Due diligence : six-in-one collection [First edition.] 9781925672862, 1925672867

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Foreword My objective in writing the Due Diligence series was to create an accessible resource for busy managers and safety professionals on work health and safety legislation which had just been introduced at the time of publishing in 2012. The legislation introduced a number of new duties and categories of duty holders. Six years later, there are now a number of cases illustrating the application of the legislation. The series, now in its second edition, has become an indispensable resource on the practical implementation of the legislation. An analysis of prosecutions in Australia in the Clyde & Co Work Health and Safety in Australia: Year in Review 2017 Report found that there were 194 completed and published prosecutions under health and safety laws around Australia in 2017. A total of $14,036,325 was imposed in fines across those cases. The vast majority of those prosecutions were commenced against organisations. Victoria, which has not as yet adopted the model work health and safety Act, appears to be the most active jurisdiction, with close to 50% (94) of Australia's completed health and safety prosecutions in the State. Queensland was the next most active jurisdiction in 2017 with 22% (43) followed by NSW as the third most active jurisdiction with approximately 16% (32) of all completed prosecutions. Victoria also recorded the highest penalties. Victoria imposed 36% of

the total penalties, with NSW coming a close second, imposing 31% of the total penalties in the context of 16% of the total prosecutions. The average penalty handed down varied from jurisdiction to jurisdiction with the highest average penalties in the Commonwealth with $465,625, followed by NSW with $137,281 and the lowest in Western Australia with $21,563. The Report found that prosecutions against organisations for breaches of the primary duty of an organisation to its worker are still the most actively used provisions (with 134 of 194 prosecutions falling into this category). However, there was a trend towards personal prosecutions of both workers and officers. The vast majority of the prosecutions relate to risks associated with plant (cranes, forklifts, excavators, failures in traffic management, vehicle interaction/movements and/or the maintenance of exclusion zones, guarding failures)(44%), work at height (23%), falling objects (13%) and electricity (5%). Queensland also saw an increase in enforcement action arising from asbestos related matters with 5 of its 43 prosecutions relating to this topic. The Report also found that the construction and manufacturing industries accounted for 57% of all prosecutions in 2017. Agriculture, transport and waste management were also well represented in prosecutions (with 10%, 6% and 6% respectively). The highest penalty for a single safety offence, $1,300,000, was handed down in Victoria in December 2017 against Downer EDI Works Pty Ltd. This is one example of the significant ramp up of penalties being imposed for health and safety offences around the country but it is not an isolated case. There is a steady stream of cases demonstrating courts are prepared to impose penalties around the $1 million mark. This includes the record $1,137,525 penalty imposed against CK Crouch Pty Ltd (in liquidation) in Victoria, the $1 million penalty imposed in Safe Work (NSW) v WGA Pty Ltd [2017] NSWDC 92 (5 May 2017) and the $1 million penalty imposed in DPP v Toll Transport Pty Ltd [2016] VCC 1975 (14 December 2016). In that case, logistics company Toll Transport was fined $1 million in relation to an incident in which a stevedore was fatally crushed by a trailer

while helping to load cargo onto a ship. In the landmark decision in Williamson v VH & MG Imports Pty Ltd [2017] QDC 56, the Queensland District Court found that a fine of $90,000 imposed by the Queensland Magistrates Court at first instance was “manifestly inadequate” and substituted a fine of $125,000. Significantly, the Court held that the state’s mirror WHS Act permitted sentencing courts to have regard to comparable decisions from other harmonised states and territories, given that the main object of the WHS Act is to provide for a “balanced and nationally consistent framework” for work health and safety. Finally, the Report found that there were 8 completed and published officer prosecutions around the country, 5 of which were commenced in the context of a fatal incident. A total of $338,000 in penalties were imposed in those officer prosecutions. The highest penalty handed down in an officer prosecution in 2017 was $180,000 in a Victorian case in the Melbourne County Court under the Occupational Health and Safety Act 2004 (Vic) where David Shane Fergusson (a sole director of the relevant company Jacbe Builders) was charged along with his company for failures in providing safe systems of work. Mr Fergusson was carrying out work at an apartment building construction site in Caulfield and was injured in the incident that also caused the death of his apprentice. It is yet another example of a case reflecting the trend of personal officer prosecutions involving officers in smaller companies who have more day to day involvement in the work being performed in the incidents subject to investigation. There were also 8 completed and published worker prosecutions in 2017. New South Wales, Queensland and Western Australia each had 2 prosecutions. The 8 prosecutions saw total penalties of $62,000 while the highest penalty imposed in a worker prosecution in 2017 was $20,000.

Preface Five years have passed since the landmark introduction of the model

Work Health and Safety legislation. Although the model legislation is yet to be adopted by Victoria and Western Australia, the experience in the seven jurisdictions that have adopted the reforms is now sufficient to enable us to assess some of the predictions made at the time of the release of the first edition of this Due Diligence series. This series set out to provide a practical guide to the reforms on the core issues of officer liability, incident management, worker and stakeholder engagement, worker duties, dealing with regulators and the duties of the person conducting a business or undertaking. In its original edition, each book in the series introduced novel approaches to each of those topics. Whether it was the idea of a safety impact assessment in the first book (Due Diligence: Duty of Officers), the concept of a positive investigation in the second book (Due Diligence: Incident Notification, Management and Investigation), the use of interface agreements in the third book (Due Diligence: Horizontal and Vertical Consultation), the development of a model for worker duties in the fourth book (Due Diligence: Worker Rights and Duties), the strategic approach to engaging with regulators in the fifth book (Due Diligence: Dealing with Regulators) and PCBU duties in the sixth book (Due Diligence: Persons Conducting a Business or Undertaking), each book brought something new to the table, both provoking what were then new thoughts and ideas which are now commonplace in most large workplaces. The second edition of this series seeks to develop some of these ideas with the benefit of five years' experience in implementing them in various businesses. The hallmark of this series has been the simple illustrative diagrammatic illustrations of the complex concepts of the legislation and the inclusion of cases, as illustrations of the practical implementation of the principles. Like its predecessor, the second edition maintains the plain English, practical approach, with an emphasis on the practical rather than the theoretical. While work health and safety performance has improved over the

years, work-related deaths and serious injuries remain unacceptably high. According to Safe Work Australia statistics, there were 178 workrelated death in 2016. The last major survey of workplace injury experience, the Australian Work-related Injury Experience by Sex and Age, 2009–10, published in 2012, indicates that 638,400 workers reported a work-related injury in the period 2009–10. This equates to an incidence rate of injury of 57.9 per 1,000 workers. I hope that by adopting some of the recommendations in this series, we can maintain our progress in this crucial area.

Wolters Kluwer Acknowledgments Wolters Kluwer wishes to thank the following who contributed to and supported this publication: Managing Director:

Michelle Laforest

Content Director:

Scott Abrahams

Head of Content — Books: Alicia Cohen Content Coordinator:

Hui Ling Lee

Editor:

Helen Tillman

Cover Designer:

Jessica Crocker

About the Author Michael Tooma is a Partner of Clyde & Co where he heads up the Global Occupational Health, Safety and Security Practice. He is the author of over 20 books on occupational health and safety (OHS). Michael has lectured on OHS law at several Australian and international tertiary institutions for almost 20 years. He currently teaches OHS law at the School of Law at the University of New South Wales, University of Sydney and Auckland University, and is colecturing OHS law at the Australian National University. Michael is consistently ranked as a leading expert in OHS. He is

described in APL 500 as “phenomenal” and Chambers 2016 says that he has a top reputation in Australian work health and safety practice, with clients saying he is “an absolute authority” on safety legislation who can “talk about it in applicable layman's terms”. Chambers 2013 describes him as “a leading practitioner in Australia in health and safety”. Peers regard him as an “excellent OHS expert” and “a real powerhouse in this area” (Chambers 2012). He has continuously ranked as one of the best lawyers in Australia in Best Lawyers, since 2008.

Author Acknowledgments I am grateful to a number of people for making this series possible. I am delighted to have had another opportunity to collaborate with Alicia Cohen who was involved in the first series. Her continuing support is very much appreciated. I am grateful to Helen Tillman who edited this series. It is a privilege to have someone of Helen's calibre as its editor. Finally, I would like to thank my wife Rachel for her unwavering support to my often unreasonable writing endeavours. Writing books of this kind occurs on weekends and late in the evenings and comes at the expense of precious family time.

Dedication To my daughter Kaitlyn Tooma.

Part I Duty of Officers

CHAPTER 1 INTRODUCTION Key messages • Due diligence is a proactive duty. • Due diligence is part and parcel of leadership. • Due diligence duty is criminal in nature.

Case example

Officer’s duty turned upside down by bat venture An overenthusiastic academic gained notoriety for all the wrong reasons in becoming the first officer to be convicted under the Work Health and Safety Act 2011 (WHS Act). The Professor was an officer in a scientific and environmental venture into bats, aimed at promoting better appreciation of bats. The venture was open to the public, allowing feeding of the bats by members of the public and allowing them interaction with the bats. Workers and the public were exposed to scratches and bites from the bats and to an increased risk of Australian bat lyssavirus infection. The workers and members of the public interacting with the bats were not notified of the risk of exposure to lyssavirus or how to protect against the risk. There was no warning that, if bitten or scratched, to immediately seek medical treatment. The defendant pleaded guilty in the Cairns Magistrates Court on 15 January 2014 to breaching his due diligence duty. Magistrate Mr Joe Pinder ordered a 12-month good behaviour

bond with recognisance in the amount of $10,000, as well as ordering costs. After the incident, the Professor authorised alterations to the facilities and put in substantial efforts to ensure the facilities had proper procedures and protocols to manage the risks associated with interactions with bats.

What is the due diligence duty? Senior corporate positions often come with additional responsibilities and scrutiny. A great deal is expected of the modern director or senior executive. High profile corporate collapses have only served to reinforce that trend. However, few areas instil fear amongst executives as much as duties and liabilities for work health and safety (WHS). Legal obligations Work health and safety laws impose a proactive duty on officers of persons conducting a business or undertaking to exercise due diligence to ensure compliance with the WHS legal obligations by that entity. Nature of duty The due diligence duty is a duty imposed on officers personally. It is separate from the duty imposed on their company. The duty is also proactive. In essence, it is a duty to put in place a corporate governance regime. That is, it can be breached merely for failing to do so, even though there may not have been a WHS incident at the officer’s company. A breach of that duty is a criminal offence attracting a maximum penalty of $600,000 and up to five years imprisonment for serious offences. These penalties are imposed on officers personally and are over and above any penalty that is imposed on their company arising from any incident. Being criminal in nature, they cannot be insured against — nor can the officer seek an indemnity from their corporate employer or in the case of public sector officers, the Crown. Any

penalty imposed must be paid for personally and obviously terms of imprisonment will be served by the convicted officer. Structure This book is a plain english explanation of that duty. This chapter provides an overview of the duty. Chapter ¶2 explores the question of “who is an officer”. Chapters ¶3–¶8 deal with each element of the due diligence definition. Chapter ¶9 deals with the liabilities arising from breaches of the due diligence duty and explores practical recommendations for compliance by categories of officers such as directors, company secretaries, chief financial officers, human resources directors, general counsel and operation management. Figure 1 — Relationship between officer duty and company duty

What does due diligence mean? Due diligence is a familiar concept for an officer. It is a duty under the corporations law. It is a duty under consumer protection law. It is also a defence for liability under environmental law. In the WHS context, it is defined to include six elements.

Definition Due diligence is defined under the WHS Act to consist of six elements: • Knowledge of WHS matters — first element of due diligence. • Understanding of the nature of the operations of the business and the hazards and risks associated with those operations — second element of due diligence. • Resources and processes — third element of due diligence. • Information regarding incidents, hazards and risks and responding in a timely way to that information — fourth element of due diligence. • Legal compliance — fifth element of due diligence. • Verify the provision and use of these resources and processes — sixth element of due diligence. This book will practically analyse each of these elements in subsequent chapters. For ease of reference, it will adopt the above numbering of elements as a shorthand method to calling up their requirements. That is, the requirement to acquire knowledge in relation to WHS matters is the first element. Figure 2 — Components of due diligence

What is the duty of the company? The legislation imposes duties on any person conducting a business or undertaking (PCBU). The definition of PCBU is deliberately broad, as is the primary duty of care imposed on such persons. The breadth of the duty is intended to capture every business or “business-like” activity. Person conducting a business or undertaking The concept of a PCBU is a critical aspect to understanding the duties under the WHS Act. A person may conduct a business or undertaking alone or with someone else. They may do so for profit or gain or not for profit or gain. They can do so as partners in a partnership or unincorporated association in which case each partner will be a PCBU. But a person is not conducting a business or undertaking merely because they are a worker or an officer of an entity which is conducting a business or undertaking. Such persons, workers and officers have duties of their own. The duty of officers will be explored in this book. The duty of workers is explored in another title in this Due Diligence series — Due Diligence: Duty of Workers.

There is a limited exemption for volunteer associations, which are a group of volunteers working together for one or more community purposes where none of the volunteers employs any person to carry out work for the volunteer association. Liability under modern corporate structure A company is regarded as a PCBU under the WHS Act. Even a holding company within a group of companies is conducting a business or undertaking. Each corporate entity within a corporate group will be regarded as a separate duty holder conducting a business or undertaking. In a typical modern structure, a company in a group of companies which employs staff, will be conducting a business or undertaking of labour supply, and therefore will be held responsible for risks arising from that activity and all related or incidental activities. A company in the group which takes out the lease or owns the work premises, will be relevantly conducting the business or undertaking of control or management of premises used as a place of work. It will therefore have obligations and be liable in relation to risks arising from the premises and any related or incidental activities associated with that undertaking. A company in the group which owns or leases the plant and fixtures used, including mobile plant, will be relevantly conducting the business or undertaking of supply of plant and fixtures for use at work, and therefore will have obligations and liabilities in relation to any risks arising from that business or undertaking, including any related or incidental activities. A company in the group which conducts the customer-facing transaction, or processes the invoices or payroll, will also be relevantly conducting a business or undertaking, and will be similarly liable for risks arising from its activities and any related or incidental activities. Clearly, those activities in the structure outlined above would overlap. The WHS Act requires each entity to discharge its obligation to the full extent of its control over an issue and to consult, co-ordinate and cooperate with the other entities in relation to the discharge of their

respective duties. Case example

Individual as person conducting a business or undertaking George and Marie Karam, the former owners of a Sydney hairdressing salon, pleaded guilty for failing to comply with their WHS obligations under s 19 of the WHS Act (Primary duty of care). WorkCover NSW inspectors attended the salon in July 2012 and seized bottles containing a product being used as a keratin treatment containing unsafe levels of formaldehyde, following complaints from staff who complained of respiratory difficulties and skin irritations when using the substance. In April 2013, after further complaints from workers, a second product was seized and testing found that it also contained illegal levels of formaldehyde. The product label was predominately written in Arabic and thus was not compliant with labelling requirements under cl 335 of the Work Health and Safety Regulations 2011 (WHS Regulations). A translation of the label indicated that the product was not a keratin treatment, but a fabric softener for hairdressing towels. The court held the pair liable, as PCBUs have an obligation to ensure staff are given appropriate training and personal protective equipment and that the potential risks associated with being exposed to a carcinogenic substance, should have been identified and addressed. The pair were fined $25,000 each.1

What is the duty of a person conducting the business or

undertaking? PCBUs have a duty to ensure, so far as reasonably practicable, the health and safety of workers while the workers are at work in the business or undertaking. That includes workers who are not directly engaged by the person conducting the business or undertaking but are caused to be engaged by them, or whose activities in carrying out work are influenced or directed by the person. A PCBU must also ensure, so far as is reasonably practicable, that the health and safety of other persons is not put at risk from work carried out as part of the conduct of the business or undertaking. Figure 3 — Primary duty of care of company

Figure 4 — Corporate structures

At its broadest, a company has a duty to ensure, so far as is reasonably practicable, that other persons are not put at risk from work carried out on its behalf. That means the company has to ensure that it does not create a risk to health and safety to anyone in the conduct of its business activities. As indicated above, the company also has a duty to its workers and other workers it causes to be engaged. That includes contractors, subcontractors and employees of contractors and subcontractors. It also has a duty to other workers whose activities are influenced or directed by it. That includes labour hire workers that its subcontractors may use, for example, such as transport companies used to deliver plant or components for the services of its contractors. It must ensure, so far as is reasonably practicable, the health and safety of workers engaged directly or indirectly by it, and workers whose activities are

influenced or directed by it. The duty is very broad and is not limited to what happens at the company’s workplace. “Workers” means anyone performing work, including contractors, subcontractors, employees of contractors or subcontractors, labour hire workers, apprentices and trainees, outworkers, students on work experience and volunteers, not just employees. Figure 5 — Definition of worker

The company also has a duty to consult workers in relation to matters affecting their health and safety. It is required to consult, co-operate and co-ordinate with other duty holders in relation to discharging the respective duties in areas of overlap. It has obligations in relation to reporting of incidents. There is also an extensive regime aimed at protecting workers and prospective workers against victimisation on

safety grounds. The legislation creates powers for inspectors and union officials in relation to entry to workplaces and, in relation to inspectors, extensive investigation powers. The obligation is therefore imposed on the company to ensure that it does not obstruct or hinder the exercise of those powers. The WHS Regulations impose specific obligations on the company in relation to the management of risks arising from its undertaking, such as the management of chemicals, plant and fixtures, electrical work, construction work and work involving hazardous manual handling or the risk of a fall, for example. Practically, however, the company must have a comprehensive system to manage the risks associated with its operations in order to discharge the above obligations. The duty of PCBUs and the elements of such a system is explored in the sixth book of this series, Due Diligence: Persons Conducting a Business or Undertaking. Breaches of the duties of the company are criminal in nature and attract a maximum penalty of up to $3m for serious offences. Figure 6 — Liability formulae

Note: “PCBU” is a person conducting a business or undertaking. Duties are subject to reasonable practicability.

Reasonable practicability As broad as it is, the duty of the company is still limited by reasonable practicability. Reasonable practicability is a balancing exercise. It means doing what is reasonably able to be done in relation to ensuring health and safety, taking into account and weighing up all relevant matters including, on the one hand, the likelihood of the hazard or the risk concerned occurring, the degree of harm that might result from the hazard or the risk, what the person concerned knows, or ought to reasonably know about the hazard or the risk and ways of eliminating or minimising the risk; and, on the other, the availability and suitability of ways to eliminate or minimise the risk and the cost associated with available ways of eliminating or minimising the risk, including whether it is grossly disproportional to the risk. The greater the risk both in consequence and welfare, the more that will be expected — by way of controls. The concept is not new in the law. It has been around for over a century and there is a large body of law interpreting that weighing-up exercise. It is a point in time assessment. That is, the weighing-up exercise is considered from the perspective of what was known about the risk (both in terms of likelihood and consequences), and the relevant controls and costs, at the point in time that the relevant decision was made giving rise to the alleged breach. The assessment therefore is not retrospective. Figure 7 — Reasonable practicability

Case example

Scope of duty is broad The first case under the new work, health and safety (WHS) laws

in Australia involved an application for an external review of an Improvement Notice, issued to electrical distribution company Essential Energy. In Essential Energy v WorkCover Authority of NSW,2 the court considered the definition of “worker” under the new WHS Laws. The Improvement Notice was issued in response to an incident that occurred in April 2012, when Essential Energy gave an electrical service provider access to the electricity network between two power poles. An apprentice employee of the provider was electrocuted when he grasped live wires that were outside of the designated work area. The court granted Essential Energy’s application to have the Improvement Notice stayed, pending external review. In considering the application, however, the court found that it was open to conclude that Mr Sweeney was a “relevant worker” of Essential Energy for the purposes of the WHS Act, given its broad definition under the WHS laws. Although the court also noted that Mr Sweeney could fall within the broader definition of “other persons” to whom a duty was owed, subsequent decisions have indicated that there is no overlap between the two duties.3

What is safety and why do officers have a safety duty? Officers of the company are its leaders. The due diligence obligation is a reflection of that role in the safety context. It is the embodiment of the safety leadership principles. As leaders, officers are expected to lead the company to ensure positive health and safety outcomes. One of the founding fathers of modern safety principles, Professor Patrick Hudson observed that: Safety is an ubiquitous concept … Most people see safety as concerned primarily with the personal well-being of stakeholders, by which I mean all those involved, not just the immediate actors and owners. Some also add the integrity of the business and its

assets. While these are necessary preconditions, I view safety, and more specifically safety management, in a more active way. I see the creation of a safe environment as allowing dangerous activities to take place successfully, which means without harm or damage. What this means is that safety is more than a passive and well-meaning notion, such as “Thou shall do no harm”. Instead safety is something that has to be actively managed to allow profit or advantage to be gained.4 Seen in that way, safety is implied in operational requirements. A safe organisation is a highly reliable organisation. As a practical reality, a corporation operates through its officers, employees and agents. While true leadership occurs at all levels within an organisation, the law recognises a category of leaders within corporations known as officers. This level within an organisation, capturing the top echelon of an organisation, is singled out for duties under many laws including safety laws as well as corporate laws and consumer protection laws. A number of studies have shown that continuous and genuine support of safety is critical to a safe and healthy working environment. A study by Whiting and Bennett (2003)5 found that management systems alone are not enough to achieve good safety outcomes. The study into best practices in corporate safety and health among major corporations by international think tank, The Conference Board concluded that achieving excellence is about empowering everyone — management, supervisors, employees and contractors alike — to make safety and health truly work.6 Officers, as leaders, are required to ensure that operational objectives are delivered safely. They can do this in a number of ways. They can prescribe a set of rules relating to every risk and enforce compliance with it, creating a rules-based culture. Alternatively, they may create a culture of interdependence based on trust, where everyone contributes towards ensuring safety. Every organisation has a culture. Culture refers to a style, sense of purpose and approach; it is the way things are done. To the extent that an organisation addresses safety by its acts or even its omissions, that subset of its culture is its safety

culture.7 While a rules-based culture is superficially attractive, bitter experience tells us that it is impossible to anticipate a rule for every situation that might arise and, as such, a rules-based culture invariably does not achieve the desired outcome. Indeed, it can often inhibit that outcome. Another of the founding fathers of modern safety, Professor James Reason, identifies the components of safety culture as follows: • an informed culture (a culture in which those who manage and operate the system have current knowledge about human, technical, organisational and environmental factors that determine the safety of the system as a whole) • a learning culture (a climate in which there is a willingness and ability to draw the right conclusions from the safety information system to address system deficiencies and the will to implement major reform when needed) • a reporting culture (a climate in which people are prepared to report their errors and near misses • a just culture (an environment of trust in which people are encouraged, even rewarded, for providing essential safety-related information through the sharing of incidents and near-miss information, but expected to be held accountable for unacceptable behaviour), and • a flexible culture (an environment where people are trusted to make the right decisions based on the information presented to them, consistent with the objectives of the system rather than simply blindly following the rules).8 In developing these concepts further, Hudson et al offer a taxonomy of organisational culture: • Pathological: These are organisations that are more concerned about avoiding liability than improving safety. The driver to compliance is not getting caught. In the absence of a very well

resourced and active regulator, they are not likely to comply with the legal requirements. When caught, they minimise the overall cost by promptly pleading guilty to a charge or settling the case so that they can get on with business. • Reactive: These are organisations that are forever reacting to incidents. They have accidents, which propel them into action to prevent a repetition of the same accident, but then the momentum is lost and they focus on getting on with business. • Calculative: These are organisations where safety is well accepted, the workforce is more involved, a safety management system is in place, and procedures exist, but they are not well imbedded. • Proactive: These are organisations where management is proactive and seeks out safety issues. Management knows and cares about safety. The workforce is involved, but there is still a high need for supervision. • Generative: These are organisations where safety is embedded in production — “safety is how we do business around here”. All feedback loops are closed, the workforce demands information as they can prevent problems, management knows and cares about safety, and safety is equal to production.9 Professor Hudson identifies the following characteristics of a good culture:10 • Leadership: Leaders are not afraid to do “difficult” things. Officers are required to understand the operation and the risks associated with it and to make the decisions necessary to deliver safe production. • Respect: Individuals are respected, as are the dangers they face. Workers are afforded protections to ensure that they do not suffer a detriment in their employment as a result of their engagement in health and safety consultation or dispute resolution processes.

Proper implementation of these requirements builds respect and trust. • Informed: Officers know what is really going on and workers are willing to report their errors and near misses. • Mindful: Everyone is wary and always ready for the unexpected. Officers should not seek assurances, but rather, they should have a suspicious and inquisitive mind when it comes to understanding the vulnerabilities of the system. • Just and fair: A just culture presents a clear delineation between acceptable and unacceptable behaviour and known and consistently enforced consequences. • Learning: This refers to a willingness to adapt and implement necessary reforms, particularly necessary in relation to near misses, not just actual accidents. Hudson argues that a consequence of these features is that the organisation will be flexible (ie it will operate according to need), reliable (ie it will always deliver) and profitable (ie because the risks are better managed). Whether a flexible culture is an outcome of a good culture or is a prerequisite to it, is debatable. On one view, a PCBU needs to foster a flexible culture where workers are empowered to make decisions that deliver the safest outcome in the circumstances, based on their training, qualifications and experience, using the risk management approach. The inclusion of profitability as a feature of generative organisations is noteworthy. That reliability is a feature of companies displaying a good safety culture, is a corollary to the same point. If a good safety culture results in reliability, not just in safety outcomes but in production outcomes as well, then the company will be profitable. Figure 8 — Hudson maturity model

The role of leaders is to drive the culture of their organisation to become a generative culture, where safety is integrated into every aspect of the business or undertaking so that safely performing the activities involved in the business or undertaking, is how things are instinctively done. Collins and Hansen identify the following three features of great leadership: (1) Fanatic discipline: That is, consistency of action, consistency with values, consistency with long term goals, consistency with performance standards, consistency of methods and, ultimately, consistency over time.11 (2) Empirical creativity: relying on empirical evidence (and not what other people are doing) to validate creative instincts.12 (3) Productive paranoia: maintaining hyper-vigilance in good as well as bad times.13

However, these features on their own will not achieve greatness for the company. One additional central force is required — a cause. Collins and Hansen call this “Level 5 ambition”. The same concepts can be applied to safety. Fanatic discipline in the safety context is a values based approach. Safety is a value not an objective. It underpins the approach. It is consistent over time. Great safety leaders display consistency and discipline in their commitment to their values. This consistency and reliability promotes predictability of decision-making and therefore, empowers flexibility. If everyone knows what drives the leaders, they can predict their response on any given issue and concern and can act in an emergency — even in the absence of any specific guidance. Production will be stopped if there is a safety concern without hesitation (regardless of the cost implications), because everyone can predict that this is what the leaders would determine if they were available to be asked. It is not because of a specific delegated power or authority, but rather, an understanding developed through consistent decision-making, apparent attitudes, approaches and beliefs by those leaders. If people understand the values of the leader, they can adjust their approach to deliver outcomes consistent with those values, without the need for prescription. Consistency in values, standards and approach creates the culture in the organisation, ie “the way we do things around here”. The important point here is consistency in the long term, ie pursuing long term goals and consistently working towards them, regardless of economic conditions or other distractions. However, leadership requires much more than a mere commitment expressed in a policy. Leaders need to lead on safety. They should be demonstrating an interest in safety, welcoming and encouraging the reporting of bad news so that the lessons can be learnt and the issues addressed, and avoiding reliance on assurances from others, preferring instead to be inquisitive in their approach and taking a personal interest. Great leaders also display empirical creativity. In the safety context, that is a principles based approach. Very little emphasis is placed on

programs and products under that approach. Rather, a first principles approach that is tailored for the organisation is preferred. Solutions are developed from the ground up. This is important because what it requires is a mind concentrated on the needs of the organisation. Solutions are bespoke, not generic. Data collection is purpose-built and designed to validate the effectiveness of the solutions developed. Leaders need to display productive paranoia. They need to be aware of the vulnerability of their organisation’s success and be constantly on guard to protect that hard-earned success. In safety, this is referred to as mindful leadership. Some commentators have called on leaders to be in a constant state of chronic unease about the possibility of things going disastrously wrong.14 Whether a state of perpetual anxiety and paranoia is necessary or not, is a moot point. Certainly, the proactive engagement of leaders to embrace safety improvement rather than safety assurance, is required. Figure 9 — Safety leadership foundation

However, productive paranoia or mindfulness, empirical creativity and fanatic safety discipline of themselves are not enough. Leaders in pathological organisations in many respects display some of these features. They key ingredient that distinguishes a great safety leader from the pack, is their passion for safety which ties each of the other elements together. Great safety leaders are enthusiastic about discussing safety initiatives. They are as curious and anxious about the PCBU’s safety performance as high-performing students are curious and anxious about their test results. They are genuinely excited about new and smart safety initiatives. They show empathy

towards their direct reports in relation to challenges they face, working through solutions rather than simply demanding results. Safety is not number one on the agenda because they need to set an example or want to send a message; it is number one on the agenda because that is what they are passionate about. The force of that passion is contagious. Direct reports see it, believe it, embrace it and celebrate it. That effect is reinforcing. Importantly, that is an entirely positive approach. Passion for safety is not about seeking out failure to highlight vulnerability. It is about seeking out success to celebrate it. This approach motivates the organisation to greater success. While mindfulness is a component of safety leadership — a productive paranoia that catastrophic failure may be imminent and a vigilance to avoid that failure — it is a minor part of great safety leadership. It is merely there to balance against the hubris that creeps into high reliability organisations, causing the spectacular collapses in safety culture that have been observed with some of these organisations. It is not the driving force of great safety leadership. If it were the driving force behind the organisation’s safety leadership, the culture that the organisation would be displaying would be entirely reactive. Can officers rely on their health and safety advisors to discharge their duty? The due diligence duty is a personal duty of officers. Like other duties under the legislation, it cannot be delegated, modified or transferred. It must be discharged by the officers themselves. This does not mean that there is no role for the health and safety advisors of the company. Much of what is expected by the due diligence duty can and should be facilitated through processes. Firstly, knowledge management systems are required to acquire information and educate the officers in relation to WHS matters to discharge the first element. A number of processes are required to identify and facilitate the personal understanding of officers of the risks associated with their operations to discharge the second element.

A management system, risk management assessment tools and financial analysis is required in order to permit an officer to discharge the assurance in relation to resources and processes inherent in the third element. Safety key performance indicators must be established, data collected, analysed and disseminated to officers as part of a comprehensive reporting system in order to permit them to discharge of the fourth element. A legal compliance audit system must be developed and maintained in order for officers to be satisfied of the fifth element. An audit program, together with a quality assurance system for verifying the quality of such audits, is necessary in order to discharge the sixth element. Consequences of breach of officer duty A breach of the duty of an officer is a criminal offence attracting a maximum penalty of $600,000 and up to five years imprisonment for serious offences. In addition, officers may be subject to a publicity order where their name is published in newspapers together with the details of the offence committed. They can be subject to training orders where they can be made to undergo training on a safety topic to prevent the repetition of the offence. They can also be ordered to undertake specific projects or undertake restorations. Figure 10 — Penalties for breach of work health and safety laws Category

Description

Penalty

1

Most serious cases — breach the primary (general) duty involving recklessness and serious harm to a person or risk of such harm.

Corporation = $3 million Individual officers = $600,000 Imprisonment — up to five years Workers and other persons = $300,000 Imprisonment — up to five years

2

Breach of the primary (general) duty where serious harm or the risk of it without the element of recklessness.

Corporation = $1.5 million Individual officers = $300,000 Workers and other persons = $150,000

3

Breach of the duty that does not involve high risk of serious harm.

Corporation = $500,000 Individual officers = $100,000 Workers and other persons = $50,000

Are these liabilities insurable? While directors and senior managers will often have “directors and officers’ liability insurance”, these insurances do not cover liability in relation to WHS offences. This is because these offences are criminal in nature. In the same way that an aggravated assault or armed robbery cannot be insured, nor can a prosecution and conviction for a WHS offence. Any insurance contract which purports to offer such an insurance cover is void and against public policy. This is expressly provided in the legislation in that the WHS Act provides that any contract that purports to contract out of, transfer or modify an obligation is void.15 The best that one can do is ensure that legal costs associated with a defended prosecution are covered by the relevant insurance policy or an indemnity from the company in relation to those legal costs and other expenses associated with defending a prosecution. There are also limits to the extent to which a company can offer that indemnity under the corporations law. It is important that directors and other officers negotiate the terms of such an indemnity at the outset of their engagement or employment. It is not uncommon for a prosecution to take place after the person has left the company, in which case they may be left to fund their defence from their own resources, sometimes without access to key documents that may assist them in their defence. In some cases, an incident may take place after the person has left the company but they

may, through their conduct prior to the incident, be implicated in some way and therefore be the subject of an investigation and prosecution. It is therefore prudent to have a detailed deed of indemnity and assistance between directors and other officers and the company dealing with assistance, access to information, and indemnity for legal costs associated with a regulatory investigation of an incident and defending any charge. These are important documents and should be carefully negotiated. They are not standard documents in the sense that they should be tailored to the relevant circumstances, being specific on the type of information that the officer will require access to and the conditions placed on such access. Case example

Are you risking jail by taking out insurance? A recent South Australian case has put the spotlight on the risks associated with taking out insurance for WHS offences. The case, Hillman v Ferro Con (SA) Pty Ltd (in liquidation) and Anor,16 arose as a result of a fatality on a construction project undertaken by Ferro Con, a construction company. The company went into liquidation shortly after the accident. Its director was charged as an officer and pleaded guilty. It emerged during the sentencing hearing that the director was in fact insured against any penalty imposed. Magistrate Lieschke observed that the insurance “undermined the Court’s sentencing powers by negating the principles of specific and general deterrence”. The magistrate awarded the highest penalty available to him in the matter under the relevant South Australian legislation that applied at the time, with a penalty reducing it only for the early guilty plea. It is important to note that imprisonment was not an option available to the magistrate on sentencing in this case, under the legislation that applied at the time of the offence. It is interesting to speculate what his honour would have done had that option

been available to him.

Footnotes 1

Work Cover Authority of New South Wales v George Karam and Marie Karam; WorkCover Media Release 2012.

2

[2012] NSWIRComm 83.

3

WorkSafe v Rawson Homes [2016] NSWDC 237.

4

P Hudson, Safety Culture — Theory and Practice (NATO Research, Defense Technical Information Centre, 2001) 1 (emphasis added).

5

MA Whiting and CJ Bennett, Driving Toward “0”: Best Practices in Corporate Safety and Health (The Conference Board Research Report No R-1334-03-RR, 2003).

6

Ibid 4.

7

D Rousseau, “Quantitative Assessment of Organisational Culture: The Case for Multiple Measures” in LC Cooper and I Robertson (eds), International Review of Industrial and Organisational Psychology (Wiley, 1988).

8

J Reason, Managing the Risk of Organizational Accidents (Ashgate Publishing, 1997).

9

PTW Hudson, D Parker, R Lawton, WLG Verschuur, GC van der Graaf and J Kalff, “The Hearts and Minds Project: Creating Intrinsic Motivation for HSE”, Proceedings 5th SPE International Conference on Health, Safety and Environment in Oil and Gas Production and Exploration

(CD-ROM, SPE, Richardson, Texas, 2000). 10

The following section is based on P Hudson, “Climbing the Safety Culture Ladder”, Workshop (Norton Rose Fulbright, October 2013).

11

J Collins and MT Hansen, Great by Choice (RH Business Books, 2011) 46.

12

Ibid 55.

13

Ibid 60.

14

A Hopkins, Failure to Learn — The BP Texas City Refinery Disaster (CCH Australia Limited, 2010) 113.

15

See Work Health and Safety Act 2011 s 272.

16

[2013] SAIRC 22.

CHAPTER 2 WHO IS AN OFFICER? Key messages • First step of compliance is identifying who is covered. • Officer includes anyone who participates in making decisions affecting a substantial part of the business of the company.

If you don’t know you are an officer, you have no charge to comply with your duty. Why identify officers? The WHS legislation imposes the duty to exercise due diligence on officers of PCBU. Identifying who is an officer in any company is the first step to discharging the duty to exercise due diligence. Officers need to know that they are caught by the duty in order to take the necessary steps to comply. As indicated in Chapter ¶1, there are separate duties imposed on the company itself and on workers. The focus of this book, however, is on the duty of officers. Definition of officer Officer of a corporation means: • director of the corporation • secretary of the corporation • a person who makes decisions that affect the whole of the business of the corporation • a person who makes decisions that affect a substantial part of the business of the corporation • a person who participates in making decisions that affect the whole of the business of the corporation

• a person who participates in making decisions that affect a substantial part of the business of the corporation • a person who has the capacity to affect significantly the corporation’s financial standing • a person in accordance with whose instructions or wishes, the directors of the corporation are accustomed to act (excluding advice given by the person in the proper performance of functions attaching to the person’s professional capacity or their business relationship with the directors or the corporation) • a receiver, or receiver manager of the property of the corporation • an administrator of the corporation • an administrator of a deed of company arrangement executed by the corporation • a liquidator of the corporation, and • a trustee or other person administering a compromise or arrangement made between the corporation and someone else. Officer of the public sector Officer of the public sector means a person who makes or participates in making decisions that affect the whole or substantial part of an undertaking of the Crown. This does not include Ministers or elected local councillors. They are expressly excluded by the WHS Act. Case example

Guiding principles for determining officers In Morley & Ors v Australian Securities and Investments Commission,17 the NSW Court of Appeal observed at [897] that “[i]t is a reality of corporate life that board and other important

decisions involve many persons other than the ultimate decisionmakers”. On appeal to the High Court of Australia, French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ set out the following principles at [23]–[26] for determining whether a person “makes or participates in making decisions affecting the whole or substantial part of the business of the company”: “First, the inquiry required by this paragraph of the definition must be directed to what role the person in question plays in the corporation. It is not an inquiry that is confined to the role that the person played in relation to the particular issue in respect of which it is alleged that there was a breach of duty. Second, in a case like the present, where the breaches of duty alleged were omissions to provide advice, it is evident that determining how a reasonable person occupying the same office and having the same responsibilities would exercise the powers and discharge the duties of that office may be assisted by consideration of how the officer in question acted on occasions other than the one which is alleged to give rise to a breach of the duties imposed by s 180(1) … Third, each of the three classes of persons described in par (b) of the definition of ‘officer’ is evidently different from (and a wider class than) the persons identified in the other paragraphs of the definition … Fourth, sub-par (i) of par (b) distinguishes between making decisions of a particular character and participating in making those decisions. Contrary to Mr Shafron’s submissions, participating in making decisions should not be understood as intended primarily, let alone exclusively, to deal with cases where there are joint decision makers. The case of joint decision making would be more accurately described as ‘making decisions (either alone or with others)’ than as one person ‘participating in making decisions’. Rather, as the Court of Appeal rightly held, the idea of ‘participation’ directs

attention to the role that a person has in the ultimate act of making a decision, even if that final act is undertaken by some other person or persons. The notion of participation in making decisions presents a question of fact and degree in which the significance to be given to the role played by the person in question must be assessed.”

Examples of officers Directors of companies, including non-executive directors, are officers because they are expressly identified in the definition. Indeed, no distinction is made in the definition between executive and nonexecutive directors. A director of a company is a person who is appointed to the position of a director or is appointed to the position of an alternate director and is acting in that capacity, regardless of the name that is given to their position. That is, changing the name of the position does not change the application of the duty. Practically, the directors of the company can be identified through a simple Australian Securities and Investment Commission company search. A person who is not validly appointed as a director is still a director if they act in the position of a director or the directors of the company are accustomed to act in accordance with their instructions or wishes. This is often known as “shadow directors” because, even though the person is not actually appointed as a director, they in effect behave in that capacity and everyone accepts their authority to do so. In practice, that can sometimes be the case in relation to major shareholders who control the affairs of the company even though they may not be appointed to the board of directors. Those provisions do not apply merely because the directors act on advice given by a person in their professional capacity or business relationship with the directors or the company. Company secretaries are also expressly included in the definition. The company secretary attends and participates in board meetings and in

that capacity, can influence the direction of the company. Their inclusion in the definition of officer is therefore appropriate. Practically, company secretaries will be identifiable through an Australian Securities and Investment Commission company search. Insolvency practitioners (exercising the role of receivers, receiver managers, administrators, liquidators and trustees of a company arrangement or compromise made with creditors) are also officers. The chief executive officer, chief financial officer (in their capacity to influence the financial standing of a company), chief operating officers and general counsel (in their respective capacity as persons making or participating in making decisions that affect the whole or substantial part of the business or the corporation) are also officers. Beyond that, the precise identification of who is an officer becomes harder. The reach of the officer definition will be determined on a case-by-case basis based on the organisational structure and custom and practice of the relevant company. In some companies, the above list may represent the complete list of people who will be officers. In most companies, however, several additional layers of positions will fall within the scope of people who participate in making decisions that affect a substantial part of the business of the company. Possible candidates for this, depending on the organisational structure, include human resources managers, health and safety managers, chief information officers, information technology managers and compliance managers. Officers are involved in policy making and decisions that affect the whole or a substantial part of the business of the corporation. To participate in making decisions that affect the whole or a substantial part of the business of a company, is the same as taking part in the relevant process. “Taking part in” connotes active participation of the person in the management of a corporation. Such participation would have to be real and direct but not necessarily in a role in which ultimate control is exercised, although it would have to be more than the administrative carrying out of the orders of others responsible for a company’s management. Participation in decisions may involve some “frequency or repetition”.

Case example

Who is not an officer? The first decision to consider the application of the officer definition in the context of the WHS legislation arose from a fatal incident in the ACT, involving a construction project performed by Kenoss Contractors. Kenoss contracted with the ACT Government for road resurfacing works at the intersection of Barry Drive and Clunies Ross Street in Turner, ACT.18 Kenoss had at the relevant time, only one director, Mrs Beverly Brendas. Her husband, Mr Spiros Brendas, was employed as the General Manager. Their son, Mr Dimitri Brendas, was employed as the safety officer. He had no experience or qualification in safety systems.19 Mr Al-Hasani, a well qualified engineer, was employed as Project Manager. At the time, he was managing a number of projects for the company.20 Two compounds were provided for use by Kenoss as part of this project, being the main site compound on nearby Froggatt Street, which included a site office, some temporary buildings as well as housing plant and some materials, and a second, smaller storage site which was a short distance away at the intersection of Boldrewood Street and Hackett Gardens, both in Turner. The second of the sites was used solely to store materials.21 Mr Sandeep Thorat was the project engineer for the Barry Drive project. Mr Louis Clarke was the general foreman.22 David O’Meley Truck Hire was retained by Kenoss on an hourly rate basis to deliver materials as required. The principal, Mr David O’Meley, was contacted by telephone with instructions. He or a nominated driver would then collect and deliver materials. He had

never had a site induction nor attended a safety talk prior to attending the site. When he made deliveries, the load was dumped on Barry Drive itself. A spotter assisted during the dumping.23 He employed Mr Michael Booth. Mr Booth had also made a number of deliveries for the Barry Drive project. On the afternoon of 23 March 2012, he made a delivery of road base to the Boldrewood Street site. Mr Louis Clarke, foreman on the job, said that this was Mr Booth’s second delivery for the day.24 As was most common, the first delivery was directly to the site at Barry Drive. The foreman stated that he directed Mr Booth to dump the second load that day at the “main compound” but that, without direction or obvious reason, he relocated to the small compound.25 The foreman said that he had told the workers to stop using the small compound because he considered it was dangerous with low hanging electrical wires. He also stated, nonetheless, that he left the site unlocked, initially just during the day but later permanently, as he thought that another contractor was going to take over the site.26 Mr Booth went to the Boldrewood Street compound alone. While there was fencing around the compound, it was not locked. There was a general sign marked “construction site, keep out” but otherwise no warning signage at the compound itself, nor on the lines above it, indicating the presence of live power lines.27 The visibility of the lines was obscured by foliage.28 It was a cloudy day which made the lines less visible.29 In addition, there were wind gusts of up to 54 km/h which would have set the lines in motion.30 When Mr Booth tipped his load, the bucket of the truck either came very close to, or contacted with, the power lines forming an electrical arc.31 Mr Booth must have exited the truck as he was found very shortly

thereafter collapsed on the ground.32 He had been electrocuted. 33

Attempts at resuscitation failed. 34 Mr Booth subsequently died as a result of electrocution.35 Mr Al-Hasani and the foreman, Mr Clarke gave evidence at the hearing that they had instructed workers not to use the site. However, the evidence demonstrated that the site was in fact being used.36 As her Honour, Chief Magistrate Walker, observed the risk presented by working near overhead power lines “was obvious, even without safety qualifications”.37 Mr Al-Hasani himself had been served with a prohibition notice on behalf of Kenoss, regarding working near power lines on another project, back in August 2008.38 Her Honour held that there were a number of relatively simple safety measures which could have been utilised to mitigate or eliminate the risk associated with the power lines above the Boldrewood Street compound. These included: “• not using that site at all, • limiting access to the site, particularly by securing the fence around it, • having power turned off if a delivery to the site was required, • requiring that any deliveries be accompanied by a spotter, • providing appropriate signage as to the particular risk of overhead power lines, consisting of a sign on the gate or fence surrounding the site, • placing flags or ‘tiger tails’ on the lines themselves to make them more visible, • warning all potential users to the site of the presence of, and

risk associated with, the lines at the Boldrewood compound in particular through a site induction.”39 Her Honour determined that Kenoss clearly had a duty of care to those who visited its sites, including subcontractors.40 Her Honour held: “That duty was clearly breached in failing to take adequate measures to address the risk posed by live overhead electric cables … There is no evidence that the risk to other visitors was even contemplated never mind addressed in the multiple simple ways available and identified above.”41 Kenoss contractors was convicted and fined $1.1m. Her Honour’s analysis in relation to Mr Al-Hasani, however, was materially different in that she recognised that the duty, if owed by Mr Al-Hasani, was a separate duty than that owed by the company. Her Honour observed: “The issues in respect to Mr Al-Hasani, whilst overlapping with those relevant to Kenoss, are different in a material way. The offence relies on establishing whether Mr Al-Hasani was an ‘officer’ of Kenoss as defined, and, if so, whether he acquitted his safety duty by the positive exercise of due diligence as required by s.27(5) of the Act. In the text ‘Understanding The Model Work Health And Safety Act’, Barry Sheriff and Michael Tooma, leading authorities in this area, noted: ‘One of the most important reforms of the model work health and safety act is the introduction of a duty of care on officers of companies and other organisations. The introduction of a position duty is new to the workplace health and safety regulatory framework … In all jurisdictions, officers are merely attributed liability to conduct that is committed by the company, rather than being allocated to duty in their own right’.42 They continue: ‘The approach taken by the model WHS Act, however,

emphasises the corporate governance responsibilities of officers. The personal liability in that context reflects the culpability of company officers in failing to meet the corporate governance responsibilities by preventing the corporate misconduct. Consistent with this rationale, officers under the model laws will have a duty to ensure due diligence. Thus, their attributed liability is transformed into a positive duty to ensure corporate compliance through sound corporate governance’. In the event that Mr Al-Hasani is found to be an officer of Kenoss, then he holds a positive duty to exercise due diligence in respect to safety compliance.”43 Her Honour went on to discuss the application of that duty if Mr Al-Hasani were to meet that threshold. Her Honour observed: “As project manager responsible for the Barry Drive project, Mr Al-Hasani was fully aware of the Boldrewood Street compound and indeed, on his own evidence, of the risks associated with the live overhead power lines above it. He did not exercise due diligence in respect to safety compliance. His failures in that respect were multiplicitous. They include, for example, as to sub-section s 27(5)(c), the SWMS was general in nature and inadequate to address the particular risk evident at the Boldrewood compound. Mr Booth was not aware of it. Simply directing that the site not be used by large machines (if in fact such a direction was given) is patently inadequate, particularly given the involvement of others in the project, such as Mr Booth in his capacity as a delivery driver. A further example of the lack of due diligence, as to sub-section 27(5)(e), was the readiness of Mr Al-Hasani to a relinquish responsibility for the identified risk to the foreman, with no process in place to ensure compliance. As was observed by Staunton J in WorkCover Authority (New South Wales) (Inspector Mansell) v Daly Smith Corporation (Aust) Pty Ltd and Smith,44 due diligence:

‘is not done by merely hoping others would or could do what they were told, but also ensuring they have the skills to execute the job they are required to do and then ensuring compliance with that in accordance with the safe standards established. Compliance requires a process of review and auditing, both formal and random, in order to ensure that the safe standards established are in fact being adhered to and under ongoing review.’ However, the requirement to exercise ‘due diligence’ pursuant to section 27 only arises if Mr Al-Hasani was an ‘officer’ of Kenoss. This position is defined in the Act by reference to section 9 of the Corporations Act 2001 (Cth). Some positions in a corporation are clearly identified as falling within the definition.”45 In applying the test to the definition of officer, her Honour observed: “[I]t appears that the interpretation of the concept of an officer should to be viewed through the prism of the organisation as a whole rather than a particular function in which the individual was engaged.”46 In relation to Mr Al-Hasani, her Honour held that he was not a person who made or participated in making decisions affecting the whole or substantial part of the business of Kenoss Contractors. In that regard, Mr Al-Hasani gave evidence at the trial regarding his role within the overall structure, where he referred to Mr Spiros Brendas as “El Supremo” and stated that he reported up to Mr Spiros Brendas and Ms Beverly Brendas. He also gave evidence that he “could not tell Mr so-and-so to pay Mr so-and-so” nor could he “hire Mr so-and-so without people in the accounting department and the administration department”. He went on to say “I have no power to even go and buy a glass of water”.47 Her Honour held: “The prosecution has not established that Mr Al-Hasani had control or [was] responsible for the business or undertakings

of the company; rather he had operational responsibility for delivery of specific contracts which had been entered into. His role was to implement these projects. The limited evidence before me establishes that Kenoss was essentially a ‘family business’, with a husband and wife director and general manager and a relatively flat management structure. In it, Mr Al-Hasani sat close to the top of that structure but there is no evidence that he made, or participated in making, decisions which affected the whole, or a substantial part of the business of the corporation … He could identify potential employees but was not responsible for hiring and firing them. His evidence was that he could not commit corporate funds. There is no evidence that he had direction over the type, or the specific contracts, which were to be pursued by Kenoss. He did prepare tenders for particular work but he did not sign off on them … What is established is that Mr Al-Hasani’s participation in the business process was operational; whether it went beyond that to being organisational is speculative It is not clear that he made decisions, or participated in making decisions, that affected either the whole or a substantial part of Kenoss’ business.”48 Crucially, her Honour observed that “Mr Al-Hasani had responsibility as an employee” but he was not charged in that capacity.49 It is interesting to speculate what her Honour may have held had he been so charged, given the findings in relation to circumstances of the breach by Kenoss and Mr Al-Hasani’s role in it.

