Changes to OHS regulations affecting CFOs and Senior ...static.knowledgevision.com/account/brr/assets/attachment/8HAR20… · 2002 NOHSC develops a National Safety Strategy 2002-2012

Changes to OHS regulations affecting CFOs and Senior Management

Michael Harmer, Chairman & Senior Team Leader, Harmers Workplace Lawyers

17 May 2011

© Talent2 Pty Ltd 2011

Agenda

» Introduction

› Need for uniformity

» A brief historical context

» Harmonised Work Health & Safety Laws

› What it means for your business

› Main changes

» Due Diligence under the new scheme

» OHS Legal Risk Management Model

» Concluding comments

› Checklist of steps for your business


Prevention

CompensationRehabilitation


Harmonised Work Health & Safety Laws

A first step…

…in the right direction


Brief historical context

Industrial Revolution

UK Factory Acts

(nineteenth century)

Adopted by Australian colonies

eg: Factories & Shops Act 1896 (NSW)



Problems with the original OHS legislation:

» Piecemeal prescriptive legislation

» Failed to cover all areas of work

» Could not keep up with technology & new types of risk

» Operative in Australia until late 20th Century


UK Roben’s Committee Report 1972

Key recommendations:

» Move from prescription to 'goal-setting'/performance based legislation

» Broad performance duties on entities to ensure safety, health & welfare:

› Assisted by specific ‘regulations’ and ‘codes of practice’

» Devolution of responsibility to workplace levels:

› Business to assess and deal with their risks

› Consultative mechanisms with workers (committees)

» Entire workforce covered

» Emphasis on prevention via:

› Consultation, education and regular inspections

› Prosecution as a latter resort



Roben’s-style legislation

Gradually adopted in all Australian jurisdictions in modified form

NSW Williams report

Occupational Health & Safety Act 1983 (NSW)

(SA 1972; TAS 1977; NSW 1983; WA 1984; VIC 1985; NT 1986; ACT 1989;

CTH 1991; QLD 1995)


Key areas of difference between Australian States & Territories

» Nature of obligations:

› 'Ensure safety' (eg: NSW; QLD)

› 'Ensure so far as is reasonably practicable' (VIC; other)

› 'Reverse onus defence' distinction

» Nature of offences

» Penalties

» Management liability

» Extensive regulations

» Codes of Practice


History of the steps towards OHS harmonisation

1985 NOHSC established

1991 NOHSC starts to work on national standards for adoption by the States/Territories

1995 Industry Commission Report recommends single national scheme based upon Robens

2002 NOHSC develops a National Safety Strategy 2002-2012

2004 Productivity Commission Report

2005 NOHSC replaced by Australian Safety and Compensation Commission (ASCC)

2005 Large national employers permitted to self-insure under the Comcare scheme

2006 Council of Australian Governments (COAG) agree to improve development of National

OHS Standards

ASCC begins a review of the national OHS Framework



2007 ALP Government commits to harmonisation via 'cooperative

federalism' (ie: not via a 'WorkChoices-style' takeover)

July 2008 COAG inter-governmental agreement for harmonisation by

1 January 2012

2008-2009 National Review into OH&S Laws

SafeWork Australia established:

» Replaces ASCC

» To develop Model - Act

» Regulations

» Codes of Practice



Dec 2009 Model Work Health and Safety Bill 2009

Dec 2010 - Mar 2011

» Public comment period on model WHS Act Regulations and

priority model Codes of Practice

» Further development of model Codes of Practice

Dec 2011 States and Territories to adopt model WHS Act and model WHS

Regulations by this time

1 Jan 2012 Date for commencement of harmonised system via local

State/Territory legislation


The result

» Focus on the Prevention regime

» The Commonwealth and each State/Territory adopt the scheme to suit local application – 9 different adaptations (Jurisdictional Notes)

» 9 Different Regulators (eg: WorkCover, NSW)

» 9 Different Court systems for enforcement cases

» An important first step towards uniformity

National harmonisationNot national uniformity


Harmonised OHS laws

The Harmonised Scheme

» Model Act

› Sets out general obligations and the enforcement regime

» Model Regulations

› More detailed prescription of requirements in specific areas

» Model Codes of Practice

› Provide guidance for compliance

› Admissible as evidence relevant to compliance with a duty under the Act


Harmonised OHS laws

The Harmonised SchemeModel WHS Regulations are being developed for many areas including:

» Authorisations including registration and licences including asbestos removal and high risk work

» Work environment and facilities, first aid, personal protective equipment, emergency plans

» Hazardous chemicals including inorganic lead

» Asbestos

» Major hazard facilities

» Other hazards including plant, manual tasks, noise, fall hazards, remote and isolated work,

confined spaces, electricity

» Construction work

» Occupational diving


Harmonised OHS laws

The Harmonised SchemeModel Codes of Practice are also being developed for many areas including:

» Managing work health and safety risks

» Consultation

» Work environment and facilities

» Asbestos

» Hazardous chemicals – labelling and safety data sheets

» Plant, manual tasks, noise, work at heights and confined spaces

» Construction hazards

» Traffic management, fatigue and first aid, and

» Hazardous work including diving, abrasive blasting, logging, welding and spray

painting



» Entities subject to OHS duty (PCBU)

