Tag: case law

Are health and safety managers “company officers” and should they be?

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This post has been prompted by recent activity on various blogs and safety discussion boards about whether a health and safety manager could be a Company Officer for the purposes of recently adopted health and safety legislation.

For those of you who follow this blog outside of Australia, part of this post is particular to recent legislative developments is Australia, although part of the discussion also looks at the broader accountabilities of health and safety managers.

Since about 2008, Australia has been engaged in a discussion about a legislative change agenda commonly referred to as “harmonisation”. The object of harmonisation was to achieve nationally consistent health and safety legislation across all jurisdictions in Australia. Although due to commence in 2013, and despite “harmonised” laws having been implemented in a number of jurisdictions, to date, the objectives of harmonisation have not been achieved.

You can read more about harmonisation here.

One of the key elements of harmonisation is a positive obligation of “due diligence” imposed on “company officers”.

Previously, under Australian law Company Officers could be held personally liable for breaches of safety legislation where offences occurred due to the company officers consent, connivance or neglect. A recent example of this type of case was the Western Australian decision, Fry v Keating, and you can see a presentation of this type of case here.

The due diligence obligations mean that relevant individuals must demonstrate positive actions to be satisfied that health and safety risks are being effectively controlled. So for example, the “model bill” used to frame harmonised legislation provides that due diligence includes taking reasonable steps:

  • to acquire and keep up-to-date knowledge of work health and safety matters; and
  • to gain an understanding of the nature of the operations of the business or undertaking of the person conducting the business or undertaking and generally of the hazards and risks associated with those operations; and
  • to ensure that the person conducting the business or undertaking has available for use, and uses, appropriate resources and processes to eliminate or minimise risks to health and safety from work carried out as part of the conduct of the business or undertaking; and
  • to ensure that the person conducting the business or undertaking has appropriate processes for receiving and considering information regarding incidents, hazards and risks and responding in a timely way to that information; and
  • to ensure that the person conducting the business or undertaking has, and implements, processes for complying with any duty or obligation of the person conducting the business or undertaking under this Act; and
  • to verify the provision and use of the resources and processes referred to above.

Given that harmonisation is about legislation aimed specifically at managing health and safety risks, it does suggest two important questions: Could health and safety managers by company officers for the purposes of the due diligence obligations, and should they be?

In my view, the answers are “probably not”, and “yes”.

Although health and safety managers, are often “senior managers”, they are not by default company officers. The term “officer” of a corporation is defined by s 9 of the Corporations Act 2001, and relevantly for this post includes a person who makes, or participates in making, decisions that affect the whole, or a substantial part, of the business of the corporation.

A relatively recent case looking at the issue of who may be a company officer was Shafron v Australian Securities and Investments Commission [2012] HCA 18, which you can access here. The case was one of a series of cases that concerned the prosecution of a number of company officers and executive managers of James Hardie arising out of disclosures by the company over its ability to fund potential asbestoses liabilities.

Mr Shafron was both Company Secretary and the General Legal Counsel, and the relevant arguments turned on whether Mr Shafron could be a company officer in his capacity as General Legal Counsel.

Part of the argument run by Mr Shafron was that he could split the two roles, Company Secretary and General Counsel; so that when he was acting in his capacity as a Company Secretary, he was a Company Officer, but that in his capacity as General Counsel.

That majority of the High Court “greatly doubted” that the capacities could be spilt in that way, but usefully for this discussion went on to discuss whether Mr Shafron was a Company Officer when acting in his capacity as General Counsel.

In forming the view that Mr Shafron was a person, who makes, or participates in making, decisions that affect the whole, or a substantial part, of the business of the corporation  the High Court made a number of observations.

First, that Mr Shafron was a senior officer, the second or third most senior executive in the company.

Second, Mr Shafron was one of a small group of three people who were “responsible for formulating” the relevant proposals.

Third, Mr Shafron’s “participation” went beyond merely providing advice – he played a large and active part (along with two others) in putting together the proposal that they chose should be put to the Board and adopted.

What is clear from the decision is that in some circumstances, whether a person is a Company Officer is situational – it is not fixed. So a person in making (or participating in making) some decisions may be regarded as a Company Officer, but in other cases may not.

On the face of the reasoning of the High Court, it is difficult to envisage too many circumstances where a health and safety manager would be likely to be found to be a Company Officer.

In my experience, health and safety managers are not typically amongst the senior echelon of executive managers, nor do they put proposals directly to the Board. To the extent that health and safety management proposals are put before a Board, they often come via a CEO or “sustainability” manager who put their own imprimatur on the proposal.

So to answer the first question, could health and safety managers be company officers for the purposes of the due diligence obligations? In my view – I cannot rule it out, but probably not,

As interesting (or otherwise) as this discussion might be, the more fundamental question is whether health and safety managers should be regarded as company officers – or at least have equivalent obligations of due diligence under safety legislation.

