provisions enabling the prosecution, and the reasonably easy prosecution, of people in that position. In his excellent paper Personal Liability of Company Offices for Corporate Occupational Health and Safety Breaches: Section 26 of the Occupational Health and Safety Act 2000 (NSW), Neil Foster points out that the vast majority of prosecutions against directors and managers involved officers who were directly involved in making specific decisions that led to the injury or fatality, and that the majority of companies whose offices were prosecuted were small (page 114).

This pattern seems to be repeating itself given the short history of due diligence prosecutions to date, and that despite all of the hoopla and razzmatazz attached to WHS legislation, in practical terms absolutely nothing has changed.

To the extent that due diligence provisions make it easier to prosecute company offices and increases the penalties against them, those provisions  continue to be used against hands-on, working directors in small businesses. Senior executives and boards of large organisations who are not involved in the day-to-day operations of their businesses have nothing personal to fear from health and safety prosecutions.

I am not sure that was the point of the changes to WHS legislation, and it is certainly not what was sold – and continues to be sold – by the safety industry.

 

 

Comcare v Transpacific Industries

Comcare v Transpacific Industries [2015] FCA 500 is an interesting case that looks at the liability of an employer for the death of a non-employee in a motor vehicle accident. In February 2011 a Transpacific employee driving a garbage collection truck ran into a vehicle killing the driver. Subsequent investigations revealed that the truck had faulty brakes.

The case provides some very interesting insights into the “illusion of safety” where it appears that, notwithstanding regulator approval and a routine maintenance regime, the high risk of poorly maintained brakes on a garbage truck was not identified.

There is also an interesting point raised in the case about the extent to which an employer should monitor the work of an employee who has been issued a warning for safety related breaches. Should an employer monitor the employee until they are satisfied that they are working in accordance with the safety requirements?

A short video presentation about the case is available here.

You can access a copy of the case here.

Boal V BHP – Zero Tolerance: Are your “systems” commensurate to your attitudes?

I am not a fan of the language of “zero“, either as an aspiration or as a stated goal. It has never sat well with me, and seems so disconnected from day to day reality in both society and a workplace that people cannot help but become disconnected from, or dismissive of, the message behind the term. My view has always been that the language of zero actually undermines the objectives it is trying to achieve.

If you are interested in this topic (and if you are involved in safety you should be) there are far more passionate, learned and articulate critics of the language of zero than me – See for example, anything by Dr. Robert Long.

However, as a lawyer who specialises in workplace safety and health, I was very interested in a recent decision by the Fair Work Commission that demonstrates how an employers attitude of zero can be used against them.

In Mr Shannon Boal v BHP Coal Pty Ltd (U2014/5272), Mr Boal was dismissed for breaching mobile phone usage requirements when his mobile phone was found in the cabin of the truck he had been operating.

While the Fair Work Commission found that there was a valid reason to terminate Mr Boal’s employment, it found that the termination was unfair for a number of procedural reasons. In part, the Fair Work Commission relied on the level of training and information that Mr Boal had been provided about the relevant procedure.

The training documentation provided did not clearly demonstrate that employees were trained in this new procedure and signed accordingly, or that it was given a significant roll-out to employees commensurate with their ‘zero tolerance’ attitude to incidents of breaches, given how this case has been pursued (my emphasis added).

Whatever your view about zero as appropriate language for managing workplace health and safety issues, there is no doubt that it is strong, absolutist language. If you are going to frame your approach to safety in the rhetoric of zero, you need to be sure that your actions at work match the rhetoric. If you don’t, your workers will see your safety messages as nothing but “window dressing“, designed to look good but basically meaningless, and lawyers will use the term to undermine the efficacy of your systems.

Case discussion: Capon v BHP Billiton – Part 2 the appeal

Early in 2013 BHP Billiton was convicted and fined $130,000 following a fatality at one of its facilities in Port Hedland. They were also ordered to pay $300,000 in legal costs.

