Company Director’s OH&S Duties

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May 15, 2012
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May 16, 2012

Company Director’s OH&S Duties

The Work Health and Safety Act 2011 (the WHSA), which commenced on 1 January 2012, and the recent Western Australia Supreme Court decision in Keating v Fry [2012] WASC 15, are timely reminders that company directors are ultimately responsible for occupational health and safety and maintaining a safe system of work.

The WHSA now imposes an obligation on directors and officers to act with due diligence regarding occupational health and safety (OHS) matters. Under the WHSA, due diligence includes:

1.         Acquiring and keeping up-to-date knowledge of work health and safety matters;

2.         Gaining an understanding of the nature of the operations of the business and the hazards and risks associated with those operations; and

3.         Ensuring there are appropriate resources and processes to eliminate or minimise risks.

If faced with a charge under the WHSA, directors will not be able to argue that they were not involved in the day-to-day running of the business as they are the ones who will be found responsible for their company’s OHS requirements.

This is what occurred in Keating.

In that case, two directors of a company specialising in the hire and sale of hoists and cranes appealed the finding that they failed to provide and maintain a safe working environment under the Western Australian equivalent to the WHSA.

An employee was killed after an L68 pack of 16 crane components slipped while being lifted. There were two known methods for lifting the packs, the first was the safe method and the second was the unsafe method. The second method was being used when the employee was killed. The directors argued that if they saw method 2 being used, they would have stopped it and enforced method 1.

The court dismissed the appeals and said that the directors assumed method 1 was in use but the company had no sufficient procedures in place to ensure method 1 was always used. For instance, the company did not have a system to enforce method 1 or a proper induction procedure in place.

The directors were fined $10,000 each and the company was fined $70,000. They were also ordered to pay costs.

Similarly, in the case of Inspector James v Paul (No 2) [2011] NSWIRComm 117, a director who was charged with breaching his OHS obligations, was unable to avoid liability by arguing that he was not involved in the day-to-day management of the business. That case also involved an employee being killed after a machine he was operating malfunctioned.

The cases and legislation not only reinforce that directors are ultimately responsible for OHS but should also be a reminder that if insureds do not maintain a safe system of work for their employees, they may not only have to defend a common law claim, but may also be charged with breaching the WHSA.

In extreme cases, breaches can result in imprisonment.

Source: Barry Nilsson Lawyers

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