Checklist: Are you an officer? ☐ Are you a director of the company? ☐ Are you the company secretary of the company?

☐ Are you a person in accordance with whose instructions or wishes the directors of the company are accustomed to act? ☐ Are you a receiver, or receiver manager of the property of the company? ☐ Are you an administrator of the company? ☐ Are you an administrator of a deed of company arrangement executed by the company? ☐ Are you a liquidator of the company? ☐ Are you a trustee or other person administering a compromise or arrangement made between the corporation and someone else? ☐ Do you make decisions that affect the whole of the business of the company? ☐ Do you make decisions that affect a substantial part of the business of the company? ☐ Do you participate in making decisions that affect the whole of the business of the company? ☐ Do you participate in making decisions that affect a substantial part of the business of the company? ☐ Do you have the capacity to affect significantly the company’s financial standing?

Footnotes 17

[2010] NSWCA 331.

18

McKie v Al-Hasani ACTIC 1 [9].

19

Ibid [10].

20

Ibid [11].

21

Ibid.

22

Ibid.

23

Ibid [12].

24

Ibid [13].

25

Ibid.

26

Ibid [14].

27

Ibid [15].

28

Ibid.

29

Ibid.

30

Ibid.

31

Ibid [16].

32

Ibid.

33

Ibid.

34

Ibid.

35

Ibid.

36

Ibid [18].

37

Ibid [20].

38

Ibid.

39

Ibid [23].

40

Ibid [28].

41

Ibid [29].

42

B Sheriff and M Tooma, Understanding The Model Work Health And Safety Act (CCH Australia, 2010) 29.

43

McKie v Al-Hasani ACTIC 1 [31]–[33].

44

[2004] NSWIRComm 349 [131].

45

McKie v Al-Hasani ACTIC 1 [35]–[37].

46

Ibid [42].

47

Ibid [44].

48

Ibid [50].

49

Ibid [51].

CHAPTER 3 THE FIRST ELEMENT — KNOWLEDGE OF WORK HEALTH AND SAFETY MATTERS Key messages • Officers must acquire knowledge to enable them to understand and test the information presented to them and make informed decisions. • Knowledge must be systematically acquired and maintained. • Requirement extends to horizon gazing to identify emerging issues.

Context is everything. In her seminal book, Mindfulness, Professor Ellen Langer observes that [t]he way we behave in any situation has a lot to do with the context. We whisper in hospitals and become anxious in police stations, sad in cemeteries, docile in schools, and jovial at parties. Contexts control our behaviour, and our mindsets determine how we interpret each context.50 The first element of due diligence is about setting the context for the due diligence obligation. It is about establishing the duties and obligations of both officers and their corporations or organisations, and framing their role in meeting those obligations. Fundamentally it is about making officers aware of their role and providing them with a working knowledge of the tools and principles required to fulfil that role. For some officers, becoming aware of their personal liability sets the context for their behaviour. For other officers, understanding the impact of their leadership on safety outcomes is sufficient. For others, understanding the positive link between safety performance and operational performance is key to influencing their behaviour. For many, it is a combination of all three drivers. The key is recalibrating the mindset from one that is singularly focused on financial

performance, to one that is sufficiently balanced to also address safety performance. That is, creating mindfulness at a leadership level of the need to achieve the organisation’s operational objective safely. Due diligence includes taking reasonable steps to acquire and keep up-to-date knowledge of WHS matters. What does the first element require? The first element of due diligence is acquiring and maintaining knowledge in relation to WHS matters. The obligation is to take reasonable steps to acquire and keep up-todate knowledge in relation to WHS matters. Given that this is an element of due diligence, an officer cannot discharge their due diligence duty unless they take reasonable steps to acquire such knowledge. In practice, this implies some knowledge management process or system to assist the officer acquire the relevant knowledge and maintain it over time. Rationale for element Officers are not typically pathological. Disasters are not typically caused by deliberate action on the part of callous officers but rather through omissions. That is, the failing on the part of relevant officers is that they did not know, did not take sufficient interest, did not know what the information presented to them meant and did not know what questions to ask. There is no better example of this issue and the devastating consequences of such ignorance, than the Pike River Disaster.

Pike River The 2010 Pike River disaster in New Zealand which killed 29 miners, is a further illustration of the problem. The Pike River mine exploded at 3.45 pm on 19 November 2010. The Royal Commission into the Pike River Mine Disaster concluded that miners died immediately from the blast or shortly thereafter from

the toxic atmosphere at the underground coal mine. Over the next nine days, the mine exploded three more times before it was sealed. The immediate cause of the first explosion was the ignition of a substantial volume of methane gas; methane gas is found naturally in coal and is explosive when it comprises 5 to 15% in volume of air. In that range, it is easily ignited. Methane control is therefore a crucial requirement in all underground coal mines. Control is maintained by effective ventilation, draining methane from the coal seam before mining if necessary, and by constant monitoring of the mine’s atmosphere.51 The Royal Commission noted: “The mine was new and the owner, Pike River Coal Ltd (Pike), had not completed the systems and infrastructure necessary to safely produce coal. Its health and safety systems were inadequate. Pike’s ventilation and methane drainage systems could not cope with everything the company was trying to do: driving roadways through coal, drilling ahead into the coal seam and extracting coal by hydro mining, a method known to produce large quantities of methane. There were numerous warnings of a potential catastrophe at Pike River. One source of these was the reports made by the underground deputies and workers. For months they had reported incidents of excess methane (and many other health and safety problems). In the last 48 days before the explosion, there were 21 reports of methane levels reaching explosive volumes, and 27 reports of lesser, but potentially dangerous, volumes. The reports of excess methane continued up to the very morning of the tragedy. The warnings were not heeded. The drive for coal production before the mine was ready created the circumstances within which the tragedy occurred.”52 As the Royal Commission observed, a drive for production is a normal feature of coal mining. However, Pike River Coal was in a particularly difficult situation. It had only one mine, which was its sole source of revenue. The company was continuing to borrow to keep operations going. Development of the mine had been

difficult from the start and the company’s original prediction that it would produce more than a million tonnes of coal a year by 2008, had proved illusory. The company had shipped only 42,000 tonnes of coal in total. It was having some success in extracting coal as it drove roadways but it was pinning its hopes on hydro mining as the main production method and revenue earner. Hydro mining started in September 2010 but was proving difficult to manage and output was poor.53 The Royal Commission found that “even though the company was operating in a known high-hazard industry, the board of directors did not ensure that health and safety was being properly managed and the executive managers did not properly assess the health and safety risks that the workers were facing”.54 The Royal Commission further observed that: “In the drive towards coal production the directors and executive managers paid insufficient attention to health and safety and exposed the company’s workers to unacceptable risks. Mining should have stopped until the risks could be properly managed.”55

If the key role of a leader is to provide direction and oversight of the operation of the business, they have to know what questions to ask. They also need foundation knowledge from which they can formulate a vision for the company. This is not uncommon in a commercial context. We expect directors, for example, to be “financially literate” — that is, to be able to read a balance sheet and know what questions to ask to test the veracity of the information presented to them. A similar rationale exists for WHS issues. In order for officers to be in a position to test the information placed before them under the fourth element, for example, or to be able to undertake the tasks expected by the second element, they need a base of knowledge of WHS matters. Given the foundation of WHS in risk management, knowledge of the principles of risk management is critical to that understanding, as is a

basic knowledge of the legal framework in which WHS operates, and key regulations and codes of practice which are applicable to the industry within which their company operates. There is also an overlap between the second element and the fourth element, in that knowledge of lessons from incidents and major disasters which is critical to the fourth element, goes towards satisfying the second element also. Case example

Ignorance of law is no excuse In WorkCover Authority of NSW (Inspector Dawson) v Waugh,56 WorkCover appealed against a sentence imposed against a director.57 The case related to an accident where a young employee sustained numerous fractures to his arm, severe nerve damage and loss of movement to his wrist, elbow and fingers when his arm became caught between the moving parts of an unguarded conveyor. The injured employee had been given no instruction or training in his duties. The defendant conceded that he was aware of the hazard but said that he “never got around” to guarding it. The defendant had pleaded guilty. The trial judge, Schmidt J, exercised her discretion under the Crimes Act 1900 (NSW) and did not record a conviction against the defendant. On appeal, Schmidt J’s decision was overturned and the defendant was fined $10,000. In its judgment, the Full Bench of the Industrial Relations Commission of NSW (Fisher CJ, Bauer and Cullen JJ) said: “The Act and common-sense require that managements who employ persons daily in an admittedly dangerous industry do know elementary facts about guarding dangerous parts of machines and safe working. Ignorance of this kind is not only not an excuse, it amounts to an aggravation of the offence … When challenged the personal defendant, Mr Waugh, who speaks for the company, accepted the necessity for the

guards by saying — ‘I just never got around to it’. Such an answer is insupportable and must be seen as a serious aggravation.”

Safety culture relies on knowledgeable leaders One of the key components of safety culture is an informed culture — a culture in which those who manage and operate the system have current knowledge about human, technical, organisational and environmental factors that determine the safety of the system as a whole.58 A leader cannot drive a positive safety culture in their organisation if they do not systematically inform themselves of developments and trends. They need a baseline of general knowledge to enable informed decision-making. That is, the legal obligation on officers to acquire and maintain knowledge of WHS matters is designed to meet the foundation conditions of safety culture.

Senior management failure in Ladbroke disaster To fail to acquire this knowledge would reduce the officer’s approach to an entirely reactive one. This is what Lord Cullen was critical of in his findings in the inquiry into the 1999 rail disaster in Ladbroke Grove in the UK, which claimed the lives of 31 people and injured 400 others. The disaster was a head-on collision at high speed between two trains. The disaster was caused by one of the train drivers misinterpreting a signal indicating for his train to stop. However, the signal was in fact difficult to see. The inquiry into the disaster found that the root cause of the disaster was a failure on the part of management to identify the deficiencies in the running of the integrated electronic control centre. The inquiry found that if management had applied the lessons of past incidents of trains passing signal at danger,

and if signallers had been adequately instructed and trained in how to react to such an event, it may well be that the disaster could have been avoided. This did not happen because senior management were too reactive. Lord Cullen observed: “The impression which senior management witnesses created was that they would wait to deal with a problem until a proposition was put before them by someone else …. If that approach was reproduced at each level of management, it would carry the risk of proposals for improvements being stultified or lost. In my view senior management should have given and maintained the lead in seeking solutions and ensuring a response.”59

Which information? The knowledge which the officer is required to acquire and maintain is knowledge in relation to “work health and safety matters”. While the legislation does not provide any guidance on what that is, the knowledge that is required must be looked at in the context of the duty and the operation of the legislation. If the purpose of acquiring the knowledge is to facilitate the officer’s role in putting in place the checks and balances implicit in due diligence, then the degree of knowledge is that required to discharge that role. That means officers don’t need postgraduate degrees in safety. They need sufficient basic knowledge to ask the right questions and to understand the answers given. The type of knowledge that would fall into that category would be knowledge of the theory and practice of safety leadership and safety culture; knowledge of their legal obligations, the company’s legal obligations and the due diligence requirements; and knowledge of risk management, incident investigation and auditing methodology. Safety leadership and safety culture The essence of the legal obligation to exercise due diligence is a duty on officers as leaders to exercise safety leadership. As such, the theory and practical tools for exercising safety leadership must be an

integral part of the requirement to acquire knowledge in relation to WHS matters. On one view, due diligence is no more than the mechanism through which safety leadership is given practical effect with a view to driving a better safety culture in the organisation. Safety leadership therefore is more than just commitment. It is certainly not mere gimmicks or slogans. It is the collection of actions by leaders giving effect to the value sets of the corporation. If safety culture is the force that propels the system towards the goal of maximum safety health regardless of the leadership’s personality or current commercial concerns,60 safety leadership is the fuel maintaining that force. Safety culture without safety leadership is best likened to the momentum of a speeding car after its mechanical motive force has been disabled. The car will propel in the same direction, and depending on the speed and the coefficient of friction, for potentially a significant distance. But eventually, it will come to a stop. So too will safety culture absent safety leadership. Those concepts and links are a critical component of the knowledge expected of the officers in order to contextualise their duty to exercise due diligence.

Beware of empty slogans — Massey Energy In testimony before a US Senate subcommittee on 20 May 2010, the chief executive officer of the mine operator,61 Massey Energy, Mr Blankenship, maintained that safety had been his number one priority since he became part of Massey’s management team.62 Blankenship cited his purpose built safety leadership program “S1” — meaning safety first. Indeed, ironically, Mr Blankenship said that he felt other programs were too reliant on slogans, which is why he devised his own program. Indeed, Mr Blankenship touted Massey’s innovations in safety from reflective clothing, to metatarsal boots, to seat belts for mining equipment, to flapper pads for roof bolters, and lights on belt line feeders.63 The reality was that during the 10 years prior to the incident, Massey had been cited for 62,923 violations of mine safety laws including

25,612 which were considered significant and substantial. Indeed, the federal mine safety regulator had proposed $49.9m in fines on Massey; some $15m more than any other company.64 Indeed, the causes of the West Virginia mine disaster reflect a reckless disregard of basic safety standards at the Upper Big Branch mine, including rock dusting65 — the most basic element of safe underground coal mining. The company’s indifference to rock dusting was evidenced by the fact that a two-man crew was assigned to dust the entire mine on a part time basis.66 Yet Massey management boasted of its safety leadership program even after the disaster. Remarkably, 17 of the 24 victims autopsied had coal worker’s pneumoconiosis (black lung disease). This amounts to 71% compared with a US industry average of 3.2%. With Dickensian conditions such as these in its mines, it is clear that “S-1” was an empty slogan and that, far from being an industry leader in health and safety, Massey Energy’s safety culture left a lot to be desired.67

The tools that may be sensibly explored in any training provided on safety leadership would include safety observation processes — that is, what questions to ask to get the most from a safety outcomes perspective out of your interactions with workers. Legal obligations The law sets out the minimum standard expected of companies. As such, basic knowledge of the WHS laws including the duty of officers is a necessary component of the knowledge required to be acquired by the officers. Codes of practice which are relevant to the critical risks associated with the industry in which the company operates, are also relevant. Case law also provides fertile ground for learning for officers. After all, a case is no more than the legal chapter in a real life incident — usually at the more serious end of the spectrum. As such, it provides

valuable real life lessons which have been vetted by a judge. Risk management An officer must have training in risk management to be able to understand the methodology underpinning the safety management system in operation in their company. Risk management is also a legal requirement imposed on their company, both generally and specifically in relation to certain hazards. Risk management in the health and safety context is the process of systematically identifying hazards and assessing and treating the risks to health and safety arising from each hazard. The risks must be treated so far as is reasonably practicable and in accordance with a prescribed hierarchy. A Code of Practice for managing WHS risks — How to Manage Work Health and Safety Risks — sets out practical guidance for the risk management methodology and is a useful basis for any training that officers receive. Indeed, the Code of Practice itself identifies officers as persons who should use the Code of Practice. Risk management will be a familiar concept for most officers. Risk management processes are inherent in all business activities. It is most commonly undertaken in the financial context, and in many respects, WHS risk management borrows heavily from that methodology. The first step in risk management is identifying hazards. Identifying hazards involves finding all of the things and situations that could potentially cause harm to people. Hazards generally arise from three aspects of work and their interaction with the physical work environment, the equipment, materials and substances used, and the work tasks and how they are performed. Some hazards arise from the work process, such as mechanical hazards, noise or toxic properties of substances. Other hazards result from equipment failures, chemical spills and structural failures. Hazard identification is done by inspection of the working environment, consulting workers and reviewing the available data, including information on incidents both from the business and externally, such as industry information and information disseminated

by the regulator, and information from suppliers and manufacturers.

Table: Examples of common hazards Hazard

Potential harm

Manual tasks

Overexertion or repetitive movement can cause muscular strain

Working at height

Falling objects, falls, slips and trips of people can cause fractures, bruises, lacerations, dislocations, concussion, permanent injuries or death

Electricity

Potential ignition source Exposure to live electrical wires can cause shock, burns or death from electrocution

Machinery and equipment

Being hit by moving vehicles, or being caught by moving parts of machinery, can cause fractures, bruises, lacerations, dislocations, permanent injuries or death

Hazardous chemicals

Chemicals (such as acids, hydrocarbons, heavy metals) and dusts (such as asbestos and silica) can cause respiratory illnesses, cancers, dermatitis

Extreme temperatures

Heat can cause burns, heat stroke, fatigue Cold can cause hypothermia, frostbite

Noise

Exposure to loud noise can cause permanent hearing damage

Radiation

Ultra violet, welding arc flashes, microwaves, lasers can cause burns, cancer, blindness

Biological

Viruses, bacteria, fungi can cause hepatitis,

legionnaires’ disease, Q fever, HIV/AIDS, allergies Psychosocial hazards

Effects of work-related stress, bullying, violence and work-related fatigue Figure 11 — Managing risk

Source: How to Manage Work Health and Safety Risks Code of Practice

Incident investigation

Given that one of the elements of due diligence is monitoring incidents and risks (fourth element), it is critical that an officer have a basic understanding of the methodology behind incident investigation. As Reason (1990) observes, most of the root causes of serious accidents in complex technologies are present within the system long before an obvious accident sequence can be identified.68 It is the capacity of a system to uncover these proactively that is the key to delivering safety outcomes. An officer must play their role in achieving this result. In order to do so, they must acquire knowledge in relation to incident investigation and root cause investigation techniques. As Kletz (2001) notes: we should investigate all accidents, including those that do not result in serious injury or damage, as valuable lessons can be learnt from them. “Near misses”, as they are often called are warnings of coming events. We ignore them at our peril, as next time the incidents occur the consequences may be more serious.69 The focus on investigations should not simply be restricted to what went wrong, but equally to what went right. Organisations should seek to learn as much from effective defences as they do from absent or failed defences. There should also be a healthy curiosity in understanding why things were not worse or why things worked. Auditing Another element of the due diligence duty of officers relates to verification that the processes of due diligence are indeed in place (sixth element). As such, it is implicit in the scope of the first element that the officer will acquire sufficient knowledge regarding auditing methodologies to be able to test the quality of information presented to them as part of that verification process. That is not to say that the officer must become an accredited auditor. Rather, they must understand the process of auditing, common standards used for WHS auditing and the limitations of audits.

Horizon gazing Leadership of any organisation requires the leaders to prepare the organisation for emerging issues. Health and safety is no exception. An important component of the first element relates to identifying emerging issues in industry or development in knowledge in relation to processes and hazards that may impact the health and safety of persons arising from the business or undertaking of the company. In a recent discussion paper, the Australian Law Reform Commission identified family violence as relevantly falling within the scope of duty of care of PCBUs.70 That is because PCBUs control the workplace, their obligation would extend to ensuring the safety of their workers at the workplace including in access and exit from the workplace. Many instances of family violence occur when workers are leaving their work or with them being pursued from their work. Some violent instances occur at work. Where the PCBU has working from home arrangements, the home of their workers is their workplace. As such, family violence may be relevantly a risk that the business needs to consider. In the UK, Health and Safety Executive, the independent watchdog for health, safety and illness, makes the observation that with the rise of obesity in the UK, businesses may be expected to be proactive in addressing the issue as part of their duty of care. Mental health is another issue that continues to be a point of emphasis for regulators. At one extreme, workplace violence and bullying have long been recognised as being important risks that must be addressed by a PCBU. However, workplace stress and depression are still not well understood. There may even be a link between general health, nutrition and mental wellbeing that some progressive companies are exploring. Officers should be mindful of these trends and seek to position their companies to be at the forefront of preventative initiatives in that regard. Consider also cyber security (discussed below). There is increasing evidence of industrial sabotage through cyber attacks. Although these incidents have not resulted in casualties to date, they highlight an emerging issue for PCBUs and their officers.

Cyber security Cyber security is an emerging issue for WHS management. The UK Health and Safety Executive observes that the threat to the safety of industrial processes from breaches in the security of safety critical electronic control systems is now a known issue that must be managed. Such risk may be a result of either a targeted malicious attack by an organised group or a disgruntled former worker, or from exposure to the wide range of viruses promulgated in cyberspace. The increasing use of common, open operating systems, combined with wireless networking and greater interconnectivity of process control, safety-related systems and business management or external networks, is increasing the likelihood of such risks. Attacks by hackers or criminals are said to be commonplace but are to date mostly being directed at activities such as spamming or denial of service, or for monetary gain involving identity theft, fraud, extortion and the like. However, the same methods by which these attacks are carried out can readily be adopted to seriously disrupt processes and services in a way which could lead to major health and safety risks for operators and the public.

Consider also the risk associated with the increasing reliance on mobile phones and smart phones as a work tool (discussed below). Electromagnetic radiation emitted from mobile phones has long been suspected of presenting a risk to the health of users. While moderate use has been ruled out as being a public health concern, there is increasing evidence that excessive use may be an issue for closer scrutiny. This is something that officers of PCBUs must monitor to steer their organisation through this emerging issue.

Mobile Phones Mobile phones transmit electromagnetic radiation (EMR). It is largely accepted that in the short term, the use of mobile phones probably does not increase the risk of developing brain tumours. However, in the long term; use for 10 years or more, the risk has been reported to be increased, particularly for glioma and acoustic neuroma (a benign brain tumour), on the same side of the head as the phone is generally held.71 Almost all of the radiofrequency electromagnetic energy (RFE) emitted by mobile phones is absorbed in the hemisphere of the brain where the phone is held, with 50–60% absorbed by the temporal lobe which is situated closest to the ear. The health concerns related to mobile phones relate to non-ionising RFE radiation, which can heat tissue and potentially have a detrimental effect on health. A major international study of the health effects of mobile phones in 2010, Interphone, looked at two of the most common types of brain tumours; meningioma, usually non-malignant and glioma, often malignant, using data from 13 countries including Australia. The study found a suggestion of an increased risk of glioma for those with the highest level of use — in excess of 1,640 hours (ie a combination of the number and duration of calls) or people who spoke on the phone for 30 minutes a day or more. This was the case for gliomas on the same side of the head as phone use and the temporal lobe separately. The study did not conclude that mobile phones caused this increase, as limitations of the study design were thought more likely to explain these findings. While this finding is not conclusive, commentators have suggested that given that this is a consistent finding, it requires further investigation.

Consider also the rise in diagnosis and understanding of autism spectrum disorders and the potential risks to the health and safety to

persons affected by that disorder (discussed below).

ASD epidemic and the changing nature of workers Autism spectrum disorder (ASD) is a neurodevelopmental disorder disrupting fundamental processes of socialisation, communication and learning.72 It is characterised by marked difficulties in social interaction, impaired communication, restricted and repetitive interests and behaviours, and sensory sensitivities.73 One in 160 Australians is on the autism spectrum. In the USA, the figure is even higher at 1 in 150. While in the UK the figure is a staggering 1 in 50. ASD is an umbrella term grouping a large spectrum of disorders loosely sharing common behavioural characteristics. Persons on the spectrum range from highly functional and highly intelligent persons often with unique talents in areas such as mathematics, art and musical abilities, to persons with more limited physical functionality and mental capability and every combination in between. Persons on the autism spectrum frequently exhibit challenging behaviours. A study by Louisiana State University found that, in all four categories of behaviour, the frequency of challenging behaviours increased with severity of autistic symptoms.74 The study concluded that challenging behaviours are a major barrier to effective education, training and social development and often persist throughout adulthood, at least for individuals with ASD and intellectual disability. On the other hand, a number of adults on the ASD spectrum can be successful by taking advantage of their learning strengths. These include taking in whole tracts of information quickly, remembering information for long periods of time, using visual information meaningfully, learning and repeating long routines,

understanding and using context-free information and rules, and concentrating on narrow topics of interest.75 The iconic image of autism was provided by Dustin Hoffman’s depiction of Raymond Babbitt in the 1988 movie Rain Man, also starring Tom Cruise. The character of Raymond Babbitt was inspired by Kim Peek, who scriptwriter Barry Morrow met in 1984. Kim Peek, a “mega-savant” with an incredible photographic memory, is not in fact autistic but rather likely has FG Syndrome. However, Dustin Hoffman’s character in the movie is depicted as being autistic. Some have postulated that many famous historical figures had ASD including Albert Einstein, Isaac Newton, Hans Christian Andersen, George Orwell, Ludwig van Beethoven and Wolfgang Amadeus Mozart, to name a few. These claims are highly controversial. However, whether or not people such as Mozart, Beethoven and Einstein were on the autism spectrum, what is undeniable is that some people on the spectrum display incredible abilities which can be extremely lucrative if channelled to commercial use. Although “autism” as a recognised disorder has been around since 1943, the scale of diagnosis of autism is a relatively recent phenomenon. For example, one recent US study has suggested that the rate of autism has doubled from 2002 to 2006.76 Are workplaces ready for this dramatic change? In the first major study into adults living with autism, published in September 2009 in the UK, it was shown that the prevalence of autism spectrum disorders among adults was roughly the same as that for children.77 Before the study, we knew little of how ASD affected people over the course of a lifetime, but the findings strongly suggest that ASD continues into adulthood. As a result, ASD can have a significant impact on employment opportunities and job performance for people on the autism spectrum. The study also found that the rate of ASD in men was much higher than women (1.8% of adults compared with 0.2%) and that incidences of ASD were lower among those with a degree level

qualification than among those with no qualifications. The latter finding indicates that workplaces which employ a high proportion of non-tertiary qualified persons may come across more people living with ASD. International autism expert, Eric Fombonne, suggests that it has only been in the past 30 to 40 years that accurate diagnoses of ASD have been made.78 As a result, a number of working-age adults who may have only had a few ASD characteristics as a child did not benefit from early intervention. In addition, Frombonne says that governments around the world are struggling to deal with the ASD epidemic and that public funding and services are lagging behind. For these reasons, workplaces may have to absorb issues affecting current workers and a new onset of young people on the ASD spectrum in the future. Persons on the autism spectrum, by the very nature of the disorder, learn differently to neurotypical persons. They communicate differently and they behave differently. Some have incredible focus and concentration, so much so that they would miss a fire alarm sounding if they were entranced in thought on a problem. Some will be startled by a certain noise or crowded areas, making standard evacuation techniques inappropriate. The same single-minded focus which allows the person to achieve incredible feats, can itself be a hazard. Focus on the task may lead the person to come into contact with nip points on machines or making contact with hazardous energy. Furthermore, instructions for some persons on the spectrum may be taken literally, with harmful consequences to themselves or others. These are all challenges that a modern workplace must quickly become alert to if it is to respond appropriately to the ASD epidemic. It is a challenge that officers of PCBUs must meet head on if they are to steer their organisation to a path of success by leveraging the talents of people on the spectrum while protecting their health and safety at the same time.

Finally, consider the challenges posed by nanotechnology (discussed below) and the lack of information available about the health and safety impact of nanotechnology despite its proliferation in industry and consumer products.

Nanotechnology Nanotechnology is the shrinking of particles to 0.000000001 metre. This shrinking gives such particles different characteristics than they possess in their normal state.79 In 2003, the nanotechnology industry was estimated to be worth US$45.5b, with an estimated global workforce of between 0.8 million to 2 million people.80 Nanotechnology holds significant promise in commercial, military and medical application.81 However, the safety and environmental impact of such technology is uncertain. Serious questions have been raised about possible adverse consequences to humans through greater potential absorption into the body and questions have been raised about the effectiveness of existing controls including personal protective equipment (respiratory masks, gloves etc) as barriers to certain nanoparticles. However, despite these concerns, their use continues and is growing rapidly because of the tremendous potential for commercial and industrial application of the technology.82 One of the first commercial applications of nanotechnology in consumer products was in sunscreens. Zinc oxide and titanium dioxide have been used as sunscreens for many years.83 Of the 1,200 sunscreens authorised for supply in Australia, 228 contain zinc oxide, 363 contain titanium dioxide and 73 contain both.84 They are particularly valuable because of their ability to filter UVA as well as UVB light, giving broader protection than other sunscreening agents.85 However, products containing a high concentration of zinc oxide and/or titanium dioxide have a visible

“paint-like” appearance. The inclusion of titanium and zinc oxide as nanoparticles maintains the UV protection without that conventional “zinc” appearance.86 However, concerns have been raised about the potential for nanoparticles to permeate the outer skin and enter the blood stream.87 A 2006 review of the scientific literature on the safety of nanoparticulate titanium dioxide or zinc oxide in sunscreens, by the Australian Therapeutic Goods Administration (TGA) concluded that the likelihood of penetration beyond the stratum corneum into viable cells was very low.88 Notwithstanding this finding, some dermatological studies have suggested that some topically applied substances may be able to penetrate the hair follicle and translocate along the follicular duct under certain conditions.89 The controversy is instructive also because of the reactive nature of the regulator’s response, leading commentators such as Bowman and Hodge to draw the analogy with the experience with asbestos.90 Indeed, the link with asbestos may be more pronounced than this. A 2008 UK study has found that carbon nanotubes introduced into the abdominal cavity of mice show asbestos-like pathologenicity.91 In the study, long multi-walled carbon nanotubes acted in an asbestos-like manner, causing inflammation and the formation of lesions, similar to those that appear in humans after inhaling asbestos fibres. In the case of asbestos, those lesions become mesothelioma. Carbon nanotubes have a needle-like fibre-shaped structure similar to asbestos. Mesothelioma is a particle response unique to fibreshaped particles so it is not surprising that it would be found as an effect of carbon nanotubes. Despite these concerns, there are no specific or special safety obligations placed on nanoparticles, notwithstanding the additional complications they impose.92 The shrinking of particles results in the particles displaying different characteristics to the original sized particles, but we do not know in what way or to what extent.

Some studies and reviews on nanoparticles, commissioned by Australian occupational health and safety (OHS) regulators conclude that as long as we conduct a risk assessment, then it is safe to use.93 However, we do not know what we should base the risk assessment on and how we should treat the particles. Indeed, the rule book for risk assessments, the material safety data sheets for substances, does not deal with the characteristics of substances in nanoparticle size. In effect therefore, an instruction to risk assess is of little utility given the knowledge vacuum that exists at present. What is required in relation to nanotechnology is an adaptation of the precautionary principle, widely used in the environmental context, to emerging technological developments such as nanotechnology so that we can avoid the mistakes of the past. That is, recognising the gravity of the consequences of a future conclusive scientific finding that the technology had adverse consequences, the current regulatory community should dispense with the usual insistence on conclusive scientific evidence as a prerequisite to regulatory action.

Many of the challenges set out above are at an embryonic stage in their development and our understanding of their extent. In most cases, officers can only maintain a watching brief and build contingencies to prepare their organisation in the event of adverse developments. But the challenges are instructive because they illustrate the enormity of the task at hand for officers in acquiring and maintaining knowledge of WHS matters. Knowledge management system not just information gathering Compliance with the first element requires a systematic approach to knowledge assessment, collection, dissemination and maintenance. That is, it requires a knowledge management system approach — a process for systematic: • identification of requisite information

• collection of the information • adaptation of the information to the corporate context • assessment of the most effective means of dissemination • devising a strategy for dissemination • dissemination • review of the information to maintain its currency, and • review and revisions of the system to ensure its effectiveness. The difficulty in WHS is that unlike financial knowledge, WHS has for the most part, not been seen as the realm of the boardroom or senior management. At best it is considered an operational matter, not appropriate for a board to interfere with and at worst, a specialist matter for the health and safety professionals, senior management and the board being only interested in reports about incidents or performance. That is, much of the corporate WHS knowledge has been developed with a specialist bend — riddled with jargon and assumed knowledge. Indeed, some health and safety professionals have traditionally promoted the complexity of their area as a way of self-preservation or furthering their own corporate cause. The first element is about demystifying WHS for officers. It therefore requires the translation of assumed knowledge and know-how of health and safety professionals into accessible principles and information, so that this information may be communicated. At a basic level, it is translating the many acronyms and technical terms into language relevant to officers. The next step of any knowledge management system is to then allow the person to internalise and personalise that information so that it may be understood, absorbed, retained and applied. An annual oneoff lesson in health and safety delivered by an external speaker does not constitute acquiring knowledge. It is at best, information dissemination. Officers need to relate to and apply the information.

The interaction therefore between the first element and other elements, such as the second element, fourth element and sixth element, become critical. An officer should not only be trained on audit principles but be involved in an audit pursuant to element 2 as part of understanding the nature of the operations and element 6 as part of the verification process. Similarly, an officer should not simply be trained in investigation processes and root cause analysis, but should also participate in an investigation as part of the second element to understand the nature of the operation and the risks associated with the operation and element 4 as part of monitoring the performance of the corporation and responding appropriately to incidents and risks. What system should be adopted? The training needs of categories of officers must be identified. That provides the baseline for further training. Based on that assessment, an induction package should be developed identifying the minimum information required by the due diligence duty. Officers would therefore be inducted into their role as safety leaders. That induction should be competency based with an assessment component. Once inducted, a training program is then developed for the officers to ensure that they build upon that baseline of knowledge through more sophisticated training on related areas. For example, once officers acquire knowledge of incident investigation techniques, they may be able to analyse the lessons from major incidents in their industry or related industries. The system should identify triggers for review of the induction. These would include circumstances where the laws change, or new information becomes available through publication of information by authoritative sources, or an incident at the company or industry affecting the assumptions underlying the information, for example. Maintenance of knowledge The obligation in relation to acquiring knowledge includes “keeping upto-date” that knowledge. That is, the officer training must be maintained. An annual refresher training for officers together with a needs basis updated training, is therefore necessary.

Figure 12 — Keeping up-to-date

Footnotes 50

E Langer, Mindfulness , (Da Capo Press, 25th anniversary ed, 2014) 52.

51

Royal Commission into Pike River Disaster, vol 1, 12.

52

Ibid.

53

Ibid.

54

Ibid.

55

Ibid.

56

[1995] NSWIRC 14.

57

See M Tooma, Tooma’s Annotated Occupational Health and Safety Act 2000: NSW (Thomson Reuters, 3rd ed, 2009).

58

Reason, above n 8, 195.

59

L Cullen, The Ladbroke Grove Rail Inquiry (Her Majesty’s Stationery Office, 2001) Part 1, 138 [7.117].

60

Reason, above n 8, 107–123, 195.

61

The operator of the Upper Big Branch mine was Performance Coal Company, a Massey Energy subsidiary.

62

JD McAteer, “Upper Big Branch: The April 5, 2010, explosion: a failure of basic coal mine safety practice”, Report to the Governor (May 2011) 94.

63

Ibid.

64

Ibid 93.

65

The application of rock dust (usually limestone). If an explosion should occur, the rock dust disperses, mixes with the coal dust and prevents flame propagation by acting as a thermal inhibitor or heat sink.

66

McAteer, above n 62, 98.

67

See M Tooma, “Lessons from disasters: The design failures at the heart of major disasters”, Workplace Review

(2011, vol 2, Part 2). 68

J Reason, Human Error (Cambridge University Press, 1990) 214.

69

T Kletz, Learning from Accidents (Gulf Professional Publishing, 3rd ed, 2001) 13.

70

Australian Law Reform Commission, Family Violence and Commonwealth Laws (2011) Chapter 18.

71

Based on “Interphone, Brain tumour risk in relation to mobile telephone use: results of the INTERPHONE international case-control study”, International Journal of Epidemiology (2010).

72

A Klin, “Autism and Asperger syndrome: an overview”, Revista brasileira de psiquiatria, (Sao Paulo, 2006) ,vol. 28 suppl. 1.

73

See Autism Spectrum Australia website www.aspect.org.au.

74

JL Matson, and TT Rivet, “Characteristics of challenging behaviours in adults with autistic disorder, PDD-NOS, and intellectual disability”, Journal of Intellectual & Developmental Disability (December 2008 vol 33(4)) 323.

75

Autism Spectrum Australia, “Working with Adults with Autism” (2006).

76

R E Cinema and R J Cowan, “The costs of services and employment outcomes achieved by adults with autism in the US”, Autism (vol 13(3), 2009) 285–302.

77

T Brugha et al, “Autism Spectrum Disorders in adults living in households throughout England: Report from the Adult Psychiatric Morbidity Survey 2007” (NHS Information Centre for Health and Social care, 2009) 13.

78

J Price, “Living with Autism”, (The Canberra Times, 15 March 2007).

79

See M Tooma, Safety Security Health and Environment Law (2nd ed, Federation Press, 2011).

80

G Hodge,D Bowman and P Binks, “Governing the Invisible: The new regulatory frontiers of nanotechnology”, paper presented at the Integrated Governance Conference (Prato Italy, 26–29 October 2005) 3.

81

One potential medical application developed by two Australian scientists is the Engeneic Delivery Vehicle, a delivery vehicle for anti-cancer drugs which uses a nanocell to deliver a concentrated anti-cancer drug dosage. This invention is potentially a significant breakthrough in the treatment of cancer. See J A MacDiarmid, NB Mugridge, J C Weiss, L Phillips A L Burn, RP Paulin, J E Haasdyk, K A Dickson, VN Brahmbhatt, ST Pattison, A C James, G Al Bakri, R C Straw, B Stillman, R M Graham, and H Brahmbhatt, “Bacterially Derived 400 nm Particles for Encapsulation and Cancer Cell Targeting of Chemotherapeutics”, Cancer Cell (vol 11, 8 May 2007) 431–445. The scientists behind this remarkable breakthrough, Dr Jennifer MacDiarmid and Dr Himanshu Brahmbhatt, were featured in an Australian Broadcasting Corporation (ABC) documentary: See Australian Story, “For the Holy Grail” (6 August 2007).

82

See WorkCover Authority of New South Wales, Nanotechnology: Occupational Health and Safety

Overview (May 2007); ASCC, Review of the Potential Occupational Health and Safety Implications of Nanotechnology, (AGPS, July 2006); C Lauterwasser (ed), Opportunities and Risks of Nanotechnology (Allianz, 2005); D M Bowman and G A Hodge, “Nanotechnology: Mapping the wild regulatory frontier”, Futures (Issue 2, 2006). 83

Therapeutic Goods Administration, “Safety of sunscreens containing nanoparticles of zinc oxide or titanium dioxide” (February 2006, Canberra).

84

Ibid.

85

Ibid.

86

Ibid.

87

See above n 81; J Balbus, R Denison, K Florini, and S Walsh, “Getting Nanotechnology Right the First Time”, Issues in Science and Technology (Summer 2005) 65–71.

88

TGA, Review of the scientific literature on the safety of nanoparticulate titanium dioxide or zinc oxide in sunscreens (Department of Health and Ageing, Canberra, January 2006) 15.

89

See D Bowmann and G Hodge, “Nanotechnology products in Australia” in G Hodge, D Bowmann, and K Ludlow (eds), New global frontier in regulation (Edward Elgar, Cheltenham, UK, 2007) 239–264 and the discussion of the scientific literature therein.

90

Ibid.

91

C Poland et al, “Carbon nanotubes introduced into

abdominal cavity of mice show asbestos-like pathogenicity in a pilot study”, UK Nature Technology (20 May 2008). 92

See discussion of this issue in D Richardson, “Nanotechnology: New Risks But No Rules”, Science & Environment (6 May 2009). See also HSE, Review of the adequacy of current regulatory regimes to secure effective regulation of nanoparticles created by nanotechnology (HSE, London, 2006). See also NSW Legislative Council, Nanotechnology in NSW Inquiry (2008).

93

See WorkCover Authority of New South Wales, Nanotechnology: Occupational Health and Safety Overview (May 2007); ASCC, Review of the Potential Occupational Health and Safety Implications of Nanotechnology (AGPS, July 2006).

CHAPTER 4 THE SECOND ELEMENT — UNDERSTANDING THE NATURE OF THE OPERATIONS Key messages • Officers are expected to understand critical risks arising from their organisation’s operations and the controls which are in place to address them. • Safety observations allow officers to gain first-hand knowledge of the operations.

Due diligence includes taking reasonable steps to gain an understanding of the nature of the operations of the business or undertaking of the PCBU, and generally of the hazards and risks associated with those operations. Case example

CEO convicted for failure to understand the nature of the company’s operations Unless you were in the logistics business, you probably would not have heard of Owens Container Services before 2006. That is not to say that the company was, by any, means a small company. The company was one of a group of companies known as the Owens Group which was in the business of repairing, cleaning and storage of shipping containers and tanks. It had a series of international shipping organisation (ISO) tank washing facilities in Australia, New Zealand and Fiji. In Australia, it had operations in Sydney, Melbourne and Brisbane. It was bought out by Mainfreight Limited in late 2003. But in 2006, the company gained notoriety because of an accident at its depot in Auburn in NSW and importantly because of the impact that this accident had on its then CEO, David Ritchie.

The company had been operating a tank washing facility in the Auburn depot called Race Container Park, since February 2002. The depot is still in operation today at the corner of Carnarvon and Newton Streets, Auburn. John Howie was the depot manager at Race Container Park. He had worked for Owens Container Services since 1994 and in 2003 had been depot manager at the Race Container Park for two years. As depot manager, he managed the site. One of the workers reporting to him was Francis James, an 18-year-old labourer. A tank at Race Container Park was identified as having resin solution. Francis tried to clean the tank with cold water and detergent but that did not completely get rid of the resin solution. Francis spoke to John. John asked Francis to get him a cleaning agent used at the site, methyl ethyl ketone (MEK). John sprayed the tank with MEK. 20–30 minutes later, Francis decanted the residue MEK from the bottom outlet valve of the tank and then washed the tank using detergent. Francis saw that there was still some residual resin inside the tank. He told John. The next day, John again sprayed the tank with MEK. 20–30 minutes later, John then got a water gernie and started spraying the inside of the tank to remove the resin solution which had stubbornly remained. A few minutes later, there was an explosion. John was thrown seven metres in the air. He later died from his injuries. MEK is a highly flammable substance. It had been used at the Race Container Park depot as cleaning agent for some time, but was not used at other sites. ISO tanks are confined spaces with poor ventilation. For highly flammable cleaning agents like MEK to be used, ignition sources had to be isolated, for example by inserting an inert gas into the tank. The use of the water gernie represents multiple sources of ignition through static — water coming from the nozzle or water hitting the sides of the tank, for example. The company was prosecuted and pleaded guilty. Something which is unremarkable in the circumstances, given the system

failures involved in the incident. It was convicted and fined $160,000. Its divisional general manager, Mr Rose, was also prosecuted. He pleaded guilty and was convicted and fined $18,500.94 What shocked most senior management and brought the case to the spotlight was the fact that the CEO of Owens Group, the parent company of Owens Container Services, was prosecuted and convicted. David Ritchie was a resident of Auckland, New Zealand. He had held the position of CEO of Owens Group for two years. When Mr Ritchie was CEO he dealt with brokers, analysts, major shareholders, banks, customers, suppliers and global partners, as well as the media. The day-to-day operation of the divisions of the Owens Group was managed by the general manager of each division relying upon people with many years’ experience and expertise. General managers such as Mr Rose were relied upon to inform Mr Ritchie about what was happening in each aspect of the business. Mr Ritchie reported to the board, all of whom were non-executive directors. After commencing with the Owens Group, Mr Ritchie had investigated occupational health and safety in the Group, had talked to general managers and others, had considered safety audits and was informed what was happening on the ground. When he took over the job of CEO, he spent the first two to three months trying to understand the nature of the business and learned about the occupational health and safety system, the people running the system, the use of audits, site meetings and the understanding of regulatory provisions. The HR manager looked at occupational health and safety in all divisions. Mr Ritchie met with the HR manager on average two to three times a week, dealing with occupational health and safety and other matters. There were monthly reports received from the heads of each division and there was a monthly meeting of the executive committee. The monthly reports and the executive meetings, at Mr Ritchie’s initiative, had a specific requirement to deal with occupational health and safety issues. Occupational health and

safety became a specific agenda item for the executive committee. OHS matters were covered in the reports to the executive committee, and through this process, Mr Ritchie was able to pick up issues from managers and their reports concerning incidents, safety audits and the safety regulation of the divisions. There were regular workplace audits to ensure workplace safety and that the Group as a whole was meeting regulatory requirements. Mr Ritchie set up a cross-functional group to deal with the management of occupational health and safety across the business, something not undertaken before his appointment as chief executive officer. There were assessments by New Zealand authorities of a number of divisions and some of those divisions had obtained the highest rating in recognition of having achieved best safety practice. Each month, Mr Ritchie reported directly to the board with a report being prepared with the assistance of the company secretary. That report dealt with occupational health and safety and relied on reports from the divisions and discussion with divisional general managers. He was not, however, personally involved in the occupational health and safety of particular businesses because he regarded himself as lacking the specialist knowledge and expertise to undertake that role. That experience, knowledge and expertise was held by the general managers of divisions who had their own specialists who knew the industry and best practice in that industry. From time to time, Mr Ritchie would also attend the meetings of senior management from each division in order to obtain a view of the particular aspect of the business, to show a willingness to be involved and to participate in their discussions.

In relation to the overall business of the Owens Group, Mr Ritchie said that there were some 80 offices throughout the world. He estimated that he spent between 20% to 30% of his time each year dealing with brokers and analysts and approximately another 20% to 30% of his time dealing with suppliers, partners and customers. Mr Ritchie defended the charge on the basis that he was not in a position to influence the conduct of the company; in relation to the breach, he exercised all due diligence. He was found guilty and convicted of the charge. Haylen J said: “[The defendant]’s position as a Director meant that he had, by virtue of that position, the authority to influence the conduct of the corporation and to do so in relation to this particular contravention. It was within his authority and control to seek to have a policy of safety audits operating at the wash bay sites that addressed the critical issue of earthing and prohibiting the use of MEK or laying down strict procedures for the use of other volatile and dangerous chemicals. [He] was in a position to have reports made to him and policies endorsed addressing each and every aspect of this comprehensive failure by the company. This did not necessarily involve him or require him to become involved in day-to-day operations in a hands-on way but required effective reporting lines and recommendations from those with expertise in aspects of this specialist operation … As a Director, he had to be active and diligent in requiring information about the nature of that business, the chemicals being addressed, the risks thrown up by having to work with those chemicals, obtaining expert advice as to the best way to remove risks from the operation and ensure the safety of employees at each site. The system should have made him aware of the existence of MEK and how that was to be properly and safely dealt with

when cleaning tanks at any of its sites. He should have been informed of the importance of earthing these facilities and the risks that flowed from not having an effective system of earthing. He should have been informed of the details of appropriate protective work clothing required for this task and the means by which the wearing of this clothing was to be ensured at each site.”95 His Honour went on to say in relation to the due diligence defence: “If the hallmark of this defence is that the defendant would need to show that he had laid down a proper system to provide against contravention of the Act and had provided adequate supervision to ensure that the system was properly carried out, then Mr Ritchie’s defence case fails. The evidence does not disclose a director’s mind concentrated on the risks of this operation or addressing systems so that those risks will be exposed to the directors in order that they might take steps to address those risks. It cannot be said in the present case that the contravention was due to simple human error of an otherwise particularly well-equipped worker who, had he abided by the system laid down, would have avoided the risks inherent in the operation.”96 Mr Ritchie was convicted and fined $22,500. The Ritchie decision, is the perfect illustration of the second element of the due diligence duty. It was Mr Ritchie’s failure to understand the nature of his company’s operations and risks associated with such a critical aspect of these operations — the cleaning agents used in cleaning of tanks — which exposed him to liability.

Element 2 Due diligence includes taking reasonable steps to gain an

understanding of the nature of the operations of the business or undertaking of the PCBU, and generally of the hazards and risks associated with those operations. Why require officers to have an understanding of the nature of the operations? Officers cannot lead if they do not have the relevant first-hand knowledge of the risks facing their organisation. It is this first-hand knowledge which allows them to discern and interpret the data presented to them through safety reports such as safety incident statistics or audit reports. This first-hand knowledge is gained through safety observations. This obligation is consistent with the duties imposed on officers, particularly directors, under the Corporations law. In AWA Ltd v Daniels, 97Rogers CJ said: “A director is obliged to obtain at least a general understanding of the business of the company and the effect that a changing economy may have on that business. Directors should bring an informed and independent judgment to bear on the various matters that come to the Board for decision.”98 Similarly, in Statewide Tobacco Services Ltd v Morley,99 Ormiston J said: “In the light of the various duties now imposed upon the directors, it would not appear unreasonable that they should apply their minds to the overall position of the company … What each director is expected to do is to take a diligent and intelligent interest in the information either available to [them] or which [they] might with fairness demand from the executives or other employees and agents of the company.” In Commonwealth Bank of Australia v Friedrich & Ors,100 Tadgell J, observed: “As the complexity of commerce has gradually intensified (for better or for worse) the community has of necessity come to expect more than formerly from directors whose task it is to govern the affairs of companies to which large sums of money are

committed by way of equity capital or loan. In response, the parliaments and the courts have found it necessary in legislation and litigation to refer to the demands made on directors in more exacting terms than formerly; and the standard of capability required of them has correspondingly increased. In particular, the stage has been reached when a director is expected to be capable of understanding his company’s affairs to the extent of actually reaching a reasonably informed opinion of its financial capacity … I think it follows that [they are] required by law to be capable of keeping abreast of the company’s affairs …” [emphasis added] What does the second element involve? The second element of the due diligence duty builds on the first element. Having required the officer to acquire and maintain a base knowledge in relation to WHS matters, the officer is then required to contextualise that knowledge in relation to the business or undertaking of the company. In that regard, there are two limbs to the second element — (i) a duty to take reasonable steps to gain an understanding of the nature of the operations of the business or undertaking of the PCBU, and (ii) a duty to take reasonable steps to gain an understanding generally of the hazards and risks associated with those operations. Given the WHS context of the legislation, the first limb of the second element cannot be an end in itself, but rather a means to achieving the second limb of understanding generally, the hazards and risks associated with those operations. In a sense the second element supports the primary duty of care of PCBUs in that it requires officers to systematically turn their minds to their legal footprint — the scope of their operations — and the risks arising from that footprint. The concept underpinning the second element is exactly what was being debated in the Ritchie decision. Owens Containers was in the business of repair, cleaning and storage of shipping containers and tanks. The fatal incident that lead to the prosecution of its managing

director arose during the cleaning of one such container at one of the company’s yards. Justice Haylen’s observations go to the reporting system that could have been implemented by Mr Ritchie to gain an understanding of the hazardous substances used in such a core part of the operations of his company, so that he may be satisfied that the critical risks arising from those operations are adequately managed. This is the essence of the second element. The element requires officers to take an active and personal interest in the nature of their company’s operations. This can be achieved through commissioning reports on critical risks. Through that process, a leader should be able to accurately identify the critical risks in their organisation and have real insights into how they arise and how they are managed. They should be front-of-mind on every safety observation or management walk-around. The questions to every worker should be around the effectiveness of those critical risks: How can we improve things for you to make you safer? What are the risks that you encounter in your day-to-day activities and what are we doing about managing those risks? How can we improve those controls? Understanding the nature of the operations The report into the 1999 rail disaster at Ladbroke Grove in the UK, which claimed the lives of 31 people and injured 400 others, identified the need for senior management involvement in safety, including senior management field visits and safety observations. The report chaired by Lord Cullen observed: “Companies in the rail industry should be expected to demonstrate that they have, and implement, a system to ensure that senior management spend an adequate time devoted to safety issues, with frontline workers.”101 The report quantified this at 30% of the time of line managers, one hour per day for middle managers and at least one hour per week for senior executives. The observation is not unique to the rail industry. While the quantum of time allocated to safety observation need not be prescribed, the observation serves as a practical guide to the level of commitment required by different levels of management.