By way of comparison, there was and continues to be ongoing debate about how the mining industry is some parts of Australia will implement the principals of harmonisation.  At one point, a draft set of what were referred to, as “non-core” mining regulations were prepared, and without going into the rationale behind, and operation of the non-core regulations they did propose:

  1. The appointment of a senior person on a mine site who would be responsible for safety under the regulations – the Site Safety executive or SSE; and
  2. That the SSE would be “deemed” a company officer for the purposes of the health and safety regulations.

In doing this, the regulations were clear that the positive obligations of due diligence would apply to that position.

There seems to me to be no reason in principle why a similar approach could not be adopted in relation to health and safety managers. And if you look at the due diligence obligations as set out above, there is no reason that I can think of why you would not expect a health and safety manager to be across all of those requirements.

So, even is a health and safety manager may not be a company officer, there is no reason why they should not have the positive obligations of due diligence. After all, where would we expect the company officers to get the information top discharge their obligations if not from the health and safety manager?

Transpacific Industries: Disciplinary action as a safety control

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This is a case I have looked at before, and often use in management training to help explain the concept of reasonably practicable, and the relationship between reasonably practicable and the hierarchy of controls.

I was prompted to post it following the release of Safe Work Australia’s guidance material on reasonably practicable.

The case involved the prosecution of Transpacific Industries following a fatality in 2009. In an earlier, almost identical  incident, Transpacific had responded to a breach of its procedures with what the Court described as “robust disciplinary action“. When the repeat incident occurred in 2009 the question that was argued was whether the earlier disciplinary action was a “sufficient response“: Was it reasonably practicable? You can access the video discussion of the case here, and a copy of the case here.

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Regards.

Greg Smith

Unfair dismissal, delphic motherhood statements and other observations on safety documentation

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Delphic adj. ambiguous, enigmatic, obscure. Also Delphian [L Delphicius, from Gk Delphikos of Delpji (the ancient city in central Greece, famed for its oracle of Apollo, which was noted for giving ambiguous answers.) (The Macquarie Dictionary)

Let me apologise for the somewhat ‘delphic’ nature of the title for this blog, but it is an accurate description of a recent case and other findings, which has led to the observation on safety documentation. Although I might say less of an observation and more an update on, or restatement of, a long running concern that I have had about how safety documentation continues to actively undermine our efforts to create safer workplaces.

First are the recent unfair dismissal proceedings in Paul McGrath and Maitland Hayward v Sydney Water Corporation t/as Sydney Water [2013] FWC 793.

The case involved two workers who had their employment terminated after apparently breaching their company’s ‘lock out/tag out’ (LOTO) procedures. In the end, the termination was overturned and they were reinstated to their original positions. A number of the reasons for the decision turned on matters particular to Australian unfair dismissal laws, and included things such as:

• The long period of service of the two workers.

• The long and unblemished safety records of the two workers.

• The workers’ age and work history.

• The impact of the termination on the workers.

• The workers’ remorse.

However, the quality of the LOTO procedure was also a factor. The tribunal dealing with the claim noted:

• The LOTO procedure did not expressly detail the steps required to be taken to isolate power sources.

• The LOTO procedure requires formal training every two years, which did not occur.

The tribunal noted that there was “some attraction” in a submission that Sydney Water was itself in breach of its own policy.

• Evidence of experienced electricians was that the LOTO procedure was, at best, unclear, and at worst, confusing.

The tribunal noted that Sydney Water seemed to acknowledge this problem by undertaking extensive retraining of its employees on the procedure, because employees were concerned that they could also be subject to disciplinary action for a breach of the procedure.

The issue of the quality of safety documents in a safety context was also explored in the Royal Commission into the Pike River Coal disaster. The Commission noted in that case:

By November 2010 there were over 398 documents in the electronic system. Of these 227 were in draft as they were not signed off by two managers, although they were still used in the meantime. The number, and length, of the documents posed a challenge to the credibility of the system.

Although many of the documents were helpful, there were problems, not only with the sheer volume of material, but also with some of its content. For example, in 2010 two consultants and a Pike manager assessed the ventilation management plan and concluded it needed a complete review. (Volume 1, page 73)

Unfortunately, there is nothing surprising in this. The quality of safety documentation has been implicated in most major disasters for the past 25 years. And again, unfortunately, the response of the safety profession (and others) seems to be to keep doing the same thing and expect a different result. A few examples should suffice to make the point:

Longford Royal Commission: Fire and explosion at Esso’s gas plant in Longford, Australia. Two fatalities.

Esso’s [safety management system], together with all the supporting manuals, comprised a complex management system. It was repetitive, circular, and contained unnecessary cross referencing. Much of his language was impenetrable. These characteristics made this system difficult to comprehend both by management and buy operations personnel. (Page 200)

Montara Commission of Inquiry: Uncontrolled release of hydrocarbons off the north-west coast of Australia on 21 August 2009. No fatalities.

