On the hook: Officer duties and the potential for personal liability for work health and safety

While many companies understand and have in place a system to discharge their work health and safety obligations, a specific duty often less understood is the obligation of a company's officers to exercise due diligence in ensuring that the company does what is required of it from a health and safety perspective.

A majority of prosecutions under the national harmonised WHS laws regarding the so-called "officer's duty" have resulted in guilty pleas, with courts having little opportunity to date to formulate any authority on precisely what will be expected of a company's officers, particularly in the scenario of a large company where officers may have no direct involvement in day-to-day business. That said, it would be ill advised for officers to take their duty lightly. The duty is a personal one and, as a result, carries with it the serious potential for personal liability up to and including imprisonment in the event something goes wrong.

Recent prosecutions under the Work Health and Safety Act

A recent prosecution brought under NSW's incarnation of the Work Health and Safety Act highlights the high expectations safety regulators hold for company officers. SafeWork NSW commenced a prosecution against Edgesafe Pty Ltd and its sole director Mr Butler, after a guardrail around a roof installed by Edgesafe at a client's site came loose, causing a worker engaged by the client to fall 5 metres to the ground, suffering serious injuries in the process.

Edgesafe was charged with a failure to eliminate risks to health and safety arising from its installation of the guardrail. Mr Butler, as the sole director of Edgesafe, was also personally charged with a breach of his duty as an officer of Edgesafe to exercise due diligence, exposing the worker to the risk of death or serious injury, to which he pled guilty. It is particularly interesting to note that Mr Butler was not even present at the time of installation of the guardrail which led to the relevant incident — he was on holiday!

The case law developing in this area indicates that absence or a lack of knowledge of WHS issues facing a company does not excuse an officer from discharging their duty; in fact ignorance will likely make things worse.

So, in light of the ever-present risk of personal liability, how does a company ensure that the duty imposed on its officers is discharged?

Who is an "officer"?

The first question that must be asked is who are the officers within the business? The answer for many companies will not be as simple as in the Edgesafe case,where the company was operated by a single director.

Luckily, the harmonised work health and safety laws provide a useful mechanism for determining who the officers within a company will be. An "officer" includes anybody who is:

• any director or secretary of the business;
• a person who makes, or participates in making, decisions that affect the whole or a substantial part of the business;
• a person who has the capacity to significantly affect the business' financial standing; or
• a person on whose instructions or wishes the directors of the business are accustomed to act.

Due diligence: what is it, and how do you show it?

Having determined your company's officers, the question then arises of what they are accountable for in discharging their duty. The harmonised work health and safety laws give six examples of what regulators and courts are likely to look for when considering whether officers have discharged their duty. Specifically, the question will be asked whether officers have taken steps to:

• acquire and keep up-to-date knowledge of WHS matters which affect the business;
• gain an understanding of the hazards and risks involved in operation of the business;
• ensure that resources and processes are provided within the business to eliminate or minimise risks;
• ensure that the business has appropriate processes in place for receiving and considering information relating to WHS issues;
• ensure that the business has in place processes for complying with its WHS duties; and
• verify the provision and use of any resources and processes provided.

What should businesses do to ensure due diligence?

Clearly, the actions required to discharge the duty of due diligence means that officers, even if they are far removed from the day-to-day operations of the business, cannot sit on their hands and rely on a lack of knowledge or involvement to circumvent their duty. Instead, officers must proactively and consistently seek to understand the WHS issues facing their business and take a key role in determining the action to be taken by the business on those issues. Employers can provide crucial assistance to its officers in this respect, specifically by:

• establishing a reporting structure which recognises the paramount importance of work health and safety, and clearly provides for the escalation of WHS matters to the officer level through an appropriate channel. For example, the business may employ a person to perform the specific role of WHS Officer, with a key component of the job being to feed information through to the officers for consideration and seek their direction as required; and
• maintaining a rolling "due diligence" plan, which can be updated both as new issues arise, as well as to reflect the specific response to each issue as given by the officers of the business. This will ensure a consistent record of reference exists should the question of whether the officers of the business have discharged their duty ever arise.