Of course, many companies currently have health and safety observation programs. However, the quality of such programs and the actual observations varies. Hopkins points out that the day before the Deepwater Horizon disaster, a group of BP senior executives were on the rig undertaking a health and safety observation as the first stages of the oil spill were occurring. They failed to observe any of the signs and left, giving the rig a clean bill of health.102 The effectiveness of any observation relies on the competence of the personnel undertaking it. The second element requires “understanding” the nature of the operation and not merely acquiring information or data. That is, there must be an emphasis in the practical implementation of this obligation on up-skilling officers to effectively discharge that obligation. Take, for example, the oil spill from the Montara Wellhead Platform on 21 August 2009, the worst oil spill in Australia in over 20 years. The Commission of Inquiry into the spill found that senior personnel of the operator, PTTEPAA, had only limited experience of batch drilling and batch tieback operations and did not fully comprehend the implications of such operations. The operator’s senior personnel on the rig and onshore, were also deficient in their decision-making and judgments in relation to a number of important matters. In particular, the commission found that the drilling supervisor, the onshore drilling superintendent and the onshore well construction manager failed adequately to comprehend that the cementing operation was seriously compromised and required testing and, most likely, remedial action. The magnitude of this failure reflected a failure of judgment and competence. The inquiry observed that “the problems were not complicated or unsolvable, and the potential remedies were well known and not costly. This was a failure of ‘sensible oilfield practice 101’”. The commission of inquiry also found that a contributing factor to PTTEPAA’s systemic errors extended to its onshore management and governance structure. There was a direct line of reporting through the CEO to the parent company in Thailand. Under this management structure, insufficient attention was paid to putting in place mechanisms to assess and manage project risks, the competence of

key personnel, the adequacy of the system, and the interaction with contractors — the essence of due diligence. Understanding the risks A practical way of discharging the second element is to commission a review of critical health and safety risks arising from the conduct of the business or undertaking. Critical risks are low frequency, high consequences events. Because of their lack of frequency, they are often not adequately captured by conventional risk management processes. But their catastrophic consequences make them a priority for the officers of the organisation. By definition, every high profile disaster falls within that category — from the Pike River Mine explosion in New Zealand which killed 29 people, to the Macondo Well, Deepwater Horizon disaster or to the Upper Big Branch mine explosion in Virginia which killed 29 people, to the BP Texas refinery explosion. Pragmatically, these are events for which officers will be held accountable. Tiger teams Tiger teams — teams of experts assigned the task of investigating a problem — may be a useful way of practically discharging the critical risk component of the second element. Critical risks are typically identified through a combination of site inspections and workshops involving stakeholders, including operations management and worker representatives. The aim of such workshops is to “red team” scenarios that may lead to catastrophic consequences arising from the operations — that is, testing the defences for vulnerability by teams — red teams — role playing the extremes of how things could go wrong. While the actual incident and near-miss data of the operations is relevant, industry experience locally and internationally, and the experience of similar or related industries, can often be more fruitful for identifying critical risks. As such, critical risk tiger teams can benefit from experienced external facilitators to inject broader imagination to the exercise. Footnotes

Footnotes 94

Inspector Kumar v Rose [2006] NSWIRComm 325 and Inspector Kumar v Owens Container Services Australia Pty Ltd [2006] NSWIRComm 324.

95

Inspector Kumar v Ritchie [2006] NSWIRComm 323 [173] (Haylen J).

96

Ibid [177].

97

(1992) 7 ACSR 759, Rogers CJ said at 864 (emphasis added).

98

See also Daniels v Anderson (1995) 37 NSWLR 438.

99

(1990) 2 ACSR 405, 431.

100

(1991) 5 ACSR 115, 126.

101

L Cullen, The Ladbroke Grove Rail Inquiry, (Part 2, Norwich, Her Majesty’s Stationery Office, 2001) 64–65.

102

A Hopkins, “Management Walk-Arounds: Lessons from the Gulf of Mexico Oil Well Blowout”, Working paper 79, (National Research Centre for Occupational Health and Safety Regulation, 2011).

CHAPTER 5 THE THIRD ELEMENT — RESOURCES AND PROCESSES Key messages • Due diligence requires that the safety impact of every resource decision is assessed. • Resources includes human resources and not just financial resources. • Safety expenditure may be better characterised as a capital investment. • Safety in design is implied in a duty to ensure adequate resources and processes.

Due diligence means taking reasonable steps to ensure that the PCBU has available for use, and uses, appropriate resources and processes to eliminate or minimise risks to health and safety from work carried out as part of the conduct of the business or undertaking. Case example

Managing director convicted for not adequately supervising compliance of the safety policy Tom Smith is a name known to anyone who has taken an interest in personal liability provisions of directors and managers under WHS legislation. Tom Smith has been publicly protesting against his 2004 conviction by the New South Wales Industrial Relations Commission for breaches of WHS legislation because of what he regards as unfair provisions that deem directors and managers guilty until they prove themselves innocent — the deeming liability provisions in the then NSW regime which have been replaced by the officer duty under the current laws. Tom Smith’s predicament symbolised the unfairness of the system — a managing director held personally liable because a

guarded machine at his customer’s factory failed to operate as intended for some inexplicable reason. Like many directors who have faced prosecution under the former laws, he would have welcomed the abandonment of the deeming provisions. Surprisingly, however, it is not entirely clear that Tom Smith would have got a better outcome had the current laws applied to his situation. The incident that resulted in Tom Smith’s personal conviction happened on 30 June 2000. Steven Rowe was employed by Daly Smith Corporation, a labour hire company, as a labourer and placed at their client, Hayman Industries. On 30 June, he was operating a John Heine power press that he was engaged to operate, stamping out and removing pole caps. The power press was guarded by a bi-fold guard. When open, the press should not function. I say “should not” because on 30 June 2000, it did — once. It has not done it since and did not do it previously. How it came that the power press operated despite the guarding, remains unexplained. But we know it did that day because Steven Rowe lost four fingers of his left hand when the die of the press closed and crushed his left hand against the die block. Daly Smith Corporation was not a rogue operation. Tom Smith founded the company and was its managing director, but the dayto-day operations fell on Gerald Teahan, the general manager. Daly Smith Corporation would, as part of the engagement process with new clients, inspect the premises of the clients. If the premises were unsafe, they would not proceed. They would require the particular machine, process or operation for which the labour hire placement is sought, to be demonstrated to them. The job which Steve Rowe was placed to was an unskilled labourer to operate the power press. The press was guarded. The client was to provide instructions on the use of the press and supervision of the hired worker. Yet in WorkCover Authority of NSW (Inspector Mansell) v Daly Smith Corporation (Aust) Pty Limited and Smith,103 not only was Daly Smith Corporation convicted for the offence, so was Tom Smith, as managing director of Daly Smith Corporation. He was

personally prosecuted and convicted in relation to the incident. He defended the charge but was found guilty nevertheless and fined $5,000.104 An appeal against the decision to the Full Bench of the Industrial Court of New South Wales was dismissed.105 A special leave application to the High Court from that decision was refused.106 The basis of the conviction was that Steve Rowe should have been instructed to keep his hands away from the die press area at all times. He was in fact instructed that so long as the guard was open, the machine would not operate and therefore it was safe to retrieve the completed pole caps — that is how the machine was supposed to operate. But, as indicated, it did not operate as planned on 30 June 2000. In convicting Mr Smith, Staunton J said: “[I]t was submitted that as Managing Director, Mr Smith had a system in place to manage occupational health and safety risks and that he adequately supervised compliance with that system. Mr Smith did not have such a system in place. He (or rather DSC) had a policy in place. Mr Smith had been directly responsible for that policy being developed. But what he did not do was exercise all due diligence to ensure that that policy became the basis for an entrenched systemic process within DSC designed to ensure the worksites to which the company’s employees were sent were safe and free of risks to safety. The management staff at DSC, particularly at branch level, were ill-equipped to do the task that the company’s occupational health and safety obligations demanded let alone the company’s own policy. On the evidence before me, Mr Smith took no proactive steps to ‘adequately supervise compliance’ with the company’s policy let alone any system contingent on it. He certainly viewed Mr Teahan [the general manager] as having that responsibility but beyond asserting that belief, there is no evidence that Mr Smith took any steps that could be characterised as all due diligence in that he adequately supervised compliance with any system designed to ensure

that the company’s policy was being carried out in furtherance of its occupational health and safety obligations … I accept the import of the submissions of counsel for the prosecution that the words ‘all due diligence’ have a wider import than the words ‘due diligence’. Certainly, in order to discharge his onus, Mr Smith must establish that, on balance, he did all that was required to ensure the putting in place of a system of work within DSC designed to identify and manage risks to safety in his employee’s worksites. On that approach, I accept the submission on behalf of the prosecution that that is not done by merely hoping others would or could do what they were told, but also ensuring they have the skills to execute the job they are required to do and then ensuring compliance with that in accordance with the safe standards established. Compliance requires a process of review and auditing, both formal and random, in order to ensure that the safe standards established are in fact being adhered to and under ongoing review. Both in relation to his management employees and in relation to employees such as Mr Rowe [the injured employee], Mr Smith did not do that. As such, his defence as to all due diligence must fail.”107 [emphasis added] That is, Mr Smith’s due diligence defence failed because he had failed to ensure that his company had available for use, appropriate resources — particularly human resources with the requisite competence — and failed to ensure that his company used appropriate processes to eliminate or minimise risks to health and safety from work carried out as part of the conduct of the business or undertaking. That is, Tom Smith was convicted for failing to meet the third element.

Element 3

The third element of the due diligence duty relates to resources and processes. Officers have a duty to take reasonable steps to ensure that the person conducting the business or undertaking: (1) has available for use appropriate resources (2) has available for use appropriate processes (3) uses appropriate resources (4) uses appropriate processes to eliminate or minimise risks to health and safety from work carried out as part of the conduct of the business or undertaking. The third element requires the safety impact of decisions to be adequately considered in every operational decision. Whether it is taking on clients as in the Daly Smith Corporation case, capital expenditures or cost cutting initiatives, due consideration whether the person conducting the business or undertaking has adequate resources and processes to comply with its legal obligations — and whether there are adequate systems for ensuring that those resources and processes are implemented — is necessary in order to satisfy the third element. Cost cuts and the third element The US Chemical Safety and Hazard Board investigation into the 2005 BP Texas refinery incident found that “cost cutting, failure to invest and production pressures from BP senior executives did not provide adequate resources to prevent major accidents and that budget cuts impaired process safety performance at the Texas City refinery”.108 It is this link with which the resourcing element is concerned. In a book analysing the incident, Professor Andrew Hopkins makes the following observations about BP senior management’s approach to resourcing: Senior executives demanded cost cuts and left it to others further down the hierarchy to ensure that these cuts were not at the expense of safety. Lower-level managers responded as best they

could to these conflicting requirements but, inevitably, safety was compromised. The only way out of this predicament is for those who order the cost cuts to take responsibility themselves for ensuring that safety is not compromised.109

BP Texas refinery disaster The 2005 BP Texas refinery disaster was the worst industrial accident in US history. The explosion at the BP Texas refinery killed 15 people and injured 180 others. The explosion resulted in a “shelter-in-place” order that required 43,000 people to remain indoors. Houses were damaged as far away as three-quarters of a mile from the refinery. The BP Texas City facility is the third-largest oil refinery in the United States. The refinery was owned by Amoco prior to 1999. BP acquired the refinery as part of a merger with Amoco in 1999. The incident occurred during the start-up of an isomerization (ISOM) unit after a maintenance outage. The ISOM unit is a process used that provides higher octane components to unleaded gasoline. During the start-up, operators pumped flammable liquid hydrocarbons into the raffinate splitter tower — a vertical distillation column with an inside diameter of 3.8 m and height of 52 m with an approximate liquid-full volume of 586,100 litres — for over three hours without any liquid being removed, which was contrary to start-up procedure instructions. Critical alarms and control instrumentation provided false indications that failed to alert the operators of the high level in the tower. Consequently, the tower was overfilled and liquid overflowed into the overhead pipe at the top of the tower. The overhead pipe ran down the side of the tower to pressure relief valves located 45 m below. As the pipe filled with liquid, the pressure at the bottom rose rapidly from about 21 pounds per square inch (psi) to about 64 psi. The three pressure relief valves were opened for six minutes, discharging a large quantity of flammable liquid to a blowdown drum with a vent stack open to the atmosphere. The

blowdown drum and stack overfilled with flammable liquid, which led to a geyser-like release out the 34 m tall stack. This blowdown system was a 1950s antiquated and unsafe design. It had never been connected to a flare system to safely contain liquids and combust flammable vapours released from the process. The failure to upgrade the blowdown drum is an issue to which we will return as it goes to the heart of the cost cutting mindset. A pick-up truck nearby, left with the engine idling, provided the ignition source for the flammable cloud which had by then formed around the plant. The resultant explosion and fire engulfed the near-by demountable offices, burning an area of 18,581 square meters. Upon acquiring the Texas refinery from Amoco, BP embarked on a program of cost cutting with a 25% cost reduction in 1999 and further cost cutting initiatives in 2002.110 In 2004, BP senior management challenged its North American refineries to cut their capital expenditure estimates for the following year by 25%. The Texas refinery site management argued against the cuts and managed to secure a concession with their target set at 16% rather than the expected 25%. These decisions were made by senior management, oblivious to their impact on safety and with the underlying assumption that they would be delivered without compromising safety. But that is precisely what it did. Cost cutting initiatives led to waves of staffing cuts, which meant that one operator was charged with monitoring several refinery units as the tragedy unfolded. Cost cuts also lead to the slashing of the learning and development budget by half over the six years preceding the incident. Face-to-face training was replaced with computerised training as part of that cost reduction strategy, leading to a poor appreciation of the risks associated with the operations. At the time of the incident, operators would routinely overfill the raffinate

splinter tower believing it to be safer to do so than to insufficiently fill it. Reduction in capital expenditure meant that plant was run to fail. Only repairs could be justified and not preventative maintenance. All but compliance driven maintenance would be undertaken and not design improvements. As such the blowdown drum was never fitted with a flare, despite this being standard industry practice, because there was no legal requirement to do so. Had that simple change been made, the disaster would have been averted. It is interesting to note that the Texas refinery was a very profitable operation. Indeed, the year prior to the incident the refinery had its most profitable year, generating $930m to its parent company. This was $145m more than any other refinery in the BP group. The driver for the cost cutting was not a desire to increase profit per se, but rather a desire to improve the return on investment. The Texas refinery was a large, complex plant and therefore had a lot of tied up capital. It was also an old plant requiring a great deal of capital injections to maintain it. Amongst the 18 BP refineries worldwide, the Texas refinery was one of the worst performing refineries on a return on investment measure because of its size, complexity and age. Ironically, the savings fade into insignificance compared to the cost of the disaster, with direct financial costs alone estimated at US$1.5b, an additional US$87m in OSHA infringement penalties, and several million in undisclosed commercial settlements of legal proceedings brought by families of the victims of the disaster. The third element institutionalises cost considerations in boardroom decision-making to avoid the type of flawed decisionmaking engaged in by BP.

Rethinking safety expenditure Capital is a concept well-known to economists. It invokes notions of investment with an expectation of a return on that investment,

appreciation of the asset through investment, and depreciation through wear and tear and neglect. All these concepts have salient applications and parallels to safety. A business which fails to account for its capital is doomed to fail. The analogy is true also of safety. Operational budgets carefully calibrate the level of expenditure which is sustainable in regard to the need to replenish and maintain its assets. They should similarly consider the safety position. One can consider safety capital as the bundle of systems, processes, controls, training, behaviours and attitudes which comprise the safety culture in an organisation. It follows that an organisation with a large safety capital will have fewer incidents. Given the cost of incidents, this represents a financial value-a return-to be derived from safety capital. In addition, an organisation with a large safety capital can also be expected to have higher productivity. Investments in training, systems and processes can be expected to have a positive impact on staff morale and wellbeing. This can be expected to manifest itself in higher productivity. On the cost side of the equation, hidden costs associated with absenteeism can be expected to be reduced. Within a safety capital framework, expenditure on safety can be seen as a capital investment made, based on traditional assessments of the need for and expected returns derived from, such expenditure. Productivity gains from decreased incidents and improved productivity can be seen as the return on the investment in safety capital. Since those gains are quantifiable, the return investment in safety capital can be measured and assessed. Safety capital can also be expected to share many of the features of other forms of capital. For example, we can expect a trend of diminishing marginal returns on investment to be associated with safety capital, as is the case with other forms of capital. At the early stages in the safety journey, where safety capital in the organisation is low, incremental investments in safety capital can be expected that have a significant impact on safety performance and therefore produce high returns. For example, the introduction of a safety management system, or the implementation of risk assessments or

safety audits where such systems and processes had previously not existed, will result in dramatic reductions in accidents. Over time, further investments in safety audits, for example, are unlikely to yield the same returns. At later stages in the safety journey, where there is a substantial, positive, safety culture in place, the marginal return on investment in safety capital will be smaller. Case example

Resources includes human resources In O’Sullivan v The Crown in the Right of the State of New South Wales (Department of Education and Training),111 the Department of Education and Training was prosecuted and convicted for breach of the employer’s duty of care for, amongst other things, failing to provide adequate staffing to ensure the health and safety of employees. The prosecution related to an incident at a special needs school where a teacher’s aide, who was left alone in charge of a number of physically and intellectually disabled students — some of whom were known to be particularly violent — was attacked by one of the students. Walton J, VP said in relation to the failure to provide adequate human resources charge: “The real culpability of the defendant, in the context of this charge, relates to Mrs Griffiths’ position on 9 February 1999 once Mr McKenzie departed: one of two aides supervising ten students, each of whom was severely disabled, six of whom had severe behavioural disorders, three of whom were known to be violent (albeit that in the case of AK the extent may not have been known), one of whom was known to abscond regularly, and some others of whom were in wheelchairs. That position was simply untenable … it is clear that the defendant’s failure to provide additional human resources to assist Mrs Griffiths in that divided classroom with that complement of students on 9 February 1999 caused

the detriment to her safety (the risk) … The risk … was patent.”112

Inadequate allocation of resources to WHS management is as much a cause of poor safety culture as a symptom of it. Practical tools The third element is concerned with ensuring that there are adequate resources and processes for discharging the safety obligations of the PCBU. This requires an assessment of such resources in face of operational requirements. That is, an assessment of the safety impact of decisions, particularly resources decisions such as capital expenditure or cost cutting programs. A safety impact assessment can be used as a practical tool for discharging that element. A safety impact assessment describes the positive and negative safety effects of a proposed action, and where appropriate, lists one or more alternative actions that may be chosen instead of the action described as a point of comparison for decision making purposes. Case example

The role of design in resources and processes On 5 April 2010, a series of explosions at an underground coal mine in West Virginia claimed the lives of 29 mine workers.113 We referred to this case study briefly in Chapter ¶3. A better design of the mine and the mine ventilation system would have averted the West Virginia disaster. The Governor’s Independent Investigation Panel Report found that the Upper Big Branch mine lacked an effective engineering design. Rather than having an overall engineering plan to guide the mining, the mine was engineered as operations advanced. Indeed, the engineers

were based at the office about a mile away from the North and South portals of the mine. They frequently were not involved with ventilation changes made by upper management at the mine. Of the engineers who gave testimony to the Independent Investigation Panel, one said he travelled underground at the mine only once every couple of years; one said he had very little involvement with the mine; one had never been underground at the mine. The chronic issues with the ventilation system at the mine were symptomatic of those design deficiencies. Furthermore, the ventilation system used at Upper Big Branch is commonly referred to as a push-pull system. Air is pushed into the mine and pulled through the mine by fans. Once the air has travelled its intended course, it exits the mine through entries. Fresh air and return air are directed through the mine by “ventilation controls”, referred to as stoppings, overcasts, regulators, seals and airlock doors. The location, construction and maintenance of these controls are critical to the proper functioning of a ventilation system. Missing controls, poorly constructed controls or controls in need of repair will result in an ineffective or failed system. The mine often installed airlock doors rather than constructing permanent overcasts to direct airflow. The doors are cheaper and can be installed much more quickly than overcasts but are an inferior design from a safety perspective because it is almost impossible to make doors truly airtight; the doors are vulnerable to damage within days of installation if they are struck by heavy equipment moving through them and can easily be compromised by human error if accidentally left open by workers or, as often happened at the Upper Big Branch Mine, used by shift supervisors to redirect airflow to their crew at the expense of another crew because of the chronic air shortage at the mine. It became part of the routine of miners and section bosses to “go get some air” by closing airlock doors or hanging curtain. In the months leading up to the disaster, the airflow was reversed on a number of occasions. The push-pull ventilation system at Upper Big Branch also had a

design flaw: its fans were configured so that air was directed in a straight line, even though miners worked in areas away from the horizontal path. As a result, air had to be diverted from its natural flow pattern into the working sections on the longwall, Headgate 22, Tailgate 22 and the crossover sections. Because these sections were located on different sides of the natural flow pattern, multiple diversionary controls had to be constructed and frequently were in competition with one another.

A PCBU cannot be said to have in use, adequate resources and processes if its premises, system or plant design is found wanting. In that way, safety in design is a core component of the third element. Figure 13 — Safety in design

Footnotes

103

[2004] NSWIRComm 349.

104

WorkCover Authority of NSW (Inspector Mansell) v Daly Smith Corporation (Aust) Pty Limited and Smith [2005] NSWIRComm 101.

105

Daly Smith Corporation (Aust) Pty Limited and Anor v WorkCover Authority of NSW (Inspector Mansell) [2006] NSWIRComm 111.

106

Daly Smith Corporation (Aust) Pty Ltd & Anor v Workcover Authority of NSW [2006] HCATrans 475 (1 September 2006).

107

Ibid [131]–[132], [134].

108

US Chemical Safety and Hazard Investigation Board, Investigation Report, Refinery Explosion and Fire, BP Texas City, Texas, 23 March 2005 (CSB, USA, 2007) 210.

109

Hopkins, above n 14, 81.

110

For a discussion of the impact of cost cutting on the Texas Refinery and its link to the incident see A Hopkins, Failure to Learn: The BP Texas City Refinery Disaster (CCH, Sydney, 2009) 73–83. The following discussion is based on that analysis.

111

[2003] NSWIRComm 74.

112

[2003] NSWIRComm 74 [148]–[151]. See O’Sullivan v The Crown in the Right of the State of New South Wales (Department of Education and Training) [2003] NSWIRComm 303 regarding penalty.

113

A year earlier, on 21 November 2009, 108 miners were killed in China as a result of an explosion at the state-run Xinxing Coal Mine in northeast China’s Heilongjiang Province. The force of the explosion caused nearby buildings to partly collapse, littering the ground above with shattered glass and metal. Poor ventilation was identified as a cause of the disaster.

CHAPTER 6 THE FOURTH ELEMENT — MONITORING PERFORMANCE Key messages • The fourth element is concerned with both incident and hazards and risks. • Analysing and learning from incident and near-miss data is critical to avoiding further incidents. • There is a role for a properly constructed incentive scheme as part of the mix of tools to drive better safety performance.

Due diligence means taking reasonable steps to ensure that the PCBU has appropriate processes for receiving and considering information regarding incidents, hazards and risks, and responding in a timely way to that information. Case example

Fined for not having a system to monitor incidents Charles Street Parramatta, NSW is in the heart of a vibrant mixed commercial and residential area, which at lunchtime swells with hundreds of people from nearby offices searching for a quick meal before they return to their work. At 10.20 am, on Thursday, 6 November 2003, residents and business tenants near Charles Street heard a loud thump and walked out to see a collapsed tower crane and debris from what was a pallet of fibre cement wallboard sheeting, littered all over their street. The crane was provided by Anywhere Tower Cranes.114 It was leased to Karimbla Construction Services, one of the subcontractors at the Meriton development on the corner of George and Charles Streets.

Miraculously, no one was injured from the incident. But the incident highlights a common failing of corporate governance arrangements. The crane toppled because it was overloaded. There was a problem with the weight gauge of the crane. The crane operator, a labour hire worker, reported the problem to Tom Gabris, the manager with responsibility for implementing the WHS system of Anywhere Tower Cranes. It was recorded in the hazard log book four days before the incident. But nothing was done about it. The director of Anywhere Tower Cranes, Ghada Nouh, took no interest in the hazard log book. Once missed, there were no checks and balances to catch the problem. It was an accident waiting to happen. On 6 November, the load changed from gyprock to wallboard. No one told the operator. The crane was overloaded and with a faulty gauge, he had no way of knowing. The crane collapsed. Tom Gabris had 19 other cranes in operation on the day of the accident and was attending another site. He was clearly at fault, but there was also no due diligence on the part of the officers of Anywhere Tower Cranes to oversee that he was doing what he was required to do — there was no system for monitoring incidents, hazards and risks — the fourth element. Anywhere Cranes was fined $100,000 in relation to the incident. The director of Anywhere Cranes, Ghada Nouh, was also charged and fined $9,000, even though she was only involved in the company in an administrative capacity and had no experience in crane operations. The WHS manager, Tom Gabris, was charged, pleaded guilty and was fined $9,000.115

Element 4 Officers are the stewards of an organisation. It is their responsibility to monitor performance of the organisation and drive improvements where necessary to meet the strategic objectives of the organisation. Safety is no exception. In the same way that the board of directors

receives regular reports on financial performance and annual financial accounts audited by an external accountant, so too must they receive regular reports in relation to the safety performance of the company. The fourth element requires officers to take reasonable steps to ensure that the PCBU has appropriate processes for: (1) receiving (2) considering, and (3) responding in a timely way to information regarding: (i) incidents (ii) hazards and risks. Rationale for the fourth element The monitoring of safety performance is not merely a question of accountability. An organisation can only improve its performance if it learns from its mistakes. In a safety context, that learning culture requires thorough consideration and reflection on the causes of incidents so that they may be addressed and their repetition averted. Of course, one cannot learn without the data to analyse. That means the starting point is creating an environment in which incidents are reported. That is, creating what renowned human errors and safety culture expert Professor James Reason calls a reporting culture — a climate in which people are prepared to report their errors and near misses.116 This is achieved in part through creating an environment of trust in which people are encouraged, even rewarded, for providing essential safety-related information through sharing of incidents and near-miss information but expect to be held accountable for unacceptable behaviour — just culture.117 It is then the role of senior management to create the climate where there is a willingness and ability to draw the right conclusions from the safety information system to address system deficiencies and the will

to implement major reform when it is needed — learning culture.118 It is tempting for officers to judge workers involved in incidents. Often, with the benefit of hindsight, the error committed by the worker involved in the incident, is obvious. However, the workers concerned do not have the benefit of hindsight. If you start with the premise that no one goes to work with a view to harming themselves or harming others, whatever decision the workers made must have seemed like a good idea at the time or at least the consequences of that decision were not apparent to them. Understanding why that was the case, is far more instructive than identifying the error itself. The more the organisation is concerned with understanding those conditions rather than attributing blame, the more willing the workers will be to come forward with information about errors, incidents and challenges they face. What do you measure? What an organisation chooses to measure, speaks volumes of its culture. Typically, organisations are focused on incidents. The Australian Standard 1885.1-1990: Measurement of occupational health and safety performance — Describing and reporting occupational injuries and disease identifies a number of lag indicators of safety performance is used as the benchmark for safety performance indicators. It sets out definitions for key measures such as lost time injury rate (LTIR),119 lost time injury frequency rate (LTIFR),120 medical treatment injuries (MTI),121 medically treated injury frequency rate (MTIFR)122 and lost workdays (LW).123 Such key performance indicators are appropriate for measuring “incidents” — which is a requirement of the fourth element — but tell you little about “hazards and risks”. This is why they need to be supplemented with more proactive performance measures. The absence of an incident does not necessarily indicate a high level of safety or absence of “hazards or risks”. The UK safety regulator, Health and Safety Executive (HSE), observed that “too many organisations rely heavily on failure data to monitor performance. The

consequence of this approach is that improvements or changes are only determined after something has gone wrong. Often the difference between whether a system failure results in a minor or a catastrophic outcome is purely down to chance. Effective management of major hazards requires a proactive approach to risk management, so information to confirm critical systems are operating as intended is essential”.124 The UK HSE recommends a dual approach to performance measurement. The HSE “dual assurance model” sees a lead indicator and a lag indicator assigned to each risk control system.125 This model leverages the benefits of both approaches to performance measurement to have a dual assurance that risk control systems are operating as intended.126 Consistent with this approach, companies should not simply measure failure. But rather, they should equally analyse, understand and measure success. What that means is setting a target for investigating projects or tasks that have been completed without incident to better understand the conditions that contributed to that success. Those investigations must be conducted with an open mind. It is possible that an investigation of success might uncover that work is being done successfully in a manner inconsistent with the plan set out in the relevant procedures. This may be an early indication of a normalised deviation which must be corrected. Or it may be an indication of a deficiency in the procedures themselves. Of course, it may be both of those things. It is also possible that the deviation may reflect a more appropriate manner of performing the work either as performed, or with minor tweaks. After all, that approach has led to success on at least the particular occasion identified. A balanced use of leading indicators — indicators designed to identify hazards and risks — with lag indicators — indicators reporting incidents — is not only an effective practice for verifying that risk controls measures continue to operate as intended, it is a legal requirement under the fourth element. Setting goals and priorities Any monitoring of safety performance must be done against the

backdrop of a set target. As such, officers must set the strategic objective for safety at the outset of every financial year, together with the targets which will meet those strategic objectives. Targets must be allocated to managers to implement as part of a company safety implementation plan. For a performance indicator to be effective it must be: (i) relevant — that is linked to the organisation’s safety strategic goals (ii) clearly defined and easy to understand (iii) measurable (iv) acceptable — that is, perceived to be fair by employees and managers (v) comparable — that is, permits effective comparisons over time and to other organisations (vi) unambiguous — that is, indicates improvement or deterioration in performance (vii) attributable — that is, it allows management to influence results by taking action (viii) statistically valid (ix) timely — that is, it represents current performance, and (x) cost effective — that is, it balances the costs of collection with the usefulness of the information captured. When setting targets, critical risks must be given priority. As such, a proactive implementation plan should reflect a program of investment in controls aimed at reducing the vulnerability of the company to critical risks. In that regard, implementation plans provide transparency and accountability in relation to safety investment.

Role of implementation plans in due diligence Any business plan requires an implementation strategy which sets out the objectives, targets, priorities, timeframes and responsibilities, and sets out the practical steps which will be undertaken over the short to medium term to effect the objectives and targets, including period targets to assess ongoing effectiveness of the plan. Remarkably, this step is often missed in safety and environmental management systems or relegated to aspirational goals lacking in specificity and accountabilities. One way of achieving this is by undertaking a critical risk review of the critical risks arising from the relevant business or undertaking and developing a bow tie analysis, setting out the preventative and mitigation barriers for controlling each critical risk. In relation to each of these barriers, a vulnerability analysis is required to identify what threats may exist which may compromise the effectiveness of those barriers and as such, what additional controls are required to mitigate against those threats — called escalation factors. Accountability in relation to each barrier, including escalation factors, can then be assigned at each level of the organisation and lead indicators identified to monitor their effectiveness. Figure 14 — Critical risk review

Role of incentive schemes In relation to reporting of incidents, impediments to incident reporting

in incentive schemes must be removed. An incentive scheme with a safety performance component based on negative performance indicators, such as lost time injury rates, medically treated injury rates or frequency measures of those indicators, creates a financial incentive for under-reporting, robbing management of the opportunity to learn from incidents. Conversely, a reward and recognition scheme which rewards reporting of near-misses for example, can assist in creating the right reporting culture in the organisation. Effective incentive schemes can have both direct results through a reduction of incidents and indirect results through improved morale and productivity, and an increase in safety awareness among employees. Safety performance measurement, remuneration and incentive frameworks can be useful in encouraging an organisational culture committed to better safety outcomes. As the old saying goes, “what is rewarded is done”. To drive better safety outcomes, organisations should systematically set safety targets or key performance indicators, review and assess the safety performance of its employees, and reward superior safety performance both formally, through bonus and incentive schemes, and informally, through employee reward schemes. Effective incentive schemes can have both direct results, through a reduction of incidents, and indirect results, through improved morale and productivity, and an increase in safety awareness among employees.

Hazard and risk indicators Some examples of positive performance indicators include: • worker perception of management commitment — conducted by survey • percentage of staff with required WHS training

• number of compliance audits undertaken, and • number of toolbox meetings undertaken. Some examples of positive performance indicators concerning risk management, of which relevant parts can be included in every employee’s KPIs for the purposes of an incentive scheme include: • percentage of planned risk assessments completed • percentage of planned workplace inspections completed • percentage of reported incidents investigated • percentage of corrective actions closed out within 30 days • percentage of staff who have received health and safety training in the past 12 months • percentage of risk assessment recommendations implemented • percentage of WHS inspection recommendations implemented, and • percentage of incident investigation recommendations implemented.

Figure 15 — Roadmap to Performance Measurement

Footnotes 114

It was owned by Santino’s Cranes.

115

WorkCover Authority of NSW v Anywhere Tower Cranes Pty Ltd & Ors [2007] NSWIRComm 44.

116

Reason, above n 8, 195.

117

Ibid.

118

Reason, above n 8, 196.

119

Occurrences that resulted in time lost from work of one day or shift or more/the number of employees x 100.

120

Lost time injury rate per million hours worked.

121

Incidents leading to a single injury or multiple injuries requiring treatment by a medical practitioner/number of employees x 100.

122

Number of medically treated injuries in the period per million hours worked.

123

The number of workdays beyond the day of injury the employee was away from work because of the injury or illness.

124

Health and Safety Executive, Developing process safety indicators (HSE Books, London, 2006) 1.

125

Ibid 2.

126

Ibid.

CHAPTER 7 THE FIFTH ELEMENT — LEGAL COMPLIANCE Key messages • Officers must ensure that they implement a process for legal compliance audits. • Audits must be conducted by competent persons. • Audits are required at reasonable intervals.

Due diligence means taking reasonable steps to ensure that the PCBU has, and implements, processes for complying with any duty or obligation of the PCBU under the WHS legislation. Case example

Council fined for systemic compliance failures Lithgow City Council owned and operated the Oakey Park Water Treatment Plant on Bells Road, Lithgow. Discharges from the water treatment plant are to an adjacent creek called Farmers Creek. Farmers Creek is a part of the Cox’s River catchment that ultimately drains to Lake Burrogorang and Warragamba Dam. Raw water is treated in order to produce potable water. Water is extracted from a dam located to the north-east of the premises. The council treats the water by the addition of chemicals to remove suspended solids and then passes the water through sand filters. The resulting water is then disinfected and added to the reticulated water supply of Lithgow. One of the chemicals used in the water treatment at the premises is alum (aluminium sulphate), which is used as a coagulant to remove solids from the raw water.127 On 9 July 2004, liquid alum and alum sludge polluted Farmers Creek and one of its tributaries.128

The NSW Environment Protection Authority (EPA) investigated the pollution incident and required the council to clean up the pollution and to implement a pollution reduction program. The EPA issued a Notice of Variation of the Licence inserting conditions U1 and U2. Condition U1 required the council to undertake an upgrade options study for the water treatment plant so that there would be no need to discharge backwash to the waters. Condition U2 required an investigation as to the permeability of the sludge lagoons for the water treatment plant. The investigation was required to examine the works as executed drawings for the sludge lagoons; examine the soils and geology underlying or immediately surrounding the sludge lagoons, particularly in terms of permeability; test to ascertain if leakage was occurring from the sludge lagoons (in situ permeability testing, water balances, tracing, etc); if possible, identify the location(s) where leakage was or may be occurring; and if appropriate, propose measures to eliminate any identified leakage from the sludge lagoons.129 The council failed to prepare and submit the completed options study for the backwash diversion system by the date required by condition U1. The council submitted a report of the permeability investigation by the date required by condition U2. Qualitative testing results contained in the permeability investigation report disclosed that the permeability of the material in the embankments and the base of the sludge lagoons was between 100 to 1,000 times more permeable than the EPA’s typical requirements for these types of structures. After reviewing the report, the EPA determined that the sludge lagoons were in fact leaking. It issued a Notice of Variation of Licence which substituted a new condition U2. The new condition U2 required the council to undertake the remedial works to the sludge lagoons recommended by the Department of Commerce in the permeability investigation report. The council failed to undertake the remedial works in time. The EPA charged the council with two offences against s 64(1) of the Protection of the Environment Operations Act 1997 (NSW).130

The council entered pleas of guilty to each of the charges. It was fined a total of $48,750. In sentencing, Preston CJ held: “The circumstances of the offences reveal that the offences were a product of systemic failure in the Council’s management and operation of the water treatment plant. The Council failed to prioritise long term asset management and the need for regulatory compliance. The Council failed to allocate the financial and human resources necessary to comply with the conditions of its licence. The fact that the contraventions involve systemic failures and are not an isolated incident increases the objective seriousness of the offences.”131 His Honour went on: “[T]he Council’s failure to comply with the conditions of the environment protection licence was a product of the outdated management practices and organisational structure within the Council and self imposed budgetary constraints. The Council did not give priority to compliance with, including carrying out the works required by, the conditions of the licence or allocate sufficient financial and human resources to enable it to do so. This was a result of a series of deliberate decisions of the Council.”132 Importantly, Preston CJ observed: “Compliance with environmental laws is not optional; it is not contingent on a person having sufficient funds or sufficient willingness to expend funds to comply with environmental laws. The laws mandate compliance; it is a criminal offence not to comply. Persons must assign first priority to compliance with the laws and arrange their organisational structure, management, human resources and financial resources to ensure that this occurs.”133 Preston CJ’s observation is as true of WHS compliance as it is of environmental compliance. That is in essence of the fifth element.

Element 5 The fifth element requires officers to take reasonable steps to ensure that the PCBU: (1) have, and (2) implement processes for complying with any duty or obligation of the PCBU under the WHS legislation. The fifth element therefore requires a process for conducting regular legal compliance audits — a legal compliance audit process — where the standard against which the system is measured is the law itself. Standard The standard against which the system must be audited is “any duty or obligation” of the PCBU under the WHS legislation. That is, the WHS Act, regulations (as interpreted by the courts from time to time) and, because of the effect of the reasonable practicability definition and the admissibility of Codes of Practice as evidence of what is reasonably practicable, the Codes of Practice themselves — even though they are not legally binding. There are few obligations imposed by the Act itself. Rather the Act imposes the general duties, consultation duties, anti-discrimination obligations and incident reporting obligations. The balance of the provisions of the Act itself are enabling provisions — concerned with the nuts and bolts of enforcement. The bulk of the legal obligations are imposed by the regulations. They include: • general workplace management, such as information, training and instruction, general working environment, first aid, emergency plans, personal protective equipment, remote or isolated work, managing risks from airborne contaminants, hazardous atmospheres, storage of flammable or combustible substances and falling objects • hazardous work such as noise and hazardous manual tasks

• confined spaces • falls • high risk work • demolition work • diving work • plant and structures • construction work • hazardous chemicals • asbestos, and • major hazard facilities. Law not standards The standard which must be applied in an audit for the purpose of the fifth element is the law itself and not Australian or international standards. Case example

This point was well made by Staunton J in WorkCover Authority of NSW (Inspector Macready) v Forcon Pty Limited and Forsyth134 where the prosecution was emphasising the defendant’s failure to comply with an Australian standard which, like all but a few Australian standards, is not legally binding. The judge pointed out that there were express legal obligations imposed on the defendant under the regulations which were relevant to the issue and it was these and not a non-binding instrument, which her Honour intended to apply.

The defendant in this case was a principal contractor on a construction site. It was fined $73,125 and its director fined $4,100 in relation to an incident where an employee of a subcontractor fell from a height while performing cement rendering work. The worker lost his balance while performing the work on an upstairs balcony of a unit at the site. He fell approximately 4.46 m and sustained head, neck and spinal injuries, and fractures to his wrist and elbow. He was lucky to be alive. Forcon had installed a temporary handrail on the balcony. However, the handrail had been removed by the worker on three occasions on the day of the incident. Forcon’s building supervisor noticed that the worker had removed the temporary handrail and instructed him on two occasions, that he could not work without the handrail. Nevertheless, Forcon was charged under s 8(2) of the Occupational Health and Safety Act 2000 (NSW) for failing to ensure that people other than its employees were not exposed to risks to their health and safety arising from its undertaking while they were at its place of work. Forcon’s director was also charged under s 8(2) pursuant to s 26(1) which then deemed a director liable for the offences of a corporation. Both defendants pleaded guilty. In sentencing, the prosecutor submitted that regard should be had to the failure of the temporary handrail to meet the requirements of Australian Standard AS 1657 — Fixed platforms, walkways, stairways and ladders — Design, construction and installation. Staunton J rejected this approach. Her Honour noted that Australian Standards have at best been accepted by the courts as “the consensus of professional opinion and practical experience as to the sensible safe precautions”. They are not legally binding and it is up to the judge to determine how much weight to give them. Her Honour held that little weight should be given to the failure of the temporary rail to comply with the

standard. By contrast, her Honour considered the provisions of cl 56 (Prevention of falls from heights — particular risk control measures) of the Occupational Health and Safety Regulation 2001 (NSW) to be of more significance and found that the temporary handrail did not comply with this clause. Staunton J held that the central failure of Forcon and the director was a failure to ensure that all subcontractors and persons engaged on their project adhered to safe systems of work in accordance with Forcon’s own safe work method statement. Her Honour noted that while the defendants did have in place a process designed to ensure subcontractors, and others they contracted, were aware of their occupational health and safety obligations, the defendant did not follow through with their policies by ensuring that the systems of work in those policies were adhered to. Staunton J found that although there was some evidence the defendants attempted to enforce their work safety obligations such as Forcon’s building supervisor instructing the worker not to work without the handrail, her Honour held that these were inadequate.

Audit tools For that purpose, a legal compliance audit tool must either be developed or acquired to assist with the conduct of such audits. Not all obligations are equal Not all legal obligations should be given equal status in this exercise. Depending on the nature of the operations of the PCBU, some legal obligations may be more critical than others. For example, it is more critical that a large chemical plant must meet the major hazard facility provisions than the manual handling ones. Frequency of audits

The legislation provides no guidance on the frequency of legal compliance audits under the fifth element. That is, the frequency of the audits is what is reasonable in the circumstances given that the fifth element is qualified by “taking reasonable steps”. It would be reasonable to expect system audits (sometimes called desktop audits) to be conducted annually, unless the circumstances require a higher frequency — for example, because of the state of non-compliance of the system or because of a major legislative change or court decision representing a significant shift in interpretation. Implementation audits would depend on the circumstances of the operation. Once every two to three years would be reasonable in most industries. Where external audits are being conducted against safety management system standards, it may be appropriate to tie-in the legal compliance audit in that process, particularly given that it is usually a component of most commonly used standards such as Australia and New Zealand standard AS 4801 and SafetyMap. Competence of auditors An audit is as good as the person conducting it. In the same way that a safety management system auditor requires minimum competencies, an auditor of legal compliance also requires minimum competencies. These competencies include knowledge of the standard against which the auditor is expected to audit — the WHS laws. Figure 16 — Legal audit

Footnotes 127

Environment Protection Authority v Lithgow City Council [2007] NSWLEC 695 [2]–[3].

128

Ibid [8].

129

Ibid [8]–[15].

130

No actual environmental harm had been identified as having resulted from the failure of the council to comply with each of the licence conditions.

131

Environment Protection Authority v Lithgow City Council [2007] NSWLEC 695 [28].

132

Ibid [36].

133

Ibid [68].

134

[2007] NSWIRComm 132.

CHAPTER 8 THE SIXTH ELEMENT — VERIFY Key messages • The sixth element requires verification of the implementation of the due diligence framework. • Verification is typically achieved through audits. • Audits are not necessarily the most effective process for verification — safety observations and peer reviews may be more effective, particularly when used in combination with audits as part of an overall system of verification.

Due diligence means taking reasonable steps to verify the provision and use of the resources and processes referred to in the other elements. Case example

Conviction for failure to verify the accuracy of plans It was 14 November 1996 at 5.30 am, and the night shift crew at the Gretley mine were nearing the end of their shift. Gretley was owned by the Newcastle Wallsend Coal Company Pty Limited, a wholly owned subsidiary of Oakbridge Pty Limited. Four men were operating a continuous miner and four others were on a break in the crib room. Suddenly, with tremendous force, water rushed into the heading from a hole in the face made by the continuous miner. The continuous miner, which weighs about 50 tonnes, was swept some 17 metres back down the heading where it jammed against the sides. The four workers were engulfed by the water, swept away and drowned. The tragedy was to spawn an epic legal battle that undermined the moral foundation of the WHS regulatory system.135 The water from the inrush came from the long-abandoned old

workings of the Young Wallsend Colliery. The mine was operating according to a plan, which had been approved by the mine safety regulator in NSW, the Department of Mineral Resources. The plan showed the Young Wallsend Colliery more than 100 m away from the point of holing-in. The plan was wrong. At the commencement of the night shift at 11.00 pm on 13 November 1996, the Young Wallsend Colliery was only seven or eight metres away. The workings of the old mine were full of water. The hazard of inrush is well known in underground mining operations. It arises from the penetration of a reservoir of water (or other material which flows) in the course of mining. Once penetrated, the reservoir naturally empties into the mine. It often does so with great force, especially if it has a high head of pressure. When an inrush occurs therefore, fatalities are likely. Once a mine has been abandoned, it is likely that, over time, water will accumulate in the void. Abandoned mines are therefore recognised as a potential source of danger from inrush. When mining in the vicinity, the risks associated with inrush from the abandoned mine cannot be ignored. Steps must be taken either to drain the water, or maintain a barrier of unworked coal around the abandoned mine, sufficient to prevent the escape of that water. Whatever the strategy, it is fundamental that the colliery form an appreciation of the location and extent of the abandoned mine. Fifty two charges were laid by the prosecutor against two corporate defendants — the Newcastle Wallsend Coal Company Pty Ltd (NWCC) and Oakbridge Pty Ltd (OPL) and eight personal defendants: the statutory mine manager at Gretley at the time of the inrush, Mr Richard Porteous; the former statutory mine manager, Mr Jonathan Romcke; five statutory under managers, Mr Phillip Pritchard, Mr Michael Alston, Mr Michael Coffey, Mr Christopher Nicholls and Mr Terence Shacklady; and the statutory mine surveyor for a number of relevant periods, Mr Mark Robinson. At first instance,136 Staunton J found the corporate defendants,

NWCC and OPL, guilty and fined them $1,460,000. Mr Porteous was found guilty and fined $42,000. The mine surveyor, Mr Robinson, was found guilty and fined a total of $30,000. The former statutory mine manager, Mr Romcke, was found guilty and fined $30,000 at first instance. However, this conviction was reversed on appeal137 and the charges were dismissed under s 10 of the Crimes (Sentencing Procedure) Act 1999 (NSW). Charges against the statutory under managers were dismissed. But it is easy to get caught up in the theatrics and the legal manoeuvring around this case, and in the process lose sight of the fact that the tragedy was avoidable and could have been avoided. In finding Mr Porteous and Mr Romcke guilty, her Honour observed: “The role of Mr Romcke and Mr Porteous in appending their signatures, and thereby their authority, to those particular mine plans is significant. This is particularly so, in my view, because of what I have referred to as the primary failure that is the catalyst of the offences before me — the failure of the corporate defendants to properly research the location and extent of the Young Wallsend Colliery old workings.… In summary, in their positions of General Mine Manager and Statutory Mine Manager at Gretley for successive periods covering the planning, research and assessment charges, Mr Romcke and Mr Porteous had a practical connection between them and the acts or omissions making up the offences involving the corporations.”138 In finding the mine surveyor, Mr Robinson, guilty, her Honour observed as follows: “As Mine Surveyor for the period that he was, he had control of the surveying and survey drafting staff for the mine, subject to the instructions of the Mine Manager. As Mine Surveyor, he and his staff prepared mine and mine sections plans as requested and required for diverse activities within

the mine and in the preparation for and planning of mining activities at Gretley. For example, when NWCC made its initial s 138(1) application to the DMR, an approved copy of the relevant mine plan accompanied the application. In relation to Gretley and 50/51 panel in particular, the mine plan that accompanied the s 138(1) application was signed off as approved by Mr Romcke as Mine Manager and Mr Murray as the then Mine Surveyor. In doing so, that mine plan depicted the Young Wallsend old workings as depicted on RT 523 Sheet 3, being presumed workings in the Young Wallsend Seam. As I have already explained, because of the computerised mapping programme utilised at Gretley, those presumed old workings in the Young Wallsend Seam were always depicted in the same survey context. … In particular, prior to the inrush and during the relevant period as Mine Surveyor, he certified as to the accuracy of mine plans produced in relation to the Gretley Colliery that included 50/51 panel and the presumed, but incorrect, depiction of the Young Wallsend Colliery old workings in the Young Wallsend Seam … In producing the mine plans that he did, it can safely be assumed, in my view, that he relied upon the ISG survey coordinates of the presumed old workings of the Young Wallsend Colliery that had been earlier entered into the computerised mapping programmes at Gretley by either Mr Tilden or Mr Murray, Mr Robinson’s successors as Mine Surveyor. In so entering those coordinates, reliance was placed on the mine plans issued by the DMR, RT 523 Sheets 2 and 3. As is well established, those mine plans were wrong.”139 The failure to verify the accuracy of the plans provided by the department was in essence the reason why the managers in Gretley were convicted.

