A reformed reality – liability in the wake of WHS law reforms
On 10 June 2020 the Work Health and Safety Amendment (Review) Bill 2020 (NSW) (Bill) was assented to, introducing a number of significant reforms to the Work Health and Safety Act 2011 (NSW) (WHS Act).
The key changes to the WHS Act are discussed below.
Increased WHS Act penalties
The Bill provides for an increase in penalties attached to Category 1, Category 2 and Category 3 offences under the WHS Act, and now sets those penalties by reference to index penalty units rather than a fixed amount. A penalty unit is $100 for the FY19-20 year but will increase on 1 July each year.
The maximum penalties now available under the WHS Act for Category 1, 2 and 3 offences (as compared to previously) committed by a body corporate are as follows:
A new breed of Category 1 offence
The Bill also broadens the scope of a Category 1 offence under the WHS Act, by introducing a ‘gross negligence’ offence.
Previously, a Category 1 offence under the WHS Act could only be made out where a person with a health and safety duty (including both a body corporate or an individual worker):
a) without reasonable excuse, engaged in conduct that exposed workers or other people to a risk of death, serious injury or illness; and
b) was ‘reckless as to the risk to an individual of death or serious injury or illness’.
Under the amendments to the WHS Act, a Category 1 offence can now also be made out where it can be demonstrated that a PCBU:
a) without reasonable excuse, engaged in conduct that exposed workers or other persons to a risk of death, serious injury or illness; and
b) engaged in the conduct with gross negligence.
In summary, a Category 1 offence can now be committed not only through reckless conduct (which requires evidence of some foresight of the risk), but also through gross negligence. The introduction of a ‘gross negligence’ test is intended to address the difficulties faced by prosecutors in proving ‘recklessness’ which ordinarily requires proof of a conscious choice to take an unjustified risk.
The Bill does not define ‘gross negligence’ but the term has a common law definition that will likely be applied. That is, gross negligence is ‘such a great falling short of the standard of care which a reasonable man would have exercised and which involved such a high risk that death or grievous bodily harm would follow that the doing of the act merited criminal punishment’.
It is expected that the amendment will make it easier to prosecute Category 1 offences for the most serious safety shortcomings.
Prohibition of certain insurance arrangements
Finally, the Bill introduces a new provision to the WHS Act – section 272A – which prohibits insurers and insureds from entering into insurance contracts that indemnify an insured for monetary penalties under the WHS Act.
These changes mean that it is more important than ever for both private and public sector entities to ensure that they have comprehensive safety management systems in place as well as quality assurance activities that verify the ongoing appropriateness and implementation of those systems.
General Managers, Chief Executive Officers and other senior managers should also ensure that they are exercising due diligence to ensure that their organisation is complying with its duties, as this is necessary to avoid exposure to personal criminal liability with respect to their duties as officers.
For further information on any of the issues raised in this alert, please contact the Employment Relations and Safety team at McCullough Robertson.
This publication covers legal and technical issues in a general way. It is not designed to express opinions on specific cases. It is intended for information purposes only and should not be regarded as legal advice. Further advice should be obtained before taking action on any issue dealt with in this publication.