Amongst the reasons for the conviction was BHP’s apparent failure to implement and enforce its own requirements for supervision and risk assessments by workers.

A video presentation and discussion about the case is available by following the link below:

Capon v BHP Billiton Iron Ore PH 1917/11

On 28 July 2014, the Western Australian Supreme Court allowed, in part, an appeal by BHP against the conviction. A key finding was that, while BHP did not enforce or supervise its own processes in relation to JHAs or Take 5s, that failure did not “cause” the fatality.

You can access a copy of the case here:

BHP Billiton Iron Ore Pty Ltd v Capon [2104] WASC 267

You can also see a video presentation and discussion about the case by following this link:

BHP Billiton Iron Ore Pty Ltd v Capon [2104] WASC 267 – discussion

(There is also an App available if you want to download the presentation to your device and view it later – iSpring Mobile Player)

A key question that comes out of the case – and one that I think has had some relevance for a number of years now is, what value does the JHA process add to our safety management system, and is there a case for removing them from our day to day processes?

At least, it seems that there is an arguable case that the JHA process should not be adopted with such lemming like dogma, and we can consider front line risk assessment processes that actually add value to our business.

 

 

 

 

 

 

How safety regulation undermines safety

There is an interesting paradox in safety management, in so much as a lot of what we do in the name of safety and health actively undermines our safety efforts.

This week I was confronted with another, recurring example.

I was speaking at a conference and talking, in part, about the relationship between “safety” risk management and “legal” risk management, and the relationship between them.

After the presentation a manager that I know well and have worked with in the past spoke to me about a a significant problem that he was grappling with. They had recently been prosecuted in relation to a workplace injury. He was not complaining about the prosecution, in so far as the nature of the incident most likely warranted some form of sanction.

What irritated him was that they were prosecuted, essentially, based on evidence drawn from their own, internal, incident investigation.

To make matters worse, some of the charges did not relate to the incident. They did not allege that the safety failures “caused” the incident – they were simple “breaches” of their safety obligations in the broader sense.

As this manager described it, they did not need to identify these “non-causal factors” in the incident investigation. They did it in the spirit of trying to learn and improve, yet to his mind they had been punished for trying to do the right thing.

What this meant, somewhat understandably, was that the approach to incident investigations had changed: Narrowly focussed, only considering objective, immediate causes and not examining safety management more broadly and all investigations are sanitised by lawyers.

A good outcome for safety?

I recall a number of years ago working with an industry group that used to regularly share members’ incident investigations on their web site and at regular forums – again, in the spirit of learning and improving.

Unfortunately, the practice has all but ceased as companies refused to have potentially “harmful” information made public. Those that did make information available had sanitised it to the extent that it was effectively meaningless.

There is also a seemingly common practice among safety regulators, whereby rather than do their job and investigate incidents, they simply require a company to provide them with a copy of their internal investigation. Again, hardly an incentive for an organisation to undertake any meaningful interrogation of their safety management.

When we look back at the harmonisation process in Australia it is clear that it was a terrible opportunity lost to address how we legislate to provide better safety outcomes. Unfortunately, it was only ever intended to provide a better “administrative” outcome.

As Western Australia embarks on a process of “modernising” its safety legislation, perhaps there is an opportunity to genuinely think differently.

For example, as an individual I have a right to protection against self incrimination, so that if an Inspector compels me to give a statement, that statement cannot be used against me in a subsequent prosecution. Why couldn’t that same right be extended to a company’s incident investigation?

Surely, the interests of improving workplace safety and health through a fearless examination of safety management following an incident should take priority over arming regulators with the information that they need to mount a prosecution?

Paper Based Safety Systems in a Contract Environment

Two recent cases have highlighted the focus that is put on documented safety systems following a serious workplace incident. The cases have also shown that despite the mountains of paperwork deployed in the name of safety, organisations still struggle to understand if health and safety risks are being controlled.

The cases are also instructive because they both arose in the context of contractor safety management.