Element 6

Due diligence means taking reasonable steps to verify the provision and use of the resources and processes referred to in the other elements. That level of oversight by officers over the activities of the company is not unusual. It is expected in the financial context. For example, in a case called Daniels v Anderson,140 their Honours Clarke and Sheller JJA held that directors must exercise a reasonable degree of supervision and control over the activities of the company’s executive officers, and may not rely on the judgment of others where there is notice of mismanagement or where a matter for decision by the board poses an obvious risk.141 It is not unreasonable, therefore, that the same level of diligence be applied to WHS matters. Indeed, there is much to be said for an integrated approach to all risk issues and for the verification audits to incorporate all manner of risk from fraud prevention and financial risks, to environmental and WHS risks. Importantly, the duties of directors are not limited to giving attention to the affairs of the company at periodic board meetings142 and they are heightened where there is evidence of increased exposure. The Royal Commission into the Tricontinental Group of Companies referred to “the need for directors to have an inquiring mind”.143 In ASIC v Healey,144 Middelton J outlined the extent of the obligation as follows [576], [579], [582]: “Based upon the evidence, which in the main was uncontroversial, each director did not take all reasonable steps to focus and consider for himself the content of the financial statements … Each director was aware of or should have been aware of the relevant accounting principles which would have alerted each director to the apparent error in the proposed financial statements. Each director could then and should have made the relevant enquiries, if they had taken all the reasonable steps required of them. The directors did not focus upon or properly consider the issues the subject of ASIC’s allegations … The failure to notice certain omissions may well be explicable —

but here the directors, in some cases on their own admission, clearly looked solely to management and external advisors. If they had acted, as Senior Counsel for ASIC suggested, as the final filter, taking care to read and understand the financial accounts, the errors may have been discovered earlier than they were.” The assessment of the performance of a system is a crucial part of any effective management system and is the gateway to the continuous improvement process. It is the essence of the sixth element requirement. Audits The sixth element does not require audits. It requires verification. While audits are the most common form of verification, they are not necessarily the most effective form. A great deal of effort is put into presenting the organisation in the appropriate light to “pass the audit” of the external auditor. Where those audits are with notice, management will go to some trouble orchestrating an abnormal level of compliance on the day. Housekeeping will be immaculate. Record keeping in the preceding weeks will be extremely well kept and managed and employees will be on their best behaviour. The problem with that approach is that the audit findings become meaningless. The opportunity for learning and continuous improvement, the raison d’être of the audit, is lost. System performance audits should be treated as opportunities for learning; re-focusing the organisation back to its roots in continuous improvement. For that reason, safety observations by officers and peer reviews may be more effective as a tool for verification. Safety observations Safety observations are site visits by senior managers and directors — that is, officers — designed to afford the officers an opportunity to observe operations at the “coal face”, to gain a better understanding of the risks associated with the operations and to communicate with workers their expectations. Safety observations differ from audits in that they are about observing

how things are being done, getting an explanation of processes in an open manner, and discussing safety needs and standards. While it is naive to expect that the site will not put on a show for a visiting dignitary such as an officer, because the discussion is about what the process should be and identifying hidden risks — in the sense of risks that the worker is not aware of — it serves its purpose regardless of the show. As discussed in the context of the second element, it serves two additional purposes — it gives the observer an appreciation of the risks and it sends a powerful message to the workers that officers care about safety. To be effective, however, the officers require basic competence in conducting such observation and a genuine commitment to the exercise. All too often we see organisations setting targets for management around safety observations without any checks and balances on the quality of such observations and without a leadership program to drive the necessary commitment by management. This results in a “check the box” mentality to safety observations. The safety observations concept takes a leaf from the behavioural based safety approach and applies it to leaders. There are numerous ways of conducting safety observations. Some techniques are more effective than others. The idea is that the officer attends the site and meets with workers and site management. The meeting with site management is about understanding challenges and resource needs. This helps the officers appreciate what is required of them under the third element. It is also about reinforcing the commitment of officers to safety. By having a formal discussion about safety with site management, it suggests to them that this is something that senior management values and something for which they will be held accountable.145 The meeting with workers serves a similar purpose. It is about gaining a better understanding of the work they do and the risks they face in performing that work — this assists the officers in meeting the second element. It is also, in part, about understanding the design needs of the business or undertaking. By hearing from workers about issues they face, the officer is able to better appreciate the effectiveness or

otherwise of the design of the system of work and the plant, structures and substances supplied to workers to perform that work. This will help them in future decision-making about resources and processes — again assisting in meeting the requirements of the third element. The officers ask the workers about the work they do and seek a demonstration. The officers note safe behaviours and any behaviours they regard as at-risk behaviours. At the end of the observation, the officer discusses with the worker, the safe behaviours first. This serves as a reinforcer of safe behaviours. The worker feels rewarded for their positive behaviours by the officer, in that the officer acknowledges they have observed that behaviour and note their appreciation for it by pointing that out. This is important because we all crave recognition. The officer then discusses with the worker, behaviours which they perceive to be “at risk” behaviours. By questioning or challenging the behaviour and seeking an explanation, the officer empowers the worker to explain their working conditions. There may be various explanations for the behaviour, some of which may be outside the grasp or understanding of the officer as someone who is not familiar with the working environment. The explanation may also lead to the disclosure of broader system deficiencies and cultural issues. Any information acquired in this inquisitive mode would be more valuable than levelling an accusation from an assumed superiority of knowledge position. For example, the worker’s explanation may disclose that the method they have adopted was how they were shown to do the task or how “everyone” does this task. That might betray a deeper issue in relation to the quality of the information, training, instruction and supervision afforded to that worker. Equally, their explanation may reflect a poor understanding of the system of work, in which case that should call into doubt the quality of the training afforded to them and other workers. Alternatively, the explanation may be very credible and it may be that the worker is making do with limited resources. This would lead the officer to reexamine the adequacy of the resources available at the site. In many cases, the worker may simply have been unaware that the conduct puts them at risk and would gain a greater understanding of the

impact of their conduct through the discussion. The officer may also get an insight into the vulnerability of the worker to risk, arising from simple human error and therefore the need to improve the system of work. While on site, the officer can inspect any hazard register and discuss with the workers and management any incidents or near-misses that may have occurred at the site since the last safety observation at that site. The officer can also inspect the visitor register to check whether a regulator or union official has attended the site since the last safety observation. If a regulator or union official has attended the site, the officer can inquire with site management in relation to the purpose and outcome of that attendance. Conducted in this way, the safety observation achieves the purpose of verification of the adequacy of the resources and processes — the third element; confirms the officer’s understanding of the nature of the operations and the risks associated with those operations — the second element; and verifies the reporting of incidents and risks — the fourth element. The safety observations also partly go to verifying the extent of legal compliance inquiring in relation to regulatory activities which may not have been reported to officers and observing the extent to which the system which has been checked for legal compliance under the fifth element is being implemented. Investigating success One of the features of verification initiatives is that they are entirely negative. Workers comply with the majority of requirements imposed on them for their protection most of the time, yet we focus on the minority of instances where they inadvertently fail to comply with a requirement. They are not recognised for their compliance, yet we are quick to reprimand or criticise them for their failures. In many cases, the same “safety failures” — rule deviation and short-cuts — are a feature of operational success. Indeed, in some cases, the deviations are innovations out of necessity on the part of the workers because of inadequate resources or ill-considered processes. The obsession with failure that underpins the safety verification approach invites

obfuscation. We know that positive reinforcement is far more effective than negative reinforcement. Success has as much to offer us in terms of lessons as failure. A project completed without incident can teach us a lot about the processes and systems that work. It allows us some reflection on work done successfully and the ability to compare that to the plan for that work. Where work done matches work planned, then the systems and processes are effective. If work planned does not match work done, we have a challenge. The work processes followed by the workers were effective. This could be through pure luck and the processes followed reflect at-risk behaviour, in which case we have an opportunity to explain and correct that behaviour. Alternatively, the workers may well have identified a better or alternative way to perform the work in which case we need to capture that and systemise it. In either scenario, we have an opportunity to reflect on why the systems and processes prescribed are not followed — that is, “why don’t they work?” What is it about them that makes them cumbersome or inefficient. Investigating success gives us the opportunity to engage with workers in a positive setting. Workers will be more open in that context. They will proudly be sharing details of their approach. If approached in the right way, they can be a powerful tool for officers to better understand what works and what does not. What if? What works in one setting may not work in another setting, however. An innovation or deviation developed by workers in response to work challenges may be process or workplace specific. It is important to verify the resilience of the approach to different working conditions and processes. In that regard, verification of the effectiveness of the controls identified in response to an incident through a series of “what if scenarios”, should be sought. One useful set of scenarios to contemplate would be changes in: (i) The working environment: for example climate conditions such as extreme weather or the time of day that the work is performed.

Precautions must be taken to ensure effectiveness of the controls across those variations. (ii) The work process: there are typically a number of ways to perform the same work depending on the circumstances and the resources available. (iii) The plant being used: the similar work can often be done using different plant. (iv) The consequences: this is a reference to the extent of vulnerability to hazardous energy, for example, the altitude, speed or pressure involved. (v) The workers: the competency and physical attributes of workers differs from job to job. It is important that the control implement can be effective despite those differences or at least that this is recognised. What went right? The focus on any inquiry in relation to investigating success is on “what went right?” as opposed to “what went wrong?” It is also possible to apply that approach even if a high potential incident occurs. In a high potential incident, there is system failure in that an undesired event nearly happened. Sometimes it is instructive to focus on the failures that permitted that to occur. However, something(s) intervened to prevent the undesirable outcome from occurring. That thing or things is either an effective or unplanned defence. That is, it is either a planned control that worked as intended, in which case it is instructive to understand and recognise that or it is an unplanned defence, in which case it is important to consider what lessons can be learnt from that, so we can systematise the use of that defence, turning the unplanned into planned. The latter category is often referred to as a lucky event. But with proper planning and creativity, the conditions that allowed that event to prevent the injury may be capable of being systematised.

What underpins this approach is a recognition that things that work in practice have an inherent value and as such, great focus should be paid to better understanding them. Figure 17 — “What went right” approach

Figure 18 — Near Miss

In adopting this positive methodology, we can capture the practical lessons of what actually works rather than the theoretical lesson of what should, but is not working. This creates more powerful feedback loops. Reinforced through key performance indicators for undertaking such positive investigations identifying what went right and converting those lessons into appropriate controls, such a system can be a very powerful tool in incident prevention and in verifying that the duties and obligations are working effectively. Peer reviews Peer reviews afford officers a different mechanism by which they can verify compliance with the elements of due diligence. A peer review is a process by which senior representatives from different operations or sites within the business or undertaking are hosted by a site for the purpose of undertaking a health and safety review. The visitors receive a pack of all relevant policies and procedures prior to the visit. On the day of the review, they are taken on a guided site tour to gain an understanding of the operations. Workers are also interviewed as part of that tour to gain a first-hand appreciation of the risks and to lend a “fresh pair of eyes” to their hosts in relation to safety risks arising from the operations which have

been “normalised” through familiarity. They are then given access to site management, one at a time. Management is expected to provide a “warts and all” explanation of the health and safety issues they face and to seek input and to workshop with their peers, solutions for those issues. The reviewers report their observations and summarise their suggestions to the management team at the end of the review. They are also expected to identify learning opportunities for their own sites through the peer review. Because each peer takes a turn playing host, peer reviews tend to foster a more cooperative and honest atmosphere than audits. The reviewer is not trying to catch out their host and, as a result, the host is not trying to hide anything from their visiting peer. Because senior management are expected to participate in the peer reviews both as hosts and reviewers, peer reviews afford them an opportunity to gain a first-hand understanding of the risks — verifying the second element; the reporting systems — verifying the fourth element; and the adequacy of resources — verifying the third element. There is also an opportunity to observe the extent of legal compliance and the processes for ensuring legal compliance — going in part towards verifying the implementation of the fifth element. Other officers receive the complete peer review report which includes both the reviewer observations and suggestions, and the lessons they learnt from the review. A properly constructed peer review process would create accountabilities for closing out the learning opportunities for both the hosts and the reviewers. Figure 19 — Benchmarking

Footnotes 135

An inquiry; 52 charges; a retrospective Act of parliament passed in the early hours to cure a fatal legal defect in the charges; judgments which cumulatively ran in the thousands of pages and a scathing dissenting judgment which called into question whether the system had been brought into disrepute by the proceedings. It had. The system had suffered a fatal blow and the regulatory regime we now have was in no small part a result of this case.

136

McMartin v Newcastle Wallsend Coal Company Pty Limited & Ors [2004] NSWIRComm 202.

137

Newcastle Wallsend Coal Company Pty Limited & Ors v Inspector McMartin [2006] NSWIRComm 339.

138

Ibid [906]–[907].

139

Ibid [936], [938].

140

(1995) 37 NSWLR 438.

141

Daniels v Anderson (1995) 37 NSWLR 438, 502.

142

Daniels v Anderson (1995) 37 NSWLR 438, 501.

143

Royal Commission into Tricontinental Group of Companies, Final Report (vol 2, 31 August 1992) [19.58]–[19.68].

144

[2011] FCA 717.

145

Where the site is subject to a license or accreditation requirement — such as major hazard facilities — the discussion with management should also include a discussion of the extent of compliance with license or accreditation conditions.

CHAPTER 9 PRACTICAL APPLICATION OF DUE DILIGENCE ¶Key messages Key messages • While all officers have the same duty, the practical application of the duty at different levels of officers, differs. • A sliding scale of obligations operates so that officers highest in the hierarchy have the greatest due diligence obligations. • Certain elements will fall squarely in the laps of certain officers because of their role. They will be primarily responsible for delivering on those elements.

Introduction While the duty to exercise due diligence to ensure compliance by the PCBU is a duty that is imposed equally on all officers of organisations, the practical application of this duty must differ depending on the position held by that officer. This chapter explores how the processes set out in the previous chapters can be applied in practice to different positions. Chairman The chairman of a board of a company is an officer of a person conducting a business or undertaking — the company — and is therefore required to exercise due diligence to ensure compliance by that company with its legal obligations under the WHS legislation. A chairman is required to ensure that directors receive training in WHS matters — that is, ensuring compliance with the first element. A chairman is also expected to ensure that a due diligence framework is put in place by management to meet the requirements of the due diligence duty. This includes ensuring that the board receives reports in relation to safety incidents and risks — the fourth element; annual

reports in relation to legal compliance audits — the fifth element; safety impact assessment in relation to resource decisions — the third element; and audit and peer review reports — the sixth element. The chairman is also required to ensure that board meetings are rotated between operational sites as part of a safety observations program to enable board members to gain an understanding of the nature of operations and risks associated with those operations — the second element. Non-executive directors Non-executive directors are expected to attend and participate in any training provided for the purpose of the first element. They are expected to actively participate in any safety observation program put in place for the purpose of the second element. They are also expected to apply an inquisitive mind to the information provided to them in relation to the safety impact of resource decisions under the third element; safety performance under the fourth element; legal compliance audit results under the fifth element and audits, peer reviews and safety observations under the sixth element. That is, they are expected to do their jobs as directors in asking the right questions of management and holding management accountable for safety performance. Managing director The managing director of a company has ultimate control over operational matters and, as such, has the greatest responsibility for exercising due diligence to ensure compliance by the company with its WHS duties and obligations. The managing director must oversee the introduction and implementation of a due diligence framework, meeting the requirements of the due diligence duty. Their responsibility does not end in merely receiving and considering information — they are required to take reasonable steps to verify that the right information is being funnelled to management and the board — this is inherent in the sixth element. Ultimately, the managing director is required to show leadership on

health and safety matters. They are required to lead the knowledge acquisition and consideration discussion by being constantly on the look-out for relevant developments in health and safety matters — the first element. It is their leadership in this regard which will give real meaning to the due diligence framework because it will drive a greater quality of scrutiny of the performance of the company in relation to health and safety matters, and a greater improvement in health and safety performance. The managing director must carefully scrutinise resource decisions, both in terms of cost reduction initiatives and projects which are taken on by the company. They must build in safety considerations in those decisions at their inception. Safety cannot be an after-thought in that regard — the essence of the third element. The managing director must lead the way in terms of safety observations. They can have the greatest influence on the culture of their organisation through their interaction with workers and site management. Their role is to use such observations and any reports they commission, as a result of their observations to better understand the nature of the operations and the risks involved in the operations so that those risks, particularly critical risks, are addressed — the second element. Finally, the managing director must oversee the delivery of legal compliance audits — for the purpose of the fifth element; and reports in relation to the health and safety performance of the company — for the purpose of the fourth element; and in relation to both sets of reports, carefully scrutinise them to ensure that the company’s performance is appropriate. As will be discussed below, the primary obligation to compile the reports, falls on the general counsel and health and safety director respectively. Company secretary Company secretaries prepare the papers for board meetings. It stands to reason that they would be required to ensure that the board is presented with reports meeting the requirements of the due diligence duty. That is, reports meeting the requirements of the fourth element in relation to the health and safety performance of the company;

reports in relation to any audits, safety observations or peer reviews conducted for the purpose of the sixth element; legal compliance audits conducted under the fifth element; and any report in relation to critical risks conducted for the purpose of the second element. The company secretary must also ensure that resource decisions put before the board are accompanied by a safety impact assessment for the purpose of the third element. Most importantly, it is the role of the company secretary to organise meetings, at the direction of the chairman and the board. As such, the company secretary must make the arrangements for the training which the board requires for the purpose of the first element and facilitate the safety observations of board members, as part of board meetings or otherwise, to sites for the purpose of the second element. In practice, it is the job of the company secretary to make the due diligence framework work. They oversee the delivery of the reports the board needs to consider in order to discharge their due diligence duty and record the relevant deliberations of the board on those issues so that there is a future record of those deliberations and decisions — the evidence of due diligence. It is also the job of company secretaries to protect the board from itself. All too often, board agendas are packed-in and health and safety is left to compete with a packed agenda of “critical commercial matters”. That means, it is the most likely agenda item to be deferred to the next meeting. Most boards have become alert to this, which is why health and safety is the first item on the agenda — sending a message in relation to its importance. But training for the purpose of the first element can fall vulnerable to this treatment because of the significant time investment required of the board. Company secretaries have an important role to play in this context. General counsel The main role of a general counsel within a due diligence framework is to ensure legal compliance for the purpose of the fifth element. That is, it is their role to commission the legal compliance audit and to review and close-out the outcomes of the audit.

General counsel must also ensure that any contractual arrangements entered into by the organisation, enable and facilitate its compliance with its legal, WHS obligations. For example, organisations cannot get incident and risk reports in relation to their workers for the purpose of the fourth element if the contract for service with contractors — that is, workers — does not mandate such reporting. Chief financial officer The main role of the chief financial officer is to ensure that there are adequate resources to comply with the WHS obligations in every aspect of the business or undertaking — the third element. Practically, the chief financial officer must oversee the preparation of safety impact assessments in relation to material resource decisions, such as cost reduction decisions or capital expenditure decisions. Chief operating officer The chief operating officer will usually have operational management responsibility and, as such, will have a role across all of the due diligence elements. They have to participate in any training program put in place for the purpose of the first element. They should also replicate such a program to their direct reports. An officer has no hope of complying with their due diligence obligations unless all those that report to them, co-operate with their initiatives to discharge that duty. In relation to the second element, a chief operating officer must not only undertake the safety observations necessary to gain an understanding of the nature of the operations and the risks associated with those operations, they are required to drive the implementation of such a program by facilitating the safety observations of other officers. If critical risk workshops are undertaken as part of understanding the critical risks facing the operations of the business or undertaking, a chief operating officer has an important role to play in participating in such sessions, given their proximity to operations. In relation to the third element, the chief operating officer must ensure that resource needs are identified prior to the commencement of any project and that processes are implemented at the commencement of

every aspect of operations. They are also required to ensure that incident and risk reports are collected and analysed to ensure that the organisation’s safety performance is appropriate — the fourth element. They must respond appropriately to any indication of deficiencies in the safety management system or lapses in its implementation. They are also required to oversee the operational implementation of the audits and peer reviews designed to meet the requirements of the sixth element. If peer reviews are in operation, they will have an important role in facilitating them between operations or sites. Human resource directors The human resource director has an important role in delivering the requirements of the first, second, third, fourth and sixth elements for the benefit of fellow officers. They, for example, have a critical role to play in ensuring that there are adequate human resources and processes in place for complying with the WHS obligations of the company — the third element. That means ensuring that a training-needs-analysis is undertaken on a regular basis and that the competency of workers for their allocated work is kept constantly monitored. The human resources director must also ensure that worker recruitment, retention and reward and incentive programs are aligned to the elements of due diligence. That is, there needs to be an alignment of safety observation requirements for the purpose of the second element and sixth element. There also needs to be an alignment of reporting requirements with performance appraisals so that such reporting requirements are accepted as being part of the job requirements, particularly for lead indicators such as near-miss reporting. This is important for ensuring the effectiveness of the fourth element requirements. It will often fall upon the human resource director to arrange the training program for directors and officers meeting the requirements of the first element. Health and safety director

The health and safety director’s role in due diligence is more limited that most officers would appreciate. Their role principally relates to ensuring that there are adequate processes — in terms of the WHS management system — for the purpose of the third element; and ensuring that there are adequate processes for collecting incident and risk reports — the fourth element. While undoubtedly they play an important role in arranging any safety observation, peer review or audit program for the purpose of the second and sixth elements respectively, it is not their responsibility to oversee the implementation of those requirements. That responsibility should fall on line management and therefore the officers to whom line management reports. General managers The general manager’s role in due diligence is similar to that of the chief operating officer but is limited to their areas of responsibility. That is, they are responsible for ensuring that incidents within their operations are reported — the fourth element; that the observations, reviews and audits are occurring in their operations — for the purpose of the second element and sixth element; and that there are adequate resources for performing the work safely within their operations — the third element. This category has typically been targeted for prosecution because of its proximity to operations. Under the new regime, general managers would not automatically be officers unless they make or participate in the making of decisions affecting a substantial part of the business or undertaking. However, even if they are not officers, they will have a duty to take reasonable care with respect to the health and safety of workers and others at the workplace, and as such will be caught under those provisions. Interaction between the Officer duty and the Worker duty While some people are obsessed with determining whether or not they are officers, often naively manipulating the reality of their role and responsibilities to achieve an outcome where they are not regarded as officers, the tag is best understood as being part of a continuum of responsibilities, the nature of which changes depending on the

position. If a person is an officer, they are required to exercise due diligence to ensure that the company for which they are an officer complies with its duties and obligations. As discussed above, in practice, what is required under each element depends on the role and responsibility of the individual officer. That is, what is required of a Managing Director is different from what is expected of a Chief Operating Officer and what is expected of a Chief Financial Officer. Similarly, what is expected of a worker under the duty of care imposed on the worker depends on their role, responsibilities, skills and experience. The greater their responsibilities, the greater the duty expected of them under the duty of care of workers. Case example

Appropriate standard of care expected of an employee In Inspector Thomas v Cruden,146 Marks J considered the appropriate standard of care which is to be expected of an employee — the relevant duty holder under the legislation at the time — for the purposes of the duty of care. His Honour concluded that an objective standard should be applied. His Honour said: “[T]he requisite standard to be applied is that which should reasonably in all the circumstances have been expected of an employee carrying out the duties and discharging the responsibilities in a manner appropriate to the skills and expertise expected of a person holding himself or herself out to be able to undertake that work.”147

All that workers can do is take reasonable care, given their qualification, experience and training, with regard to the health and

safety of people at their place of work. The worker’s culpability arises only to the extent that the standard of care they provide falls short of the standard to be expected of a person possessing similar experience, qualifications and training. But the more senior the worker, the more experienced and skilled they are, the greater that expectation. To the extent that middle managers are not officers, they will be workers and as such, they will have a duty of care that is commensurate with their position and responsibilities. This was the point that Chief Magistrate Walker made in Al-Hassani (discussed in Chapter ¶2). Figure 20 — Continuum of personal liability

This book has attempted to provide a practical framework for officers of companies and other organisations to discharge their duty of due diligence. A snapshot of that framework is included as the Chapter ¶10 checklist. Other books of this series similarly explore other aspects of the WHS regulatory framework including the duty of workers, incident investigations, consultation, dealing with regulators and the duty of PCBUs. Footnotes 146

(1996) 67 IR 469.

147

Inspector Thomas v Cruden (1996) 67 IR 469, 475.

CHAPTER 10 DUE DILIGENCE CHECKLIST Action

Due Diligence Element

□ Identify officers and develop due diligence framework policy

Chapter Reference Chapter ¶2

□ Due diligence training program for officers

First Element

Chapter ¶3

□ Safety observations program for officers

Second Element

Chapters ¶4 and ¶8

Sixth Element □ Critical risk review

Second Element

Chapters ¶4 and ¶6

Fourth Element □ Safety impact assessment procedure

Third Element

Chapter ¶5

□ Key safety performance Fourth Element indicators report

Chapter ¶6

□ Legal compliance audit

Fifth Element

Chapter ¶7

□ Peer review program

Sixth Element

Chapter ¶8

□ Audit program

Sixth Element

Chapter ¶8

□ Due diligence framework review

Sixth Element

Chapters ¶1 and ¶8

Part II Persons Conducting a Business or Undertaking

CHAPTER 1 WHO IS A PERSON CONDUCTING A BUSINESS OR UNDERTAKING? Key messages • A person conducting a business or undertaking (PCBU) is the key duty holder under work health and safety (WHS) legislation. • All business or public sector activities are caught by the duties imposed by WHS legislation. • Legislation takes a risk-based approach.

Overview of duties The WHS legislation imposes duties on any PCBU. The definition of PCBU is deliberately broad, as is the primary duty of care imposed on such persons.1 The breadth of the duty is intended to capture every business or “business-like” activity. Who is a PCBU? A person may conduct a business or undertaking alone or with someone else. They may do so for profit or gain or not for profit or gain. They can do so as partners in a partnership or unincorporated association, in which case, each partner will be a PCBU. But a person is not conducting a business or undertaking merely because they are a worker or an officer of an entity which is conducting a business or undertaking. Such persons, workers and officers have duties of their own. The duty of officers is explored in another book of this series, Due Diligence: Duty of Officers and the duty of workers is explored in yet another, Due Diligence: Worker Rights and Duties. There is a limited exemption for volunteer associations (ie a group of volunteers working together for one or more community purposes) where none of the volunteers employ any person to carry out work for the volunteer association. Strata title body corporates that are

responsible for common areas used only for residential purposes are also excluded unless the strata title body corporate engages one or more workers as an employee. Elected members of local authorities are not conducting a business or undertaking when acting in that capacity. A PCBU can be a natural person such as a partner in a partnership or sole trader or, as is usually the case, a legal entity such as a company. The “Interpretive Guideline — model Work Health and Safety Act — the meaning of ‘person conducting a business or undertaking’” (Interpretive Guideline) published by Safe Work Australia provides the following: “A ‘person’ is defined in laws dealing with interpretation of legislation to include a body corporate (company), unincorporated body or association and a partnership. An individual is also a ‘person’, but will only be a PCBU where that individual is conducting the business in their own right (as a sole trader or self-employed person). Individuals who are in a partnership that is conducting a business will individually and collectively be a PCBU. Section 5(4) of the WHS Act makes it clear that an individual is not a PCBU if they are involved in the business or undertaking only as a worker or officer of the business or undertaking.”2 The Crown is also a “person” for the purposes of the WHS legislation. The Crown usually conducts an undertaking, rather than a business, and does so through its government departments and agencies. However, the Crown will occasionally be involved in businesses such as government-owned enterprises and state-owned corporations. What is a “business” or “undertaking”? The WHS Act does not define the meaning of the words “business” and “undertaking”. These words therefore, take on their ordinary meanings. The Interpretative Guideline provides that:

“whether a person conducts a business or undertaking is a question of fact to be determined in the circumstances of each case. The following table identifies the usual meaning of these terms: Businesses →

enterprises usually conducted with a view to making a profit and have a degree of organisation, system and continuity

Undertakings →

may have elements of organisation, systems, and possibly continuity, but are usually not profit-making or commercial in nature

…”3 The Interpretive Guideline also provides the following examples of businesses or undertakings: “• A retailer • A wholesale business • A manufacturing business • An importer that is on-selling the imported goods • An owner-driver of their own transport or courier business • A fast food franchisor and the operator of the fast food outlet (the franchisee) • A self employed person operating their own business • A government department or government agency • A local council • A school

• Partnerships and unincorporated joint ventures. Where the partnership or joint venture is unincorporated, each partner is a person conducting the business or undertaking of the partnership or joint venture • A builder (including principal contractors and sub-contractors) • A not-for-profit organisation that engages and pays administrative staff • A clothing manufacturer employing outworkers.”4 A person may be conducting multiple businesses or undertakings. Furthermore, multiple businesses or undertakings may be conducted at the same workplace. Private or domestic purposes The inclusion of the work undertaking in the scope of the duty holder expands the application of the duty holder to a broader category of activities than just mere business activities. As such, there is a blurring of the line between the private or domestic sphere, and the public sphere. To address this, the Interpretive Guideline sets out what the “regulators” regard as excluded undertakings as a matter of policy. The Interpretive Guideline provides the following: “The regulators consider that the intent of the legislation is that the following kinds of persons should not to [sic] be taken to be PCBUs: • Individuals who carry out domestic work in and around their own home (e.g. domestic chores etc). • Individuals such as home-based foster carers who care for foster children. • Individual householders who organise one-off events such as dinner parties, garage sales, lemonade stalls etc. • Individual householders who engage persons to carry out ad

hoc home maintenance and repairs or other domestic work, e.g. casual babysitters; tradespeople to undertake repairs. It is important to note that a tradesperson will either be a worker for a business or undertaking, or a business or undertaking in their own right if the tradesperson is selfemployed.”5 However, the Interpretive Guideline goes on to provide that: “[a]n individual householder may have the duties of a PCBU if they engage a worker, for example, employing a nanny to care for children in the householder’s home. While the householder is not employing the worker as part of a business, employing the worker to carry out certain duties at the home is regarded as an ‘undertaking’. Consequently, the householder has a duty of care as a PCBU and the person employed by the householder has the worker’s duty of care under the WHS Act.”6 The Interpretive Guideline further provides that: “[a] householder may also be a PCBU if ‘work’ is carried out by or for them that is not purely domestic, but is part of a business or undertaking conducted by them (e.g. a business is operated from home). The householder may then be a PCBU involving the management or control of the workplace, and have duties as such. If the person is undertaking ‘work’ for the householder, as part of the conduct of a business or undertaking by the householder, then the householder will have the primary duty in relation to that person. A householder who is a foster parent is not a PCBU or worker. This is because the activities of a home-based foster parent in caring for a foster child are not regarded as work. The organisation or agency that arranges and monitors the foster care, would however be doing so as a PCBU, and its activities would be regarded as work. This means that organisations will have obligations to volunteer foster parents in so far as they can be affected by the PCBU’s business or undertaking.”7 Figure 1 — Definition of PCBU

Liability under a modern corporate structure A trading company will be a PCBU under the WHS legislation. Even a holding company within a group of companies is conducting a business or undertaking. Each corporate entity within a corporate group will be regarded as a separate duty holder conducting a business or undertaking. Figure 2 — Example of businesses or undertakings in a complex corporate structure

In a typical modern structure, a company in a group of companies which employs staff, will be conducting a business or undertaking of labour supply. Therefore, it will be held responsible for risks arising from that activity and all related or incidental activities. A company in the group which takes out the lease or owns the work premises will be relevantly conducting the business or undertaking of control or management of premises used as a place of work. It will therefore, have obligations and be liable in relation to risks arising from the premises and any related or incidental activities associated with that undertaking. A company in the group which owns or leases the plant and fixtures used, including mobile plant, will be relevantly conducting the business or undertaking of supply of plant and fixtures for use at work

and will therefore have obligations and liabilities in relation to any risks arising from that business or undertaking, including any related or incidental activities. A company in the group which conducts the customer-facing transaction, processes the invoices or processes the payroll, will also be relevantly conducting a business or undertaking. Similarly, it will be liable for risks arising from its activities and any related or incidental activities. Clearly, the activities in the structure outlined in Figure 2 would overlap. The legislation requires each entity to discharge its obligation to the full extent of its control over an issue and to consult, co-ordinate and co-operate with the other entities in relation to the discharge of their respective duties. Footnotes 1

See s 5 of the model Work Health and Safety Act 2011 (WHS Act) and cl 7 of the model Work Health and Safety Regulations 2011 (WHS Regulations).

2

Safe Work Australia, “Interpretive Guideline — model Work Health and Safety Act — the meaning of ‘person conducting a business or undertaking’”, Guidance material, Commonwealth Government, Canberra. See www.safeworkaustralia.gov.au/doc/interpretive-guidelinemodel-work-health-and-safety-act-meaning-personconducting-business-or.

3

Ibid.

4

Ibid 2.

5

Ibid 3.

6

Ibid 4.

7

Ibid.

CHAPTER 2 WHAT IS THE DUTY OF A PERSON CONDUCTING A BUSINESS OR UNDERTAKING? Key messages • Duty of care is broad. • Duty of care is overlapping. • A PCBU will owe a duty in relation to any safety risk the PCBU creates.

Duty of a PCBU A PCBU has a duty to ensure, so far as is reasonably practicable, the health and safety of workers while the workers are at work in the business or undertaking engaged. That includes workers who are not directly engaged by the PCBU, but are caused to be engaged by the PCBU, or whose activities in carrying out work are influenced or directed by the person. A PCBU must also ensure, so far as is reasonably practicable, that the health and safety of other persons is not put at risk from work carried out as part of the conduct of the business or undertaking. Figure 3 — Primary duty of care

The company has a duty not only to its workers but also to other workers it causes to be engaged. That includes contractors, subcontractors and employees of contractors and subcontractors. The company also has a duty to other workers whose activities are influenced or directed by it. This includes labour hire workers that its subcontractors may use for example, or subcontractors of its subcontractors, such as transport companies used to deliver plant or components for the services of its contractors. The company must ensure, so far as is reasonably practicable, the health and safety of workers engaged directly or indirectly by them and workers whose activities are influenced or directed by them. The duty is very broad and is not limited to what happens at the company’s workplace. Who is a “worker”?

The term “workers” refers to anyone performing work, including contractors, subcontractors, employees of contractors or subcontractors, labour hire workers, apprentices and trainees, outworkers, students on work experience and volunteers, not just employees. Figure 4 — Definition of “worker”

The company also has a duty to consult workers in relation to matters affecting their health and safety. It is required to consult, co-operate and co-ordinate with other duty holders in relation to discharging the respective duties in areas of overlap. It has obligations in relation to the reporting of incidents. There is also an extensive regime aimed at protecting workers and prospective workers against victimisation on safety grounds.

The WHS legislation creates powers for inspectors and union officials in relation to entry to workplaces and, in relation to inspectors, extensive investigation powers. The obligation is therefore imposed on the company to ensure that it does not obstruct or hinder the exercise of these powers. The relevant powers and obligations are explored in another book in this series, Due Diligence: Dealing with Regulators. The WHS Regulations impose specific obligations on the company in relation to the management of risks generally and the risks associated with certain common hazards, such as the management of chemicals, plant and fixtures, electrical work, construction work and work involving hazardous manual handling or the risk of a fall. The company must have a comprehensive system in place to manage the risks associated with its operations in order to discharge the above obligations. This system should possess a number of elements, including: Commitment Resources and leadership

Implementation and Plant accountability

Premises

Substances

Processes

Design

Customers/clients Suppliers

Contractors

People (ie workers)

Training

Reward and recognition (eg incentives)

Consultation Critical risk control

Supervision

Procurement

Emergency/incident System response and performance business continuity assessment and review

Figure 5 (below) sets out the twenty elements of safety management systems, showing how they interact with each other.8 Figure 5 — Twenty elements of safety management systems

Each of these elements will be explored in subsequent chapters. The elements are intended to form part of an integrated and interdependent system, such that many of the elements reinforce each other in their requirements. Plant safety management requires proper design of plant and effective procurement of plant. In that respect, the requirement is found in three parts of the system. These three parts are necessary to ensure that different areas of the organisation are accountable for the delivery of the requirement that plant procured by a PCBU is safe by design. Such an interface is littered throughout the twenty elements. The elements constitute the framework for compliance with the duties and obligations of a PCBU. Breaches of the duties of a PCBU are

criminal in nature and attract a maximum penalty of up to $3m for serious offences by companies. Reasonable practicability As broad as it is, the duty of the PCBU is still limited by reasonable practicability. Reasonable practicability is a balancing exercise. It means doing what is reasonably able to be done in relation to ensuring health and safety, taking into account and weighing up all relevant matters, including: • the likelihood of the hazard or the risk concerned occurring • the degree of harm that might result from the hazard or the risk • what the person concerned knows, or ought reasonably to know, about the hazard or the risk • ways of eliminating or minimising the risk • the availability and suitability of ways to eliminate or minimise the risk, and • as a last step, the cost associated with available ways of eliminating or minimising the risk, including whether it is grossly disproportionate to the risk. The concept of reasonable practicability is not new in the law. It has been around for over a century and there is a large body of law interpreting that weighing-up exercise. It is a point-in-time assessment. That is, the weighing-up exercise is considered from the perspective of what was known about the risk (in terms of both likelihood and consequences) and the relevant controls and costs at the point in time the relevant decision was made, which gave rise to the alleged breach. The assessment therefore, is not retrospective. As such, frequently the legal analysis turns not on what actually happened, but rather, whether the PCBU had a robust system for managing the risk of that event from happening. That is in practice, the duty of care turns on the development, implementation and

maintenance of an effective safety management system. The following chapters explore the elements of such a system. Chapter ¶3 deals with leadership, resources and accountability. These are respectively, the first three elements of the effective safety management system model put forward in this book. Chapter ¶4 deals with the life cycle of the business or undertaking; the design process, procurement process, and the safety management of premises, processes, plant and substances. These are elements four to nine of the model. Chapter ¶5 deals with the human factors issues arising in managing risks associated with workers, contractors, suppliers and clients. These are elements 10 to 13 of the model. Chapter ¶6 deals with the enabling system tools; consultation, training and reward and recognition programs. These are, respectively, elements 14 to 17 of the model. Chapter ¶7 deals with process safety and critical risk control, which is element 18 of the model. Chapter ¶8 deals with emergency response management, which is element 19 of the model. Chapter ¶9 deals with system assessment and review, which is element 20 of the model. Footnotes 8

The twenty elements were first explored in my book M Tooma Safety, Security, Health and Environment Law (Federation Press, Sydney, 2008) and further in the 2nd ed of the same book in 2011.

CHAPTER 3 COMMITMENT, LEADERSHIP, RESOURCES AND ACCOUNTABILITY Key messages • There is a link between the duty of officers and the duty of the PCBU. • Officers must be committed to safety improvement if safety outcomes are to be achieved. • Resourcing safety through the economic cycle is crucial. • Safety expenditure is capital expenditure. • Measuring the return on investment in safety can be a useful tool for entrenching a safety culture. • What is measured is done — there needs to be an implementation plan with clear objectives, targets and accountability.

Leadership and PCBU duty Research has shown that organisation culture is shaped by the leadership approach of its leaders.9 Safety is no exception to that. O’Connell (2016) observes that: While there is evidence that governance processes are critical it is the quality with which processes are designed and implemented than the mere presence of policies and procedures that determines whether they will be successful. There is a sense that research about effective organisational governance should move away from the features of a system … and instead focus attention on contextual issues — a company’s leadership, culture and specific situation. While these are more difficult to measure, they are also likely to have a far greater impact on quality governance outcomes than structural requirements.10 In other words, if we want to achieve the governance outcome of an

organisation that ensures, so far as is reasonably practicable, the health and safety of its workers and others, it is far more likely to achieve that if we focus on leadership and culture, rather than on systems and processes alone. In many respects, leadership is a concept more readily recognisable in its absence than in its presence. It has been described as the ability to decide what is to be done, and then to get others to want to do it.11 Former US President Henry Truman called it the ability to get people to do what they don’t want to do and like it.12 Leadership involves providing direction to resources, behaviours and energies towards the achievement of goals. There are many identified leadership styles. Two have been most frequently studied; one is transactional and the other is transformational leadership. Transactional leaders focus on incentives and rewards to get followers to meet agreed objectives.13 Transformational leaders inspire their followers to put in discretionary effort to meet the overall organisational objective.14 Because of its process emphasis, safety has traditionally been driven through transactional leadership — a bargain between leader and followers to punish unsafe behaviour and to reward good safety behaviour. At times that has been by creating incentives and disincentives around matters outside of the control of the follower such as lag indicators. More recently, it has been through reward and recognition of proactive safety initiatives such as hazard or near-miss reporting, safety observations and innovation in safety. However, increasingly, we are realising that great safety leadership requires a transformational leadership style. Transformational leaders motivate their followers to surpass the minimum expectations, adopting attitudes and behaviours that go beyond individual interests and prioritise the collective cause.15 In that context, transformational leaders give their followers autonomy and encourage them to deal with problems to enhance their efficacy. As a result, followers demonstrate a stronger trend of creative suggestions to the system, as they feel more empowered.16 This is important in the

safety context since an environment of trust, engagement and flexibility to deal with risks in complex systems, is key to safety culture and system resilience (discussed below). Due diligence and leadership There is an intrinsic link between the duty of officers and the duty of the PCBU. After all, the officer’s duty is to exercise due diligence to ensure compliance by the PCBU with their duties and obligations. In that respect, there is an overlap between the due diligence requirements of officers and the first three elements of an effective safety management system aimed at meeting the duty of care of a PCBU. It has long been recognised that safety leadership is a prerequisite to effective safety management. In the first book of this series, Due Diligence: Duty of Officers, we considered the six elements of due diligence. These are: (1) knowledge of WHS matters (2) understanding the nature of the operations (3) resources and processes (4) monitoring performance (5) legal compliance, and (6) verification. The first element of due diligence and the second element of due diligence are designed to secure the personal involvement of officers in safety leadership of the PCBU. The third element is about translating that personal involvement into action, through requiring the officers to oversee the implementation of processes and ensure provision of resources. These are also requirements of an effective management system. The fourth element requires supervision of the performance of the system and appropriate action in response to the performance indicators. Together with the sixth element it, in effect,

imposes a continuous improvement loop on officers in respect of their leadership of the safety management system of the PCBU. That is, in exercising due diligence, officers are required to adjust resources and oversee system improvements in response to trends in safety performance indicators. As discussed in Chapter ¶2, the PCBU is required to ensure, so far as is reasonably practicable, health and safety in relation to the conduct of its business or undertaking. That includes workers as well as other persons who may be put at risk from work in the conduct of the particular business or undertaking. Hudson summarises the objective in the following way: Safety is an ubiquitous concept … Most people see safety as concerned primarily with the personal well-being of stakeholders, by which I mean all those involved, not just the immediate actors and owners. Some also add the integrity of the business and its assets. While these are necessary preconditions, I view safety, and more specifically safety management, in a more active way. I see the creation of a safe environment as allowing dangerous activities to take place successfully, which means without harm or damage. What this means is that safety is more than a passive and well-meaning notion, such as “Thou shall do no harm”. Instead safety is something that has to be actively managed to allow profit or advantage to be gained.17 This is the condition that officers, through their leadership of the PCBU, are expected to embed. They can do this in a number of ways. They can prescribe a set of rules relating to every risk and enforce compliance with it, creating a rules-based culture. Alternatively, they may create a culture of interdependence where everyone contributes towards ensuring safety. Every organisation has a culture. Culture refers to a style, sense of purpose and approach; it is the way things are done. To the extent that an organisation addresses safety by its acts or even its omissions, that subset of its culture is its safety culture.18 If the PCBU is to consistently meet its statutory duty of care, it must engender a positive safety culture. While a rules-based culture is

superficially attractive, bitter experience tells us that it is impossible to anticipate a rule for every situation that might arise and, as such, a rules-based culture invariably does not achieve the desired outcome. Indeed, it can often inhibit that outcome. In Due Diligence: Duty of Officers, we explore the pioneering work of Professor Reason in identifying the components of safety culture. Safety culture refers to: • an informed culture (a culture in which those who manage and operate the system have current knowledge about human, technical, organisational and environmental factors that determine the safety of the system as a whole) • a learning culture (a climate in which there is a willingness and ability to draw the right conclusions from the safety information system to address system deficiencies and the will to implement major reform when needed) • a reporting culture (a climate in which people are prepared to report their errors and near misses) • a just culture (an environment of trust in which people are encouraged, even rewarded, for providing essential safety-related information through the sharing of incidents and near-miss information, but are expected to be held accountable for unacceptable behaviour), and • a flexible culture (an environment where people are trusted to make the right decisions based on the information presented to them — consistent with the objectives of the system, rather than simply blindly following the rules).19 The last of these elements of safety culture is rarely discussed. It requires trust, engagement and flexibility. It is the antithesis of a rulesbased culture. Workers are given the work environment, information, knowledge and resources they need to do the job safely, and are empowered and trusted to make the right decisions in the circumstances they face. Policies and procedures in that context are

mere guides rather than strict rules. Consistent with this thinking, we regard rules-based cultures as being immature safety cultures. For example, Hudson et al offer a taxonomy of organisational culture as follows: • Pathological: These are organisations that are more concerned about avoiding liability than improving safety. The driver to compliance is not getting caught. In the absence of a very well resourced and active regulator, they are not likely to comply with the legal requirements. When caught, they minimise the overall cost by promptly pleading guilty to a charge or settling the case so that they can get on with business. • Reactive: These are organisations that are forever reacting to incidents. They have accidents, which propel them into action to prevent a repetition of the same accident, but then the momentum is lost and they focus on getting on with business. • Calculative: These are organisations where safety is well accepted, the workforce is more involved, a safety management system is in place, and procedures exist, but they are not well embedded. • Proactive: These are organisations where management is proactive and seeks out safety issues. Management knows and cares about safety. The workforce is involved, but there is still a high need for supervision. • Generative: These are organisations where safety is embedded in production — “safety is how we do business around here”. All feedback loops are closed, the workforce demands information as they can prevent problems, management knows and cares about safety, and safety is equal to production.20 Figure 6 — Hudson maturity model

That is, an organisation that has an informed, reporting, learning and just culture but is rules-based is, at best, a calculative organisation (that is, middle of the maturity ladder). Unless a flexible culture is promoted, the higher rankings of proactive and generative are unattainable. That implies transformational leadership. In identifying the characteristics of a good safety culture, Professor Hudson offers the following features:21 • Leadership: Leaders are not afraid to do “difficult” things. This is a direct output of the due diligence duty of officers discussed in Due Diligence: Duty of Officers (the first book of this series). Officers are required to gain an understanding of the nature of the operation and the risks associated with the operation (second element), to ensure there are adequate resources and processes to meet the obligations (third element) and to monitor the incidents and hazards and respond appropriately (fourth element). • Respect: Individuals are respected, as are the dangers they face. This is a direct output of the duty to consult workers discussed in Due Diligence: Horizontal and Vertical Consultation (the third book of this series). PCBUs are required to consult workers in relation to matters affecting their health and safety. Workers are

afforded protections to ensure that they do not suffer a detriment in their employment as a result of their engagement in health and safety consultation or dispute resolution processes. Proper implementation of these requirements builds respect and trust between the PCBU and workers. • Informed: Officers know what is really going on and workers are willing to report their errors and near misses. This is an output of the due diligence duty of officers, particularly the second element and fourth element discussed in Due Diligence: Duty of Officers. The investigation of incidents is discussed in the second book of this series, Due Diligence: Incident Notification, Management and Investigation. • Mindful: Everyone is wary and always ready for the unexpected. This is an output of the due diligence duty of officers and particularly the sixth element — verification. As discussed in Due Diligence: Duty of Officers, officers should not seek assurances, but rather, they should have a suspicious and inquisitive mind when it comes to understanding the vulnerabilities of the system. • Just and fair: A just culture presents a clear delineation between acceptable and unacceptable behaviour and known and consistently enforced consequences. This is discussed in Due Diligence: Incident Notification, Management and Investigation. • Learning: This refers to a willingness to adapt and implement necessary reforms, particularly necessary in relation to near misses, not just actual accidents. See also Due Diligence: Incident Notification, Management and Investigation. Hudson argues that a consequence of these features is that the organisation will be flexible (ie it will operate according to need), reliable (ie it will always deliver) and profitable (ie because the risks are better managed). A flexible culture is a prerequisite to a good safety culture. A PCBU needs to foster a flexible culture where workers are empowered to make decisions that deliver the safest outcome in the circumstances, based on their training, qualifications

and experience using the risk management approach. The inclusion of profitability as a feature of generative organisations is interesting and is something we will come back to later on in the discussion on resources. That reliability is a feature of companies displaying a good safety culture, is a corollary to the same point. If a good safety culture results in reliability, not just in safety outcomes, but in production outcomes as well, then the company will be profitable. The role of leaders is to drive the culture of their organisation to become a generative culture where safety is integrated into every aspect of the business or undertaking so that safely performing the activities involved in the business or undertaking, is how things are instinctively done.22 How this can be achieved is discussed below. Leadership and commitment Commitment to WHS is a critical component of any safety management system. Meaningful PCBU commitment will result in greater resource allocation, effective implementation, systematic compliance and a proactive safety culture. Collins and Hansen identify the following three features of great leadership: (1) Fanatic discipline — consistency of action, consistency with values, consistency with long-term goals, consistency with performance standards, consistency of methods and, ultimately, consistency over time.23 (2) Empirical creativity — relying on empirical evidence (and not what other people are doing) to validate creative instincts.24 (3) Productive paranoia — maintaining hyper-vigilance in good as well as bad times.25 However, these features on their own will not achieve greatness for the company. One additional central force is required — a cause. Collins and Hansen call this “Level 5 ambition”.