A number of aspects of PTTEPAA’s Well Construction Standards were at best ambiguous and open to different interpretations. The fact that a number of PTTEPAA employees and contractors interpreted aspects of the Well Construction Standards differently illustrates the ambiguity and inappropriateness of the Well Construction Standards. (Page 9)

The Deepwater Horizon: Fire, explosion and uncontrolled release of hydrocarbons in the Gulf of Mexico in April 2010. 11 fatalities.

If you look at the [Transocean’s safety] manual, you’re really impressed by it. It’s a safety expert’s dream. Everything anybody could ever imagine is in there. …because as one looks at it, everything under the sun is covered. It’s hard to see at a particular place somebody saying symptoms of that or this. If you see that, do this. This is not said by way of criticism. People have tried like hell in this manual to get it right. But it may be that when time is short, there might have been different ways to make clear exactly what should have been done in a short period of time. (Page 168-169)

I do not have any firm evidence about why this continues to be a problem, but I do have a number of observations based on my experiences over the past couple of decades.

Some of the issues appear to be systemic, for example, it does not seem to me that many health and safety professionals receive training in writing quasi-legal documents – which is ultimately, what safety management documentation is.

Another issue is the continuous “layering” of the safety documentation. This is often evident after an incident where the automatic response appears to be to amend or write a new procedure. More often than not, this is done without actually understanding why the initial procedure failed. Over time, this builds a volume of safety documentation incapable of being implemented.

However, the biggest concern I have observed in the last three or four years in particular is the ubiquitous “thumb drive” or USB stick. More and more we are observing safety documentation that has not been developed for a business or a particular risk, but rather has been cut and paste from some other organisation with no real regard for its application.

When you consider the quality of safety documentation in a general sense, it is not unreasonable to conclude that nobody is really reading these documents with any care or attention. I find it extraordinary how often I have to deal with safety management plans and other documents that contain the name of a totally unrelated company. Clearly the document is nothing more than a cut and paste from some other plan, but has been signed off by four, five or move different managers – yet even something as basic as the wrong company in the documentation is not being picked up. If the people responsible for developing and approving these documents were not reading them, why on earth would we expect the workforce to?

OK. So what does this have to do with the oracle of Apollo? It is taken from the Montara Commission of Inquiry:

The Inquiry also considers that (i) the Hazard Identification (HAZID) workshops which were conducted between PTTEPAA and Atlas to identify and manage risks at Montara; and (ii) the Safety Case Revisions/SIMOPS Plans which were produced by both entities, were pitched at far too great a level of generality. For instance, the workshops and documents did not deal in any specific way with management of barriers. Moreover, the SIMOPS documents were replete with delphic ‘motherhood’ statements, such as the following:

Safety management in the field is primarily the responsibility of the Vessel Masters/Superintendents, FPSO OIM, Rig OIM and WHP Person In Charge (PIC). The prioritisation of all activities in the Montara field is the responsibility of the PTTEPAA Project Manager. However, control of the individual activities during the field development remains with the relevant supervisors.

…

All parties in the Montara field development shall have clear structuring of HSE interfaces to ensure that there is no confusion as to: approval authority; roles and responsibilities of personnel; organisational structures, management of HSE; operating procedures; reporting structures; and SIMOPS. (page 135)

In the end, if our safety documentation does not provide good guidance about how the health and safety risks in the business are to be managed, what value does it add? And if it cannot be understood by the people expected to implement it, if it creates ambiguity and confusion, it is not overly pessimistic to think that it could be undermining our efforts to create safer workplaces.

Directors conviction in relation to workplace fatality upheld

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On 23 April 2013 , the Western Australian Supreme Court confirmed the conviction and increased the penalties of two Company directors charged in relation to a workplace fatality.  The charges against the Directors aleged “neglect” undr section 55(1) of the Occupational Safety & Health Act 1984 (WA).

You can access a copy of the case at the following link:

Fry v Keating [2013] WASCA 109

or see a short presentation about the case here.

Managing spontaneous stupidity

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This is an older case study that I put together a few years ago when I was working at STE, but in light of a number of recent discussions about workers making “mistakes“, I thought it might be worth revisiting.

The looks at the implications of asking a person to put in place controls to manage risks, but not ensuring that those controls are actually implemented. What are the consequences if some one is injured? And what if the injured person is the same person you asked to put the controls in place? Does it make a difference?

You can see a discussion about the case at the following link:

http://ste-safety-legal.ispringonline.com/view/4890-veh4g-72lSi

Please note that my contact details at the end of the presentation are not my current contact details, but you can contact me on gws@nexuslawyers.com.au or through our website, http://www.nexuslawyers.com.au