The first case, Hillman v Ferro Con (SA) Pty Ltd (in liquidation) and Anor [2013] SAIRC 22, examined the perils of contractors creating safety management systems to meet the requirements of the client, rather than the risks of their work.

On 16 July 2010 a fatality occurred during lifting operations at the Adelaide desalination water plant. A rigger employed by Ferro Con (SA) Pty Ltd was killed when he was struck on the head by a 1.8 tonne steel beam.

The Company, Ferro Con, and its Director, Paolo Maione were prosecuted under South Australian health and safety legislation, and in June 2013 were handed fines of over $200,000.

The case has attracted a lot of attention because Mr Maione was able to call on an insurance policy to pay his penalty – effectively avoiding the punishment of the Court. However, the judgement also offers good insights into the weaknesses of “paper based” safety management systems, a compliance mentality and lack of assurance. The judgement also explores some issues in the Principal/Contractor relationship.

It seemed clear from the case that the “safety system”, such as it was, was designed to meet the need of the client, not manage the risk associated with the work:

No detailed JSA’s for different types of lifts, or lift plans, were required by Adelaide Aqua. Ferro Con took its cue for the level of safety planning it would use in its work from Adelaide Aqua, and not from the foreseeable hazards of its work activities. Ferro Con was more focussed on complying with contractual requirements than taking all reasonably practicable steps to minimise the foreseeable hazards its business created.

The inappropriate nature of safety documents in a contracting relationship was also looked at in Nash v Eastern Star Gas Ltd [2013] NSWIRComm 75, only this time, from a Principal’s perspective.

In August 2009, Bruce Austin a working director of a small business, The Saver Guys, died from head injuries after he was hit by a length of pipe that was being extracted from the ground.

There were many different entities involved in the contractual arrangements, and a number of parties were prosecuted. This case, however, looked at the safety arrangements in place between Eastern Star Gas Ltd (ESG) and Austerberry Directional Drilling Services Pty Ltd (ADD).

The case provides some useful insights into the expectations placed on businesses removed from the conduct of the physical work by a contractor. It also demonstrates how an organisations’ own, documented safety management systems (in this case a contractor safety management system) can be used to show that the organisation is not meeting its obligations.

The general “failure” in this case was that:

ADD did not have a documented safe work procedure or method (SWP) for the Activity and no job safety analysis or risk assessment for the Activity was conducted by ADD

However, the criticism of ESG, the defendant in the case, related to both ADD’s system, and ESG’s own system and conduct. The Court noted:

  • ADD OHS documents, including 42 SWPs, were from another job.
  • ESG did not require any documents specific to the job it was doing.
  • ESG did not check if the safety documents were appropriate.
  • No inquiries were made by ESG to check if the safety documents addressed the activities on this job.

The Court also noted that ESG operated in breach of its own contractor safety management system, for example:

  • ESG’s contract representative did not ensure the work was subject to Hazard identification and risk assessment, including that a safe work procedure approved and JSAs were done.
  • There was a requirement to assess contractor performance, but there was no program for that assessment, and no assessment was in fact done.

These were not things that the Court thought were a good idea – these were requirements set out in ESG’s own system.

The Court found that the:

… defendant had, in its paper systems, a roll (sic) for auditing and for checking. However, what it did not do was to comply with its own systems and that included a failure to carry out any checking of safety issues at the site.  If documented safety systems are not complied with, then that failure creates a significantly legal risk. More importantly, however, if the documented safety systems represents what should be done to create a safe workplace, non-compliance far from being a legal risk, means that our workplaces are not safe.

If documented safety systems are not complied with, then that failure creates a significantly legal risk. More importantly, however, if the documented safety systems represents what should be done to create a safe workplace, non-compliance far from being a legal risk, means that our workplaces are not safe.

Do we need to rethink safety prosecutions?