The same concepts can be applied to safety. Fanatic discipline Fanatic safety discipline is a feature of great safety leaders. Great safety leaders display consistency and discipline in their commitment. Safety is a value not an object, priority or target. It does not require proof or justification. It is simply how things are done, regardless of the economic environment, production pressure or other regulatory environment. This fanaticism produces consistency and reliability, which in turn promotes predictability of decision-making and therefore, empowers flexibility. If everyone knows what drives the leaders, they can predict their response on any given issue and concern and can act in an emergency — even in the absence of any specific guidance. Production will be stopped if there is a safety concern without hesitation (regardless of the cost implications), because everyone can predict that this is what the leaders would determine if they were available to be asked. It is not because of a specific delegated power or authority but rather, an understanding developed through consistent decision-making, apparent attitudes, approaches and beliefs by those leaders. Consistency in values, standards and approach creates the culture in the organisation, ie “the way we do things around here”. The important point here is consistency in the long term, ie pursuing long-term goals and consistently working towards them, regardless of economic conditions or other distractions. The charter for that discipline starts with the commitments symbolically expressed and displayed in the safety policy. Safety commitment is usually expressed in the form of a policy, approved by the board of directors and signed by the Chief Executive Officer or Managing Director. This is in addition to the due diligence framework anticipated by the due diligence duty of officers (discussed in the first book in this series, Due Diligence: Duty of Officers). The policy should be widely distributed and displayed as a constant reminder of the PCBU’s commitment. The policy must be backed up by actual commitment, leadership and engagement of senior management in

the PCBU. The safety policy is largely symbolic. It reflects a public commitment by senior management to ensuring the health and safety in relation to the conduct of the business or undertaking of the PCBU. While it needs to sufficiently discharge any of the duties under WHS legislation, it drives a framework of compliance, accountability and an aspiration for continuous improvement. A safety policy is a requirement of the Australia and New Zealand Standard of Safety Management Systems — AS/NZS 4801. It is also a requirement of the international standard on safety management systems — OHSAS 18001 and ISO 45001 — Occupational Health and Safety. Empirical creativity Leadership requires much more than a mere commitment expressed in a policy. Leaders need to lead on safety. They should be demonstrating an interest in safety, welcoming and encouraging the reporting of bad news so that lessons can be learnt and the issues addressed. They should also be avoiding reliance on assurances from others, preferring instead to be inquisitive in their approach and taking a personal interest. Great safety leaders also display empirical creativity. Leaders lead. This is important because what it requires is a mind concentrated on the needs of the organisation, working through concepts from first principles and innovating to achieve appropriate tailoring for the organisational need. That is, their solutions are bespoke, not generic. Their systems are built from the bottom up. Their data collection is purpose-built. Their incident analysis is purpose-built. They take no comfort in the fact that every one of their peers does it in a particular way and, indeed, they have a healthy suspicion of any process that is ubiquitous. Leaders do not look to others at times of uncertainty. They do not reach for an off-the-shelf solution, or adopt the methodology adopted by their peers uncritically. They chart their own course, consistent with their values, and look to validate that chosen course through empirical analysis. A study by Rodriguez (2015) found that transformational leadership creates an environment where followers offer creative suggestions for

system improvement, self-training and co-operation as well as a favourable perception of the organisation externally.26 That is, by creating autonomy and trust, transformational leaders encourage, and reap the rewards of, innovation. This point has been lost in recent years. There is an alarming level of homogeneity in safety in everything from incident investigation and analysis to behaviour safety programs. Far from leading, leaders are mimicking. This is a dangerous trend for safety. Productive paranoia Leaders need to display productive paranoia. They need to be aware of the vulnerability of their organisation’s success and be constantly on guard to protect that hard-earned success. Some commentators have called on leaders to be in a constant state of chronic unease about the possibility of things going disastrously wrong.27 But the requirement may not be as negative as the description suggests. It is essentially a caution against hubris. In safety, often organisations are most vulnerable after a period of perceived success such as a period without lost time injuries — a statistic recording shifts lost to an injury. This was the case with the BP Texas refinery explosion where the contractors killed in the explosion were in their temporary accommodation celebrating a year without lost time injuries. It was the case also with the Deepwater Horizon explosion where executives of BP were on the oil rig to hand out an award for a year without lost time injuries. It was the case before the Longford disaster. It was also the case before Piper Alpha. While there are a number of explanations for this, one of them is that leaders often believe their own marketing and refocus their attention away from safety which they perceive to be under control. Productive paranoia is a warning against that. Safety leadership requires productive paranoia that catastrophic failure may be imminent and vigilance to avoid that failure; it is merely there to balance against the hubris that creeps into high reliability organisations, causing the spectacular collapses in safety culture that have been observed with some of these organisations. Passion However, productive paranoia or mindfulness, empirical creativity and

fanatic safety discipline of themselves are not enough. Leaders in pathological organisations in many respects display some of these features. The key ingredient that distinguishes a great safety leader from the pack is their passion for safety which ties each of the other elements together. Great safety leaders are enthusiastic about discussing safety initiatives. They are as curious and anxious about the PCBU’s safety performance as a high-performing student is curious and anxious about their test results. They are genuinely excited about new and smart safety initiatives. They show empathy towards their direct reports in relation to challenges they face, working through solutions, rather than simply demanding results. Safety is not number one on the agenda because they need to set an example or want to send a message; it is number one on the agenda because that is what they are passionate about. The force of that passion is contagious. Direct reports see it, believe it, embrace it and celebrate it. That effect is reinforcing. Figure 7 — Safety leadership foundation

Importantly, that is an entirely positive approach. Passion for safety is not about seeking out failure to highlight vulnerability. It is about seeking out success to celebrate it. This approach motivates the organisation to greater success. Resources Leadership without resource commitment is empty rhetoric. Leaders need to walk the talk. That means more than just leading by example on the workshop floor; it means leading by example in the boardroom as well.28 Unfortunately, safety is typically looked upon as a cost centre. Expenditure on guarding machinery, auditing systems and training workers in safe systems of work is a cost to business and is accounted for in that way in financial balance sheets. Safety expenditure is often justified on moral or legal grounds. But that analysis is inconsistent with safety culture. These things are not done for mere legal compliance. If safety expenditure is justified with reference to the significant penalties which attach to breaches of the legislation and the personal liability which may attach to individual directors and managers, it reflects what Hudson would characterise as a pathological or, at best, reactive culture (see the previous discussion). Similarly, in some rare cases, safety is justified with reference to the savings that such expenditure will produce through the avoidance of costs associated with industrial accidents. However, this is not the norm and, because of the characterisation of the expenditure, such dialogue is often unconvincing. The point ultimately is one of avoiding liability through such expenditure since the principal reference used for such costing is typically the penalties and compensation associated with workplace accidents. However, study after study has shown that, far from being a begrudging expenditure, safety is in fact good for business. Positive safety performance has been shown to be a good indicator of operational performance.29 Safety conscious and environmentally sustainable companies outperform their peers on the share market, delivering net additional share value of as much as 4%.30 Indeed,

better performing safety companies outperform their peers by a factor commensurate with their safety over performance.31 There are also a number of more controversial studies that seek to prove the link between good safety performance and the health of the bottom line, by reference to the savings which result from the absence or diminution in accidents. For example, a study by the United States health and safety regulator, the Occupational Safety and Health Administration (OSHA), found that an investment in safety can achieve a return on investment of between 4:1 and 6:1.32 That is, for every US$1 spent on safety, a return, by way of cost savings to workers compensation premiums and associated costs of between US$4 and $6, is achieved. Similarly, a report by the Center of Chemical Process Safety (CCPS) in the United States found that major industrial accidents cost an average of US$80m each. Other costs such as business disruption costs, which the CCPS estimates are up to four times the average cost of the property damage or an average of US$320m for each major industrial accident, also accrue.33 Other studies have placed the indirect costs of an incident at up to 10 times the direct costs, once factors such as training and compensating replacement workers, accident investigation and implementation of corrective actions, scheduling delays and lost productivity, administrative expenses, low employee morale and increased absenteeism, and poor customer/community relations, have all been considered.34 These studies are controversial in that they seek to define safety as the absence of accidents and therefore proceed to quantify the return on investment of “safety” on the basis of the reduction in accidents. While tempting, the analysis is somewhat flawed. There is no doubt that the reduction in accident rates or at least more serious accidents is an output of better safety performance. But there are numerous examples of companies with great short-term safety records that exist in the absence of an effective safety management system. If we are to adopt the “accident reduction cost as a return” approach, these companies are enjoying the returns without the investment. The better view is that safety is not “the absence of something” but rather “the presence of something”. Safety represents the cultural intangibles that exist over and above the direct

cost of the interventions which drive better operational and financial performance. In that respect, safety is capital. The rethinking of safety as capital rather than expenditure has profound implications to our approach and philosophy to safety management. The old thinking — safety expenditure as a cost to business — sits uncomfortably with the findings of the studies set out above, which instead reflect improved operational and stock market performance through better safety management and therefore increased expenditure. In a practical sense, this categorisation of safety expenditure limits the relevance of safety in the areas of strategic planning and critical business decisions. To corporate executives, safety is a compliancedriven expenditure or, at best, a morally-driven expenditure. In an economically rational environment, that expenditure should extend only to what is required to ensure legal compliance. Indeed, arguably, if the expenditure is driven by compliance, the extent of the expenditure may be proportional to the likely consequences of noncompliance, ie a calculation taking into account the likelihood of being caught and the maximum applicable penalty. Safety in that paradigm is an operational implementation detail. If safety expenditure is no more than a compliance-driven cost, the extent of safety investment will be driven by the extent of regulation. That is, without regulation, rational businesses will reduce their safety expenditure to zero. People who advocate that view, point to the historical experiences of the industrial revolution. However, it may be that the problem lies in the short-sightedness of decision-makers, rather than some market failure. While short-term growth can be derived at the expense of safety considerations, long-term sustainable growth cannot. BP — Texas City The experience of BP in Texas City demonstrates this in dramatic fashion. The US Chemical Safety and Hazard Board (currently referred to as the US Chemical Safety Board (CSB); see

www.csb.gov) investigation into an incident at the Texas City refinery found that “cost cutting, failure to invest and production pressures from BP senior executives did not provide adequate resources to prevent major accidents and that budget cuts impaired process safety performance at the Texas City refinery”.35 It is this link with which the resourcing element is concerned. In a book analysing the incident, Professor Andrew Hopkins makes the following observations about the BP senior management team’s approach to resourcing: Senior executives demanded cost cuts and left it to others further down the hierarchy to ensure that these cuts were not at the expense of safety. Lower-level managers responded as best they could to these conflicting requirements but, inevitably, safety was compromised. The only way out of this predicament is for those who order the cost cuts to take responsibility themselves for ensuring that safety is not compromised.36 However, those savings fade into insignificance when compared with the cost of the disaster where direct financial costs alone were estimated at US$1.5b, with an additional US$87m in OSHA infringement penalties and several million dollars in undisclosed commercial settlements of legal proceedings brought by families of the victims of the disaster. BP — Gulf of Mexico BP’s experience with Deepwater Horizon is even starker in comparison. The commercial ramifications for BP have been astronomical. Nearly US$70b was wiped off the value of BP due to its 38% plunge in its share price.37 The incident cost BP over US$2.65b38 in spill response, containment, relief well drilling, grants to Gulf states, claims paid and federal costs alone. There have been over 64,000 legal claims made by people whose livelihoods have been affected by the spill. BP has also put US$20b in an escrow fund to pay future claims. These figures are very significant, even when viewed against the company’s sales and other operating revenue figures for 2009 of US$239b. Savings achieved from cutting safety expenditure cannot be rationally justified against this backdrop. The truism of the old saying — “if you think safety is expensive, try an accident” — is obvious.

Qantas Similarly, Alan Joyce (Chief Executive Officer of Qantas) first became aware of the troubles QF32 was experiencing (ie the A380 aircraft which experienced two engine failures in mid-air shortly after taking off from Singapore In November 2010), not from his safety team, but from his investment adviser who noticed the share price of Qantas plummeting. Mr Joyce anxiously made inquiries to understand the reason for it. The explanation? A tweet from an Indonesian resident who had noticed a piece of the A380 falling in his backyard and had tweeted that a Qantas plane had fallen from the sky. Safety expenditure is, at the very least, necessary to maintain shareholder value. When a similar exercise is done on a property or plant, it is regarded as capital expenditure. Safety expenditure Safety expenditure has more in common with capital than it has with costs. A business can gain a long-term competitive advantage by rethinking its safety expenditure, to distinguish between true business growth and business growth derived at the expense of the stock of tangible and intangible assets which secure safe operation.39 Within a Safety Capital framework, expenditure on safety can be seen as a capital investment that is made based on traditional assessments of the need for and expected returns derived from, such expenditure. Productivity gains from decreased incidents and improved productivity can be seen as the return on the investment in Safety Capital. Since those gains are quantifiable, the return investment in Safety Capital can be measured and assessed. Figure 8 — Safety as an investment

Safety Capital can also be expected to share many of the features of other forms of capital. For example, we can expect a trend of diminishing marginal returns on investment to be associated with Safety Capital, as is the case with other forms of capital. At the early stages in the safety journey where Safety Capital in the organisation is low, incremental investments in Safety Capital can be expected to have a significant impact on safety performance and, therefore, produce high returns. The introduction of a safety management system or the implementation of risk assessments or safety audits (where such systems and processes have previously not existed) will result in a dramatic reduction in the number of accidents. Over time, however, further investments in safety audits are unlikely to yield the same returns. At later stages in the safety journey, where there is a substantial, positive safety culture in place, the marginal return on investment in Safety Capital will be smaller. This process of analysis elevates safety within an organisation. As an investment, it can be prioritised, even in an economic downturn. Equally as a capital investment, incremental investments in Safety Capital can be assessed against other priorities for that investment

and comparisons can be made based on the return on investment. A systematic approach to safety management has the greatest potential for success where the economic and safety objectives are aligned. That is, what is good for safety is also good for profit. The Safety Capital model of analysis maximises the likelihood of that link occurring. Accountability Any business plan requires an implementation strategy. This strategy establishes the objectives, targets, priorities, timeframes and responsibilities, and sets out the practical steps which will be undertaken over the short to medium term to effect the objectives and targets, including period targets to assess ongoing effectiveness of the plan. Remarkably, this step is often missed in safety and environmental management systems or relegated to aspirational goals lacking in specificity and accountabilities. By including a safety implementation plan as an element of the management system, the organisation can guarantee systematic implementation of the safety agenda. The planning involved also exposes any obstacles or deficiencies in the operation of the system. An implementation plan must be proactive in nature. It is the preventative maintenance of an operating management system. History shows that the cause of safety flourishes after a major incident. At that point, the dark underbelly of the system has been exposed by the incident and the drastic cost associated with failing to proactively address it, is bared for all to see. It is hard to oppose investment in safety against this background. However, latent accident-producing conditions often exist for some years prior to a major incident occurring. The implementation plan must be aimed at addressing such conditions. The plan should also be seeking out vulnerabilities in critical controls to ensure that these are monitored and reinforced. In that respect, the “bow tie method” of risk analysis can be a useful tool in informing implementation plans. The bow tie method as an accountability tool The bow tie method is a risk management approach made popular by

the oil and gas industry. This method is now used in a number of industries as a way of preventing major incidents. The undesired event is identified in the centre of the process. Threats that can cause that event are identified on one side and the consequences that flow from that event are identified on the other. Barriers are then identified to prevent each threat from eventuating. On the other side, mitigation treatments are identified to reduce the impact of the event once it occurs. A simple bow tie is identified in Figure 9. Figure 9 — Simple bow tie diagram

The attraction of the bow tie process is that it neatly and diagrammatically represents both sides of the event — prevention and mitigation. As such, the vulnerability of the PCBU to the event can be captured in a snapshot. The greater the barriers on both sides of a left-to-right path, the less likely the consequences will occur. The less barriers there are, the more vulnerable the PCBU is to the relevant consequences identified. In that respect, such a process can be a very useful tool for mapping the controls to identified process safety or critical risks facing the PCBU. However, a simple bow tie does not tell the full story. First, not all controls are created equal. Some are more effective than others. This is why we have a hierarchy of controls. The series of procedural barriers left to right appears impressive, but may be completely

ineffective in preventing the consequences. By contrast, fewer better controls (eg design or engineering controls) may be far more effective. Second, each barrier is vulnerable if not effectively maintained. These are called escalation factors and are, in effect, represented as a second level of threat on more sophisticated bow tie diagrams.40 Figure 10 — More sophisticated bow tie

To maximise the effectiveness of the implementation plan, a bow tie diagram should be included for each identified process safety or critical risk, including “escalation factors”, to identify the vulnerability of each control. A performance indicator metric needs to be developed to monitor the effectiveness of each of those barriers, particularly those with a high degree of criticality (because they are repeated across several threat lines). The barriers adopted in relation to every threat must follow the hierarchy of controls to ensure that the controls are as effective as is reasonably practicable.

Setting goals and priorities for implementation plans The goals and priorities for implementation plans must be informed in part by the critical risks facing the PCBU and, in part, by a review of incident and near-miss records to identify patterns of system deficiencies. Given their nature, the balance should always be tilted in favour of critical risks. As such, a proactive implementation plan should reflect a program of investment in controls aimed at reducing the vulnerability of the company to critical risks. In that regard, an implementation plan provides transparency and accountability in relation to safety investment. It provides officers with confidence that the limited resources of the company are appropriately allocated, given competing priorities. An implementation plan also ensures that such resources are not squandered on programs aimed at low-order controls, but rather, because of the elevation of the deliberation to a senior level of the company, higher-order controls (eg design of plant, premises and/or processes) can be undertaken as part of the assessment of the expenditure in the implementation plan. The use of implementation plans also facilitates accountability regarding the allocation and competence of personnel assigned to programs. Like any other program, once it is planned, responsibilities and resources are allocated to it. An implementation plan allows senior management to assess at the outset, the allocation of resources to certain projects and to monitor and review the competence of those personnel allocated to those projects. Finally, the use of implementation plans has the benefit of elevating safety to senior levels within the PCBU where it can be analysed in the same manner as other business-critical issues. An implementation plan allows the dialogue at those levels to proceed in a constructive and transparent manner using comparative managerial tools. Footnotes 9

See for example A O Rodrigues and M A Ferreira, “The impact of transactional and transformational leadership

style on organisational citizenship behaviour” (Braganca Paulista, v 20, n 3, 2015) 493–504. 10

D O’Connell, “Leadership styles and improved governance outcomes” (Governance Directions, May 2016) 202–206.

11

A Larsen, The President Nobody Knew (Popular Library, NY, 1968).

12

H S Truman, Memoirs (Doubleday, NY, 1958).

13

See Bass, “Two decades of research and development in transformational leadership”, European Journal of Work and Organisational Psychology (1999) 8(1), 9–32.

14

For a discussion of the two types of leadership and a review of relevant literature see J A Odumeru and H G Ogbonna “Transformational vs Transactional Leadership Theories: Evidence in Literature”, International Review of Management and Business Research (vol 2 Issue 2, June 2013) 355–361.

15

Rodriguez above n 9, 500.

16

Ibid.

17

P Hudson, Safety Culture — Theory and Practice (NATO Research, Defense Technical Information Centre, 2001) 1.

18

D Rousseau, “Quantitative Assessment of Organisational Culture: The Case for Multiple Measures” in LC Cooper and I Robertson (eds), International Review of Industrial and Organisational Psychology (Wiley, Chichester, 1988).

19

J Reason, Managing the Risks of Organizational

Accidents (Ashgate Publishing, Burlington, 1997). 20

PTW Hudson, D Parker, R Lawton, WLG Verschuur, GC van der Graaf and J Kalff, “The Hearts and Minds Project: Creating Intrinsic Motivation for HSE”, Proceedings 5th SPE International Conference on Health, Safety and Environment in Oil and Gas Production and Exploration (CD-ROM, SPE, Richardson, Texas, 2000).

21

The following section is based on P Hudson, “Climbing the Safety Culture Ladder”, Workshop, October, 2013 hosted by the author in Sydney, Brisbane, Melbourne and Perth.

22

It should be observed that this is no easy task. A survey of 400 companies found that more than half believed their organisation’s safety culture was calculative and, worse, the vast majority believed there was a need for improvement, but did not believe their organisation had the tools to achieve this: M Tooma, Safety Culture Survey 2013.

23

J Collins and MT Hansen, Great by Choice (RH Business Books, 2011) 46.

24

Ibid 55.

25

Ibid 60.

26

Rodriguez, above n 9, 499.

27

A Hopkins, Failure to Learn — The BP Texas City Refinery Disaster (CCH Australia Limited, 2010) 113.

28

The concept of Safety Capital was first discussed in M Tooma, Safety Security Health and Environment Law

(Federation Press, 2nd ed, 2011) 261–273. This section is based on and builds on that work. 29

A Veltri, M Pagell, M Behm and A Das, “A data based evaluation of the relationship between occupational safety and operating performance”, The Journal of SH&E Research, (2009, vol 4(1)). The study collected data from 19 manufacturing firms regarding quality, productivity and economic performance. The study found that as safety deteriorates, product quality and plant performance suffer.

30

A 2002 study by Holliday, Schmidheiny and Watts found that the Dow Jones Sustainability Group Index consistently outperformed the Dow Jones Global Index: CO Holliday, S Schmidheiny, P Watts, Walking the Talk: The Business Case for Sustainable Development (BerrettKoehler Publishers, USA, 2002) 19–31. Similar studies in Australia have demonstrated that the OHS index significantly outperforms the All Ordinaries Index. A similar study by Fabius et al in 2013 found that the winners of the American College of Occupational Medicine’s Corporate Health Achievement Award outperformed the market on the stock exchange: R Fabius, D Thayer, D Konicki, C Yarborough, K Peterson, F Isaac, R Loeppke, B Eisenberg, M Dreger, “The Link between workforce health and safety and the health of the bottom line: Tracking market performance of companies that nurture a ‘culture of health’”, Journal of Environmental Management (September 2013, vol 55 number 9) 993–1,000.

31

R Fabius, R Loeppke, T Hohn, D Fabius, B Eisenberg, D Konicki, P Larson, “Tracking the Market Performance of Companies that Integrate a Culture of Health and Safety: An assessment of corporate health achievement award applicants”, Journal of Environmental Management (January 2016, vol 58 number 1) 3–8.

32

American Society of Safety Engineers, White paper addressing the return on investment for safety, health and environmental management programs (2010).

33

Center for Chemical Process Safety, The Business Case for Process Safety (American Institute of Chemical Engineers, New York, 2nd ed, 2006) 8.

34

“The safety cost of containment”, Australian Compensation News (CCH Aust Ltd, 2004, Issue 6, 9 August).

35

US Chemical Safety and Hazard Investigation Board, Investigation Report, Refinery Explosion and Fire, BP Texas City, Texas, 23 March 2005 (CSB, USA, 2007) 210.

36

Hopkins, above n 27, 81.

37

C Kahn “BP chief to face investors, questions about job”, McAlester News-Capital (2010, 4 June), available at mcalesternews.com/local/x1910026150/BP-chief-to-faceinvestors-questions-about-job; BP website, share chart for 20 April 2010–28 June 2010, available at www.bp.com.

38

“BP Spill Costs Rise to 2.7B” (CBC News, 28 June 2010), available at www.cbc.ca/news/business/bp-spill-costs-riseto-2-7b-1.880381.

39

M Tooma, Safety Security Health and Environment (Federation Press, 2nd ed, 2011).

40

Hudson takes the analysis further by creating levels of escalation factors: Levels 2–3. These levels correspond with line management and senior management respectively.

CHAPTER 4 LIFE CYCLE OF UNDERTAKING

Key messages • Whole-of-life cycle risk management is critical to effective safety management. • Design, procurement, premises, processes, plant and substance safety management are interdependent.

Case example

$412,500 fine for failing to implement processes and procedures Visy is one of the world’s leading privately owned packaging and resource recycling companies with more than 120 sites across Australia, New Zealand, Thailand and Vietnam. One of these sites is a waste recycling facility in Smithfield, New South Wales. The site included a large warehouse building called the “covered paper yard”. Loose and baled recyclable paper materials were delivered to the yard by truck. Those materials were unloaded from the trucks and moved by the use of a forklift and a front-end loader, with a view to loading them into a conveyor with the frontend loader, at the western end of the yard. The yard operated 24 hours per day, seven days per week. About 70 trucks were unloaded every day at the yard. Mr Soleski worked as a forklift operator and a traffic controller in the covered paper yard for 25 years. When he was not operating a forklift, he was acting as the traffic controller and directing truck drivers, as to where to unload their materials within designated exclusion zones of the yard. At about 10 am on 12 December 2012, Mr Soleski operated the

boom gate to allow a semitrailer into the yard, and walked over to direct the truck driver where to park and unload. The truck driver got out of the truck and operated the controls of the truck to unload it mechanically. While the truck was unloading, Mr Soleski was struck by a front-end loader and was killed. At the time of the incident, in breach of Visy’s policies: (a) there was no traffic controller to ensure safe distances between pedestrians and front-end loaders (b) there were no physical barriers to protect pedestrians performing duties within the yard from being struck by mobile plant (c) there were no exclusion zones marked out by the use of red painted zones on the floor of the yard (d) there were no areas within the yard within which mobile plant could operate in which pedestrians could not enter without authorisation (e) two-way radios were not used to allow communication between employees within the yard (f) the front-end loader was operating within 10 m of an unloading truck (g) the front-end loader was operating within 10 m of pedestrians, and (h) the reversing alarm on the front-end loader was not audible when it was operating above idle. Visy was prosecuted and fined $412,500.41 The case reflects failings on the part of Visy in relation to premises and process design, premises safety, plant safety and failure to implement processes and procedures. These, together with procurement and substances, are the focus of the discussion

in this chapter.

Design The design of the workplace, work processes, plant and organisational structures is critical to improving long-term safety outcomes.42 Plant and workplaces must be safe by design. That means they must be designed to, so far as is reasonably practicable, minimise the risks associated not only with the use of the plant, but also with the manufacture, installation, maintenance and disposal of the plant. Similarly, workplaces must be designed in a manner which minimises, so far as is reasonably practicable, the risks associated with the construction, use, maintenance and demolition of the premises or structure. By focusing greater energy at the design stage of plant, equipment, premises and processes, a PCBU can ensure that less reliance is placed on administrative controls which, by their very nature, are susceptible to human error. Safety-by-design process The safety-by-design process has a number of key components: • Proper instructions • Subject matter expert innovation • Stakeholder engagement • Quality assurance • Consultation. Instructions Taking proper instructions is the most critical step of the design process. Designers need a clear understanding of the outcomes sought, including the intended use, working environment, user

profiles, maintenance requirements, life cycle and proximity of nonworkers to the plant or structure. The process of taking instructions requires patience, careful consideration and a continuous dialogue. Once the designer has what they believe to be a good understanding of the requirements, they should confirm their understanding to the instructor. Subject matter experts Once instructions are received, the next step is to compile the team of experts who will lead the design (ie subject matter experts (SMEs)). Having received proper instructions in relation to what is required, the PCBU will be in a better position to identify who those experts may be. The SMEs should meet, to workshop some of the issues and to scope out the design parameters. A big part of that exercise is in fact identifying the life cycle of the plant or structure. HAZOP The SME team would then conduct a hazard and operability analysis (HAZOP) for the plant or structure, taking into account the whole-oflife cycle of that plant or structure. That process would include, in relation to plant, its commissioning, use, maintenance, transportation, storage and dismantling. Similarly, in relation to structures, the process would include its constructability, use, maintenance and demolition. Quality assurance Quality assurance is a crucial part of the safety-by-design process because it permits greater reliability of designed controls and avoids risks being created through the interaction of controls. Review and revise Once a HAZOP has been completed, the design should be reviewed in consultation with stakeholders and revised if necessary to address any concerns. Importantly, stakeholder consultation and the feedback loop with stakeholders should be an ongoing commitment. Figure 11 — Safety-by-design

Premises safety management A PCBU is required to ensure, so far as is reasonably practicable, the provisions and maintenance of a work environment without risks to health and safety.43 A safety risk assessment is required: • whenever an organisation uses premises for the first time as a place of work (be it a permanent place of work or a temporary place of work) • whenever a new process, plant or substance is intended for use in the premises, and • (in any event) on a periodic basis.

A premises risk assessment also needs to take into account the security risks presented by the premises and the effectiveness of the emergency management systems available at the premises. An assessment of the premises at the acquisition stage (whether as a freehold or leasehold) can produce a significant flow of savings in the ongoing implementation and maintenance of controls. Regrettably, safety considerations are rarely elevated to the business-critical criteria and therefore, such assessments are frequently made at later stages, if at all. Such assessments need to be built-in at the procurement stage so that places selected for use as workplaces are assessed and ranked based on a whole-of-life cycle safety approach. Costs aside, are they the best designed and located premises for the company’s operational needs? The quality of the design of the premises can have a significant impact on the safety risk profile of the premises and therefore, the provisioning that needs to occur to manage safety (eg space constraints which may impact on the design of the workplace, the availability of anchorage points for harnesses, or the presence of asbestos in the premises). Once selected, the next challenge for permanent workplaces is the fitout. It is crucial that the PCBU carefully designs the layout of the premises to minimise risks associated with its use and maintenance. There needs to be some careful consideration of the needs of the intended work processes. For example, many manual handling incidents can be minimised by careful planning of the design of shelves and working spaces. Similarly, the design of premises will be one of the most important controls in relation to minimising the risks associated with cash in transit, through careful positioning of exits and lighting (for example). These are decisions best made at the fit-out stage. Once the fit-out has been completed, a preventative maintenance plan for the premises needs to be developed to ensure proactive management of risks. This includes the maintenance of fire safety equipment. A plan must also be developed for regular risk assessments of the

premises. The frequency of such inspections will depend on the age of the premises, its condition and its use. It is also necessary to develop and maintain an induction module for the premises, providing the relevant information for workers, contractors and visitors regarding the hazards on the premises, emergency arrangements and site rules. Figure 12 — Safe premises process

Plant safety management Plant safety has been at the heart of workplace safety from the outset of workplace safety regulation in Factories, Shops and Industries legislation in Great Britain and, subsequently, in the Australian colonies. For example, the requirement to fence the moving parts of machines has been a feature of workplace safety legislation for over a century. Yet, despite this, accidents caused by inadequately guarded machines are among the most common categories of workplace accidents. There are between 65,000 and 70,000 plant-related workers compensation claims costing some A$550m in workers compensation payments each year.44 As the Vice-President of the Industrial Relations Commission of New South Wales, Walton J observed in Inspector Belley v Hughston & Sons Pty Limited:45 “the failure to properly guard machinery continues to be a significant cause of injury in the workplace and should be deterred by an appropriate penalty.”46 The control of safety risks arising from the commissioning, use, maintenance, storage, transport and disposal of plant is critical in discharging the PCBU duty of care.47 This requires risk assessments to be undertaken before acquiring plant to ensure that the proposed plant for acquisition is not only safe and free from risks to health and safety, but also that it will not give rise to additional risks once it is commissioned in the workplace and is operating in combination with other plant and substances, and in the vicinity of existing systems of work. A risk assessment is required at the commissioning stage. This should deal with the commissioning, installation, and future use and maintenance of the plant to ensure that the plant is commissioned to operate in a manner which minimises risks. A risk assessment is then required by the operator before plant usage. Further risk assessments are required before the maintenance, transportation, storage and decommissioning (or disposal) of the plant. Figure 13 — Plant safety

Substances safety management The effective management of chemicals is critical to safety management.48 Chemical procurement, use, transport, storage and disposal are highly regulated from a safety perspective. An effective safety management system must systematically undertake risk assessments in relation to the selection, procurement, use, storage and disposal of all chemicals at the workplace. The first step in that process is the selection of the chemical and, in particular, consideration of whether the chemical to be introduced is necessary. If it is, then the next step is to consider whether this is the safest chemical that can do the job, ie to consider whether it can be substituted with a chemical with a lower risk profile (eg less toxic, less volatile and so on). If such a substitution can reasonably and practicably be made, then it must be made. Once the selection of the chemical has been determined, the next step is the procurement of the chemical. As discussed below in the context of procurement, and in the next chapter in the context of suppliers, effective procurement begins with the selection of a supplier that shares your values and approaches to safety. This is because suppliers will be asked to provide information and assistance during the life cycle of the chemicals, in relation to the chemicals they supply. During procurement, the supplier must supply and the PCBU must obtain, a copy of the Material Safety Data Sheet (MSDS) for that chemical. The maintenance of a hazardous chemical register and collection of MSDSs in relation to hazardous substances, are crucial to effective management of risks arising from these chemicals. The

MSDS informs the risk assessments undertaken in relation to safe use, handling and disposal. It also informs the emergency response procedure, including the medical treatment in the event of exposure (eg if someone is overcome by fumes or a chemical is splashed into a worker’s eye). There are also storage and transportation requirements in relation to dangerous goods. For substance management to be effective, regular atmospheric monitoring, health surveillance and testing is required to ensure that existing controls are effective in controlling the risks to persons and the environment arising from the substances. Figure 14 — Managing hazardous chemicals

Process management The provisions and maintenance of a safe system of work is a vital component of discharging the duty of care of a PCBU.49 Case example

No process leads to fall Austral Hydroponics was a small company owned by Mr Eang Lam, who was also its sole director. The company operated a farming business in Austral, growing greenhouse truss tomatoes. Austral Hydroponics employed Mr Savoeun Nuon as a farmhand, for 10 years. On 7 March 2013, Mr Nuon was directed by his supervisor, Mr Lam, to remove pliable plastic sheets from the roof of a hothouse. No instruction on how to perform this task was provided by Mr Lam. The roof was curved, forming an arch with a low point of 2.5 m and a high point of 4 m. Mr Nuon used a ladder to climb onto the roof of the hothouse and stood on the gutter while undertaking the task of removing the plastic sheets. At approximately 4.30 pm, as Mr Nuon was trying to pull away damaged plastic, he lost his balance and fell backwards, approximately 2.5 m. He suffered a fracture to the spine which caused spinal cord damage and tetraplegia. His condition was considered catastrophic, requiring high care. He died in hospital from respiratory failure and recurrent aspiration pneumonia. Austral Hydroponics was prosecuted and fined $150,000.50 Mr Lam was also prosecuted and fined $15,000. At the trial, his son gave evidence that after the incident, his father became a “broken man” and “lacked the capacity to continue running the business” of Austral Hydroponics. He told the court that his father expressed regret to him almost every day for not having taken steps which would have prevented the accident.51

Processes are often the focal point of every incident. While historically we simply used to blame workers for incidents,52 we now blame processes. Although this approach lacks sophistication in that often there is nothing wrong with the process, but rather, there are deeper organisational factors in operation that are often accentuated with governance issues (ie lack of leadership on safety resulting in a

negative safety culture), there is little doubt that the design and implementation of processes or systems of work are important components of a safety management system and of the PCBU’s duty of care. The first step in managing safety of systems of work and processes is looking at the design of the processes themselves. Consideration needs to be given to the planning and design of processes to eliminate or minimise, so far as is reasonably practicable, the risks associated with these processes. In complex systems of work, sophisticated risk-based planning techniques (eg the bow tie) can be used to identify the necessary barriers to prevent incidents and to mitigate their consequences in the event that they occur (see the discussion in Chapter ¶3 in relation to implementation plans). However, for simple processes, a traditional risk assessment approach is sufficient. See Figure 15 below. Figure 15 — Simple process risk assessment

It is important that the design of a system of work is undertaken in consultation with workers who are involved in, or who are likely to be involved in, that system of work. This is important because experienced workers will have a unique perspective on the hazards associated with the process and how to manage risks arising from such hazards. Furthermore, there is often a stark difference between management’s understanding of how work is done and the actual reality of how it is done. This is something referred to as the difference between “work as imagined” and “work as done”. The experience of workers rarely reflects the ideal circumstances imagined by those that design the procedures for their work. That gap creates an expectation of innovation on the part of workers to get the job done, despite the sub-optimal conditions. That innovation or deviation from prescribed

procedures is recognised and rewarded in the event of success (job completed without incident) but derided in the event of failure (the occurrence of incident). Clearly, such an approach is unhelpful. The better approach is to seek to understand how work is done and to design the system to reflect that reality. Where variations exist, the system should recognise the need to deviation but create parameters to ensure that any deviation is within safety tolerances. It is the latter category — the parameters for safe operation — that needs to be reinforced and policed. Once the system of work design is determined, it must be recorded in a work procedure which is written in plain and accessible language (where possible with pictures or diagrams to illustrate concepts or processes). The language of such procedures needs to take into account the language needs of the workers and the literacy ability of the workers. Workers must then be trained in the relevant procedure, including the concepts underpinning each relevant control: “We do this because if we don’t, this is what will happen”. As we will discuss in Chapter ¶5, worker training is not about the provision of information; it aims to render the worker competent in the work procedure and the safe undertaking of the relevant system of work. As such, competencybased training and (more specifically) competency assessment, is a necessary part of that process. While a risk assessment of premises, plant and substances will capture most risks arising from work activities, many accidents occur as a result of changes in processes or in undertaking an unusual process. By requiring a risk assessment before starting any process or task, an organisation can have confidence that such risks will be identified and controlled. In some systems, this is called “Take 5”, “Task Safety Assessment” or “Job Safety Assessment”. It is aimed at gaining situational awareness, that is: “How does my current work environment compare to the anticipated work environment in the procedure, and what do I need to do to ensure that my work can be done safely?”. Inevitably, task-oriented risk assessments are only as effective as the

people charged with undertaking them. Because such risk assessments are undertaken at the “coal face” by the workers themselves, the effectiveness of this component of the safety management system depends largely on the training provided to such workers on the theory and methodology of risk assessments and the culture of the organisation. As Harper J said in Holmes v Spence:53 “in the main, such a responsibility can only be discharged by taking an active, imaginative and flexible approach to potential dangers in the knowledge that human frailty is an ever-present reality.”54 In WorkCover Authority of New South Wales (Inspector TwynamPerkins) v Maine Lighting Pty Ltd,55 Bauer J summarised the requirement for safe systems of work as follows: “[T]he very purpose of the Act was to introduce safe working practices so that accidents are prevented. The Act was designed to protect against human errors: inadvertence, inattention, haste, and even foolish disregard of personal safety as well as foreseeable technical risks in industry.” If all that a PCBU has in place is the site specific assessment, it will not be complying with its obligations. A system which merely requires workers to look out for themselves is not a safe system of work. In WorkCover Authority of New South Wales (Inspector Robinson) v Milltech Pty Ltd,56 Marks J said: “Milltech is required under s 15 [of the former New South Wales occupational health and safety legislation, the Occupational Health and Safety Act 1983 (NSW)] to create a system of work which eliminates risks of injury to employees. All tasks must be assessed to ensure the system of work allows no risk of injury … It is not sufficient for Milltech as the employer to leave the responsibility for carrying out this task safely to be assessed by workers carrying out the task on the spot. They did not exercise the necessary foresight and vigilance to avoid any undue risk to the health and safety of persons who may have been affected by

the task.”57 Furthermore, a system of work which is not properly implemented is no system at all. As Haylen J pointed out in Inspector Dieter Franke v Vin Heffernan Pty Ltd:58 “The employer’s duty is not discharged by simply creating a system of work which requires safe working or by leaving it to others by way of delegation to either establish the system and/or apply it. The employer is required to be active in ensuring that the system is in fact followed in the workplace and in doing so must take into account the everyday experience that there will sometimes be encountered human errors including inadvertence, inattention, haste and even foolish disregard of personal safety by those employees … The employer is not being diligent and active in preventing risks to safety in the workplace if the bush team is permitted to stray from those directions on the basis they are all experienced people and otherwise good people and good workers.”59 Procurement The procurement process gives rise to a number of hidden safety risks. Once premises, plant, substances or contractor services are procured, the options (from a safety perspective) become more limited; the PCBU must work within the parameters presented by those premises, plant, substances or contractors. Once premises are chosen for example, the best a PCBU can do is manage the risks that exist as a result of the location (eg security risks or remote work risks), the layout (eg manual handling risks or slip and trip risks because of restricted space), or risks associated with the state of repair or hazardous material in the premises (eg in a building containing asbestos). These issues were canvassed in the discussion on premises earlier. Figure 16 — Procurement safety management

Similarly with plant, the noise emissions of plant or the maintenance needs of plant have an impact on the types of controls which become necessary at the workplace as a result of the introduction of the plant. Those controls are costly to maintain over time. However, had these factors been considered at the procurement stage, a substitute may have been available or a design feature may have been incorporated in the plant to reduce those risks. We know that engineering controls of this kind will be far more effective in safeguarding safety than controls that rely on work instructions and procedures or personal protective equipment (PPE) (eg hearing protection in the case of noise). The latter controls rely on workers following the procedures or wearing PPE, which makes them vulnerable to human factors. Effective safety management requires an assessment of risks arising from the procurement of plant, substances and services. Such assessments need to take into account the working environment, intended use, life cycle, maintenance and disposal of the plant or substance. By integrating safety considerations into the procurement process, plant and substances can be carefully selected and procured in a manner that will eliminate or minimise many risks at the outset. This requires the development of safety requirements in the procurement manual and safety consideration in procurement decision-making. For regular suppliers, a supplier selection process is

necessary to determine whether a supplier has the appropriate quality assurance and risk management processes in place to supply a consistently safe plant or substance. In relation to premises which are acquired, a due diligence process must be undertaken on the safety of the premises and the suitability of the premises for the intended use. In relation to premises being leased, what is needed is not only an assessment of the premises, but also consideration of the maintenance regime for the premises. In relation to the procurement of services, as will be discussed in Chapter ¶5, consideration of nonprice factors for contractor selection is critical. Ultimately, if you work with people who share your values and approach to safety, the joint management of risks that arise from the premises, plant, substances or provision of services will be easier to co-ordinate. It is important also that safety requirements are included in contracts for the provision of such plant and substances. This is also the case in relation to leases and contracts for the provision of services. The requirements that must be included are: • warranties in relation to the premises, plant or substances • the provision of relevant information in relation to the safe use of the plant or substances (this is typically in the operations manual for the plant and the MSDS for the substances) and, in the case of premises, the provision of relevant information regarding the premises and its safety maintenance (eg an asbestos register and the location of essential services). (Importantly, there should be an obligation to maintain the currency of that information as further information comes to light from incidents, research and other sources.) • arrangements for the horizontal consultation duty, ie arrangements for consultation, co-operation and co-ordination. (These may deal with issues such as the transportation and delivery of the plant or substances. In the case of premises, it would include the use of contractors on the premises and the interaction with other tenants), and • arrangements for assistance in the event of an incident, including

the provision of information to assist with response to incidents involving the relevant substances or plant, and the investigation of causes of incidents involving the relevant plant, substances, structures or premises. If procurement processes are to improve, there needs to be a process of review and revision based on the delivered outcomes. That feedback loop can be triggered by incidents, risk assessments or audit results. It must also be done as part of the decommissioning of the relevant plant, substances or structure, or the vacating of premises at the end of a lease. That formal assessment will allow improvements in procurement decision-making and promote accountability. Footnotes 41

WorkCover v Visy Paper Pty Ltd [2015] NSWDC 284.

42

Section 22 of the Work Health and Safety Act imposes a duty on a PCBU who conducts a business or undertaking that designs a plant, substance or structure to ensure, so far as is reasonably practicable the safety of the plant, substance or structure for the whole of its life cycle. See also cl 187–192 of the Work Health and Safety Regulations.

43

Work Health and Safety Act 2011 s 19(3)(a). See also cl 40–41 of the Work Health and Safety Regulations and cl 422–430 in relation to asbestos at workplaces.

44

NOHSC, National Standard for Plant, NOHSC, Canberra, 1994.

45

[2002] NSWIRComm 340.

46

Ibid [65].

47

See s 19(3)(b) which specifies the provision and maintenance of safe plant and structures as a component of the primary duty of care. Section 19(3)(d) also specifies the safe use, handling and storage of plant as part of the duty. See also cl 203–226 of the Work Health and Safety Regulations.

48

Section 19(3)(d) specifies the safe use, handling and storage of substances as a component of the primary duty of care. See also cl 328–391 of the Work Health and Safety Regulations.

49

See s 19(3)(c). See also requirements in the Work Health and Safety Regulations in relation to noise (cl 56–59); hazardous manual tasks (cl 60–61); confined space (cl 65–77); falls (cl 78–80); safety (cl 144–666) and construction work (cl 289–327).

50

Safe Work New South Wales v Austral Hydroponics P/L and Lam [2015] NSWDC 295.

51

Ibid [37].

52

For example, in the 19th century, workers were blamed for injuries suffered on production lines because they placed their hands in the moving parts of machinery. We now recognise this as a guarding issue and expect moving parts of machinery to be adequately guarded.

53

(1992) 5 VIR 119.

54

Ibid 123.

55

(1995) 100 IR 248.

56

[2001] NSWIRComm 51.

57

Ibid [18]–[21].

58

[2005] NSWIRComm 16.

59

Ibid 117.

CHAPTER 5 HUMAN FACTORS: WORKERS, CONTRACTORS, SUPPLIERS AND CLIENTS

Key messages • Effective management of human factors is an important part of incident prevention. • While human factors are usually associated with workers, they apply equally to contractors, suppliers and clients. • A “whole-of-working-life” approach needs to be taken in worker management to integrate safety into every aspect of worker management. • Safety needs to be incorporated in selection considerations for clients, contractors and suppliers.

Case example

Human error causes electric shock JMW Developments Pty Ltd (JMW) was engaged as the builder for the construction of a site at 7 Stewart Avenue, Hammondville, New South Wales. It was constructing a two-storey mixed use building. The bottom level was for commercial premises and the top level was residential. The external walls of the construction were made of besser blocks. JMW engaged E & T Bricklaying for the laying of the besser blocks. The work crew consisted of five workers: Mr Kose, Mr Rahimi, Mr Hadi, Mr Haidary and Mr Giovenale. Mr Kose was an officer of E & T Bricklaying and was its representative on the site. The top courses of the besser blocks needed to be laid from an

external scaffold. JMW contracted with Ultra Group Pty Ltd for the erection of the scaffolding. E & T Bricklaying’s work on the site commenced in mid-April 2012. The contract between JMW and E & T Bricklaying was silent as to steel reinforcing bars. In the process of laying besser blocks, at about every second course, horizontal steel reinforcing bars needed to be laid in place; that is part of the process of laying blocks. On 26 April 2012, E & T Bricklaying had laid four courses of blocks. These were the top four courses. They were laid from the external scaffold. In the process of laying the courses, the block layers needed to handle horizontal bars on the scaffold to put them in place. Besser blocks are about 400 mm x 200 mm. They are 150 mm, 200 mm or 300 mm in height. They are hollow. There is a section of block that goes across the centre of the hollow, being across the short side of the block. Accordingly, they have two hollow sections. Like bricks, they are laid offset. To complete the construction of a wall built of besser blocks, it is necessary that those hollows be filled with a concrete mix from ground to top. Like many forms of concrete mix, this mix requires steel reinforcing bars. These bars, in this case, were to be inserted from the top of the wall when the erection of the wall was complete. The task of filling the hollows with the concrete mix was to be undertaken by a concreter.60 Mr Rahimi was placing the vertical reinforcing steel bars in place. He had successfully inserted three to five bars without incident. When he was handling a steel bar while standing on the scaffold, the bar came into contact with nearby low voltage overhead wires. As a result, Mr Rahimi suffered an electric shock.61 To err is human Human error is part of life and work. While competence, skills and experience can reduce the scope for simple errors, errors cannot be eliminated from work since humans are involved. To err is human. For far too long, accident analysis focused on human

error. An incident would be analysed; the direct cause would be identified as human error and the worker would be disciplined for their error. Thankfully we have moved on from that thinking and now recognise that errors occur at the pointy end of work because of conditions that the system provides to workers, which are created at the blunt end through poor workplace design, resources, systems and instructions. E & T Bricklaying was found guilty of breaching its duty of care to Mr Rahimi because, among other things, it failed to ensure its workers did not use the scaffolding at the site while working with metal material within four metres of overhead power lines, in accordance with the Code of Practice for work near Overhead Power Lines and Australian/New Zealand Standard Guidelines for Scaffolding, AS/NZS 4576:1995, unless a risk assessment had been undertaken which identified the hazard of the overhead power lines and control measures had been put in place such as arranging for the power lines to be de-energised during the work; separating the hazard by erecting a physical barrier; using an observer to warn workers if the materials they were handling were about to come into contact with the overhead power lines; and deploying visual indicators such as “tiger tails”.62 It was fined $80,000.63

Systems must be designed in a manner which is sensitive to and cognisant of, human error. Professor Trevor Klotz, an academic who dedicated a lifetime to investigating the lessons from industrial accidents, is famous for saying that to say that an accident is caused by human error is like saying that a fall is caused by gravity. Both are correct but not terribly instructive. It is far more instructive to try to understand why that error occurred. That is, why was the system intolerant to the error, given that it is inevitable that a worker will make an error in their work at some time. Introduction to human factors

The United Kingdom’s Health and Safety Executive (HSE) defines human factors as follows: … environmental, organisational and job factors, and human and individual characteristics which influence behaviour at work in a way which can affect health and safety.64 The effect can be positive or negative. By being mindful of human factors, organisations can minimise the instances of human error leading to industrial accidents. But they can equally improve safety performance by seeking to design premises, plant and processes in a manner that is more convenient to workers, and works with human tendencies — designing the work environment to suite the human rather than forcing the human to adapt to the work environment. That is, job tasks should be designed to take into account the limitations, strengths and preferences of human performance; the job should be matched to the person both physically (including the design of the workplace) and mentally (the worker’s information and decisionmaking requirements, as well as their perception of tasks and risks).65 Mismatches between job requirements and worker capability provide the potential for human error.66 People bring to the job, personal attitudes, skills, habits and personalities which can be strengths or weaknesses depending on the task demands.67 This is true of clients, suppliers, contractors and workers. Individual characteristics influence behaviour.68 Their effect on task performance may be negative and may not always be mitigated by job design.69 This is because some aspects of personalities are fixed and cannot be changed.70 Others (eg skills and attitudes) however, may be changed and enhanced.71 Figure 17 — UK HSE Human Factors Model (Source: HSG 48)

Organisational factors have a significant influence on individual and group behaviour.72 Organisations need to establish their own positive health and safety culture.73 The culture needs to promote employee involvement and commitment at all levels.74 The organisational factors component was discussed in the context of leadership in Chapter ¶3. To the extent that this relates to the role of officers in creating the conditions for a positive safety culture, it is also discussed in Due Diligence: Duty of Officers. The job tasks relate in part to the design considerations discussed in Chapter ¶4. This chapter explores the “individual” component of the human factors model (ie contractors, suppliers and clients). While workers are the only individuals in contemplation in the human factors model, the

individuals within each of the categories of contractors, suppliers and clients of PCBUs create similar issues for PCBUs through their attitudes and behaviours. Effectively managing these issues minimises the risks to health and safety and, importantly, increases the resilience of the safety management system. Interestingly, regulators can also have an impact on safety, including the safety culture. That impact may be positive, but it may also be negative, depending on the competence and attitude of the individual inspector. This is rarely discussed in the context of human factors or, indeed safety, with the notable exception of major disaster reports. It is the topic of the fifth book of this series, Due Diligence: Dealing with Regulators. Figure 18 — People impacting on safety outcomes

Workers The most obvious category of individuals interacting with complex systems is the worker category. Regardless of the extent of the planning and design considerations, worker safety cannot be achieved without taking into account worker interaction with systems and seeking to create a working environment where workers are less prone to human error and less likely to deviate, intentionally or unintentionally, from the safe working procedures (unless it is safer to do so).75 Workers include employees, labour hire workers, volunteers, students on work experience and outworkers. Although workers include contractors, subcontractors and employees of contractors and

subcontractors, the effective safety management of contractors is discussed in the section “Contractor safety management”, below. That is, with the exception of “sham contractors” (ie contractors who are in truth, employees, but masquerading as contractors for tax avoidance or entitlement avoidance reasons, or both), contractors are not covered by this section. Safety in job specifications and interviews Effective worker safety management begins prior to employment. Safety needs to be incorporated into the job specifications of any position being advertised and must form part of the assessment criteria for that position. That requires consideration of the safety competencies required in the position. It also requires asking the candidates for the position, questions about their safety performance in their previous employment and asking them questions about how they would fit into the safety culture of the PCBU. The effect of this is twofold: (1) it assists with the selection of candidates who have values and attitudes on safety which match those of the PCBU (and therefore, will display behaviours that are consistent with the safety culture of the PCBU), and (2) it sends a strong message to the prospective employees that the PCBU values safety at least at the same level as production. Safety psychometric assessment Consistent with this approach, an assessment should be made of short-listed candidates’ attitudes and values in relation to safety and the suitability of their risk profile for the position they are applying for. In that regard, our understanding of behaviours and attitudes has evolved considerably over the years. Psychological tests in recruitment are now commonplace, as organisations compete to develop and maintain an organisational culture and ensure that the people they recruit are a “good fit” within that defining culture. Within that context, it is surprising that not more is done in the area of assessing prospective candidates’ attitudes to safety as part of the recruitment process.

