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How a duty of care applies differently to officers and managers

We are often asked how a director or manager can discharge their duty of care and as from this month we can point you to further guidance material issued by Safe Work Australia, particularly if you are a small business owner.

In a press release issued in January, Safe Work Australia’s Chief Executive Officer Michelle Baxter stated that “If you make or influence the significant financial or operational decisions for a business then you may be an ‘officer’ under WHS laws”.

“As an officer, you have a duty under WHS laws to look for ways to lead on WHS matters.”

According to the press release, Safe Work Australia produced the guidance material after investigations found that small businesses needed more practical guidance about their WHS obligations.

The guidance material, including short videos, is available on a dedicated web page for officers.

Who is an officer?

If you are a director of a company then it is clear that you are an officer.

However, where on the scale of being a person who can “influence the significant financial or operational decisions” of a company, does a person become an officer?

It is important to review and understand the 2015 decision from the ACT Industrial Magistrates Court.

This was the first judgment in Australia interpreting the meaning of ‘officer’ under the harmonised Work Health & Safety Act, which operates in all States and Territories except Victoria and Western Australia.

In the case of B McKie v Muni Al-Hasani, Kenoss Contractors Pty Ltd (in liq) (2015) ACTIC 1, the Court found that a senior project manager, Mr Al-Hasani, was not required to exercise the duty of care of an officer, being due diligence, because the prosecution failed to prove beyond reasonable doubt that he was an officer of the construction company, Kenoss Contractors Pty Ltd (in liquidation).

Importantly, the Court held that whether a person (who was not a director or company secretary) could be found to be an officer depended on assessing their role in the company as a whole rather than a particular function or project in which the individual was engaged.

Kenoss was found clearly to have had a health and safety duty to those who visited its sites.

This duty included subcontractors, such as a truck driver who was electrocuted and killed when the bucket of his truck contacted with (or came close to) low hanging power lines above a site which was used by Kenoss Contractors Pty Ltd to store materials for a nearby road surfacing project.

It was found that there were a number of relatively simple safety measures that could have been implemented to mitigate or eliminate the risks associated with the power lines and so Kenoss was found to have breached the WHS Act and was guilty of a Category 2 offence.

Although the project manager conceded that he participated in making decisions that affected Kenoss’ business, the Court found that there were clear limits to his participation in this regard and that his own evidence was not determinative of the matter.

The Court drew a distinction between people with ‘organisational’ responsibilities and others whose responsibilities were ‘operational’.

While the project manager was responsible for the delivery of specific construction contracts entered into by Kenoss, the Court was not satisfied that this alone demonstrated that:

  • he had sufficient control of the company;
  • the decisions that he did make were ones which affected either the whole or a substantial part of Kenoss’ business.

This case demonstrates that it will be a matter of fact and degree as to whether a non-director will be an officer of an organisation for the purposes of the safety laws.

Businesses need to be alert as to how they structure their arrangements and the level of organisational and operational responsibility that they delegate to individuals as this will have a direct bearing on this issue.

Victoria and the harmonised states adopt the same definition, whereas in WA, an officer has a broader definition under the Occupational Safety and Health Act 1984 (OSH Act).

Under the OSH Act, a director, manager, secretary or other officer (e.g. a supervisor who is considered an officer by law) acting in those roles can be personally liable if an offence is committed due to their neglect.

Officers will always include the following people:

  • chief executive officers (CEO);
  • chief financial officers (CFO);
  • chief operating officers (COO);
  • directors; and
  • company secretaries.

Next steps

The legislation sets out the requirements for discharging the duty of due diligence.

In essence, the duty is to take reasonable steps to ensure the business complies with its obligations.

Those steps will require an officer to have an understanding of safety law, knowledge of the risks in their business and then to be able to demonstrate that they have taken proactive steps to implement and maintain an effective work health and safety management system which eliminates or reduces foreseeable risks of injury.

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