No gold for breaching the golden rule

I recently wrote about the risks attached to breaching OH&S rules. I indicated that breaches of drug and alcohol policies have lead uncontroversially to termination of employment. However, Fair Work Australia (FWA) has not been so robust with breaches of other safety rules where it is demonstrated that the breach did not lead to any imminent risk of harm to another person.

The recent case of Chadwick v Woodside Energy Limited [2011] provides further guidance on FWA’s view of OH&S policy breaches.

The Woodside Karratha site was a major hazard facility. It had a safety management system that had a specialised process around working with permits. Chadwick and another employee were directed to disassemble, test and reinstall a level gauge on site. A permit was issued. The nature of the permit was that it should be suspended at the end of each day of work, required liaison with a control room panel operator and work could not start until a fresh permit was issued on subsequent days.

Chadwick and the employee, pursuant to the permit, commenced work on one day.  The permit was only valid for seven days. After a break of several days they returned to complete the work but found the permit hut (where permits were issued) was closed. Mr Chadwick said he had full knowledge of what was in the permit and as result finalised the work. After completing the work he went to the permit hut and was issued with an identical permit to the expired one. His employment was terminated for breaching the Golden Rule (the process for issuing permits at the Woodside site). The fundamental breaches of the golden rule were:

• The failure to liaise exposing others to risk.
• Working without a permit.

Woodside argued that their system arose following the Piper Alpha disaster in 1988 which caused the death of 165 men. The new system – including the permit to work system overcame the errors that lead to that disaster. Woodside had been vigorous in enforcing the rules around permits.

FWA held that it was a valid reason to terminate a person for failing to comply with such a clear and relevant policy and procedure. The employee had been trained carefully in the golden rule, was aware of the risk associated and had made assumptions (which could have been erroneous) which could have caused serious injury or loss of life. Further, Woodside must have a system that has integrity to avoid the high levels of risk that exist at the site. In the circumstances dismissal with notice was fair and appropriate.

For employers the lessons from this are very clear. They are:

1. If you have rules associated with how people perform in the safety management system the rules must be clear, precise, trained upon and understood by employees.

2. These rules must be universally and fairly enforced.

3. Prior to terminating a person’s employment a careful and procedurally fair course must be undertaken to determine if there was a breach, what the breach was, what was the seriousness of the breach, what was the level of training, induction and understanding and what actual or potential risks arose arising from the breach.

4. Finally, you must review the employee’s personal circumstances (such as their age, longevity in the business, history of discipline, dependence of the family on the employee’s income, etc) before making any final decision.

If you can demonstrate that the breach of the rules placed other people actually or potentially at risk, the nature of the breach was known to the person at the time of breaching it (as were the potential consequences) and the person, with a disregard to that knowledge, breached the rules, it is clear that FWA will uphold the termination if you act with procedural fairness.

1. Andrew Douglas is the Principle for Macpherson + Kelley Lawyers. He is the Editor-in-Chief of the loose leaf publication, The OHS Handbook, and writes on workplace law issues such as Industrial Relations, Employment law, OHS, Equal Opportunity, Privacy, Surveillance and Workers Compensation. He is the principal of the legal division of Douglas LPT and appears in courts, tribunals and Commissions throughout Australia.