A candidate with a positive attitude to safety can contribute greatly to a positive safety culture within the organisation — from bringing enthusiasm, ideas and energy to engaging with the safety management policies and procedures. Conversely, a candidate with the wrong attitude to safety can cause considerable damage to the organisational culture and the effectiveness of the organisation’s safety management system. Once recruited, a great deal of resources and effort may need to be exerted by the organisation to influence the new recruit’s behaviour because of a deficiency in their attitude — something which may have been capable of being detected as part of the recruitment process. Of course, if all an organisation does is attempt to filter prospective employee attitudes, it will achieve very little by way of safety culture improvement. Behaviour can be managed within the structure of an effective management system. However, having a workforce with the right attitude undoubtedly helps. At the very least, it eliminates the threat posed to the culture from the recruitment of that candidate. This is particularly an issue for senior workers and, indeed, for the recruitment of officers, including nonexecutive directors. Medical assessment It is also useful in the context of pre-employment screenings to undertake a pre-employment medical assessment which also includes an assessment of mental health. This exercise is less about preventing an otherwise qualified candidate from being recruited (that would be unlawful unless their medical condition meant that they did not meet the inherent requirements of the job), than it is about using it as a benchmark on such issues as hearing loss due to occupational noise exposure (for example). It may also be relevant in relation to identifying any restrictions that may be necessary for ensuring the health and safety of the worker at work. Pre-employment and continuous medical assessments are a requirement in a number of industries, such as rail. They may also be useful in other industries for certain safety critical roles. Employment contract The employment contract is the legal instrument that records the

expectations of both the employer and the employee for the duration of the employment relationship (and beyond). It is surprising, therefore, that such contracts rarely contain provisions setting out the expectations of the employer of the worker when it comes to safety. It is both appropriate and necessary. The employment contract should include a requirement for the worker to take reasonable care with respect to their health and safety and the health and safety of others. It should also include a requirement for them to follow all relevant policies and procedures dealing with WHS. Importantly, it should include a duty to report WHS risks and hazards the worker becomes aware of, including breaches by other workers of health and safety requirements. This is particularly crucial for dealing with the issue of workplace bullying. A PCBU does not stand a chance of combating workplace bullying unless instances of bullying are reported by workers. Victims of bullying will rarely report that they are being bullied. There are many reasons for this. First, they may fear retribution or may not want to cause any trouble. Second, they may be embarrassed or feel responsible in some way. Third, it is often the case that bullying behaviour comes entangled with other relationships (friendships in some cases and romantic relationships in other cases). This makes reporting less likely. Early detection of inappropriate behaviour and the elimination of further repetition of the bullying will minimise the psychological impact on the victim and may even prevent harm to the victim. The reporting of incidents also allows an incident to be investigated and for underlying organisational factors to be detected and corrected, so that the bullying is not repeated by the perpetrators or anyone else. Figure 19 — Framework for preventing bullying

Induction The first interaction of a newly recruited worker with their new employer is usually through the induction process. Through that induction, they are introduced to various aspects of the PCBU’s processes, procedures, values, expectations and tools for performing their work. It is important at that stage to ensure that workers are inducted in the safety management system and the values and expectations of the PCBU in relation to safety. Such induction must be supplemented with a training and knowledge management program to update the worker on changes in the system and refresh and supplement the expectations of the PCBU in relation to safety. It also serves to enhance the understanding of the worker in relation to safety principles so that, over time, the worker gains a deeper understanding of the underlying principles that underpin safety in the PCBU’s operation. Promotion Organisations recognise that it is the middle management team who are the key to enforcing the safety management system, shaping the safety culture and delivering better safety outcomes. Yet safety performance, knowledge, attitudes and awareness rarely feature in the decision to promote a person to such a leadership role. Rather, operation competence tends to be the prominent, if not only, criterion. By elevating safety performance, attitudes, knowledge and awareness

to a critical threshold to promotion, an organisation can signal to its employees that it takes these issues seriously. It also signals to the would-be managers that their performance will be assessed in part on their safety performance — reinforcing the need for them to maintain their focus on safety management. Climate surveys It is also important to proactively assess the culture of the PCBU and worker perception of health and safety commitment. This can be measured through safety climate surveys. The benefit of safety climate surveys is that they act as early warning signals to any deterioration in safety performance. In that respect, they are useful lead indicators of safety performance. This is because the perception of a decline usually precedes an actual decline, unless there is an intervention. That is, people notice attitudes changing before those attitudes translate into action through behaviours or inactions, as the case may be. In any event, measuring attitudes reinforces the message that safety is important. What is measured is done. If attitudes are measured, people will be more conscious of them. They will pause and reflect and will often record what they want those attitudes to be, creating momentum for that improvement. In other words, just by measuring safety through a safety climate survey, the PCBU can drive a marginal improvement in behaviours which ultimately will translate into better safety performance. The emphasis on attitudes as part of a people management and leadership strategy is not uncontroversial. Krause et al76 have argued that attitude is not a precursor to behaviour.77 Behaviour can be managed effectively, and with it will come the shift in attitudes.78 Cameron79 argues that behaviour does not occur in a vacuum. The relationship between attitudes and behaviour is more complex. Effective management of behaviour requires an analysis of the person, their environment and their behaviour. In that model, values and attitudes are more “rusted on” than Krause et al would have us believe and, as such, behaviour management on its own will have limited effectiveness in securing long-term shifts in culture. One can take that argument one step further. Attitudes and values are

not only affected by the working environment; they are also affected, if not shaped, by the social environment and the personal experiences and lifestyle of the individual. This is why there is an increasing recognition that the next layer in the organisational safety factors model is indeed the national culture. Therefore, behaviour-based programs which focus only on the workplace are doomed to fail. A more holistic approach is required to change the behaviour of the individual and not just their working behaviour. This point is best illustrated in the context of occupational health. A stress management program will be utterly ineffective to manage stress at work if an employee is exposed to significant stressors in their personal life. A health and wellbeing program cannot end at the workplace doorstep. Fatigue management cannot be entirely workplace-focused. An employee’s behaviour in their personal life will impact on their fitness for work. If the organisation focuses only on rostering and shift work arrangements, the program will be ineffective in managing the risks of fatigue. Effective worker safety management therefore requires emphasis not only on recruiting people with the right attitudes and values with respect to safety, but also on constant reinforcement of those values and attitudes through workplace programs aimed at whole-of-life health, safety and wellbeing. Influencing behaviour so that it becomes “second nature”, regardless of whether the person is at home or at work, will have a far more lasting impact on safety culture than merely enforcing behaviours through a “command and control” or “stick and carrot” approach. Importantly, if behaviour is learnt, it can also be unlearnt quickly. This argument is often used in the context of changing bad behaviour into good. But, it equally applies to the need to constantly reinvest in maintaining positive behaviour. This requires reinforcement of the critical safety behaviour at induction and then at subsequent regular training. It also requires that safety values be entrenched in performance assessment and measurement, including remuneration reviews and, critically, promotions. Performance management

Safety should be factored into performance management, both directly and indirectly. First, if a worker (regardless of seniority) fails to comply with a requirement which they were aware of (ie they were trained in it and were competent to follow it), they should be subject to performance management in the same way as would happen for any other underperformance issue or breach of other policy. This is the requirement of a just culture, contrary to common belief. A just culture is not a “no blame” culture. It is simply a culture that recognises that human error is normal and expected. However, a worker must be held accountable for deliberate deviations from known procedures. If the PCBU fails to do this, then this will have a negative impact on the long-term safety culture. A worker in that position is not just compromising their own health and safety; they are also compromising the health and safety of their fellow workers. A PCBU that fails to act is, in effect, sending the message to workers that the PCBU does not really care about their health and safety. This is important because, often in unionised workplaces, there is a lot of industrial pressure on the PCBU not to discipline a worker in that context. The price for that short-term industrial harmony may be paid via declining safety standards. This is not what is anticipated by a just culture. Importantly, these principles must be applied to senior workers, and not only junior workers. For example, a manager who breaches the fatigue management policy by rostering workers to do double shifts, contrary to the policy, must be held accountable for such a breach through the performance management mechanism. Second, where a worker is being performance managed, the risks to health and safety associated with that performance management must be taken into account. These risks relate not only to the impact on the mental health of that worker as they undergo counselling, but also to the impact of those who may be affected by their work. A worker undergoing performance management will invariably be distracted. They may, in some cases, also become disgruntled. This needs to be factored into the planning of the performance management, particularly if the person has a safety-critical role. The controls that may be implemented might include (for example) rostering additional

support. Exit interviews It is often said that workers are rarely free to express their own opinions in relation to safety because of fear of retribution. Even in PCBUs, where greater effort is put into reassuring workers of confidentiality of their feedback or of the commitment of the PCBU to safety improvements, some hesitation still remains. In that regard, the exit interview (held when an employee has already given notice of the termination of their employment) gives the PCBU a rare opportunity to assess their performance unfettered by that implicit threat. As such, it is important that the departing worker be asked questions about the safety performance of the PCBU during their employment. Questions could be asked about whether they themselves were ever exposed to a risk to their health and safety, or whether they made a complaint about a safety matter (if this was the case, then a follow-up question might be about their experience in having that matter dealt with). Questions could also relate to their perception of the PCBU’s safety culture. There could also be an opportunity provided for the departing worker to provide suggestions on possible improvements. Organisational structure One hurdle to effective safety management of workers is the segregation of people management from work safety management. People management is often not considered to be part of safety management. Instead, it is considered a discrete and separate (albeit related) discipline. Indeed, quite perversely, safety management is often regarded as a subset of people management. This traditional formulation is in urgent need of reconsideration. Far from being a subset of people management, effective safety management depends on effective people selection, training, performance assessment and management, mentoring and discipline. That is, if safety management of workers does not feature effective safety risk management in the recruitment, induction, performance assessment, reward and recognition, promotion and performance management of workers, it will be ineffective. Figure 20 — Safety management through working life cycle

Contractor safety management The use of contractors creates unique challenges for WHS management. While contractors are often engaged to perform work by organisations because of their specialised knowledge or expertise, their involvement can often create health and safety risks. There are a number of factors that contribute to this increased exposure to risk. Contractors are typically new to the worksite. They are not familiar with it, its peculiar hazards, site rules, activities on site, position of amenities and emergency procedures. Because they are outsiders to the organisation, they do not have immediate access to the flow of information and communication that an employee would have about activities on the site. They would not have had access to training in the health and safety management system.80 Furthermore, contractors are often remunerated based on the project. That is, they have an economic incentive in completing the project as quickly as possible. This creates economic pressures on processes that are perceived as “slowing down” the project, such as WHS controls. This attitude can be expected to be inversely correlated with the size of the contractor. The smaller the contractor, the more likely it is that they are juggling several projects at the same time. They are

likely to perceive WHS controls as only being there for their own protection. In that regard, they would be willing to “cut corners” because the contractor perceives that they are the only persons at risk. In contrast to this increased risk, because of the nature of the relationship, the organisation has less control over the activities of a contractor than it would otherwise have, had the work been done by one of its own employees. Similar issues arise in relation to labour hire workers. The 2005 report of the Victorian Parliamentary Inquiry into Labour Hire Employment in Victoria identified a range of factors affecting the workplace health and safety of labour hire workers.81 The report was cited in the Stewart-Crompton Review as an example of the changing nature of work. The factors identified by the Victorian Parliamentary Inquiry included economic pressures on labour hire workers, fragmented lines of responsibility and communication, uncertainty with the delineation of workplace health and safety responsibilities between labour hire agencies and host employers, and limited provision of training by labour hire agencies or host employers. Against this background of increased risk, there is an unprecedented increase in the use of contractors and labour hire workers. Since 2004, the proportion of independent contractors has remained at 8.2% of total employment, indicating that the number of independent contractors has grown at a similar rate to that of other forms of employment in this period. Australian Bureau of Statistics data indicates that 3.9% of employees were on-hired through agencies in 2002.82 This represents a tripling of the proportion of labour hire employees from 1.3% in 1998 and a quadrupling from 0.8% in 1990.83 Practical challenges with managing contractors There is little doubt that managing contractors is one of the most challenging components of a safety management system and a duty holder’s duties. Many high-profile incidents have ineffective contractor management as their root cause. The Montara and the Deepwater Horizon incidents are but two examples.

The Montara incident was the worst oil spill in Australia in over 20 years. The Deepwater Horizon incident was the worst oil spill in United States history. Both had contractor management as their cause — coincidentally, the ineffective management of the same contractor, Haliburton. Stage roof collapses at two separate concerts for famous pop artist Madonna also demonstrate the same point. The incidents occurred in the preparation for the Los Angeles (United States) and Paris (France) concerts, as part of the “Sticky & Sweet” world tour in 2008–09. In November 2008, E S Group was engaged as a contractor to construct the stage for a Madonna concert at the LA Dodger Stadium. The stage collapsed during construction. The same company was retained in the following July to construct the stage at the Velodrome Stadium in Marseilles (France) as part of Madonna’s French leg of her global tour. Two workers were killed and eight others injured while constructing the stage, when the unfinished roof collapsed on top of them. The roof became unbalanced while being lifted by four cranes, toppling one of them. The concert was cancelled by city officials and a manslaughter investigation was conducted in relation to the accident. Exotic examples such as these are not necessary to illustrate the challenges of contractor management. Australian case law is littered with examples of ineffective contractor management causing incidents and resulting in prosecutions against the principals, contractors and subcontractors. Case example

Removal of electrical cabling — work method statement left wanting In Inspector Victor Page v Redlan Pty Ltd,84 Westfield Shopping Centre Management Co Pty Ltd engaged Redlan Pty Ltd to de-fit Shop 1112 at the Westfield Shopping Centre at Tuggerah. Westfield leased and managed the shopping centre at Tuggerah, New South Wales.

Redlan Pty Ltd engaged Mr Glen Viegas to undertake the de-fit work. Mr Viegas and a director of Redlan Pty Ltd, Mr Brendon Mulkearns, attended the “Westfield Design and Construction Site Induction” and developed a written work method statement and risk assessment for the de-fit work. The work method statement and Redlan Pty Ltd’s safety management plan did not refer to the removal of electrical wiring. Mr Viegas and Mr Mulkearns did not have any qualifications to perform electrical work. Mr Mulkearns arranged for the power to the shop to be terminated by DNA Electrical, which was confirmed in writing as follows: “The electrical disconnection of sub-circuits to this shop, except for one gpo under the switchboard is completed to AS 3000. And is ready for demolition.” The remaining electrical source in the shop was a double power point which contained live circuits. These were needed to allow power tools and lighting. Mr Mulkearns was also verbally informed by the two electricians from DNA Electrical that, after disconnection, there were live circuits in the ceiling, including data cables and emergency lighting connections, none of which had been removed. This information was not in the certificates from DNA Electrical. Mr Mulkearns advised Mr Viegas that it was safe to commence the de-fit work. However, Mr Mulkearns failed to advise that there were live circuits in the ceiling. The de-fit work commenced, and while it was being completed, Mr Viegas met with a cement renderer at the shop for a quote. While inspecting the shop, Mr Viegas used an aluminium ladder to cut down some wires and he was electrocuted. It was found on inspection after the incident that there were several live cables in the shop that supplied light to an adjacent shop, which appeared similar to the wiring left for the power tools and lighting. Redlan Pty Ltd was charged for breach of its duty of care for failing to provide a safe system of work with respect to the removal of electrical wiring of the shop and fined $65,000. In

sentencing, Kavanagh J said at [24]: “While the defendant had a comprehensive work method programme in place and had risk assessed its normal work procedures, that work method statement and risk assessment did not refer to the removal of electrical cabling. It also failed to identify the risk which arose when energised electrical cables were left in a ceiling during a shop refit. Westfield had been provided with a copy of the work method statement and the corporate defendant’s safety management plan. It also failed to identify the risk.” Her Honour continued at [25]–[26]: “In circumstances where the work involves the removal of electrical cabling there is an obvious risk. The concern of the court is that there seems to be no existing standard within the electrical industry which allows for the identification of each set of wiring. That is, after wiring is disconnected, identification tags are needed to determine which wires were live and which wires were disconnected. … In the circumstance, there was a complete failure to appropriately communicate the knowledge of the danger of electrified cable still being in the ceiling. The work method statement also failed to recognise and assess the identified risk.”

As discussed in Chapter ¶2, under WHS legislation, a PCBU must ensure, so far as is reasonably practicable, the health and safety of three categories of workers, ie those: (1) who are directly engaged by the PCBU (2) who are caused to be engaged by the PCBU, or (3) whose activities in carrying out work are influenced or directed by the PCBU. That is not the end of the matter, because PCBUs also have a duty to

ensure, so far as is reasonably practicable, that other persons are not put at risk from work in the conduct of their business or undertaking. Workers include contractors, subcontractors, employees of contractors and subcontractors, labour hire workers, outworkers, apprentices and trainees, students gaining work experience and volunteers, as well as employees and anyone else carrying out work in any capacity for the PCBU. There is no geographical limitation on that duty. It is not limited to “workplaces” (as is often assumed). The worker can be anywhere. In any event, the definition of “workplace” is such that anywhere a worker is or is likely to be, will fall within the definition of the “workplace” of the PCBU. The duty includes an obligation for the: • provision and maintenance of a work environment without risks to health and safety • provision and maintenance of safe plant and structures • provision and maintenance of safe systems of work • safe use, handling and storage of plant, structures and substances • provision of adequate facilities for the welfare at work of workers in carrying out work for the business or undertaking, including ensuring access to those facilities • provision of any information, training, instruction or supervision that is necessary to protect all persons from risks to their health and safety arising from work carried out as part of the conduct of the business or undertaking, and • monitoring of the health of workers and the conditions at the workplace for the purpose of preventing illness or injury of workers arising from the conduct of the business or undertaking. If a worker occupies accommodation that is owned by or is under the management or control of the PCBU, and the occupancy is necessary for the purposes of the worker’s engagement because other

accommodation is not reasonably available, the PCBU must, so far as is reasonably practicable, maintain the premises so that the worker occupying the premises is not exposed to risks to health and safety. That is, in a typical scenario, the company that engages a contractor (the principal) will have a duty of care with respect to the health and safety of that contractor, their subcontractors and employees of the contractor and their subcontractors. The legal dilemma is that the contractor is also a PCBU in their own right. So the question becomes: At what point does the PCBU character of the contractor come to the fore at the expense of their worker character? This is not a legal question only. It is a practical one as well. It is what judges like to call a “mixed question of fact and law”. The larger and the more sophisticated the contractor, the more important their PCBU status will be. The more specialised the expertise of the contractor, the more relevant their PCBU status will be. The legal position is not without problems. While a worker can be both a PCBU and a worker,85 as is the case for self-employed persons, a PCBU cannot be a worker86 since workers and officers are excluded from the definition of a PCBU. Furthermore, while contracting out of the legislation is prohibited, there is a clear recognition not only that the duties imposed are overlapping and not mutually exclusive, but also that each party that has a duty must discharge it to the extent of its control.87 In practice, the situation is simpler than first meets the eye. On some issues, it will be necessary to rely on the expertise of others after taking reasonable steps to verify their qualifications and the quality of their advice, and having managed those risks within one’s control, such as the working environment. On these issues, it is not reasonably practicable to do more. As such, the duty has been discharged. On other issues, such reliance would not be appropriate. In this case, more is expected of one. Most cases lie in the middle of that continuum. The duty extends to any events connected with the activities constituting the business or undertaking of the principal, such that the

contractors and/or their subcontractors or respective employees of the contractors or subcontractors can be said to be at work for the principal.88 For example, preparatory work at the contractor’s workplace done on behalf of the principal would relevantly be covered by the duty of care of the principal. That is, in a construction setting, prefabrication work for a project and the transportation of that prefabricated structure to the site, are relevantly within the scope of the duty. This is a point often missed. The question of whether the risk arose from work in the conduct of the business or undertaking is a question of fact to be determined on a case-by-case basis.89 The fact that the contractor is a duty holder in their own right, both in their capacity as a worker or in their capacity as a PCBU does not prevent the principal from also being relevantly a PCBU and having a duty with respect to that business or undertaking. In WorkCover Authority (NSW) v Techniskil-Namutoni Pty Ltd,90 Cahill ACJ held (at 8): “Although the work being performed at the time of the accident may have been the direct responsibility of a sub-contractor, who had engaged direct employees to assist in performing such work, that does not detract from the overall concept of an undertaking being conducted by Techniskil of which the work in question forms part. The same reasoning applies when considering whether the relevant area was Techniskil’s ‘place of work’. In my opinion, the circumstances of a particular work site may reasonably lead to the conclusion that it is the place of work of more than one employer and also that more than one employer is conducting an undertaking thereon.” The scope of the duty to contractors under the current Australian legislation is broader than that of its predecessor. The duty extends to the health and safety of workers “engaged, or caused to be engaged by the person” and workers whose activities in carrying out work are “influenced or directed by the person”, while the workers are at work in the business or undertaking.

The meaning of the phrase “conduct of the employer’s undertaking” was considered for the purpose of the predecessor legislation in Whitaker v Delmina Pty Ltd91 a decision of Hansen J in the Victorian Supreme Court dealing with s 22 of the Occupational Health and Safety Act 1985 (Vic). Those words are instructive in illustrating how far “at work in the business or undertaking” extends. In that case, his Honour said (at 280–281): “The expression is broad in its meaning. In my view such a broad expression has been used deliberately to ensure that the section is effective to impose the duty it states … The word must take its meaning from the context in which it is used. In my view it means the business or enterprise of the employer … and the word ‘conduct’ refers to the activity or what is done in the course of carrying on the business or enterprise. A business or enterprise, including for example that conducted by a municipal corporation, may be seen to be conducting its operation, performing work or providing services at one or more places, permanent or temporary and whether or not possessing a defined physical boundary. The circumstances must be as infinite as they may be variable.” The case was an appeal from a decision in the local court dismissing an improvement notice. The improvement notice sought to require a horseriding ranch, which was hiring out horses to the public for rides outside its premises, to have its customers accompanied by a supervisor. Hansen J overturned the decision, holding that the scope of the ranch’s undertaking extended beyond the ranch premises, and required the ranch to ensure that riders were not exposed to risks to their health or safety during the rides.92 Under the WHS legislation, the duty of the horseriding ranch would be that of a PCBU to another person who may be exposed to risks arising from work in the conduct of their business or undertaking. The relevant work would be work in the preparation and provision of the horses for horseriding by customers. Similarly, in R v Associated Octel Ltd,93 the appellant operated a chemical plant. During an annual shutdown of the plant for

maintenance, a contractor was engaged to repair the lining of a tank within the chlorine plant. One of the contractor’s employees was badly burned during the process.94 The appellant at first instance was convicted under s 3 of the Health and Safety at Work Act 1974 (UK), which concerned the duty of employers to non-employees under the United Kingdom’s legislation. The appellant appealed. The Court of Appeal dismissed the appeal. On appeal to the House of Lords, it was held that what had to be determined was whether the activity in question was part of the employer’s undertaking at its plant to have the chlorine tank repaired. The House of Lords held that it was. Lord Hoffmann, who delivered the judgment of the House of Lords, said at 1547–1549: “The question, as it seems to me, is simply whether the activity in question can be described as part of the employer’s undertaking. In most cases, the answer will be obvious. Octel’s undertaking was running a chemical plant at Ellesmere Port. Anything which constituted running the plant was part of the conduct of its undertaking … the question of whether an employer may leave an independent contractor to do the work as he thinks fit depends upon whether having the work done forms part of the employer’s conduct of his undertaking. If it does, he owes a duty under section 3(1) to ensure that it is done without risk — subject, of course, to reasonable practicability, which may limit the extent to which the employer can supervise the activities of a specialist independent contractor.” The question whether the cleaning of a factory on a weekend by a contractor was part of the factory owner’s undertaking was also considered in R v Mara.95 Parker LJ said at 90–91: “A factory, for example, may shut down on Saturdays and Sundays for manufacturing purposes, but the employer may have the premises cleaned by a contractor over the weekend. If the contractor’s employees are exposed to risks to health or safety

because machinery is left insecure, or vats containing noxious substances are left unfenced, it is, in our judgment, clear that the factory owner is in breach of his duty under section 3(1). The way in which he conducts his undertaking is to close his factory for manufacturing purposes over the weekend and to have it cleaned during the shut down period. It would clearly be reasonably practicable to secure machinery and noxious vats, and on the plain wording of the section he would be in breach of his duty if he failed to do so.” This passage was applied with approval by the House of Lords in R v Associated Octel Co Ltd.96 Lord Hoffman (with whom Lords Mackay LC, Goff, Jauncey and Mustill agreed) said the following regarding the above passage: “I entirely agree and I draw attention to the language used by the judge. It is part of the conduct of the undertaking, not merely to clean the factory, but also to ‘have the factory cleaned’ by contractors. The employer must take reasonably practical steps to avoid risk to the contractors’ servants which arise, not merely from the physical state of the premises (there are separate provisions for safety of premises in section 4), but also from the inadequacy of the arrangements which the employer makes with the contractors for how they will do the work.”97 The duty also extends to workers whose activities are influenced or directed by the PCBU. Case example

Absolute responsibility rested with self-employed engineer In Inspector Michael Dall v William Caesar Porta trading as Western Pacific Engineers,98 the defendant, a self-employed engineer, was convicted and fined $22,500 in relation to a fatal accident during the demolition of boilers at the BHP Newcastle plant. Under the WHS laws, he would be a PCBU, thus owing a

duty of care to the workers involved in the demolition work as workers whose activities in carrying out work are influenced or directed by him. Mr Porta was an engineer whose responsibility was to provide the methodology for the collapse of seven boilers at the BHP Newcastle demolition site. He was directing the induced collapse of a boiler which weighed 300 tonnes and which was 31 m in height. In preparing his calculations for the induced collapse, he failed to notice that a significant structural beam was already removed from the boiler. Mr Porta did not recall ordering the removal of the beam. He prepared calculations without this being taken into account. The boiler collapsed unexpectedly while two workers were in a cherry picker attempting to cut a column to the boiler. The collapsing boiler struck the cherry picker, killing one of the workers and seriously injuring the other. The defendant pleaded guilty to the charge of failing to provide a safe system of work through the failure to: • undertake a sufficient investigation into the structure of the boiler • accurately calculate the structural capacity of the columns • adequately risk assess the task, and • ensure the calculations took into account the state of the structure on the relevant date. In sentencing the defendant, her Honour, Kavanagh J, said at [23]–[26]: “Mr Porta was therefore obliged to exercise abundant caution and constant vigilance and take all practical precautions to ensure the safety of Mr Rees and Mr Edwards. While Mr Rees and Mr Edwards were employed by Demtech, the engineering responsibility for the demolition was Mr Porta’s.

He had an absolute obligation to protect the other workers … In his failure to properly calculate, his failure to recognise that the B11 cross beam was missing, as well as the failure to risk assess the work method, Mr Porta failed to provide the required risk-free environment for Mr Rees and Mr Edwards performing the cuts in the cherry picker. I find this a most serious offence.”

Contractor safety management steps There are a number of steps involved in effective contractor management. These include: • working out what type of contracting relationship you require — scoping • selecting the right contractor for that need and formalising the arrangements through a written contract — selection • ensuring that you have the appropriate level of instruction, induction and training, given the type of relationship involved — onboarding • ensuring that you have an effective system for performance management, auditing, review and revision — planning • ensuring effective supervision of the contractor in the performance of their work — operational, and • ensuring effective handover and feedback — handover. Scoping Before you engage a contractor, you need to work out your needs. Think about the following questions: • Do you require a specialist to provide services in an area where your expertise is limited?

• Do you simply require labour in an area where you have the relevant expertise? • Do you require a construction contractor to undertake a project? Other relevant questions include: • Will the contractor have control over their working environment? • Will there be a high degree of interaction with your employees or other workers? • What is the duration of the contract? • What is the risk profile of the work involved? • What access will you have to support the services? • What plant is required for the work? • Are there any accreditation or licensing requirements/restrictions for the work? • Are you permitted to subcontract the work lawfully? • What are the access requirements? • What are the logistics for transportation of plant and structures to the workplace? Often, the motivation for selecting one form of contractor over another is a misguided desire to minimise legal liability. That is the wrong approach. Work out what you need first. The legal risk management strategy should be secondary to commercial and operational needs. Indeed, the legal risk management strategy will be more effective if it is consistent with operational requirements because it will be less contrived or forced and, therefore, will be more effective as a result. For example, if the company has the relevant expertise internally and what it requires is labour to supplement that expertise, then treating

someone as an independent “specialist” contractor will not work. When tested in court, the court will see right through that approach because what will be reasonably practicable for someone with the relevant expertise is greater than what is reasonably practicable for someone engaging a true specialist. This means that artificial arrangements put in place solely to minimise legal risks are often doomed. What is required is a consideration of the requirements of the business and procurement of services reflecting those requirements. Once you decide what sort of contractor you need, then you can mobilise the strategy for managing that contractor according to that classification. Hence, one of the key considerations in effective contractor safety management is matching the strategy to the type of contractor. If you need a specialist contractor, you mobilise the strategy for selecting, inducting and managing specialist contractors. If you need labour which is supervised by you, then you mobilise the appropriate strategy. If you have in mind a major construction project, then you enter into those arrangements. Appropriate classification of the contractor is crucial. Three categories of contractors are commonly used: (1) contractors that operate within the principal’s safety management system (2) major project contractors (eg construction contractors), and (3) contractors with specialist skills or expertise (eg electricians, plumbers or consulting engineers). Contractors controlled by principal This is the situation where you have a need for additional labour to supplement your workforce. That may be a temporary requirement or it may be a long-term requirement as part of an outsourcing arrangement, such as facilities maintenance contracts or cleaning contracts. Historically, with these arrangements, the service would often be done

by the business. Through successive restructures, either the capacity of the business to fully provide those services is downsized with the ability to “flex up” for peak needs, or the whole support service is outsourced altogether. Either way, it would be difficult to explain why those persons performing the work as contractors are any different from those persons who perform the work as employees, or who would have done so but for the outsourcing decision. Both groups are defined as workers. Typically, the principal controls the day-to-day activities of the relevant workers. The workers will be working in an environment where they will integrate with direct employees of the principal. In some cases, employees of the principal will be performing equivalent or comparable work, or the principal would have had such capability previously, but has decided to outsource that work. These may include labour hire workers, or outsourced plant or facilities maintenance services by a single provider, usually with onsite presence. Indeed, even more complex contracts for the supply of services can also be structured in a way that resembles these arrangements because of the degree of control exercised by the principal on the relevant workers and the manner of remuneration which may essentially amount to an hourly or daily rate for labour. Some consulting engineering contracts on manufacturing sites can fall within this category. Large maintenance contracts on infrastructure controlled by the principal may similarly fall within that category. The principal’s and contractor’s agreement is usually no more than a schedule of rates with specific work directed by the principal when it arises. The most effective strategy for managing such contractors is in fact to treat them in the same manner as casual or short-term contract employees. That is, the principal must induct the workers into its safety management system and closely supervise their compliance with that system. It is the principal’s system that is applied and not an independent system designed by the relevant contractor. Case example

In Inspector Chris Henson v ABB Australia Pty Ltd,99 the defendant (ABB Australia Pty Ltd) pleaded guilty to the charge of a breach of its duty of care in relation to an incident involving labour hire workers. ABB Australia Pty Ltd was engaged to perform work at the Delta Electricity power station at Lake Munmorah. Two labour hire workers, Mr Pietraszek and Mr Cooper, were pushing a frame and, at the end where Mr Pietraszek was pulling, he was moved towards a void and fell. He fell approximately 3.5 m and, as a result, sustained spinal fracture injuries and fractured his right hip. During the course of work at the site, Mr Kerseboom, a supervising foreman, asked Mr Pietraszek and Mr Cooper whether they were all right and if they wanted to have their harnesses. Mr Cooper replied that he was okay without a harness and Mr Pietraszek did not reply. The defendant had adopted extensive safety methods. These included the identification of hazards, both at the initial stages of the project and on an ongoing basis. Also, the defendant set out in a safety management plan the requirement that a full parachute harness was to be worn by persons exposed to the risk of falls while working outside handrails. The work permit signed on the day of the incident noted the need to wear a harness and lanyard as fall protection. Haylen J noted that it was Mr Kerseboom’s obligation to ensure that the defendant’s requirements were complied with and that the labour hire employees did wear harnesses. His Honour referred to this as a “gap” in the defendant’s system. In addition, his Honour took into account subjective factors, including the fact that the defendant was prompt in entering an early plea of guilty and took thorough steps following the incident to address the risks associated with working at heights. The defendant was fined A$70,000.

Construction project contractors The second category of contractors is construction contractors undertaking major projects. Such work is typically work that can be isolated from the balance of the workplace, fenced off by hoarding and be in relation to which the principal will often have no relevant expertise. “Construction work” means any work carried out in connection with the construction, alteration, conversion, fitting out, commissioning, renovation, repair, maintenance, refurbishment, demolition, decommissioning or dismantling of a structure. It includes: • any installation and testing carried out in connection with an activity • the removal from the workplace of any product or waste resulting from demolition • the prefabrication or testing of elements, at a place specifically established for the construction work, for use in construction work • the assembly of prefabricated elements to form a structure, or the disassembly of prefabricated elements forming part of a structure • the installation, testing or maintenance of an essential service in respect of any structure • any work connected with an excavation or any preparatory work or site preparation (including landscaping as part of the site preparation) carried out in connection with construction activity, and • construction work that is carried out on, under or near water, including work on buoys and obstructions to navigation. It does not include: • the manufacture of fixed plant

• the prefabrication of elements as standard stock for sale • testing, maintenance or repair work of a minor nature carried out in connection with a structure, or • mining, or the exploration for or extraction of, minerals. The most effective safety management strategy for such work is to appoint the main construction contractor as the principal contractor for the work for the purposes of the WHS Regulations. This will require them to develop a WHS management plan for the construction work. It will also require them to collect safe work method statements from subcontractors they engage to perform the work on site, and to ensure that the subcontractors have the relevant general construction safety induction. Importantly, it will identify them as the person who is responsible for co-ordinating and supervising the construction activities on the site and, as such, having primary responsibility for health and safety. The WHS legislation does not require the appointment of a principal contractor. It deems the PCBU that commissions a construction project as the principal contractor, unless it appoints another person. If they engage a PCBU as the principal contractor for the construction project and authorise the PCBU to have management or control of the workplace to the extent necessary to discharge the duties imposed on a principal contractor, the PCBU so engaged is the principal contractor for the project. An exemption operates for owners of residential premises. If the owner of residential premises is an individual who engages a PCBU to undertake a construction project in relation to the premises, the person so engaged is the principal contractor for the project if the person has management or control of the workplace. Importantly, a construction project has only one principal contractor at any specific time. A PCBU that commissions construction work on a structure must, so far as is reasonably practicable, consult with the designer of the whole or any part of the structure about how to ensure that risks to health and safety arising from the design during the construction work are eliminated so far as is reasonably practicable or, if it is not reasonably

practicable to eliminate the risks, minimised so far as is reasonably practicable. Consultation must include giving the designer any information that the PCBU commissioning the construction work has, in relation to the hazards and risks at the workplace where the construction work is to be carried out. The designer of a structure, or any part of a structure that is to be constructed, must give the PCBU commissioning the construction work a written report. This report should set out the hazards associated with the design of the structure that create a risk to the health or safety of persons who are to carry out construction work on the structure or part, and are associated only with that particular design and not with other designs of the same type of structure. If a PCBU commissioning a construction project engages a principal contractor for the project, that person must give the principal contractor any information the person has in relation to hazards and risks at or in the vicinity of the workplace where the construction work is to be carried out, including a copy of the report given to them by the designer. The principal contractor for a construction project is required to erect appropriate signage that shows their details and the details of the site office. The signage must be clearly visible from outside the workplace where the construction project is being undertaken. The principal contractor for a construction project must prepare a written WHS management plan for the workplace, before work on the project commences. A WHS management plan must include: • names and positions of all persons at the workplace whose positions or roles involve specific health and safety responsibilities in connection with the project • arrangements in place, between any PCBUs at the workplace where the construction project is being undertaken, for consultation and co-operation in relation to compliance with their duties under the WHS Act and the WHS Regulations • arrangements in place for managing any WHS incidents that may

occur • any site-specific health and safety rules, and the arrangements for ensuring that all persons at the workplace are informed of these rules, and • arrangements for the collection and any assessment, monitoring and review of safe work method statements at the workplace. The principal contractor for a construction project must ensure, so far as is reasonably practicable, that each person who is to carry out construction work in connection with the project is, before commencing work, made aware of the content of the WHS management plan for the workplace, to the extent that it relates to the work to be carried out by the person and the person’s right to inspect the WHS management plan. The principal contractor for a construction project must review and, as necessary, revise the WHS management plan to ensure that it remains up to date. They are also required to ensure, so far as is reasonably practicable, that each person carrying out construction work in connection with the project, is made aware of any revision to the WHS management plan that is relevant to the construction work being carried out by the person. High risk construction work The principal contractor for a construction project must, before any high risk construction work commences, take all reasonable steps to obtain from each PCBU that is to carry out high risk construction work, a copy of the safe work method statement relating to that work. High risk construction work is defined in the WHS Regulations as construction work involving any of a number of specified types of risks. It is either: • construction work that involves: – a risk of a person falling more than two metres – demolition of a load-bearing or otherwise integral part of a

structure – the disturbance of asbestos – structural alterations or repairs that require temporary support to prevent collapse – a confined space – a tunnel or a shaft or trench deeper than 1.5 m – the use of explosives – tilt-up or precast concrete, or – diving, or • construction work carried out: – on a telecommunications tower – on or near pressurised gas distribution mains or piping – on or near chemical, fuel or refrigerant lines – on or near energised electrical installations or services – in an area that may have a contaminated or flammable atmosphere – on, in or adjacent to a road, railway, shipping lane or other traffic corridor used by traffic other than pedestrians – at a workplace in which there is any movement of powered mobile plant – in an area in which there are artificial extremes of temperature, or – in or near water or other liquid that involves a risk of

drowning. The principal contractor for a construction project must ensure that a copy of the WHS management plan for the project is kept for the life of the project and, in any event, for two years from the date of any notifiable incident. The principal contractor for a construction project must ensure that a copy of the WHS management plan for the project is made available to any person who is to carry out construction work in connection with the construction project, on request. The principal contractor also has an obligation to ensure: • safe storage, movement and disposal of construction materials and waste at the workplace • safe storage at the workplace or plant that is not in use • traffic safety in the vicinity of the workplace that may be affected by construction work carried out in connection with the construction project • the provision of adequate essential services at the workplace, and • site security. The appointment of a principal contractor does not mean that subcontractors are absolved of responsibilities. Subcontractors continue to have duties under the WHS legislation. These include obligations with respect to the preparation, implementation and review of safe work method statements. Subcontractors are required to prepare a safe work method statement for the proposed work. A safe work method statement must: • identify work that is high risk construction work • specify hazards associated with that high risk construction work and risks associated with those hazards • describe the measures to be implemented to control those risks, and

• describe how the risk control measures are to be implemented, monitored and reviewed. A safe work method statement must take into account all relevant matters including: • circumstances at the workplace that may affect the way in which the high risk construction work is carried out, and • if the high risk construction work is carried out in connection with a construction project, the WHS management plan that has been prepared for the workplace. The safe work method statement must be set out and expressed in a way that is readily accessible and comprehensible to persons who use it. The safe work method statement must also be reviewed if the risk control measures are revised. Subcontractors must ensure compliance with the safe work method statement. Case example

Inspector May v HG Nielsen & Co Pty Ltd & Anor100 is an example of a case where a subcontractor was prosecuted in relation to an incident involving its workers working at heights, without adequate fall protection. The case related to an incident at a site in Tempe, New South Wales. HG Nielson & Co Pty Ltd was engaged by ASB Constructions as a subcontractor to perform roofing work at the site. An employee of HG Nielson & Co Pty Ltd was attempting to climb down a ladder from the second storey of a house to the first floor. The ladder slipped and caused him to fall approximately 3.4 m onto the clip-lock roof below. The ladder was not tied off or footed and there was no other person holding the ladder as he attempted to climb down. The result of this was that the worker fractured his spine and right collarbone, broke three ribs and cut his head, which required 50 stitches. HG Nielson & Co Pty Ltd did not have

work method statements. The company was fined A$60,000 and its director was fined A$6,000.

Specialist contractors The most common category of contractors is the category of specialist contractors engaged by the principal to perform work that the principal is neither qualified to perform, nor sufficiently competent to supervise. Examples of these types of contractors include electricians, plumbers, geotechnical engineering services and mechanical services. However, the specialist expertise of such contractors does not render them outside the operation of the duty of care of the principal. They are workers just the same and are owed a duty of care in that capacity. To effectively manage such contractors, the principal must adopt a “whole relationship” approach to create safeguards and additional controls to compensate for its lack of ability to effectively scrutinise the technical component of the services. Selection The most critical aspect of contractor WHS management is contractor selection. Effective contractor selection can shield the organisation from WHS risks that would otherwise have eventuated had it not been for the quality of the contractor. This requires an assessment of the contractor’s WHS management system and WHS performance over the previous three years.101 To address the administrative burden of contractor selection and assessment, many companies have created preapproved contractor panels. This is also necessary to address urgent needs for services where the prequalification process simply cannot be accommodated in a practical way. Risk assessment Before engaging contractors, it is important that a high-level WHS risk assessment of the project is undertaken to determine what WHS risks are associated with the project and what information, instructions and

resources are required by the contractor. This is a situational awareness assessment. The aim is to better understand what is needed to be done, what are the things that can go wrong doing it, and what competencies, skills and resources are required to get it done safely. This risk assessment then forms the basis of the information provided to the contractor in the project induction.102 Induction or on-boarding The purpose of the project induction is to provide the contractor with adequate information and instruction in relation to matters affecting WHS risks. Particular emphasis needs to be placed in such inductions on projector site-specific WHS risks, which may not otherwise be known to the contractor. The induction must extend to all personnel performing work on behalf of the contractor.103 Planning — safe work method statement Each contractor must be required to undertake a WHS risk assessment and to provide a written safe work method statement setting out how they intend to perform the work safely, including what controls will be implemented and the responsibility for implementing those controls. This step is not about collecting paperwork but rather about adequate planning. The emphasis here should be on collaboration with the contractor to ensure that they understand the workplace specific or organisation specific risks, have thought through the process they will undertake and have considered the risk controls they will deploy (particularly on critical risks associated with the work). A safe work method statement must be reviewed whenever the circumstances underlying the safe work method statement change and at the beginning of each new working day to ensure its effectiveness.104 Operations — support and supervision The principal must provide adequate support to the contractor to assist them to perform their work safely. This is more than mere supervision; it is ensuring that the contractor has the resources they require and ensuring effective communication between principal and contractor for the safe delivery of the work.

The contractor must be supervised in their compliance with the safe work method statement.105 Case examples In Inspector Green v Barclay Mowlem Construction,106 a worker sustained serious leg injuries when the platform of the crane he was riding became detached from the tracks and he was forced to jump clear. The safe work method statement in relation to the work specifically prohibited “riding on the platform” during lifting. Boland J said at [13]: ”This is yet another example of a system design to avoid risks to health and safety not being properly implemented. There is little point in the principal contractor requiring its subcontractors to submit safe work method statements if they are merely filed in the bottom drawer, so to speak.” His Honour noted that the incident could have been avoided through more appropriate supervision and training by the defendant of not only its own employees but also employees of its subcontractors. Similarly, his Honour noted in Inspector Forster v A B John Pty Ltd t/as Peel Valley Machinery Service & D P John Pty Ltd t/as Peel Valley Machinery Service107 at [15]: “If a safe system of work exists but employees have not received the necessary instruction or supervision in relation to the safe system then it seems to me that the safe system might as well not exist.” Close-out and handover At the conclusion of the project, a formal handover must take place to ensure that the contractor has completed the project and that the site is safe and free from risks. This also provides an opportunity for a briefing by the contractor on the safe use of any plant installed or modified as part of the works. The handover also allows an assessment to be made by the organisation on the WHS performance of the contractor and their own performance in supporting the contractor. The latter means seeking and accepting feedback from the

contractor on the support provided through the life of the contract. This assessment can then provide feedback for the purpose of future selection of the contractor and improvement of the process.108 Figure 21 — Contractor management system

Client safety management While contractor management has now been accepted as being central to safety management, customer safety management is rarely considered. Most safety professionals are hesitant to intrude into the operational sphere by auditing customers or enquiring about the safety values of their customers. The exception to this general trend appears to be in the labour hire industry, which has been compelled through a series of cases, emanating initially in New South Wales in the occupational health and safety context, but now well spread nationally, to manage the safety risks to their employees arising from customer practices. The industry has reacted by putting systems in place for assessing their customers’ safety performance and undertaking risk assessments of workplaces where their employees will be placed. However, there is nothing unique about the labour hire

industry. Many industries “place” their staff at the workplaces of their customers. For example, this is a feature of professional services firms. While such placements are not part of a labour hire arrangement, they have all the hallmarks which attracted liability to labour hire companies — employees of an employer being required to perform work at the workplace of another employer under the second employer’s direction. The scope of the safety responsibilities is not just limited to “placements”. Many decisions made by clients impact on the safety of the organisation. Undue time pressures, for example, may result in fatigue-related risks (including in the transport supply chain). Design specifications may create safety risks in the manufacture, transport or ultimate use of the product. Furthermore, customer interaction with an organisation may create stress and other psychological risks because of inappropriate values or attitudes. The process therefore, begins with the selection of the customer. Businesses usually like to do business with like-minded people who share similar values and attitudes. Why then would that fundamental rule be suspended when it comes to safety? To manage the risks associated with customer activities, organisations need to assess every major engagement from two perspectives: (1) Are we in a position to deliver this contract, for this client, at this time and to these specifications in a safe manner? (2) Are the safety values, systems, processes and culture of the client compatible with our safety values, systems, processes and culture? Once the decision is taken to do business with the client, the question then becomes one of managing expectations in relation to scope. This is an important step, having regard to the horizontal consultation duty (ie the duty to consult, co-operate and co-ordinate).109 To properly scope the project or services, it is necessary to collect from the client sufficient information about the services or products required so that the PCBU can properly understand what is expected of them and adequately resource such work. Once that information is collected and

that consultation takes place, the PCBU is then able to confirm the instructions and the scope of the work. It is important here to be sensible about the scope. Too often a legalistic view that is impractical lands the PCBU in trouble once the incident ultimately takes place, principally because the services provided or product supplied is incomplete and therefore unsafe. A good example of this is discussed in Due Diligence: Horizontal and Vertical Consultation (see “Failure to consult designer kills woman” in Chapter ¶3 of that book). Case example

Clients can create safety risks Simpson Design Associates (SDA) was engaged to design a system for electrically operated bi-fold steel gates for a concrete batching facility. SDA produced the structural design for the steel frames and gates on the basis of instructions from the facility’s construction project manager. The gates’ electronic mechanism failed regularly, which meant that the gates had to be opened and closed manually by workers. This frequently required more than one worker due to the weight of the gates. In October 2003, a worker who was responsible for closing the gates at the end of the day had to manually shut the gates. His friend arrived to meet him and assisted. One of the gate leaves slid beyond its midpoint, fell and crushed the worker’s friend, causing her fatal injuries. No provision was made in SDA’s design for gate stops, or for the manual operation of the gates should the electronic mechanism fail. Ultimately, a number of different entities were involved in the design, supply and installation of various components of the gate system. During installation in November 2002, a worker narrowly escaped injury when one of the gate leaves slipped through its portal and fell. After this near hit and repeated recommendations from the installation company, stops were fixed to some of the gate leaves. SDA was not involved in the specification, design or

installation of the stops. Inspection of the gates after the incident showed that no further stops were fixed to the gates after November 2002. The bolted stop on the gate leaf which fell and caused the death was viewed to be grossly inadequate and not strong enough to stop the movement of the gate, whether powered by the electric system or operated manually. At first instance, the NSW Industrial Court found that the relevant design duty required SDA to: • make inquiries as to the purpose of the item to be designed, and • ensure the safety of the relevant part of the structure. This meant that SDA was required to inquire as to how the gates would be moved during day-to-day use, the type of electric mechanism to be used for the gates, and whether there would be a manual override. Essentially, SDA failed to consider how the gates would work — or fail to work — in practice. Having established this, SDA would then have needed to either advise the client that a stop would be necessary to prevent the gate drawing out of the portal, or specify a stop in the design. Fundamentally, the court found that SDA should have conducted a risk analysis as part of the design process. This would have drawn SDA’s attention to the fact that sole reliance could not be placed on the electric components of the system and that provision would need to be made for the safe manual operation of the gates. SDA was not entitled to ignore the future use or method of operating the gates just because it was responsible for structural elements of the design. The court found that it did not matter that others had designed and installed the inadequate stops after SDA provided its design; the inadequate stops were fixed on the gates because SDA had omitted to specify stops or a similar device in the initial design in the first place.

The court convicted SDA of the charge and imposed a fine of A$185,000. Other entities involved in the design, fabrication and installation of the gates were also convicted and fined separately. SDA appealed this decision before the Full Bench of the Industrial Court and again before the NSW Court of Appeal. Each court dismissed SDA’s appeal and upheld the judgment at first instance. The NSW Court of Appeal observed: “The risk to health and safety … was precisely the risk that was created by SDA’s design failure. The fact that a third party had an opportunity to eliminate that risk but did not do so successfully means that someone else also contributed to the existence of the risk. That does not mean that the Industrial Court was precluded from finding that SDA’s design failure substantially contributed to the risk.”

