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Australia – Company Officers’ Liability For Workplace Safety Clarified

15 May, 2013

 

Legal News & Analysis – Asia Pacific – Australia – Labour & Employment

 

WHAT YOU NEED TO KNOW

 

  • Company officers, such as directors, may be personally liable for breaches of the Occupational Safety and Health Act 1984 (WA) committed by the company where the breach results from their neglect.

 

  • "Neglect" concerns not just what the officer knows at the time of the breach but also what the officern ought to have known.

 

  • Whether an officer has failed to take steps to prevent the corporation's breach of safety laws will be decided with reference to the functions of that person's office. Where the circumstances under which the relevant risk arose were under the direction and control of the officer, and not remote from the officer's area of responsibility, it will be relatively easy to draw an inference of connivance or neglect by the officer. This will result in a finding of personal liability.

 

  • The matters that the directors in this case neglected are the sort of steps they would have needed to take to meet obligations of due diligence under harmonised workplace health and safety laws.


WHAT YOU NEED TO DO

 

  • Company officers must ensure:


a) safe work practices are in place and being complied with (and not just assume that they are); and


b) systems are in place to ensure safe work practices are being used and policed by adequately skilled supervisors and managers.

 

  • Employers need to be alert to the risk that employees do not always follow directions on safe work practices.

 

Directors and other officers can be liable for a company's safety breaches


Under section 55 of the Occupational Safety and Health Act 1984 (WA) (OSH Act) an officer of a corporation, including any director, may be liable for breaches of the OSH Act committed by the company where the offence occurred with the consent, connivance of, or neglect by, that officer.


There are similar provisions in the Mines Safety and Inspection Act 1995 (WA).


On 23 April 2013, in the decision of Fry v Keating [2013] WASCA 109, the Western Australian Court of Appeal further clarified directors' liability under section 55.


In summary the Court found the company's breach was attributable to the directors' neglect. They had failed to:

 

  • ensure the company had in place a safe method for slinging L68 packs; and

 

  • enforce a method that they knew was safe and appropriate for slinging L68 packs.

 

Facts of the case


WorkSafe prosecuted D&G Hoists and Cranes Pty Ltd (D&G) WorkSafe following a fatal accident to an employee. WorkSafe alleged breach of section 19 of the OSH Act for failing, so far as practicable, to provide and maintain a safe working environment.


WorkSafe also prosecuted the two directors of D&G under section 55 on the basis that the fatality was attributable to neglect by the directors.


The employee, a 22-year-old rigger, was killed in October 2007. He was fatally struck in the head at D&G's Malaga work yard when a pack of crane components, known as an "L68 pack" slipped from crane slings while it was being lifted and moved.


Relevantly, there were two methods to sling L68 packs:


(a) an authorised and safe method; and


(b) an unauthorised and unsafe method.


The unsafe method was being used when the fatality occurred. The Magistrates Court found that:

 

  • inductions were not consistently carried out and the deceased had in fact not been the subject of an induction;

 

  • no written safety procedure was in place;

 

  • new dogmen and riggers were not consistently shown how to correctly sling an L68 pack;

 

  • management had received a report of the unsafe system being used to sling L68 packs but nothing was ultimately done about it; and

 

  • there was no formal safety officer employed.


The Magistrates Court held that the company's conviction was attributable to the directors' neglect with respect to these matters.


The directors were not remote from the business. They were "hands on" directors. Mr Descare was the General Manager. Mr Keating was the Operations Director.


The Magistrates Court held that they were neglectful in being unaware that the supervision system in the yard had broken down, and in failing to enforce the use of the safe method in slinging the L68 packs. The directors had assumed that the safe method was in use, but had no sufficient procedures in place to ensure it was always used.


In the absence of:

 

  • a system to enforce the safe method of lifting; or

 

  • a proper induction system, the directors ought to have known that an employee might not always use the safe method.


Directors' appeals


The directors appealed to the Supreme Court. McKechnie J dismissed their appeals.


The directors then appealed their convictions to the Western Australian Court of Appeal on the ground that there was no evidence that they ought to have known that unsafe lifting methods were being used in the yard.


The directors alleged there was evidence to the
contrary:

 

  • there was a system in place to report any unsafe work practices to the yard supervisor, whom the directors understood enforced the use of the safe method;

 

  • when the directors visited the work yard, they would correct employees if they observed unsafe practices;

 

  • neither director actually saw the unsafe method being used on the day of the accident; and

 

  • one of the directors was overseas (at the time) and had no opportunity to observe or remedy the unsafe practice.


Appeals dismissed


The Court did not accept the directors' arguments and found that the uncontested findings of the Magistrate were sufficient to enable the inference to be drawn, beyond reasonable doubt, that the company's offence was attributable to neglect by the directors.


The Court found that the directors were obliged to take steps on behalf of the company to ensure a safe system of slinging of L68 packs was in use. This was in circumstances where:

 

  • the directors knew of the hazard involved in lifting and moving L68 packs;

 

  • the directors knew that there was a safe method which ought to be used at all times in slinging L68 packs;

 

  • the unsafe method was often used in the workplace;

 

  • there was no consistent induction process;

 

  • there was no written safety procedure;

 

  • there was no consistent system for new dogmen or riggers to be shown how to correctly sling an L68 Pack; and

 

  • D&G did not employ a formal safety officer.


As to enforcement, the Court noted the directors had merely orally conveyed to the yard supervisor in 2004 that the safe method should be used and thought the yard supervisor thereafter would enforce its use. However his other duties did not permit his full attention to the work yard.


The directors had assumed the safe method was in use, but there were no procedures in place to ensure it was always used. Indeed one director accepted that employees did not always follow authorised methods and may use the unsafe method with the risk of injury or death.


It was not necessary for the prosecution to prove, in addition, that the directors "ought to have known" that an unsafe method was actually being used on the day of the fatality. Had the directors taken steps to enforce the safe method, it was inferred that they would have become aware the unsafe method was being used.


The directors were each fined $45,000. The company was fined $90,000.


The Court also upheld a costs order for $51,576 plus disbursements in favour of the prosecution.
 

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For further information, please contact:

 

Marie-Claire Foley, Partner, Ashurst
[email protected]

 

Jason Raftos, Ashurst
[email protected]

 

 

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