» Nature of the duty:

› Reverse onus gone

› Take all steps ‘reasonably

practicable’

» Management Liability:

› Positive ‘due diligence’ obligation as

opposed to deemed liability

» Increased Penalties:

› Emphasis on graduated

enforcement

» Strong Investigation Powers:

› No privilege against self-

incrimination

› No direct union right to prosecute

› Increased union right of entry

› Extensive consultation obligations

Some key changes (NSW comparison)


NSW changes pending

» On Royal assent:

› Reverse onus

› Management liability

» Union prosecutions –retrospectively

» Transfer prosecutions to the general criminal courts (on harmonisation 1 January 2012)

New South Wales bills before Parliament



Entities subject to OHS duty

» Duties are imposed on persons conducting a business or undertaking (PCBUs)

» The duties extend to PCBUs:

› Involved in management or control of workplaces;

› In control of fixtures, fittings or plant;

› Designing plant, substances or structures;

› Manufacturing plant, substances or structures;

› Importing plant, substances or structures;

› Supplying plant, substances or structures;

› Installing, constructing or commissioning plant or structures

› The duties also extend to officers, workers and other persons at the workplace



Nature of the duty

» Duty to ensure health and safety by eliminating or minimising risks to health and

safety; so far as is ‘reasonably practicable’

» ‘Reasonably practicable’ involves :

› Balancing nature of the risk and

› Cost of risk removal

› Assessing whether the cost of removal is ‘grossly disproportionate’ to the

nature of the risk

» The duties are owed to ‘workers’ (employees; contractors; labour hire etc) and to

‘others’ capable of being put at risk by the conduct of the undertaking.



» Officer:

› As defined under Corporations Act

› ‘Officer’ participates in decisions affecting a substantial part of the business; or

› Has the capacity to affect significantly the entity’s financial standing (eg CFOs)

› Must exercise ‘due diligence’ to ensure that the PCBU complies with the duty

» Worker:

› Must take ‘reasonable care’ of themselves and others

› Must comply and cooperate with reasonable instruction, policy and procedure of PCBUs

» Other persons at a workplace:

› Carry a duty of ‘reasonable care’ similar to that of workers (follow ‘reasonable instruction’)

Duties of officers, workers and other persons



Increased Penalties

Category 1Reckless conduct exposing another to risk of death, serious injury or illness

» $3m for Corporate PCBU;» $600,000 for individual PCBU /

$300,000 for other individuals» up to 5 years imprisonment

Category 2Failure to comply with OHS duty exposes another to risk of death, serious injury or illness

» $1.5m for Corporate PCBU;» $300,000 for individual PCBU /

$150,000 for other individuals

Category 3 Failure to comply with OHS duty» $500,000 for Corporate PCBU;» $100,000 for individual PCBU /

$50,000 for other individuals



What is required of senior managers and CFOs to discharge

‘due diligence’?

» The Model Act indicates that due diligence includes:

(a) Acquiring up to date knowledge of OHS matters;

(b) Gaining an understanding of risks facing your business;

(c) Ensuring that the business uses appropriate resources and processes to manage risks;

(d) Ensuring appropriate processes for receiving and considering information regarding

risks and responding in a timely way.

(e) Ensuring processes are in place to comply with OHS duties (eg: reporting notifiable

incidents; consulting with workers; ensuring compliance with notices under the Act;

ensuring training and instruction in OHS; ensuring health and safety representatives are

trained).

(f) Verifying provision and use of resources at (c) to (e) above.


Legal Risk Management Model

A Prevention

1. Corporate commitment and leadership

2. People commitment and business culture

3. Allocation of responsibility

4. Understanding legal obligations and opportunities

5. Risk identification, analysis, assessment and prioritisation

6. Introduction of risk controls

7. Supervision, training and enforcement

8. Monitor and review


Legal Risk Management Model

B Reaction

1. Specific emergency response plans

2. Internal reports

3. External reports

4. Internal investigation

5. External investigation

6. Steps to prevent recurrence

7. Risk transfer

8. Monitor and review


Some concluding comments

» Harmonisation is but a step towards uniformity

» Much of what is required will already be in place

» Nevertheless – the Harmonised Scheme will be ‘new’ to every State and Territory

» Major educative task for each business


Some concluding comments

Suggested steps include:

a) Audit existing OHS arrangements against requirements of the Harmonised Scheme;

b) Identify areas for change – in policy, procedures, contracts and other arrangements;

c) Educate managers and workforce and others involved with your business as to the new requirements;

d) Implement change in consultation with your workforce;

e) Ensure corporate governance meets ‘due diligence’ requirements on an ongoing basis;

f) Consider components of the Legal Risk Management Model for implementation in your business;

g) Perform a personal audit;

› Encourage same across your organisation.

All the best for your ongoing endeavours

Changes to OHS regulations affecting CFOs and Senior Management

Michael Harmer, Chairman & Senior Team Leader, Harmers Workplace Lawyers

17 May 2011

Documents

Changes to OHS regulations affecting CFOs and Senior ...static.knowledgevision.com/account/brr/assets/attachment/8HAR20… · 2002 NOHSC develops a National Safety Strategy 2002-2012