The client engagement must be captured in a contract that sets out the respective safety obligations of the parties, including the ongoing duty to consult, co-ordinate and co-operate in relation to health and safety matters. This is crucial, because it enables a mechanism for the continuous disclosure of information affecting health and safety. As part of the contract (or separately), the PCBU must develop a safety management plan in relation to the proposed work. That may require them to collect further information from the client, including further information in relation to the workplace where the services will be provided, or where the product or plant is intended to be used (for example). Separately from the development of such a plan, a resource needs analysis must be undertaken to identify the resource needs of the project, in terms of both the PCBU requirements and the client requirements. As discussed in another of the books in this series, Due Diligence: Duty of Officers, it is crucial that such an exercise be undertaken so that officers of the PCBU can be satisfied that they are discharging their resource requirements (the third element of due diligence). The resource needs analysis must be communicated to the

client as part of the horizontal consultation obligation. The safety management plan will then guide the implementation of the project or delivery of the service or product. Once the project is complete, it is important that the PCBU undertake a review of the project, including identifying key learnings (ie what we did well and what we could do better). Ideally, this should be done with the client. In any event, the learnings should be shared with the client to assist with future project delivery. Figure 22 — Client safety management

Supplier safety management The effective management of suppliers is key to effective safety management. The procurement management element referred to earlier is concerned with ensuring that plant and substances are

appropriately selected in regard to safety risks. However, more fundamentally, the supplier themselves needs to be carefully selected, based on an assessment of their safety values, systems, processes and culture. Once the supplier is selected, the PCBU needs to carefully reflect and scope out their needs, including undertaking a risk assessment of what plant or substance it requires, what features are necessary given the intended use, working conditions and working environment, and what information is relevant to provide to the supplier, to assist with the safety considerations in the supply. A supply relationship in the context of plant or substances used at work is rarely a one-off purchase. Information and maintenance will usually be required during the life of the plant. Inappropriate supplier selection therefore, may compromise safety standards in the organisation, even if the plant or substance that was acquired was risk assessed. It is important that a supplier is provided with adequate information regarding the PCBU’s requirements, including the intended use, working conditions and working environment, so that the supplier is able to modify, where reasonably practicable, the plant or substance being supplied, to effectively manage risks to health and safety or provide relevant information in relation to the safe use of that plant or substance in these conditions. The specifications should be captured in an agreement which includes the respective expectations of the parties in relation to the safety of the supplied plant or substance and the initial and ongoing provision of information regarding the safe use of the plant or substance. Such an agreement should also include provisions for assistance in the event of an incident in relation to both emergency response and incident investigation. The PCBU and supplier must also consult with each other in relation to the supply arrangements, including the safe transportation of the plant or substance. The PCBU must collect relevant information in relation to the safe use,

storage, (in the case of plant) maintenance and disposal of the plant or substance. The PCBU must also make arrangements for the ongoing disclosure of safety information in relation to the plant or substance as that information becomes available, whether from incidents, research, audit and inspection results, or general research. The PCBU should also review and revise the effectiveness of the supply arrangements to ensure continuous improvement. This may include a review of the future supplier selection process. It may include the provision of feedback to the supplier to improve the plant, substance design or information supplied. Figure 23 — Supplier safety management

Footnotes

Footnotes 60

WorkCover Authority of NSW (Inspector Moore) v E & T Bricklaying Pty Ltd [2015] NSWDC 369 [9]–[15].

61

Ibid [2].

62

Ibid [53].

63

WorkCover v E & T Bricklaying [2016] NSWDC 16. Its director Mr Kose was also convicted and fined $10,000.

64

HSE, “Reducing Error and Influencing Behaviour” Health and Safety Guideline (HSG) 48 (HSE UK, 2007) 5.

65

Ibid.

66

Ibid.

67

Ibid.

68

Ibid.

69

Ibid.

70

Ibid.

71

Ibid.

72

Ibid.

73

Ibid.

74

Ibid.

75

This qualification is part of creating a flexible culture.

76

TR Krause, JH Hidley and SJ Hodson, The Behaviourbased Safety Process (Van Nostrand Reinhold, New York, 1990).

77

Ibid.

78

Ibid.

79

I Cameron, “A social learning approach to the practice of safety management”, Safety and Health Practitioner (March 1997) 26–32.

80

Tooma, above n 39.

81

Parliament of Victoria Economic Development Committee, Final Report: Labour Hire Employment in Victoria (2005).

82

House of Representatives Standing Committee on Employment, Workplace Relations and Workforce Participation, Making it Work: Inquiry into independent contracting and labour hire arrangements (Australian Government, Canberra, 2005).

83

Australian Bureau of Statistics, Social Trends (Cat No 4102.0, Australian Government, Canberra, 2000); House of Representatives Standing Committee on Employment, Workplace Relations and Workforce Participation, Making it Work: Inquiry into independent contracting and labour hire arrangements (Australian Government, Canberra, 2005).

84

[2007] NSWIRComm 91.

85

Work Health and Safety Act 2011 s 7(3).

86

Ibid s 5.

87

Ibid s 16.

88

WorkCover Authority (NSW) v CSR Ltd t/as CSR Wood Panels (unreported); NSWIRComm No CT1176/94, 10 August 1995, (Bauer J).

89

R v Associated Octel Co Ltd [1996] 4 All ER 846; [1996] 1

WLR 1543. See also WorkCover Authority (NSW) v Technical and Further Education Commission (1999) 92 IR 251 and Mainbrace Constructions Pty Ltd v WorkCover Authority (NSW) (2000) 102 IR 84; [2000] NSWIRComm 239. 90

[1995] NSWIRComm 127.

91

(1998) 87 IR 268.

92

M Tooma, Tooma’s Annotated Occupational Health and Safety Act 2000: NSW (Thomson Reuters, 3rd ed, 2009) 38.

93

[1996] 4 All ER 846; [1996] 1 WLR 1543.

94

Tooma, above n 92.

95

[1987] 1 All ER 478; [1987] 1 WLR 87.

96

[1996] 4 All ER 846; [1996] 1 WLR 1543.

97

Tooma, above n 92.

98

[2006] NSWIRComm 214.

99

[2005] NSWIRComm 373.

100

[2006] NSWIRComm 403.

101

Tooma, above n 92.

102

Ibid.

103

Ibid.

104

Ibid.

105

Ibid.

106

[2003] NSWIRComm 197.

107

[2003] NSWIRComm 116.

108

Tooma, above n 92.

109

See M Tooma, Due Diligence: Horizontal and Vertical Consultation (CCH Australia Limited, 2013).

CHAPTER 6 ENABLING TOOLS: CONSULTATION, TRAINING, REWARDS AND RECOGNITION

Key messages • Effective safety management requires the systematic provision of support to workers, contractors, suppliers and clients to ensure safe outcomes. • Effective consultation with workers, contractors, suppliers and clients assists in better understanding the risks. • Training should be structured and should be competency-based. • Reward and recognition programs can be an effective way of motivating workers, contractors, suppliers and clients to achieve safe outcomes.

Consultation and communication Consultation and communication are identified in every relevant standard as being critical to effective safety management.110 Effective safety management requires the input and “buy-in” of the workers. Many hazards cannot be identified by mere observation. Worker experience is invaluable for identifying hidden hazards of that nature. The consultation requirements are discussed at length in another of the books of this series, Due Diligence: Horizontal and Vertical Consultation. Why consult workers? While companies may have an understanding of how processes are designed to work, they will rarely have a complete understanding of how they actually work in practice. It stands to reason therefore, that companies will rarely have full knowledge of the risks that emanate from production and the measures required to most effectively reduce those risks. Worker consultation assists companies to develop better

approaches to work health and safety. Consultation also serves to foster the conditions of trust and confidence necessary to secure worker commitment and engagement in health and safety initiatives. People are more likely to embrace an initiative that they have been involved in developing and refining, than one that is imposed on them without consultation. Engagement of workers is a condition precedent for a safety culture. As independent review panel chaired by former United States Secretary of State, James Baker, observed in its report on the BP US Refineries in the aftermath of the 2005 Texas Refinery explosion: In a positive process safety culture, all constituencies of the refinery’s workforce — from the plant managers to superintendents to HSSE professionals to hourly employees and contractors — regard safety as a core value, and all the levels of the workforce appreciate that process safety expectations are not considered secondary to productions goals, budgetary objectives, or other competing considerations.111 That engagement can only occur if workers feel included in the process through which policies and procedures are arrived at and feel that their concerns in relation to work health and safety matters are heard by management. Worker consultation enables this to occur. What is consultation? Safety consultation should not become a substitute for safety leadership. It is management’s responsibility to lead the safety agenda through proactive initiatives and programs. Safety consultation should not become a negotiation either. It is the input and experience of employees which should be actively sought, considered and respected, not their consent. The courts have consistently said of consultation that: “Consultation is not perfunctory advice on what is about to happen. This is [a] common misconception. Consultation is providing the individual, or other relevant persons, with a bona fide opportunity to influence the decision maker”.112

Consultation means the provision of relevant information about the matter to workers, and giving the workers a reasonable opportunity to express their views, to raise work health and safety issues in relation to the matter, and to contribute to the decision-making process relating to the matter.113 Consultation requires that the views of workers are taken into account by the PCBU and that the workers consulted are advised of the outcome of the consultation in a timely manner. This goes to the heart of the desire to engage with workers on work health and safety initiatives. It is not simply a matter of collecting information, or seeking out views; it is also closing the communication loop so that workers feel that they were part of the process and that they were heard on the issue, even if the ultimate decision was not the one which they advocated. It follows therefore, that consultation does not mean negotiation. The views of workers need not be adopted. The duty merely requires those views to be taken into account by the duty holder — the relevant PCBU. Performing organisations will have multiple consultation and communication platforms which allow a constant and efficient flow of information and input in relation to management decisions affecting safety. These may include regular team meetings such as “toolbox meetings”, electronic communication platforms, safety representatives and safety committees. Consultation not limited to workers Consultation and communication are not limited to workers, but extend to all other duty holders such as suppliers, contractors and clients. Complexity is a feature of modern business arrangements. Over several decades, businesses around the world have refined the nature of their business undertakings and trimmed their activities to core activities where they have a competitive advantage. In relation to other activities, alliance partners, joint venture partners and contractors are enlisted to complement the required service or product offering. That is, in a modern business or undertaking, the overlap between duty holders is common and significant. Such an overlap brings risks in its

own right. If each business is only focused on its own activities and the risks to its workers from its own activities, the interaction between the workers of other businesses operating in the same space or having an overlap or point of interface, will be missed. Add to this risk the potential for controls put in place by one duty holder to affect the controls put in place by another at the point of interface, and there is a real potential for disaster in some circumstances. The requirement to consult, co-ordinate and co-operate in these circumstances is fundamental to diffusing the potential risk to workers and others arising from that interface or overlap in business activities. Duty holders have an obligation to consult, co-operate and co-ordinate their activities with other duty holders who have duties that overlap with them. This duty is in addition to the primary duty of care imposed on each of them as PCBUs. Figure 24 — Consultation framework

There are three separate and interrelated components of the horizontal consultation duty. These components are: (1) consultation

(2) co-operation, and (3) co-ordination. A duty holder does not comply with the horizontal consultation duty unless they comply with all three components of the duty, to the requisite standard of reasonable practicability. The first component of the horizontal consultation duty is to consult other duty holders in relation to the manner in which each will discharge their respective duty. That means there is a duty to take counsel, provide relevant information, refer to the other duty holders for information and have regard to the other duty holders’ interests or convenience in making plans. The Work Health and Safety Consultation, Cooperation and Coordination Code of Practice (Code) provides that: “The objective of consultation is to make sure everyone associated with the work has a shared understanding of what the risks are, which workers are affected and how the risks will be controlled. The exchange of information will allow the duty holders to work together to plan and manage health and safety.” In that regard, the Code provides that consultation should include: “• what each will be doing, how, when and where and what plant or substances may be used • who has control or influence over aspects of the work or the environment in which the work is being undertaken • ways in which the activities of each duty holder may affect the work environment • ways in which the activities of each duty holder may affect what others do • identifying the workers that are or will be involved in the activity and who else may be affected by the activity

• what procedures or arrangements may be in place for the consultation and representation of workers, and for issue resolution • what information may be needed by another duty holder for health and safety purposes • what each knows about the hazards and risks associated with their activity • whether the activities of others may introduce or increase hazards or risks • what each will be providing for health and safety, particularly for controlling risks • what further consultation or communication may be required to monitor health and safety or to identify any changes in the work or environment.” In relation to the interrelationship between consultation, co-operation and co-ordination, the Code provides that: “consultation will determine which health and safety duties are shared and what each person needs to do to co-operate and coordinate activities with each other to comply with their health and safety duty.” The second component of the horizontal consultation duty is a duty to co-operate with other duty holders in the manner in which each will respectively discharge their duty. That means working or acting together or jointly. The Code provides that co-operation: “may involve implementing arrangements in accordance with any agreements reached during consultation with the other duty holder and involve not acting in a way that may compromise what they are doing for health and safety. Co-operation also means that, if you are approached by other duty holders wanting to consult with you on a health and safety

matter, you should: • not obstruct communication • respond to reasonable requests from other duty holders to assist them in meeting their duty.” The third component of the horizontal consultation duty is a duty to coordinate the manner in which each duty holder goes about discharging their respective duty. That means a duty to harmonise and combine the respective efforts of the duty holders. At the very least, the duty to co-ordinate means that the respective duty holders must ensure that any risks arising from the interaction of controls they have put in place, are managed effectively. The Code provides that: “The co-ordination of activities requires duty holders to work together so that each person can meet their duty of care effectively without leaving any gaps in health and safety protection … This will include making sure that the measures you each put in place work effectively together to control the risks. You should: • identify when and how each control measure is to be implemented • ensure control measures complement each other. Co-ordination of activities may include the scheduling of work activities so that each duty holder carries out their work separately. It may require work to be arranged in a way that will allow for necessary precautions to be in place or pre-conditions met before particular work is done.” Furthermore, the Code provides that, where work is not effectively coordinated, the parties should consult further to determine what should be changed. In practice, horizontal consultation requires vigilant planning and monitoring. Scoping phase

The first phase of horizontal consultation relates to the scoping of activities undertaken by the company. While this seems basic, it rarely occurs in practice. Core activities are readily identifiable, but peripheral activities are more likely to present any underlying vulnerabilities in relation to horizontal consultation. This is why a scoping exercise, where all activities of the company are identified, is a necessary first step. Once those activities have been identified, it is then possible to identify the extent of overlap or interface with other duty holders. Contractual arrangements can provide a useful prompt for duty holder activities that may overlap with the activities of the company. For example leases, licences, supply agreements, maintenance agreements and contracts for supply of services all evidence a relationship that will require an interface with other duty holders. This may be temporary or it may be permanent. It is that interface with which the horizontal consultation duty is concerned. It should be noted that the duty is not limited to situations where there is a contractual relationship between the parties. It is possible to have an interface in the absence of such a relationship. Neighbouring commercial enterprises will have an interface at their common boundary, where the activities of one duty holder may impact the workers of the other duty holders and vice-versa. That interface would be caught by the horizontal consultation duty. Consultation phase Once the interface is identified, it is necessary to engage in the consultation phase. This requires the collection of all relevant information from the other duty holders and the provision of all relevant information in relation to the company’s activities to that duty holder. Where contractual arrangements are in place, it is crucial that such contracts enable this sharing of information for the purpose of the horizontal consultation duty. Co-ordination phase — risk assessment The next step in the horizontal consultation process is to conduct a risk assessment of the interface. This can be conducted separately,

with the results shared, or it can be conducted jointly. A joint risk assessment is the preferred approach, but this will not always be practicable. The purpose of the risk assessment is to identify the risks arising from the interaction between the relevant activities at the point of interface and the interaction of the relevant control measures mobilised by each duty holder. Where risks are identified, they must be minimised, so far as is reasonably practicable, through the identification of relevant controls for each risk identified. The responsibility for the implementation and monitoring of each control must be agreed between the parties. It is conceivable that the responsibility for some controls may be shared. Co-ordination phase — interface management plan The agreement in relation to the controls, including the responsibility for implementing and monitoring them, should be recorded in writing in the form of an interface management plan. The plan should not only identify the controls and responsibilities with respect to the implementation of the controls; it should also establish arrangements for monitoring the effectiveness of those controls and a dispute resolution mechanism to allow health and safety issues arising at the point of interface to be resolved effectively. Co-operation phase The interface management plan must be subject to periodic review and, if necessary, revision. It should also be audited as part of the compliance audits of each of the duty holders. Where an audit by either party identifies a deficiency, such a finding would trigger the need for further consultation. A working group must be established to monitor the interface management plan. This working group may tap into subject matter expertise from each of the duty holders on a needs basis. It may also interconnect its activities periodically with the activities of consultation forums established for vertical consultation purposes such as health and safety committees. Safety incentive and motivation program A safety performance measurement, remuneration and incentive

framework can be useful in encouraging an organisational culture committed to better safety outcomes. As the old saying goes, “what is rewarded is done”. To drive better safety outcomes, an organisation should systematically set safety targets or key performance indicators (KPIs), review and assess the safety performance of its employees, and reward superior safety performance, both formally (through bonus and incentive schemes) and informally (through employee reward schemes). Effective incentive schemes can have both direct results (through a reduction of incidents) and indirect results (through improved morale and productivity and an increase in safety awareness among employees). For a performance indicator to be effective, it must be: • relevant (ie linked to the organisation’s safety strategic goals) • clearly defined and easy to understand • measurable • acceptable (ie perceived to be fair by employees and managers) • comparable (ie permits effective comparisons over time and to other organisations) • unambiguous (ie indicates improvement or deterioration in performance) • attributable (ie it allows management to influence results by taking action) • statistically valid • timely (ie it represents current performance), and • cost effective (ie it balances the costs of collection with the usefulness of the information captured). Australian Standard 1885.1-1990: Measurement of occupational

health and safety performance — describing and reporting occupational injuries and disease is used as the benchmark for safety performance indicators. It sets out definitions for key measures such as lost time injury rate (LTIR),114 lost time injury frequency rate (LTIFR),115 medical treatment injuries (MTI),116 medically treated injury frequency rate (MTIFR)117 and lost workdays (LW).118 However, organisations are increasingly aware of the limitations of negative performance indicators as a true measure of safety performance. The absence of an incident does not necessarily indicate a high level of safety. The United Kingdom’s safety regulator, the Health and Safety Executive (HSE), has summarised the issue as follows: “Too many organisations rely heavily on failure data to monitor performance. The consequence of this approach is that improvements or changes are only determined after something has gone wrong. Often the difference between whether a system failure results in a minor or catastrophic outcome is purely down to chance. Effective management of major hazards requires a proactive approach to risk management, so information to confirm critical systems are operating as intended is essential. Switching the emphasis in favour of leading indicators to confirm that risk controls continue to operate is an important step forward in the management of major hazard risks.”119 Measuring positive performance indicators provides an ongoing assurance that these risks are being adequately controlled. It also gives the organisation an early warning of any weakness in its control systems. This is critical in the context of major hazards, because learning from your mistakes in the context of a major hazard is not a palatable outcome. Giving early warnings of system failure before the risk crystallises, allows the organisation to avoid major incidents. This realisation has led a number of organisations to measure positive performance indicators. These indicators are concerned with the effectiveness of the implementation of safety processes and controls. Some examples of positive performance indicators include:

• employee perception of management commitment — conducted by survey • the percentage of staff with adequate occupational health and safety (OHS) training • the percentage of attendance at OHS committee meetings • the number of compliance audits undertaken, and • the number of toolbox meetings undertaken. Some examples of positive performance indicators concerning risk management, of which relevant parts can be included in every employee’s KPIs for the purposes of an incentive scheme, include the: • percentage of planned risk assessments completed • percentage of planned workplace inspections completed • percentage of reported incidents investigated • percentage of corrective actions closed out within 30 days • percentage of staff who have received health and safety training in the past 12 months • percentage of risk assessment recommendations implemented • percentage of OHS inspection recommendations implemented, and • percentage of incident investigation recommendations implemented. The difficulty with using positive performance indicators as the sole, or even main measure of performance, is that these measures are not standardised within or across industries. This limits the organisation’s ability to benchmark itself against its peers within the industry and in

similar industries. For that reason, where they are used, they have tended to be used in tandem with negative performance indicators. Indeed, the United Kingdom’s HSE recommends this dual approach to performance measurement. The HSE “dual assurance model” sees a lead indicator and a lag indicator assigned to each risk control system.120 This model leverages the benefits of both approaches to performance measurement to have a dual assurance that risk control systems are operating as intended.121 Figure 25 — United Kingdom HSE Leading Indicator Model (Source: HSE, 2006, Developing Process Safety Indicators)

Training, information and instructions The PCBU’s duty of care requires that adequate information, instruction and training be provided to workers to ensure their health and safety at work.122 Arguably, that obligation extends to other duty holders such as suppliers, contractors and clients, at least so far as it relates to information and instruction. Certainly, a failure to train workers is considered “a most serious dereliction”.123 In WorkCover Authority of New South Wales v Milltech Pty Ltd,124 Marks J summarised the requirement for training as follows: “Having created a safe working system, [the employer] must train and instruct its employees in the performance of that safe working system. Even an employee who is experienced or who is a supervisor must be properly trained. Such training and instruction must be appropriate and may take into account the experience of the workers. However, it must also take into account that sometimes employees are inattentive or careless.”125 Safety knowledge management The PCBU’s duty requires the implementation of a system of training. Ad hoc training of staff is not sufficient to discharge the strict duty imposed on PCBUs. That means identifying training needs, including competency objectives, and then designing a training program to address those needs. In considering the competency requirements, regard should be had to any bow tie analysis undertaken as part of the safety implementation plan and the critical risks or process safety risks identified (as discussed in Chapter ¶7). In relation to those competencies required to prevent a critical safety risk, the competency requirements must be developed not only for workers directly involved, but also for those likely to “act up” and those supervising them. Once the competency objectives have been identified, a training needs analysis (TNA) must be conducted to identify the gaps in competency requiring the delivery of training. The TNA must identify the resource requirements for the training program. The TNA must also specify the time frame for the delivery of the program and the

maintenance of the competency through refresher training. The training must be well defined and structured, taking into account the level of skill, age, literacy and language skills and experience of the workers concerned. It is a knowledge management program in the sense that the knowledge must be not only delivered and the competency assessed, but also maintained and supplemented. Worker understanding of the safety risks must be increased over time as their skill levels develop and they gain more experience. The training program should also include senior workers and officers. A supervisor needs to understand what their workers do, what hazards are associated with those processes and what the controls are to minimise the risks associated with those hazards. In Inspector Jose Barbosa v Newstart 150 Pty Ltd t/as Style Wise Interiors,126 Walton J, VP, held: “This evidence, in my view, indicates that there was not in operation at the defendant’s premises, what could properly be referred to as, a ‘system’ of ‘on-the-job’ training. By this I mean there was an absence of a coherent and systematic process for the instruction of employees … At the end of the day, the defendant was forced to rely upon the existence of the ad hoc system of training provided by tradespersons to demonstrate that such training probably occurred. That reliance demonstrates, in itself (and without the need to finally conclude whether the deceased did receive the required training), the failings in the system of training, as there can be no guarantee that the deceased was so properly instructed. This conclusion is all the more significant having regard to the tender years of the deceased and his position as an apprentice.”127 Training should include cross-training Training should include cross-training in different, but interdependent, roles. This gives a worker insights into what is required by the other workers fulfilling those roles, leading to more effective communication and deeper insights in risk assessments. On-the-job training will rarely be sufficient

While “on-the-job” training may be adequate to satisfy the obligations imposed on a PCBU, the standard of training required is very high.128 That is, “on-the-job training” will be only adequate to meet the statutory obligation if such training is itself adequate.129 Case example

Training employees with language difficulties In Awwad v Manuele Engineers Pty Ltd,130 the South Australian Magistrate’s Court observed that it may be necessary to use an interpreter when training employees with language difficulties. This case involved an incident where an employee (an Afghan refugee who had been employed for a period of 16 months) was seriously injured when a 1.6 tonne, 21 m steel beam fell on him as he attempted to roll it over using an overhead gantry crane and a sling with shortening hooks. On the day of the incident, the employee, whose duties included slinging, lifting and rolling steel beams, had been welding cleats end on, to the steel beam. The steel beam was placed on a number of welding stands that were about 800 millimetres high. The employee had to complete the welding work on both sides of the beam. The method used for the process involved an overhead gantry crane and a chain and hook sling. The hook sling prevented the beam from rolling too far by supporting the beam as it rolled. This enabled the crane operator to lower it, getting it on its other side. However, the hooks of the shortening chain became caught on the flange of the beam before the beam was taken up, and imparted a rotational movement that rolled the beam off the ends of the welding stands towards the employee, who was trapped beneath it. The employee sustained injuries to his left leg, which was broken in three places, as well as broken bones in his right foot, and required a skin graft and hospitalisation for 12 days. The employer was convicted and fined A$17,229.

Documentation of training While the lack of documented procedures will not always indicate a deficiency in the training provided by a PCBU, it may constitute an indication that the training was less comprehensive or systematic than what was required.131 Lack of training makes auditing of training more difficult and, in that respect, makes the safety management system more vulnerable. Review and revise The knowledge management program should be regularly reviewed (annually) to confirm it is effective for ensuring that workers have the competencies they need to perform the work safely. The learning from the review must then be fed back to the identification of competency requirements and the planning of the training. Figure 26 — Safety knowledge management

Supervision The duties imposed on a PCBU by work health and safety legislation necessarily imply some degree of supervision of workers by the PCBU. The extent of the supervision required varies, depending on the nature of the job and the experience and qualifications of the worker involved. It also depends on the nature of the risks associated with the work undertaken. Figure 27 — Supervision plan

As Fisher CJ observed in Inspector Davies v Prospect Electricity:132 “It is a version of the infinite regression of the supervision argument, which if accepted would mean that every well trained tradesman should be supervised or observed by a superior trained tradesman, and he seemingly in turn be supervised himself by someone even higher. The ‘lack of instruction’ submission relied upon founders on the same practical argument. No fully trained and experienced tradesman needs to be told to cross the road safely, or to be accompanied by a supervisor to ensure that he does do so. Similarly, a thoroughly trained and supervised tradesman, employed after exhaustive instruction … does not need to be advised not to grasp an unprotected wire energised by 11 KCV, nor in the real world should supervisors be on standby in case he does.” While this is true, some degree of supervision of even the most experienced worker, is usually required in order to discharge the duties imposed by the work health and safety legislation. This does not necessarily mean that someone needs to stand next to the worker at all times. However, close supervision of safety-critical junctures in

the work process is warranted. Taking a risk-based approach, a risk assessment of the system of work involved, identifies the high risks arising from the work being performed. In relation to these risks, controls will be identified to minimise those risks, so far as is reasonably practicable. For example, in electrical work, the risk of electric shock (with the potential for electrocution) may be a risk. The usual control associated with this is to de-energise the electrical apparatus (usually through isolation), tag the isolation (by placing a personal lock on the lock-out switch) and test de-energised. At that point, save for unforeseen energisation from a secondary source such as a generator, the risk of electric shock has been eliminated. Supervision of that task in the set-up of the job would be necessary, regardless of the skill set of the worker. In many industries, direct supervision may not be reasonably practicable. However, at the very least, the PCBU’s duty of care requires the PCBU to ensure that the circumstances in which workers find themselves do not expose them to risks, including risks arising from their own inattentiveness or carelessness. As noted earlier, in Inspector Green v Barclay Mowlem Construction,133 a worker sustained serious leg injuries when the platform of the crane he was “riding” became detached from the tracks and he was forced to jump clear. The safe work method statement in relation to the work specifically prohibited “riding on the platform” during lifting. The incident could have been avoided through more appropriate supervision and training by the defendant of not only its own employees, but also employees of subcontractors. Similarly, his Honour noted in Inspector Forster v A B John Pty Ltd t/as Peel Valley Machinery Service & D P John Pty Ltd t/as Peel Valley Machinery Service:134 “If a safe system of work exists but employees have not received the necessary instruction or supervision in relation to the safe system then it seems to me that the safe system might as well not exist.”135

That case related to an incident where the defendant’s employee was killed while attempting to jump out of a forklift as it was overturning. The employee had been attempting to lift a motor on a grass-covered hill when the forklift skidded on the grassy surface and rolled on its side. The employee was not licensed to drive forklifts. There was a crane available which the employee could have used for the task. Case example

Installation work on a live essential services switchboard In WorkCover v Kevin R Sheather Services Pty Ltd,136 the defendant was charged in relation to an electrical explosion which injured two labour hire workers performing electrical installation work as part of the refurbishment of the Woolworths store in George Street, Sydney. The explosion occurred while the workers were performing work on a live essential services switchboard. There was conflicting evidence as to whether the defendant had instructed the workers to perform work on the switchboard. The defendant’s evidence was that the workers were specifically instructed not to work on the switchboard. Peterson J accepted the defendant’s evidence and found that the prosecution had failed to show beyond reasonable doubt that the defendant had instructed the workers to perform work on the switchboard. Nevertheless, Peterson J found the defendant guilty of breaching one of the two counts it was charged with, for failure to supervise the workers. Peterson J said: “While it might be thought that a specific instruction to a worker not to perform a particular task might, in the ordinary course, absolve an employer from liability for a breach of that instruction, the fact that employees are enabled, in this case by the provision of appropriate special equipment and also opportunity, to perform the work raises a failure in the context of supervision.”137 Footnotes

Footnotes 110

Work Health and Safety Act 2011 s 46–47.

111

JA Baker, FL Bowman, S Gorton, D Hendeshot, N Leveson, S Priest, I Rosenthal, P Tebo, D Wiegmann and LD Wilson, The Report of The BP US Refineries Independent Safety Review Panel (2007) 60.

112

CPSU v Vodafone Network Pty Ltd [2001] AIRC 1189 at [25].

113

Work Health and Safety Act 2011 s 48.

114

Occurrences that resulted in time lost from work of one day or shift or more/the number of employees × 100.

115

Lost time injury rate per million hours worked.

116

Incidents leading to a single injury or multiple injuries requiring treatment by a medical practitioner/number of employees × 100.

117

Number of medically treated injuries in the period per million hours worked.

118

The number of workdays beyond the day of injury the employee was away from work because of the injury or illness.

119

HSE, Developing process safety indicators (HSE Books, London, 2006) 1.

120

Ibid.

121

HSE, above n 119, 2.

122

Work Health and Safety Act 2011 s 19(3)(f).

123

DPP v Esso Australia Pty Ltd (2001) 107 IR 285 at 287.

124

[2001] NSWIRComm 51.

125

Ibid [17].

126

[2002] NSWIRComm 64; (2002) 113 IR 78.

127

(2002) 113 IR 78 [84]–[89].

128

Genner Constructions Pty Ltd v WorkCover Authority of NSW (2001) 110 IR 57; and WorkCover Authority of NSW v Newstart 150 Pty Ltd (t/as Style Wise Interiors) (2002) 113 IR 78.

129

WorkCover Authority of NSW v Bituminous Products Pty Ltd [2001] NSWIRComm 43. [71]. See also WorkCover Authority of NSW v Pacific Dunlop Ltd t/as National Cables [2000] NSWIRComm 33 (Kavanagh J).

130

[2006] SAIRC 75.

131

Genner Constructions Pty Ltd v WorkCover Authority of NSW (2001) 110 IR 57 [62].

132

(unreported, Industrial Court (NSW), Fisher CJ, CT747/1991, 9 November 1992.)

133

[2003] NSWIRComm 197.

134

[2003] NSWIRComm 116.

135

Ibid [15].

136

[2001] NSWIRComm 74.

137

Ibid [32].

CHAPTER 7 PROCESS SAFETY AND CRITICAL RISK CONTROL Key messages • Low likelihood, high consequences events are missed by traditional risk management processes. • A PCBU needs to single out critical risks for special attention. • PCBUs must develop lead indicators for critical risks.

What are critical risks? While the risk management methodology provides a sound framework for systematically identifying, assessing and controlling safety risks, it has some limitations. Because of its methodical approach, risk management processes identify all risks and then proceed to make an assessment of those risks and, therefore, the priority and resources that need to be allocated to those risks. In making that assessment, the approach takes into account not only the consequences of risks, but also their likelihood. However, certain risks, while remote, have such severe consequences that they deserve attention disproportionate with their risk score. In the safety context, fatal risks fall in that category. These risks are called critical risks. In the oil and gas industry, they are called process safety risks as they are the catastrophic events arising from the production process. The terms are used interchangeably in this chapter. While critical risks are often defined as low frequency, high consequences events, they are better understood as risks of a catastrophic event, regardless of the likelihood. A high frequency, high consequence event does not cease to be critical; it is just that the traditional risk management approach operates effectively to address it. By contrast, traditional risk management is ineffective in managing high consequence, low likelihood events because the low likelihood

disguises the nature of the risk. However, their catastrophic consequences make them a priority for the officers of the organisation. By definition, every high-profile disaster falls within this category — from the Pike River mine explosion in New Zealand which killed 29 people, to the Deepwater Horizon disaster, or to the Upper Big Branch mine explosion in Virginia which killed 29 people, or to the BP Texas Refinery explosion. In each case, the event was preceded by a period of declining or zero lost time injuries and a misguided belief by management that it had safety under control because of the good “personal safety” record. Figure 28 — Critical risk safety management

The first step in critical safety risk management is to identify critical risks associated with the undertaking of the PCBU. “Tiger teams” (ie teams of experts assigned the task of investigating a problem) may be a useful way of identifying the critical risks. Critical risks are typically identified through a combination of site inspections, reviews of

relevant data (eg historical industry incident reports) and workshops involving stakeholders, including operations management and worker representatives. The aim of such workshops is to “red team” scenarios that may lead to catastrophic consequences arising from the operations (ie test the defences for vulnerability). While the actual incident and near-miss data of operations is relevant, local and international industry experience and the experience of similar or related industries can often be more fruitful in identifying critical risks. As such, critical risk “tiger teams” can benefit from experienced external facilitators to inject broader imagination to the exercise. The list of critical risks must be maintained. By identifying critical risks in this way, the effectiveness of those controls concerned with preventing them, can be singled out, monitored and reviewed to minimise the risks. This can be done with the aid of a bow tie diagram in relation to each critical risk. The bow tie analysis should be done by the workshop which was commissioned to identify the risks. Regular vulnerability analysis is also necessary to identify any weaknesses in the critical risk controls (eg because they have not been effectively maintained, or because there are organisational factors that are undermining their effectiveness, or because they are administrative controls and, therefore, vulnerable because of the potential for human error) or whether a critical risk control is missing. In relation to each critical risk control identified by the bow tie analysis process, the PCBU must identify a lag indicator and a lead indicator for that control (see the discussion in Chapter ¶6). The PCBU must also develop a proactive assurance program and a preventative inspection and maintenance regime in relation to those controls. Incidents including near misses provide learning opportunities to review and revise some aspect of the critical risk safety control system. This approach avoids the clutter that can sometimes be created by the risk management process and ensures that an assessment is annually made of the critical risks facing the organisation and the effectiveness of controls put in place with respect to those risks.

CHAPTER 8 EMERGENCY RESPONSE

Key messages • Effectively responding to an incident begins long before any incident occurs. • Development and implementation of an emergency response is crucial to the containment of the consequences of an incident.

Why develop emergency plans? The development of an emergency response is critical to a PCBU’s ability to minimise the consequences of a safety incident and discharge its duty of care.138 This involves determining the parameters of the emergency response and allocating resources to it, including securing management buy-in. It is then necessary to undertake a risk and vulnerability analysis and a business impact analysis. Based on these, response strategies can be developed, resourced, communicated and tested, and staff can be appropriately trained. Emergency preparedness is critical Effective emergency management begins long before the actual incident itself occurs. Disaster after disaster has highlighted the need for better emergency preparedness. The Presidential Report into the Exxon Valdez disaster for example, observed that: “The very large spill size, the remote location, and the character of the oil all tested spill preparedness and response capabilities. Government and industry plans, individually and collectively, proved to be wholly insufficient to control an oil spill of the magnitude of the Exxon Valdez incident. Initial industry efforts to get equipment on scene were unreasonably slow, and once deployed the equipment could not cope with the spill. Moreover,

the various contingency plans did not refer to each other or establish a workable response command hierarchy. This resulted in confusion and delayed the cleanup.”139

Exxon Valdez oil spillage disaster At just after midnight on 24 March 1989, the 987-foot tank vessel, the Exxon Valdez, collided with Bligh Reef in Prince William Sound, Alaska. A total of 11 tanks on the centre and starboard side of the vessel were damaged and within five hours, 10.1 million gallons of crude oil had been spilt. The resulting oil slick spread over 3,000 square miles and onto over 350 miles of beaches in Prince William Sound, a previously pristine environmental habitat. It is estimated that the spill killed approximately 250,000 seabirds, 4,000 sea otters, 250 bald eagles and more than 20 killer whales. The clean-up effort mobilised over 10,000 people, 1,000 vehicles and 1,000 aeroplanes for treating thousands of miles of beach. The efforts continued throughout 1992. The Prince William Sound oil spill contingency plan provided that the Alyeska Pipeline Company (Alyeska) was the first responder. Alyeska was ill-prepared for a disaster. Few pieces of equipment arrived at the spill site in a timely manner. By the evening of 24 March 1989, only two skimmers (both of which were full at the time) were circling the expanding oil slick. No containment boom was deployed and neither Alyeska nor Exxon had sufficient dispersant or the equipment, to deploy the dispersant. All this made a bad situation, far worse. The inadequacy of the emergency response resulted in the damage to the Alaskan coastline and wildlife being far more extensive than it may have been. Similar to the response plan for the Gulf of Mexico over 20 years later, the tools were not immediately available to respond to the disaster with speed.

Emergency plans must consider the operational environment of the organisation. If operations are in remote locations, or in another environment which increases the difficulty of any response (eg in deep water, in a location of significant environmental importance or in a conflict zone), consideration must be given to these factors in the emergency response plan. In these circumstances, a “cookie cutter” approach is unlikely to be sufficient. Emergency response plans must set out clear reporting lines and responsibilities so that the response is effective. Leadership of the response should come from the top. Personnel must be knowledgeable about their roles and be able to respond. Adequate training in emergency response must be provided to staff at all levels of the organisation who will be required to respond to the incident. Realistic “worst-case scenarios” must be considered, taking into account the operational environment of the organisation, including: • the failure of “fail safe” cut-offs, and • adverse weather conditions which hinder response attempts. Exercises which test the response system must be undertaken regularly. Paper systems are not enough. Emergency response plans therefore, need to be developed, rehearsed and tested in advance of an incident occurring. Emergency plans must be specific Emergency plans must be constantly reviewed and must be sitespecific. Take the Deepwater Horizon disaster as an example. The National Commission on the Deepwater Horizon Oil Spill and Offshore Drilling found: “If BP’s response capacity was underwhelming, some aspects of its response plan were embarrassing. In the plan, BP had named Peter Lutz as a wildlife expert on whom it would rely; he had died several years before BP submitted its plan. BP listed seals and walruses as two species of concern in case of an oil spill in the

Gulf; these species never see Gulf waters. And a link in the plan that purported to go to the Marine Spill Response Corporation website actually led to a Japanese entertainment site.”140 The commission recommended that the Department of the Interior require offshore operators to provide detailed plans for source control as part of their oil spill response plans and applications for permits to drill.141 It also recommended that the oil and gas industry create and maintain readily deployable resources for rescue, response and containment. Specifically, it recommended that large-scale rescue, response and containment capabilities be developed (including equipment, procedures and logistics) and enabled by extensive training, including full-scale field exercises.142

Heilongjiang coal mine explosion A similar lesson was learnt at horrendous expense in China in the Heilongjiang mine disaster. In one of the worst coal mine disasters, an explosion at the state-run Xinxing coal mine (in the north-east of China in Heilongjiang Province) claimed the lives of 108 miners. A total of 528 miners were working underground when the blast occurred at 2.30 am on 21 November 2009. The force of the explosion caused nearby buildings to partly collapse,143 littering the ground above with shattered glass and metal.144 According to official reports, when the blast erupted, safety staff at the mine noted a sudden and dangerous increase in gas levels and were rushing to evacuate the miners.145 The Xinhua News Agency reported that 420 miners escaped the blast.146 By 23 November, 12 more bodies had been discovered, raising the official death toll to 104. Four miners remained missing and rescue operations continued.147 By 25 November, the death toll had reached 107, as officials reported that two of the four missing miners had been found.148 Some of the survivors sustained serious injuries.149 Zhang Fucheng, an official in charge of rescue efforts, reported that the rescue was delayed by

gas levels and collapsed tunnels. Rescuers also faced near freezing temperatures in their attempts to free the miners.150 The explosion resulted from a massive gas build-up. The incident started with a gas leak in one of the shafts. As a result of poor ventilation, the gas rapidly filled the main tunnel, with the resulting blast shaking 28 of the 30 mining platforms in operation.151 The mine’s monitoring room received alerts of a sudden and extreme increase in underground gas levels, 53 minutes prior to the tragedy.152 There is controversy as to whether the staff in the control room responded adequately, or at all, to the alerts.153 Local authorities stated that all personnel were immediately told to evacuate the mine, but 108 miners were still underground at the time of the blast.154

Clearly, emergency response plans must be tailored to the critical risks of the organisation. Emergency response plans must make provision for responding to the disaster immediately, as delays in responding can increase the severity of the incident. Personnel must be knowledgeable about their roles and able to respond. Adequate training in emergency response must be provided. Where safety systems rely on operators to activate evacuation plans or safety cutoffs, consideration should be given to how these systems can be engineered, to avoid the risk of the operators misjudging warning signs. Exercises which test the response system, including measures for evacuation, must be undertaken regularly. Emergency response plans must set out clear reporting lines and responsibilities so that the response is effective. As mentioned previously, leadership of the response should come from the top. Risk to response workers People should not lose sight of the risks associated with emergency response efforts. The United States Occupational Safety and Health Administration (OSHA) assigned up to 40 inspectors to the task of ensuring that workers engaged in the clean-up activities associated

with the Deep Water Horizon spill were not exposed to risks to their health and safety, including risks arising from hazardous chemicals, reflecting OSHA’s perception of the risks involved.155 So fundamental are these overarching principles in incident response, that even the strict site preservation requirements under the WHS Act provide an exemption for these activities. Footnotes 138

Work Health and Safety Regulations 2011 cl 43.

139

SK Skinner and WK Reilly, “The Exxon Valdez Oil Spill: A Report to the President”, The National Response Team (May 1989) 1.

140

National Commission on the Deepwater Horizon Oil Spill and Offshore Drilling, Report to the President (National Commission on the Deepwater Horizon Oil Spill and Offshore Drilling, 11 January, 2011) 133.

141

National Commission on the Deepwater Horizon Oil Spill and Offshore Drilling, Deepwater: The Gulf Oil Disaster and the Future of Offshore Drilling — Recommendations (2011) 32.

142

Ibid 17.

143

“Death toll rises to 104 in coal mine blast”, (China Daily, 23 November 2009).

144

M Duncan, “China Mine explosion death toll reaches 92” (Reuters, 22 November 2009), available at www.reuters.com/article/idUSTRE5AK08Y20091122.

145

Ibid.

146

China Daily, above n 143.

147

M Barriaux, “Depths of despair as Chinese mine toll rises and hope fades” (Sydney Morning Herald, 24 November 2009), available at www.smh.com.au/world/depths-ofdespair-as-chinese-mine-toll-rises-and-hope-fades20091123-iy6l.html.

148

“China coal mine explosion death toll up to 107” (The Australian, 25 November 2009), available at www.theaustralian.com.au/news/world/china-coal-mineexplosion-death-toll-up-to-107/story-fn3dxix61225803793386.

149

Duncan, above n 144.

150

Ibid.

151

“Learn mine safety lessons”, (People’s Daily Online (Source: China Daily), 24 November 2009), available at english.peopledaily.com.cn/90001/90782/90872/6821524.html

152

China Daily, above n 143.

153

Ibid.

154

Ibid.

155

See OSHA dedicated online page at www.osha.gov/oilspills/index.html.

CHAPTER 9 SYSTEM PERFORMANCE ASSESSMENT AND REVIEW

Key messages • Auditing for assurance is misleading. • System performance assessment should be more inquisitive about system health, rather than about the absence of problems. • Learning from near misses can provide fertile ground for system improvements.

Why assess system performance? The assessment of the performance of a system is a crucial part of any effective management system and is the gateway to the continuous improvement process. Unfortunately, however, this process in the safety context is dominated by outcomes. Dekker (2015) captures the paradigm shift that has corrupted the safety function: The belief that safety is generated chiefly or in part through planning, process, paperwork, audit trails, and administrative work — all at an increasing distance from the operation — has become entrenched in many industries. Originally, the ideas that gave rise to this were empowering and emancipatory, like human factors intended. Safety was not seen as a problem of only the sharp or operational end of practice. Rather it had everything to do with how work was organised, resourced, supervised, planned, designed and managed. Increasingly, however, this might become constraining. A focus on safety systems and procedural compliance, on surveillance and monitoring, has put new limits on the people who do work at the sharp end … Safety is now

sometimes held hostage by deference to liability concerns and to protocol, insurance, and fear of regulation. Rules are put in place and held in place not necessarily because they help create safety, but they manage or deflect liability for any bad outcomes … Safety has morphed in part from an operational value into a bureaucratic accountability.156 Limits of audits Audits are all too often done merely for the assurance of senior managers, clients and joint venture partners.157 Audits are done to follow a certification process. The focus of management in those audits is on passing the audits. A great deal of effort is put into presenting the organisation in the appropriate light to the external auditor. Where those audits are with notice, management will go to some trouble orchestrating an abnormal level of compliance on the day. Housekeeping will be immaculate. Record keeping in the preceding weeks will be extremely well kept and managed and employees will be on their best behaviour. The problem with that approach is that the audit findings become meaningless. The opportunity for learning and continuous improvement, the raison d’être of the audit, is lost. As Hollnagel (2014) puts it: things go right because we try to make them go right, because we understand how they work and try to ensure that they have the best possible conditions to continue to do so.158 Seeking assurances that things are not going wrong is asking the wrong question. We are far better off understanding why and how they go right. System performance audits should be treated as opportunities for learning, refocusing the organisation back to its roots in continuous improvement. They should be as much about what goes right as what goes wrong. As such, there needs to be a rethink of the language of auditing and an improvement in the terms and phrases used — moving from “deficiencies” and “non-compliances” to “safety initiatives” and “opportunities for improvement”. Instead of auditing for

assurance, we should be investigating success. There also needs to be a corresponding change in approach, shifting the focus from inspections, checklists and report production, to workshopping processes and scenarios in representative focus groups, focusing on system design and resources, rather than system compliance. We need feedback about system effectiveness not just system implementation and compliance. By rethinking performance assessment in this way, an organisation can engender a more co-operative and positive culture aimed at identifying ways of improving safety performance. Investigating success Things go right far more often than they go wrong. Yet the entire focus of performance assurance process and investigation processes, is on things that go wrong. Should not the conditions that bring about success be as interesting to us as those that bring about failure? Investigating success is not an audit. It is an investigation. The idea is that you seek to learn, without judgment, how success is achieved. A number of possibilities may emerge in that context. Firstly, the investigators may discover that success is achieved by workers following the procedures prescribed for them. If this is the case, this is useful feedback about the procedures. The investigators may wish to better understand what makes these procedures useful and accessible so that the learning can be captured for other procedures. Secondly, the investigators may discover that workers are achieving success by adopting their own processes or by innovating — that is, deviation from procedures or sometimes it is not strictly deviation but rather workers filing the gaps, which inevitably exist in procedures. The challenge here for investigators is not to assume that the deviation from procedure is necessarily bad. An assessment needs to be made of the work as done to determine whether it is safe and if not, whether it can be tweaked to make it so. In any event, the investigator needs to understand why it is that the procedure is not suitable — that is, why is it that it is not being followed. In that respect, success is fertile ground for learning.

Such investigations can be reported upon by number and trend. Feedback can be collected in relation to the suitability or effectiveness of procedures as measured by adoption and contribution to successful outcomes. This approach would refocus the perspective on the pointy end of work rather than on the blunt end, but with an appreciation of the contribution of design, resources and processes to that work. The investigation is on the adequacy of resources and processes rather than on worker compliance. Learning from near misses Greater focus should also be placed on learning from near misses. In another of the books in this series, Due Diligence: Incident Notification, Management and Investigation, we discuss the limitations of traditional incident investigation techniques. For the most part, we do not really understand what has happened in the aftermath of an incident because we are all players engaged in a level of revisionism; some deliberate and some subconscious. For example, the threat of blame, whether through litigation or disciplinary action, plays a significant part in the distortion of information. Misplaced camaraderie and loyalty also have the same effect, particularly in Australia where “dobbing in a mate” is culturally frowned upon. While these can be ameliorated through increasing trust and using protections afforded through legal professional privilege,159 some residual of that issue remains by the very nature of the process (ie an inquiry by an investigator armed with the wisdom of hindsight which has the effect of putting the spotlight on the inferiority of the workers concerned for failing to have such wisdom). No matter how “justly” you ask the “why did it go wrong” questions, you are, in effect, judging the person concerned. Their natural instinct would be to justify and explain, rather than to recount accurately their thorough process. Revisionism is the great curse of incident investigations. Figure 29 — Limitations of incident analysis techniques

The flip side of the exercise is the simplicity of the investigation techniques. With the benefit of hindsight, we can see the trajectory of the incident clearly. We begin to cherry-pick events to fit a narrative we have chosen. We place importance on events that fit that narrative that may not have had that importance at the time. We single out signals along the way which (now with the benefit of knowing how the story ends) seem like strong signals, and we ponder how they could have been missed, no matter how weak they actually were as signals in real time. We do all this and yet wonder why we do not learn the lessons from accidents. Figure 30 — Why don’t we learn?

The reality is that incidents play out in the real world and not in some theoretical, rational world where everyone has perfect knowledge and unlimited time. If we had perfect knowledge and unlimited time, we would make the “rational decisions” that the investigators expect of us. In the real world though, we do not have that luxury, which makes the condescending judgments of investigators who are obsessed with what went wrong in an incident, utterly useless. If we are to learn anything from an incident, it is that we should be mindful of the circumstances in which the incident occurred. In that respect, it is far more beneficial to focus on near misses than actual accidents. It has long been recognised that near misses offer great opportunities for learning. Those obsessed with what went wrong in accidents dwell on the catastrophic possibilities that, but for the grace of God or pure luck, were averted. The traditional approach is then to again browbeat everyone involved and explain to them how they failed, but that the God on that occasion permitted them a fresh start. But there is an alternative view. In the same way that the historical description of accidents as acts of God that are unexplainable has now been discredited, the description of near misses as divine intervention is equally non-insightful. A near miss is an example of effective barriers in action. While some barriers failed, one or more barriers succeeded in preventing the incident. Granted, that barrier may have been unplanned, unintended or purely accidental. It is an effective barrier nevertheless. Understanding that barrier and systematically capturing it becomes an important way of increasing the resilience of the system. Figure 31 — Why find out what went right?