I have seen a number of recent posts and comments on various sites, noting where company executives have been prosecuted and jailed for health and safety breaches. The general tone of the observations has been that this is an approach that should be adopted in Australia, and that the relevant authorities should be far more active in pursuing these types of prosecutions.

Set out below is an article that I did for IFAP in Western Australia. It appears in the December issue of SafetyWA.

The article suggests that there might be more to a prosecution approach than meets the eye, and perhaps even an argument that safety prosecutions could undermine the end goal of trying to achieve “safe” workplaces.

I am not trying to suggest a “correct” approach, but like so much that we do in safety, we should not just assume that a prosecution approach is right. Perhaps it is time for the genuine debate and critical thinking that was missed during the harmonization process.

The value of safety prosecutions in Western Australia

Criminal prosecutions for safety and health breaches are generally regarded as an important element of effective regulation of safety and health behaviour. Part of that is the commonly accepted belief that the higher the penalties for health and safety breach, the more effective the deterrent effect of prosecution is likely to be.

I, for one, am not entirely convinced that prosecutions are in fact an effective measure for improved safety performance (ironic from a lawyer, I know).

Some studies have suggested that criminalising safety breaches can have an adverse effect on safety (See for example, International Journal of Applied Aviation Studies, Volume 10, Number 1, 2010, page 31 on).

Australian studies have shown that the vast majority of prosecutions of “Company Officers”, have been of small businesses – directors who are “hands on” in the business (see for example Foster, N. (2005) Personal Liability of Company officers for Corporate Health and Safety Breaches: Section 26 of the Occupational Health and Safety Act 2000 (NSW). 18 Australian Journal of Labour Law, 107). This obviously calls into question the equity of offences aimed at Company Officers.

Anecdotally, my own experience is that the response of many organisations to increased legal liability for safety and health breaches is not improved safety risk management, but improved legal risk management. Just witness the harmonisation debate over the last 5 years – a debate that has been lead almost entirely by legal commentators, not the safety profession.

The psychology here is also interesting.

A number of years ago, while working as principal safety advisor at Woodside Energy, some people far cleverer than me in the area of safety culture advised that to change human behaviour, the best strategies were to ensure that consequences for individuals were:

  • Certain;
  • Immediate; and
  • Positive.

If people always got immediate, positive feedback whenever they did the right thing for safety, then this would drive the right behaviour.

The least effective way to drive change? Consequences that are uncertain, delayed and negative (think safety prosecutions!)

Leaving aside for one moment broader philosophies about safety prosecution in general, what value do they provide to the understanding of safety management

In October 2013, BHP Billiton Iron Ore and HWE Newman Services were convicted and ordered to pay a total of $363,000 in safety fines and costs, after a mobile maintenance supervisor was killed while working on the tyre of a heavy earth mover in Western Australia.

The worker was fatally struck by a tyre handler device, which sprung off the tyre when it was overinflated.

The incident occurred in August 2008

There is a well-worn saying that justice delayed is justice denied. Similarly, safety lessons delayed are safety lessons lost, and in this case the lessons learned are not available to us until 5 years after the event? Except that they aren’t.

The prosecution occurred in the Magistrate’s court, and decisions are not freely available or published. There is no published judgement that we can look to, to understand the safety management failures behind the event. It seems that the sum total of information that might have generated valuable insights into important safety management failures around risk management, contractor safety management or other critical safety management elements is – zero

I have been involved in safety law and safety management for the best part of 24 years. There are some things I know, and an enormous number of things that I do not know. But one thing that I do know to an absolute certainty is that organisations do not examine their safety management systems with anywhere near the level of rigour that they are subject to in legal proceedings. For all its faults, the legal process has the potential to offer some genuine insights into the failure of safety management, but clearly, that potential cannot be realised where cases take years to finalise, and there is no record of the findings to review.

Perhaps it is time to re-examine the role of prosecution and inquiry in safety management and to think differently about what the response to safety failures ought to be. Certainly, the current approach cannot be blindly accepted as adding value.