The new OHS regime shock

Businesses in Victoria, Western Australia, and any other jurisdiction which does not make it to the “starting line” for a January 1, 2012 start on the Work Health and Safety harmonised laws may still be liable under the Work Health and Safety Act in those jurisdictions where it is enacted.

Some businesses in Victoria or Western Australia who are breathing a sigh of relief that they have a further 12 months to get their systems into order for the new Work Health and Safety laws may in fact be covered by those laws in relation to some of their work from January 1, 2012.

A Victorian or Western Australian business that contracts with and supplies goods or services to a business in a jurisdiction where the Work Health and Safety legislation is in force may find itself subject to those laws as a worker, designer, manufacturer, supplier or other capacity.

The new Work Health and Safety laws carry significant increases in sanctions in all jurisdictions for both corporations and individuals. They also impose a unique positive duty of “due diligence” (which is defined) on “officers” (also defined).

This means businesses operating in States or Territories where the new laws do not commence on January 1, 2012 should ensure they assess the possible application of the Work Health and Safety legislation in any jurisdiction in which it has commenced operation, to their circumstances.

An example of how the Commonwealth laws can extend beyond organisations ordinarily considered to fall within their immediate coverage was provided by the July 2011 Federal Court decision under the Commonwealth Occupational Health and Safety Act. In that case a company, Subsee Explorer Pty Ltd, designed, manufactured and supplied boats to the Commonwealth Department of Immigration and Citizenship.

Subsee Explorer would not normally fall under the Commonwealth Act, but by contracting with a Commonwealth Department it brought itself under the Act. Subsee Explorer and the Department were each fined the maximum civil penalty of $242,000 following the sinking of one of those boats, the Malu Sara in Torres Strait in 2005 with the loss of five lives.

The Malu Sara failed to comply with buoyancy requirements.

Justice Collier found that the five deaths were “entirely avoidable”, and the evidence of Subsee Explorer’s culpability was “overwhelming and conclusive”. The director of the business had also signed a certification of compliance with relevant Australian Standards which the court described as a “complete falsehood”.

Although the penalty was the maximum available to the court, I personally consider it to be very low. It is in my view a sad reflection of both the low Commonwealth penalty regime under the current laws, and the failure of the authority to prosecute under the criminal provisions of the Act, which would have doubled the potential fine.

The certificate of compliance had been issued without any basis or foundation for believing it could be correct. In those circumstances my view is that it was fraudulent. From what the court found I believe that for such matters in the future a charge of reckless conduct under section 31 of the new Work Health and Safety Act would be sustained.

This would expose officers of such a business to potential personal fines of up to $600,000, or five years imprisonment, or both. In addition the company would be exposed to fines of up to $ 3 million per charge – not $242,000.

The case is a tragic and sad one. It does however serve as a clear warning to businesses that may think they will not be subject to the new laws for a year or more, that if they provide goods or services to the Commonwealth, or to businesses in any jurisdiction in which the new laws will be in force, they need to think again and carefully examine their position.

Graham Dent is a lawyer with more than 30 years experience in the OHS field. He is the owner of Work Health Safety (OHS) Harmonisation Australia, an online forum focused on the new laws.  It has nearly 2,000 members, including OHS regulators from all jurisdictions.  Membership is free.