02 June 2011
Directors and officers have new positive obligations to ensure businesses are complying with their obligations.
For the first time in some Australian jurisdiction, directors and officers will soon have a positive duty to ensure their businesses comply with their safety obligations under new occupational, health and safety laws.
Under the new laws, officers could be personally liable for up to $600,000 in fines and/or 5 years' imprisonment if they recklessly breach their duty and it results in, or exposes a person to, serious harm.
When do the changes come into effect?
The new obligations on officers will come into effect when the new safety laws come into operation around the country on 1 January 2012.
Who is an "officer" under the new laws?
The definition of officer under the new laws will replicate the definition in section 9 of the Corporations Act 2001 (Cth) which includes:
It also includes a person:
Officers must exercise due diligence
Company directors and officers will have to exercise "due diligence" to ensure that their business complies with its safety obligations. This means that officers could be liable for breaches of safety without an incident or accident even occurring. Under the new legislation , in exercising due diligence officers must take reasonable steps to:
acquire and keep up-to-date knowledge of work health and safety matters;
gain an understanding of the nature of the operations of the business and the hazards and risks associated with those operations;
ensure the business has available for use, and uses, appropriate resources and processes to eliminate or minimise risks to health and safety; and
ensure the business has appropriate processes for receiving and considering information regarding safety incidents, hazards and risks and responding in a timely way to that information;
ensure that the business has, and implements, processes for complying with its obligations under the new laws which may include:
The obligations on officers are prescriptive and clearly require them to be proactive in ensuring their business complies with its safety obligations.
What must officers do to ensure compliance with the new duties?
To ensure officers are in compliance with their new duties from the commencement of the new laws on 1 January 2012 they must immediately consider whether they need to adapt their current practices.
Any new policies or procedures should be tried and tested in the lead-up to 1 January 2012 to ensure compliance from that time. Some practical steps that officers might consider implementing include:
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For further information, please contact Dr Graham Smith.