That is the essence of the thinking behind inquiring about “what went right?” explored in the second book of this series, Due Diligence: Incident Notification, Management and Investigation. Adopting that methodology for system performance assessment creates fertile ground for learning and improvement which is entirely positive in its approach. The conversation in the investigation is not about “what you did wrong” (which is the effect of the current approach with the “you” being the worker, manager or leader and, in major disasters, the relevant regulator), but rather, “what you did right”. It celebrates success, rather than being obsessed with failure. Figure 32 — Near miss

Systematically adopting that approach, however, requires validation that the “accidental control” is indeed universally valid, such that including it in a system will increase its resilience. As such, the control needs to be tested through a series of “what if” scenarios to test its resilience in changed conditions. These changed conditions include: • change in the natural environment, such as extreme weather • change in the plant being used • change in the process being adopted • change in the consequences, such as the height at which the work is performed, or the speed at which the vehicle is travelling, and • change in the feature of the worker, such as weight, height,

literacy or language skills. Such a process will promote greater resilience in the safety management system. It will capture the controls that work and systematically implement them to improve the system. Only then can we guarantee that the systematic learning and improvement are part of the fabric of the organisation. Only then can we also claim that we are ensuring the health and safety of workers and other people that may be affected by the conduct of our business or undertaking. Figure 33 — Positive investigation methodology

In adopting this positive methodology, we can capture the practical lessons of what actually works, rather than the theoretical lesson of what should be working, but is not working. This creates more

powerful feedback loops. Reinforced through key performance indicators for undertaking such positive investigations, and identifying what went right and converting those lessons into appropriate controls, can create a system that is a very powerful tool in incident prevention. Footnotes 156

S Dekker, Safety Differently: Human Factors for a new era, (CRC Press, 2nd ed, 2015) 31–32.

157

A Hopkins, Lessons from Gretley: Mindful leadership and the law (CCH Australia Limited, 2007) 114.

158

E Hollnagel, Safety — I and Safety — II: The Past and Future of Safety Management (Ashgate Publishing, 2015) 136.

159

See the discussion in the second book of this series, Due Diligence: Incident Notification, Management and Investigation, particularly Chapter ¶3.

CHAPTER 10 FINAL OBSERVATIONS Key messages • Duty of PCBU is the centrepiece of the legislation. • The duty requires a systematic approach to safety. • The duty sits as part of an overall framework of person duties and consultation obligations.

The Work Health and Safety Act introduced a comprehensive framework for ensuring that no one is put at risk from the conduct of a business or undertaking. It did this by imposing a series of duties and obligations on anyone conducting a business or undertaking. Recognising that most businesses or undertakings are conducted through corporate vehicles (or, in the case of the public sector, departments and agencies), the Work Health and Safety Act reinforces those duties through a duty on officers of those PCBUs to exercise due diligence to ensure that the PCBU complies with those duties and obligations, and on workers of the PCBU to take reasonable care of their own health and safety and the health and safety of others. This series is concerned with this comprehensive due diligence legislative framework. In the first book, we looked at the duty of officers. In the fourth book we looked at the duty of workers. This book is concerned with the duty of a PCBU, tying together the obligations set out in the second, third and fifth books on incident notification, consultation and dealing with regulators respectively. Only by overseeing the introduction and implementation of the comprehensive twenty element system set out in this book, can an officer feel confident that they have discharged the third element and fifth element of due diligence — the availability for use of resources and processes, and of ensuring legal compliance with the duties and

obligations of the PCBU. An officer who oversees the implementation of such a system, and monitors its effectiveness, is well on the way to discharging their due diligence obligations and ensuring that their PCBU is complying with their duties and obligations.

Part III Incident Notification, Management and Investigation

CHAPTER 1 INTRODUCTION

Key messages • Effective incident management is concerned with containment and minimisation of consequences be they safety, environmental or legal. • There are competing priorities in incident management that must be finely balanced. • A proactive approach to incident management and investigation provides the optimal outcomes.

Overview There is an old saying — “if you think safety is expensive, try having an accident”. Take the 20 April 2010 explosion on the Deepwater Horizon semi-submersible Mobile Offshore Drilling Unit (MODU) in the Gulf of Mexico as an example. The incident claimed the lives of 11 workers and injured 17 others and caused an oil spill of in excess of 5 million barrels of oil.1 Oil spill response teams struggled to contain the spill for months and tried various methods to halt the flow of oil. After many failed containment attempts, they managed to install a temporary cap on the Macondo well on 15 July 2010. The well was not permanently sealed until 19 September 2010. BP was sued for tens of millions of dollars in the United States by institutional investors who allege that the oil major misled them over its safety policies and the scale of the spill in the Gulf of Mexico.2 BP settled the claims for US$175m.3 The institutional investors, who included the South Yorkshire Pensions Authority, Skandia Global Funds and GAM Fund Management, alleged that they lost substantial sums as a result of BP’s misleading statements. As such, they were sued (under Texas law) for common law fraud, negligent

misrepresentation and statutory fraud.4 The law suits relate to the 2010 blowout and explosion on the Deepwater Horizon mobile oil platform in the Gulf of Mexico that killed 11 people and caused significant environmental damage. The commercial ramifications for BP have been astronomical. Nearly US$70b has been wiped off the value of BP due to its 38% plunge in share price.5 The incident has cost BP over US$2.65b6 in spill response, containment, relief well drilling, grants to Gulf States, claims paid and federal costs alone. BP agreed to pay US$20.8b in compensation to the US Government and several States (Louisiana, Mississippi, Alabama, Texas and Florida).7 There were over 64,000 legal claims made by people whose livelihoods have been affected by the spill. These figures are significant — even when viewed against the company’s sales and other operating revenue figures for 2009, of US$239b. Interestingly, the first actual criminal charges laid arising from the incident, related not to the incident itself or the systems in place leading up to the incident, but to the alleged conduct of an individual in the aftermath of the incident. Mr Kurt Mix was an engineer with BP at the time of the incident. He was arrested and charged with two counts of obstructing justice in relation to his alleged conduct in destroying approximately 200 text messages with his then supervisor, in relation to the oil spill containment efforts. The text messages which have been partially recovered allegedly reveal that BP knew for weeks the spill was much larger than the official company estimates and that its so-called “top kill” effort to plug the leak was failing. These charges were later dropped in exchange for a guilty plea to a misdemeanour charge of computer fraud and abuse related to the deleted texts. He was sentenced to six months’ probation, 60 hours of community service and a $25 special assessment (a fine). This is a stark illustration of the key message of this book — how you manage an incident, counts. Myth of incident management

Management of incidents is the hardest task of any senior manager or other professional involved with work health and safety (WHS) or environmental management. It requires a unique set of skills not common to other areas of management. Events move at a fast pace. Infrastructure which is usually available has often been compromised by the incident itself. Every action is in the spotlight and the consequences of mistakes appear magnified. Internal and external stakeholders have an insatiable appetite for briefings and information. There is no shortage of speculation and hindsight experts. More often than not, these events play out under the watchful gaze of the media. Conventional wisdom indicates that such a task requires a special type of person. A person who has “nerves of steel”. A person with innate leadership skills. A person who is calm under pressure and able to make the right decisions. We celebrate such persons as heroes in the aftermath of a major disaster. The Federal Leader of the Opposition and former Federal Workplace Relations Minister, Bill Shorten’s popular rise was as a direct result of his involvement in the Beaconsfield incident. The entire nation watched on as he, seemingly in control, provided daily briefings on the rescue efforts. In our perception, it was his leadership that ensured that the two miners emerged safely from the underground mine. Conversely, we speak of the villains of failed rescue efforts, be they bushfires or mining disasters. The rescue efforts in Pike River were widely condemned, for example. By contrast, the individual heroic effort of the miner who rescued his colleague, making a two-hour journey to the entrance of the mine, went largely unnoticed. In crisis management however, nothing is what it seems. If you think of the swimming motion of a duck, seemingly effortless above the water, yet frantic below — that is crisis management. When it works, it is seamless. It all comes together. The lines resonate with the media. The favourable evidence emerges in time. A narrative is constructed that emphasises heroism and human achievement. But all that does not happen by accident or chance. In truth, effective crisis management is an acquired skill rather than a born talent. Like any skill, it has specific techniques and improves with

practice. This book will explore the techniques associated with crisis management in the WHS context. It will do so in the context of the WHS legislation. This is not a lessons-from-disaster book. There are many excellent books in that genre. To the contrary, this is a book about the process for responding to and investigating an incident. It takes a holistic approach — legal, safety, commercial and reputational issues are interwoven in the discussion, so what emerges is a practical blueprint. Phases of incident response There are three phases in responding to an incident: • Incident management which captures the initial incident response, regulatory and other stakeholder notifications and preliminary evidence gathering and is discussed in Chapters ¶2, ¶3 and ¶4 respectively • Incident communication which deals with regulatory liaison during the investigation stage, and media and stakeholder communication and is discussed in Chapters ¶5, ¶6, ¶7 and ¶8 respectively, and • Incident investigation which captures the incident root cause investigation, liability assessment and learning dissemination and is discussed in Chapters ¶8 and ¶9. Figure 1 — Incident management methodology

Approach of this book

The approach of this book is to explore the role of better preparedness and planning in incident management and more probing investigation techniques for future incident prevention. It recognises the competing considerations facing a company when a disaster occurs. On the one hand, legal considerations and exposure makes full and frank disclosure and dialogue in relation to the incident, difficult. Companies will often face liability claims and potential regulatory action including prosecutions arising from major disasters. They will therefore be limited in their strategy in that regard. On the other hand, commercial and corporate reputation considerations make it imperative that the company engage in a positive dialogue with the public, its customers, suppliers and shareholders. Furthermore, its workforce, including industrial representatives of the workforce, will have an interest in the manner in which the incident is managed. This book recognises these competing objectives and therefore approaches the challenge of incident management through this multidisciplinary prism. There is also a recognition in this book that in a complex world, incident causation is rarely linear. As lawyers, we are taught that there is no singular “truth”; two people engaged in a dialogue emerge from the conversation with different accounts of that conversation. Similarly, two people looking at the same scene will give different accounts of that scene, depending on their perspective and the assumptions their mind subconsciously makes about what is transpiring in front of their eyes. Both accounts are “truthful”. It is therefore unhelpful to single out one account or one perspective. Incident investigation is as much about recognising that complexity as it is about uncovering the facts. This approach pervades the recommendations in relation to evidence collection and investigation techniques. Furthermore, the focus of case studies in incident management will be as much on “what went right” as on “what went wrong”. This flows from a recognition that often what went right in an incident is not sufficiently recognised and where appropriate, celebrated as part of building up the resilience of the system to such events. Incident preparedness is fundamentally about preparing for the unexpected. To date, the literature has focused on the negative aspect of this. Thus, Weick and Sutcliffe8 talk of high reliability

organisations being “preoccupied with failure” — an anxiety and a state of unease that is said to prevent incidents. This book takes a more positive approach. Rather than promoting a state of perpetual anxiety — ironically with an incident being the ultimate vindication of that anxiety — this book promotes an approach where success, however it is achieved, is celebrated and nurtured. It is fundamentally a rejection of reactive approaches to incident investigations in favour of a more proactive approach consistent with the officer’s duty to exercise due diligence. It is an approach that seeks to identify opportunities to build system resilience. It is an approach which is respectful of workers’ superior appreciation of what works in practice, and which is therefore less dismissive of “coal face” innovation that achieves a valid or useful purpose. In that respect, the approach embraces the full potential of a flexible system built around enlightened individuals with the common goal of achieving safer outcomes. What is resilience? Resilience is the intrinsic ability of a system to remain effective despite errors and failures in its component parts. Weick and Sutcliffe (2011) summarise the essence of resilient systems by reference to high reliability organisations that develop “capabilities to detect, contain, and bounce back from those inevitable errors that are part of an indeterminate world”.9 That is, the hallmark of resilience is not the absence of errors but the ability to withstand them. An incident management methodology grounded in that approach therefore emphasises planning and preparedness. It builds contingencies, and relies on and defers to expertise. But, fundamentally, it uses every incident as an opportunity to test vulnerability and improve its resilience well beyond the actual event. Figure 2 — Competing considerations in incident management

Regulatory context There are a number of compelling reasons for effective incident management. Certainly the primary aim of initial incident response efforts should be focused on the protection of lives, attending to the injured, containment of the consequences including avoiding chain reactions and management of risks arising from the incident itself. Entangled among those objectives are operational and commercial considerations. Effective risk management will minimise property damage and commercial losses associated with prolonged shutdown. Critically, effective incident management must also protect corporate reputation and minimise legal risk. The regulatory context is relevant to those latter points. As discussed in the first book of this series, Due Diligence: Duty of Officers, the work, health and safety legislation imposes duties on any person conducting a business or undertaking (PCBU). The definition

of PCBU is deliberately broad as is the primary duty of care imposed on such persons. The breadth of the duty is intended to capture every business or “business-like” activity. Indeed, the architecture of the law is such that an entity will be liable for any risk to health and safety created through its business activities. It is that feature of the law which impacts significantly on the traditional view to incident investigation — something that we will return to in subsequent chapters. The law also imposes a proactive duty on officers of PCBUs to exercise due diligence to ensure compliance by PCBUs with the duties and obligations imposed by the legislation. Importantly, as we have seen in Due Diligence: Duty of Officers, one of the elements of due diligence requires officers to take reasonable steps to monitor the performance of their entity, including incidents, and respond in a timely manner to any issues arising from that performance. Who is a PCBU? Given that the primary duty and indeed most of the obligations imposed by the WHS legislation, is imposed on PCBUs, it is important to understand who this person is for the purpose of the legislation. This book uses the terminology “person conducting a business or undertaking” interchangeably with “entity” because in most cases, the definition funnels down to the entity that is running a business or undertaking, whether that is a legal entity or individual (as is the case with partners and sole traders). A person may conduct a business or undertaking alone or with someone else. They may do so for profit or gain or not for profit or gain. They can do so as partners in a partnership or unincorporated association in which case each partner will be a PCBU. But a person is not conducting a business or undertaking merely because they are a worker or an officer of an entity which is conducting a business or undertaking. Such persons, workers and officers have duties of their own. There is a limited exemption for volunteer associations which are a group of volunteers working together for one or more community purposes where none of the volunteers employs any person to carry

out work for the volunteer association. What is the duty of PCBUs? PCBUs have a duty to ensure, so far as reasonably practicable, the health and safety of workers while the workers are at work in the business or undertaking. That includes workers who are not directly engaged by the PCBU but are caused to be engaged by them or whose activities in carrying out work are influenced or directed by the person. A PCBU must also ensure, so far as is reasonably practicable, that the health and safety of other persons is not put at risk from work carried out as part of the conduct of the business or undertaking. At its broadest, a company has a duty to ensure, so far as is reasonably practicable, that other persons are not put at risk from work carried out on its behalf. That means the company has to ensure that it does not create a risk to health and safety to anyone in the conduct of its business activities. This broad scope is important to bear in mind when defining the scope of incident investigations including the preliminary evidence gathering. All too often, a prejudiced view of the scope of liability which is “employer-focused” results in an unjustifiably narrow scope. This is particularly the case so far as issues of upstream duty holder involvement (such as designers, manufacturers, suppliers and controllers of plant and structures) are concerned. As indicated above, the company also has a duty to its workers and other workers it causes to be engaged. That includes contractors, subcontractors and employees of contractors and subcontractors. It also has a duty to other workers whose activities are influenced or directed by it. That includes labour hire workers that its subcontractors may use, for example, or its subcontractors such as transport companies used to deliver plant or components for the services of its contractors. It must ensure, so far as is reasonably practicable, the health and safety of workers engaged directly or indirectly by them and workers whose activities are influenced or directed by them. The duty is very broad and is not limited to what happens at the company’s workplace. Workers means anyone performing work including contractors,

subcontractors, employees of contractors or subcontractors, labour hire workers, apprentices and trainees, outworkers, students on work experience and volunteers, not just employees. The company also has a duty to consult workers in relation to matters affecting their health and safety. It is required to consult, co-operate and co-ordinate with other duty holders in relation to discharging the respective duties in areas of overlap. It has obligations in relation to reporting of incidents. There is also an extensive regime aimed at protecting workers and prospective workers against victimisation on safety grounds. The legislation creates powers for inspectors and unions officials in relation to entry to workplaces and, in relation to inspectors, extensive investigation powers. This is the focus of another book of this series, Due Diligence: Dealing with Regulators. The obligation is therefore imposed on the PCBU to ensure that it does not obstruct or hinder the exercise of those powers. The practical procedures and strategies, that should be deployed in an incident response context to address those obligations and protect the legal interests of the entity, are discussed in Chapter ¶5 of this book. The regulations impose specific obligations on the company in relation to the management of risks generally and the risks associated with certain common hazards such as the management of chemicals, plant and fixtures, electrical work, construction work and work involving hazardous manual handling or the risk of a fall, for example. The company must have a comprehensive system to manage the risks associated with its operations in order to discharge the above obligations. Breaches of the duties of the company are criminal in nature and attract a maximum penalty of up to $3m for serious offences. Reasonable practicability As broad as it is, the duty of the company is still limited by reasonable practicability. Reasonable practicability is a balancing exercise. It means doing what is reasonably able to be done in relation to ensuring health and safety, taking into account and weighing up all

relevant matters including on the one hand, the likelihood of the hazard or the risk concerned occurring, the degree of harm that might result from the hazard or the risk, what the person concerned knows, or ought reasonably to know, about the hazard or the risk and ways of eliminating or minimising the risk; and, on the other, the availability and suitability of ways to eliminate or minimise the risk and the cost associated with available ways of eliminating or minimising the risk. Evidence of what was reasonably practicable, and conversely what was not reasonably practicable, is critical to assessing the viability of any legal strategy. For that reason, any incident investigation and evidence gathering exercise must be informed by the definition of reasonable practicability. The next chapters will explore the three phases of incident response from the initial response and management, to communication and to investigation. Social context The 2006 mud slides in Indonesia highlight the social impact of disasters and their ineffective management. The incident was caused by the failure of PT Lapindo Brantas, an Indonesian oil and gas company, to install safety casings at the lower levels of its drilling shaft to prevent mud leakage.10 The mud volcano that ensued on 29 May 2006 in Sidoarjo, East Java, Indonesia, killed 15 people, caused ongoing mass displacement of the local population and the inundation of farmland, villages and factories.11 Lapindo Brantas was drilling when a hot mud geyser, eight metres in height, erupted in a paddy field near the company’s well. The initial eruption caused two deaths and widespread respiratory problems for people in the surrounding areas due to the release of hydrogen sulphide gas. By July 2006, the mudflow had reached 40,000 cubic metres a day and had overwhelmed, four nearby villages. Almost 7,000 residents were displaced. By November 2006, 450 hectares were covered in mud. The attempts by Lapindo Brantas to build levees to contain the mudflow failed, and on 22 November 2006, a levee broke. Later that day, a gas pipe buried under the mud, exploded, and 13 people were killed.

By December 2007, around 600 hectares of land had been inundated by mud. Increased mud discharge and the emission of toxic and flammable gases, including methane, was reported in May 2008, with the mudflow then covering 1,250 hectares. Sixteen villages and 24 factories had been buried by the mud. More than 50,000 people were displaced. By August 2008, 14,000 homes, 33 schools, 65 mosques, a major toll road and an orphanage had been immersed in mud. The mudflow is predicted to end in 2017, some 11 years since its commencement.12 Since the eruptions, hundreds of mudflow bubbles containing a mixture of mud and gas have emerged along highways and in other locations near Sidoarjo.13 These mud bubbles have raised significant concerns as the mud contains unsafe levels of methane that could be ignited by cigarettes.14 External investigations have yielded a considerable amount of evidence that mudflow was the direct result of the negligence of Lapindo Brantas. While Lapindo Brantas has denied any connection to the mudflow, it has agreed to pay $400m to compensate 10,000 families, as ordered by then President, Susilo Bambang Yudhoyono. Police investigations into the incident uncovered evidence that Lapindo Brantas failed to install safety casings at the lower levels of the drilling shaft to prevent mud leakage.15 In March 2007, allegations came to light that Lapindo was aware of the need for a casing well to prevent any mudflow. This followed technical discussions between Lapindo Brantas and PT Medco Energi Internasional around 18 May 2006.16An audit released on 16 June 2007 by BP Migas, an independent team of government-appointed experts, found that Lapindo Brantas had failed to adequately perform their monitoring duties and did not use standardised equipment. According to the audit, Lapindo Brantas did not employ sufficiently experienced personnel to carry out the drilling operations.17 Similarly, the 2015 tailings dam collapse in Brazil resulted in a mudslide that killed 19 people and destroyed nearby villages. The mine at the centre of the disaster was run by a joint venture between Vale and BHP Billiton, called Samarco. Role of officers

As discussed in the first book of this series, Due Diligence: Duty of Officers, officers have a duty to take reasonable steps to ensure that the PCBU has appropriate processes for receiving and considering information regarding incidents, hazards and risks, and responding in a timely way to that information. This was referred to as the fourth element. In essence, the fourth element is a duty to ensure that the officer’s company has appropriate incident reporting, analysis and management processes in place. This book explores a holistic framework for such processes. Figure 3 — Elements of due diligence

Checklist of the key concepts of incident management □ Does your incident management strategy deal with commercial, legal, industrial and reputational considerations? □ Does your incident management strategy adequately take

into account the broader reach of the Work Health and Safety Act 2011 (WHS Act)? □ Does your incident management strategy assist officers of your company to comply with the fourth element of their due diligence duty?

Footnotes 1

“BP sues Cameron and Deepwater Horizon owner Transocean”, BBC (11 April 2011) available at sott.net, www.sott.net/articles/show/227519-BP-sues-Cameron-andDeepwater-Horizon-owner-Transocean.

2

E Gosden, “BP sued ‘for hiding truth over safety’ in Gulf oil disaster”, The Telegraph (4 September 2012).

3

Reuters, “BP will pay $175m to settle shareholder lawsuit over Gulf of Mexico oil spill”, Fortune (3 June 2016).

4

Ibid.

5

C Kahn, “BP chief to face investors, questions about job”, McAlester News-Capital (4 June 2010) available at mcalesternews.com/local/x1910026150/BP-chief-to-faceinvestors-questions-about-job; BP website, share chart for 20 April–28 June 2010, available at www.bp.com.

6

“BP Spill Costs Rise to 2.7B”, CBC News (28 June 2010).

7

D Rushe, “BP set to pay largest environmental fine in US history for Gulf oil spill”, The Guardian (3 July 2015).

8

KE Weick and KM Sutcliffe, Managing the Unexpected:

Resilient Performance in an Age of Uncertainty (JosseyBass, San Francisco, 2nd ed, 2011). 9

Ibid 30.

10

L M McDonald and W Widaningrum, Muddied Waters: Lapindo Brantas’ Response to the Indonesian Mudflow Crisis, ANZCA 09 Communication, Creativity and Global Citizenship (Brisbane, July 2009) 1,109–1,110. The cause of the Sidoarjo mudflow has been the subject of debate. Lapindo Brantas attributed the disaster to an earthquake in Togyakarta two days before the mudflow began. This was supported by Indonesia’s District Court, which rejected the claims brought against Lapindo Brantas by local environmentalist groups. On 26 February 2008, the House of Representatives declared the mudflow a natural disaster.

11

Ibid 1,103–1,104.

12

Ibid.

13

A Tejo, “Latest Mudflow Bubble on Sidoarjo Roadway Raises Fears of Explosion”, Jakarta Globe (18 April 2010).

14

Ibid.

15

L M McDonald, above n 10.

16

Ibid.

17

Ibid 1,103–1,104.

CHAPTER 2 INCIDENT MANAGEMENT

Key messages • Better planning and design is key to successful rescue and incident management. • Tailor your plans to the environment. • Juggling competing priorities is a feature of any crisis management. • The incident report is the start of a regulatory process rigged with legal risks — navigating through the minefield requires careful planning.

Figure 4 — Immediate priorities in aftermath of incident

“Los 33” The Chilean mine disaster and miraculous rescue of 33 trapped miners will be one of the landmark events of the 21st century. Watched live around the world, it was an event that enlivened the spirit of humanity, riddled with stories of survival, heroism, innovation and international collaboration — humanity stood as one. Some turned to science, many turned to religion, but they were all as one in their efforts to rescue the men who became trapped in a collapsed mine for a total of 69 days.

However, aside from the obvious gripping human interest story which developed, interest in the disaster was a feature of its context. The disaster came shortly after the February 2010 Chilean earthquake and the ensuing tsunami which killed 525 people.18 The Chilean Government was widely criticised for its response to the earthquake, so when the Chilean mine disaster occurred, it was determined to show its empathy. Globally, 2010 was a bad year for industrial accidents. The Chilean mine disaster came fresh on the heels of the Deepwater Horizon disaster which claimed 11 lives, injured 17 others and caused unprecedented environmental devastation in the Gulf of Mexico. In the mining industry it followed the April 2010 West Virginia mine disaster which claimed the lives of 29 miners at the Upper Big Branch underground coal mine. As such, the eyes of the world had been opened to the huge social toll being paid by workers through industrial accidents. When on 22 August 2010, a note emerged, attached to a drill bit of a borehole, written by the miners, with the words “estamos bien en el refugio — los 33” translated to “we are well in the shelter — the 33”, the scene was set for the epic rescue. The mine collapse which precipitated the disaster occurred on 5 August 2010. A mine shaft caved in at a depth of 300 metres in the San Jose copper-gold mine, 800 km north of Santiago. The 33 miners were working at a depth of 700 m when the cave-in occurred and became trapped.19 On 13 October 2010, sixty nine days after becoming trapped, the miners were successfully rescued in dramatic fashion, to the cheers of millions around the world glued to their television sets, watching the events develop. So what made this disaster rescue such a success? What went right? Despite the disaster, a number of things went right in the rescue efforts. Firstly, ventilation shafts did their jobs. They had survived the mine collapse, allowing enough fresh air to reach the chamber where the miners were trapped.

Secondly, the duty shift supervisor, Luiz Urzua; when the cave-in occurred, the trapped miners attempted to escape through the ventilation system shafts. They should have been fitted with ladders for just this purpose according to the Chilean Mining Code. But they were not.20 The shafts latter became inaccessible to rescuers through further seismic movement. At that point, Luiz gathered the trapped miners in a refuge and rationed food and other resources for long-term survival. They drank water from storage tanks, stripped off their shirts to endure the heat, and used heavy equipment to provide light and charge the batteries of their head lamps.21 Food was in short supply — once the location of miners was discovered in the refuge, rescue crews used the tiny borehole which had identified the location of the miners, to thread down tubes containing sugars, water and liquid nutrients to help sustain the miners. The thin shaft became an umbilical cord to keep the miners alive, from which they could receive information about the rescue efforts and communications from family members.22 Thirdly, innovation was a key factor in the success. The rescue operation was an international effort that involved not only technology, but the co-operation and resources of companies and individuals from around the world. The rescue effort included support from the USA, Australia, Canada and South Africa as well as other Latin American countries. The rescue plan was multi-layered to provide contingencies in the event of failure. Three concurrent boreholes were drilled using different types of equipment provided by international corporations and based on three different access strategies. The successful strategy — that is, the borehole which first reached the miners — was a technique used to drill top holes for the oil and gas industry, for mineral exploration and water wells to widen one of the existing boreholes used to supply the miners. The percussion-technology hammer drilling method23 uses four hammers to drill simultaneously, drilling at a rate of up to 40 metres a day.

The capsule ultimately used to transport the miners to the surface — Phoenix II — was a purpose — made capsule specially designed by the Chilean Navy and NASA.24 The design of the capsule was based on a pod used in the 1955 German mining disaster in Dahlbusch colliery. Engineers there developed a device that could be dropped into a small borehole and lowered and raised quickly and repeatedly. Phoenix II was a modification on that design.25 Phoenix II had retractable wheels to allow for a smooth ride to the surface; oxygen supply; video and voice communications; a reinforced roof to protect against rock falls and lighting; and an escape hatch to allow the passenger to lower themselves back down if the capsule became stuck. So there you have it, the greatest industrial disaster rescue of our times came down to food, leadership both within and outside the mine, innovation, resourcefulness and collaboration, and importantly the resilience of the mine design with ventilation shafts surviving the cavein to provide the precious air necessary for the 69-day gruelling survival — three themes consistently featured in this book. The Chile Mine collapse offers a number of salient lessons of how to manage a disaster and serves as an interesting point of contrast with mine disasters that occured at the same time, particularly the Pike River Mine disaster in New Zealand. While Chile’s political leaders raised peoples hopes, at the same time they tempered expectations by injecting realism. Within hours of the accident, the Chilean President, Sebastian Pinera, dispatched his mining minister to assess the accident first hand. Pinera flew to the mine site and declared unequivocal commitment to the rescue. His directive was clear — bring home the miners, dead or alive. Pinera then turned to Chile’s largest mining company — Codelco — for help. Its senior executives recommended Andre Sougarret to lead the rescue. Sougarret managed El Teniente — the world’s largest underground mine. He also handpicked a team of 32 Codelco managers to help. Sougarret and his team’s first task was to establish situational awareness — assuming little and asking a myriad of

questions. If the miners had survived the collapse and followed protocol, they would have gathered in a refuge located 2,300 feet underground. The roughly 530-square foot room held only enough provision for 10 miners for two days and sufficient water for one month. In his first interaction with the media, Sougarret promised a determined effort, not a successful one — he did not shy away from describing the uncertainty and difficulties that the rescuers faced. It became clear that to rescue the miners, it was necessary to drill a borehole that intersected the refuge or the tunnels near it. But drilling a hole large enough to admit a rescue capsule might take months. The miners could not survive that long without additional food and water. The rescue team decided to drill a hole (15 cm wide) to locate the miners and provide them with additional supplies and a second one large enough to extract them. Meanwhile underground, Luis Urzua had led the miners to the shelter. They allocated daily tasks and resources, established waste disposal areas and used the lighting system to simulate day and night. They passed the time by sharing stories about their lives — as the days wore on, the bonds among them deepened and they began calling themselves Los 33. Chile’s tight-knit mining community sent many experts and tons of equipment to the site. After he took stock of the situation in San Jose, Sougarret established a “restricted access” perimeter beyond which he allowed only people with technical expertise and implementable proposals. This inward focus was matched by an outward focus. They reached out through their network for new ideas and technologies, calling on the Chilean Navy, United Parcel Service, American drilling experts in Afghanistan, NASA and Maptek — an Australian 3-D mapping software company. Ideas were vetted by an offsite team and brought forward only if they were deemed to be feasible. Sougarret kept on recruiting fresh experts as the situation changed. He kept in constant contact with various groups, highlighting to them the interdependence between them. Within a week, as many as six drilling efforts were underway.

Felipe Matthews, a Chilean geologist had new technology for measuring drilling trajectories — a gyroscope-like probe inserted into the drilling hole that, regardless of the position of the mounted drill, could find the vertical. Matthews was put in charge of monitoring the accuracy of all drilling attempts and other experts measuring drill profiles were asked to leave. During the subsequent rescue phase, Igor Proestakis, a 24-year-old field engineer who worked with Drillers Supply, SA and came to San Jose on his own, believed that an American company’s cluster hammer technology would cut through the hard rock quicker than other drills could. He was right. Proestakis’ team would be the first to reach the trapped miners. The depth and size of the refuge made locating the miners staggeringly difficult. Boring down to a target 2,300 feet deep with even 5% margin of error implied that drills could end up anywhere in a base area of over 40,000 square feet. As the refuge was 530 square feet in size, the chance that any given drill hole would find it, was 1.25%. The poor quality of available maps at the mine tunnels further reduced the odds. Several teams worked independently to come up with different drilling plans. Though many drilling attempts failed, they yielded crucial information about the mine and the rock. Miners usually measure results after they finish drilling holes and reach the target depth — drillers at San Jose started taking measurements every few hours, abandoning holes that seemed to deviate too much and quickly starting over. The short action assessment minimised the time and resources spent pursuing fruitless paths and allowed corrections in almost real time. Frequent measurements revealed the patterns of deviation in boreholes that occurred as the rescue teams drilled down at an angle. To reach the refuge, drillers would have to start in a direction quite different from its estimated location and account for the inescapable but difficult to project curve, revealed by the real time drill profile data. Sougarret used an organisational design that combines centralised

and decentralised. Daily communication with the families and the press and morning updates with technical heads, were tightly controlled affairs. Technical subgroup leaders that met every morning used a strict communications protocol to handle the transition between day and night shift, and to conduct routine maintenance. At the same time, they were allowed to independently design and conduct any tests they wished. After 17 days of drilling, a team finally discovered the trapped miners. On 22 August, the 8th borehole reached a ramp in the mine about 66 feet from the shelter. For days, the trapped miners had heard drilling nearing them and had prepared a note which they taped to the drill tip when it broke through — “Estamos bien en el refugio, los 33” — “We are well in the shelter, the 33”. For 52 days, three teams worked in parallel to extract the miners: • Plan A used a massive Australian-built Strata 950 rig to drill and widen a circular hole. • Plan B used cluster hammer technology from an American company, Center Rock, to widen existing boreholes to accommodate a rescue capsule. • Plan C drilled a wide escape shaft in a single pass with a powerful oil rig supplied by the Canadian company Precision Drilling. In the meantime, the Chilean Navy and NASA worked on building a steel rescue capsule with retractable wheels. Plan B got there first. On 13 October, after 69 days underground, Los 33 emerged from the mine.26 Immediate priority The immediate priority in the aftermath of an incident is to rescue, attend to the injured and assure the site. “Los 33” were in the mine for 17 days before they were discovered. The two rescued miners in Beaconsfield, Todd Russell and Brant Webb, were similarly only

discovered some five days after the incident. Minimising the risks to health and safety from the incident, and containment of the consequences of the incident, is a high priority in the aftermath of an incident. Many serious incidents have the potential for chain reactions and indeed, in some cases, more lives can be lost in rescue efforts than from the incident itself if the emergency response is not planned and executed effectively. Look at what happened in the Sago Mine disaster in 2006.

Sago Mine On 2 January 2006, a coal mine explosion in the Sago Mine in Sago, West Virginia, USA, killed 12 miners. On the morning of 2 January, 29 coal miners went underground at International Coal Group’s Sago Mine. At approximately 6.26 am, methane ignited in a recently sealed area of the mine and triggered an explosion, blowing out the seals and propelling smoke, dust, debris and lethal carbon monoxide into the working sections of the mine. A crew of 13 men were trapped.27 One miner was killed by the force of the explosion alone. The other 16 miners (the One Left crew), who were more distant from the ignition point, were able to exit the mine safely.28 At 5.51 pm, a rescue team entered the mine. As the rescue team advanced further into the Two Left section of the mine, 12 miners were found behind a curtain at the face of the working section. On 4 January at 12.30 am, the Mine Rescue Team informed the Mine Rescue Command Centre that 11 of the miners had succumbed to carbon monoxide asphyxiation. Only one was found alive. A preliminary report to the West Virginia Governor in relation the incident observed: The failures … were, in almost every instance, failures not of individual human beings but of systems: mine safety systems, mine emergency management systems, and mine

rescue systems.29 The Report further made the following chilling observation: “[the miners] were failed by a mine rescue system that made promises it did not keep”.30 The report concludes: “The Sago tragedy leaves no doubt that the mine emergency management system [at Sago Mine] must change, and fast.”31 The key question is “why did the rescue effort take so long?” Failings in the emergency response plan for the Sago Mine have been identified as follows. The explosion occurred at 6.26 am. By 4.25 pm, mine rescue teams were still waiting for permission to enter the mine. It would be another hour before the first teams entered the mine and another 30 hours before rescuers reached the face of the Two Left working section. The absence of a gas chromatograph for much of the first day meant that it could not be determined whether there was a fire in the mine.32 An initial miscommunication between the rescuers and the command centre led to a report that 12 miners were found alive. In reality, by this time, 41 hours after the explosion, all but one miner had succumbed to carbon monoxide poisoning.33 The Report found that it was impossible for rescuers to communicate with the trapped miners as the phone system was outmoded, vulnerable and knocked out by the explosion. Had the phone system been effective, the miners could have been told that there was respirable air near their location. It was impossible to rapidly pinpoint the location of the trapped miners and drill a borehole down to them. The seismic equipment, theoretically capable of hearing their response to a prearranged signal, was not brought to the mine.34

The sole survivor, Randal McCloy Jr, reported that the selfcontained self-rescuers (SCSRs), that the miners were equipped with, had failed. The miners were unable to make them work and without enough fully functioning SCSRs to go around, there was no way for all of them to make it safely out of the section.35 The Sago Mine disaster demonstrates that: • Emergency response plans must be tailored to the critical risks of the organisation. • Incident response plans and procedures should be regularly reviewed to ensure that response is rapid and effective. • Protocols must be in place for the response and for communication. • Organisations must have immediate access to necessary resources in the event of a disaster.

Emergency plans must be specific Moreover, emergency plans must be constantly reviewed and must be site specific (not generic). Take the Deepwater Horizon disaster as an example. The National Commission on the Deepwater Horizon Oil Spill and Offshore Drilling found: If BP’s response capacity was underwhelming, some aspects of its response plan were embarrassing. In the plan, BP had named Peter Lutz as a wildlife expert on whom it would rely; he had died several years before BP submitted its plan. BP listed seals and walruses as two species of concern in case of an oil spill in the Gulf; these species never see Gulf waters. And a link in the plan that purported to go to the Marine Spill Response Corporation website actually led to a Japanese entertainment site.36 The Commission recommended that the Department of the Interior

require offshore operators to provide detailed plans for source control as part of their oil spill response plans and applications for permits to drill.37 It also recommended that the oil and gas industry create and maintain readily deployable resources for rescue, response and containment. Specifically, it recommended that large-scale rescue, response and containment capabilities need to be developed — including equipment, procedures and logistics — and enabled by extensive training, including full-scale field exercises.38 A similar lesson had been learnt at horrendous expense in China in the Heilongjiang mine disaster in 2010.

Xinxing Coal Mine In one of the worst coal mine disasters, an explosion at the staterun Xinxing Coal Mine in northeast China’s Heilongjiang Province claimed the lives of 108 miners. A total of 528 miners were working underground when the blast occurred at 2.30 am on 21 November 2009. The force of the explosion caused nearby buildings to partly collapse,39 littering the ground above with shattered glass and metal.40 According to official reports, when the blast erupted, safety staff at the mine had noted a sudden and dangerous increase in gas levels and were rushing to evacuate the miners.41 Xinhua News Agency reported that 420 miners escaped the blast.42 By 23 November, 12 more bodies had been discovered, raising the official death toll to 104. Four miners remained missing and rescue operations continued.43 By 25 November, the death toll had reached 107 as officials reported that two of the four missing miners had been found.44 Some of the survivors sustained serious injuries.45 Zhang Fucheng, an official in charge of rescue efforts, reported that the rescue was delayed by gas levels and collapsed tunnels. Rescuers also faced near freezing temperatures in their attempts to free the miners.46 The explosion resulted from a massive gas build up. The accident

started with a gas leak in one of the shafts. As a result of poor ventilation, the gas rapidly filled the main tunnel, with the resulting blast shaking 28 of the 30 mining platforms in operation.47 The mine’s monitoring room received alerts of a sudden and extreme increase in underground gas levels, 53 minutes prior to the tragedy.48 There is controversy as to whether the staff in the control room responded adequately, or at all, to the alerts notifying them of the sudden rise in gas levels, 53 minutes before the disaster.49 Local authorities stated that all personnel were immediately told to evacuate the mine, but 108 miners were still underground at the time of the blast.50

Clearly, emergency response plans must be tailored to the critical risks of the organisation. Emergency response plans must make provision for responding to the disaster immediately as delays in responding can increase the severity of the incident. Personnel must be knowledgeable about their roles and able to respond. Adequate training in emergency response must be provided. Where safety systems rely on operators to activate evacuation plans or safety cut offs, consideration should be given to how these systems can be engineered to avoid the risk of the operator misjudging warning signs. Exercises which test the response system, including measures for evacuation, must be undertaken regularly. Emergency response plans must set out clear reporting lines and responsibilities so that the response is effective. Leadership of the response should come from the top. Risk to response workers Nor should people lose sight of the risks associated with emergency response efforts. The US Occupational Safety and Health Administration (OSHA) assigned up to 40 inspectors to the task of ensuring that workers engaged in the cleanup activities associated with the Deep Water Horizon spill were not exposed to risks to their health and safety including risks arising from hazardous chemicals,

reflecting OSHA’s perception of the risks involved.51 So fundamental are these overarching principles in incident response, that even the strict site preservation requirements under the WHS Act provide an exemption for these activities. Emergency preparedness is critical Effective emergency management begins long before the actual incident itself. Disaster after disaster has highlighted the need for better emergency preparedness. The Presidential Report into the Exxon Valdez disaster, for example, observed that: The very large spill size, the remote location, and the character of the oil all tested spill preparedness and response capabilities. Government and industry plans, individually and collectively, proved to be wholly insufficient to control an oil spill of the magnitude of the Exxon Valdez incident. Initial industry efforts to get equipment on scene were unreasonably slow, and once deployed the equipment could not cope with the spill. Moreover, the various contingency plans did not refer to each other or establish a workable response command hierarchy. This resulted in confusion and delayed the cleanup.52

Exxon Valdez At just after midnight on 24 March 1989, the 987-foot tank vessel the Exxon Valdez collided with Bligh Reef in Prince William Sound, Alaska. A total of 11 tanks on the centre and starboard side of the vessel were damaged and within five hours, 10.1 million gallons of crude oil had been spilled. The resulting oil slick spread over 3,000 square miles and onto over 350 miles of beaches in Prince William Sound, a previously pristine environmental habitat. It is estimated that the spill killed approximately 250,000 seabirds; 4,000 sea otters; 250 bald eagles; and more than 20 killer whales. The cleanup effort mobilised over 10,000 people; 1,000 vehicles; and 1,000 aeroplanes treating thousands of miles of beach. The efforts

continued throughout 1992. The Prince William Sound oil spill contingency plan provided that the Alyeska Pipeline Company were the first responders. Alyeska was ill prepared for a disaster. Few pieces of equipment arrived at the spill site in a timely manner. By the evening of 24 March 1989, only two skimmers (both of which were full at the time) were circling the expanding oil slick. No containment boom was deployed and neither Alyeska nor Exxon had sufficient dispersant or the equipment to deploy the dispersant. All this made a bad situation far worse. The inadequacy of the emergency response resulted in the damage to the Alaskan coastline and wildlife being far more extensive than it should have been. Like the response plan for the Gulf of Mexico over 20 years later, the tools were not immediately available to respond to the disaster with speed.

Emergency plans must consider the operational environment of the organisation — if operations are in remote locations, or in another environment which increases the difficulty of any response (such as deep water, in a location of significant environmental importance or in a conflict zone), consideration must be given to these factors in the emergency response plan. In these circumstances, a “cookie cutter” approach is unlikely to be sufficient. Emergency response plans must set out clear reporting lines and responsibilities so that the response is effective. Leadership of the response should come from the top. Personnel must be knowledgeable about their roles and able to respond. Adequate training in emergency response must be provided to staff at all levels of the organisation that will be required to respond to the incident. Realistic worst case scenarios must be considered, taking into account the operational environment of the organisation including:

• the failure of “fail safe” cut offs, and • adverse weather conditions which hinder response attempts. Exercises which test the response system must be undertaken regularly — paper systems are not enough. Emergency response plans therefore need to be developed, rehearsed and tested in advance of an incident occurring. Site preservation The site of a “notifiable incident” must not be disturbed until an inspector arrives at the site or lifts the site preservation requirement.53 That includes any plant, substance, structure or thing associated with the notifiable incident.54 There are three broad categories of notifiable incidents: (a) a death of a person (b) a “serious injury or illness” to a person, and (c) a dangerous incident. Death of a person A death of a person is a notifiable incident if the death arose out of the conduct of the business or undertaking regardless where death occurs.55 Serious injury or illness “Serious injury or illness” is an injury or illness requiring the person to have: • immediate treatment as an in-patient in a hospital, or • immediate treatment for the amputation of any part of his/her body, or • immediate treatment for a serious head injury, or

• immediate treatment for a serious eye injury, or • immediate treatment for a serious burn, or • immediate treatment for the separation of his/her skin from an underlying tissue (such as degloving or scalping), or • immediate treatment for a spinal injury, or • immediate treatment for the loss of a bodily function, or • immediate treatment for serious lacerations, or • medical treatment within 48 hours of exposure to a substance.

Immediate treatment “Immediate treatment” is a qualifying phrase to all but one category of injuries and illnesses for the purpose of the definition of “serious injury or illness”. The phrase “immediate treatment” is not defined in the Act and therefore takes on its ordinary meaning. “Immediate” means “occurring or accomplished without delay” or “instant”. “Treatment” relevantly means “the application of medicines, surgery, psychotherapy to a patient to cure a disease or condition”. Therefore, “immediate treatment” is the urgent application of such medicines or medical techniques. However, given the context, such treatment need not be in a hospital. Only one category specifies being an in-patient in a hospital suggesting that other categories need not be restricted in that way. Source: M Tooma, Tooma’s Annotated Work Health and Safety Act 2011 (Thomson Reuters, 4th ed, 2012).

In addition, the following are serious illnesses: • any infection to which the carrying out of work is a significant contributing factor, including any infection that is reliably attributable to carrying out work: (i) with microorganisms, or (ii) that involves providing treatment or care to a person, or (iii) that involves contact with human blood or body substances, or (iv) that involves handling or contact with animals, animal hides, skins, wool or hair, animal carcasses or animal waste products • the following occupational zoonoses contracted in the course of work involving handling or contact with animals, animal hides, skins, wool or hair, animal carcasses or animal waste products: (i) Q fever (ii) Anthrax (iii) Leptospirosis (iv) Brucellosis (v) Hendra Virus (vi) Avian Influenza (vii) Psittacosis.

Serious “Serious” is a qualification to a number of injuries or illnesses captured by the definition of “serious injury or illness” including:

head injury, eye injury, burn and laceration. Serious is not defined in the legislation and therefore takes on its ordinary meaning of “critical”, “giving cause for apprehension”, or “of grave aspect”. Source: M Tooma, Tooma’s Annotated Work Health and Safety Act 2011 (Thomson Reuters, 4th ed, 2012).

Dangerous incident “Dangerous incident” is an incident in relation to a workplace that exposes a worker or any other person to a serious risk to a person’s health or safety emanating from an immediate or imminent exposure to: • an uncontrolled escape, spillage or leakage of a substance, or • an uncontrolled implosion, explosion or fire, or • an uncontrolled escape of gas or steam, or • an uncontrolled escape of a pressurised substance, or • electric shock, or • the fall or release from a height of any plant, substance or thing, or • the collapse, overturning, failure or malfunction of, or damage to, any plant that is required to be authorised for use in accordance with the regulations, or • the collapse or partial collapse of a structure, or • the collapse or failure of an excavation or of any shoring supporting an excavation, or • the inrush of water, mud or gas in workings, in an underground

excavation or tunnel, or • the interruption of the main system of ventilation in an underground excavation or tunnel. The site preservation requirements apply automatically and are also lifted automatically by the attendance of the inspector on site unless a non-disturbance notice is issued by the inspector.56 Such a notice may apply up to seven days but the inspector may issue subsequent notices.57 As indicated above, these site preservation requirements, however, do not prevent any action to assist an injured person; remove a deceased person; or any action that is essential to make the site safe or to minimise the risk of a further notifiable incident. Nor do the restrictions prevent actions associated with a police investigation or for which an inspector or the regulator has given permission. Incident reporting As their name suggests, notifiable incidents must be notified to the regulator.58 If an incident is a notifiable incident, the incident must be notified to the regulator by the fastest possible means.59 The notification must be given by telephone or in writing (including email or facsimile).60 Telephone notification If notification of an incident is done by telephone, the person giving notice must give the details of the incident requested by the regulator and if required by the regulator, give a written notice of the incident within 48 hours of that requirement being made. Written notification A written notice must be in a form, or contain the details, approved by the regulator. A PCBU must keep a record of each notifiable incident for at least five years from the day that notice of the incident is given to the regulator under this section.

Figure 5 — Incident notification and site preservation

Case example

Failure to notify a notifiable incident is an offence The failure to notify a notifiable incident was charged as a separate offence in SafeWork New South Wales v Waycon Bulk Pty Ltd,61 in addition to the charge for breach of the primary duty of care. The company conducted a business producing and supplying firewood, and providing bulk haulage services. Wayne Campbell was the sole director of the company. In September 2012, Mr Campbell placed an order with Hursts’ Engineering Pty Ltd for a wood splitting machine. The machine was delivered in February 2013. The machine had two splitting rams with blades attached. The two rams/blades were controlled by two people operating independently on opposite sides of the machine. The ram/blade took 4–5 seconds to fully descend. The machine as originally designed and supplied had a safety feature where the ram/blade

would only descend where an operator simultaneously depressed two buttons located underneath the splitting table. If the operator removed their hand(s) from one or both buttons, the ram/blade would retract. This was to protect the operator from the risk of injury to their arms and hands, by reason of the descent of the ram/blade. On one side of the machine there was an emergency stop button and controls for the gate of the bin in which blocks of wood were held. Once a block of wood was released from the bin onto the work table, galvanised hooks were used by employees to position the block beneath the ram/blade. Mr Campbell authorised the modification of the machine so as to allow an operator to cause the ram/blade to extend by pressing only one button. This modification was said to be “safer” as it allowed employees to have one hand free to defend their face or chest area in the event that a log “exploded” when it was split by the blade.62 A worker’s right hand was severed while operating the machine when his thigh accidently activated the machine as he was positioning a log. The incident would not have occurred if the “two button” safety feature had been maintained. To make matters worse, the company failed to notify the regulator of the incident. SafeWork NSW was instead notified of the incident by the Police. Waycon was convicted and fined $187,500 in relation to the breach of the primary duty of care and an additional $7,500 for failing to notify the incident.

Incident notification checklist □ Did the incident result in the death of a person? □ Did the incident result in an injury or illness requiring the person to have immediate treatment as an in-patient in a hospital?

□ Did the incident result in an injury or illness requiring the person to have immediate treatment for the amputation of any part of his/her body? □ Did the incident result in an injury or illness requiring the person to have immediate treatment for a serious head injury? □ Did the incident result in an injury or illness requiring the person to have immediate treatment for a serious eye injury? □ Did the incident result in an injury or illness requiring the person to have immediate treatment for a serious burn? □ Did the incident result in an injury or illness requiring the person to have immediate treatment for the separation of his/her skin from an underlying tissue (such as degloving or scalping)? □ Did the incident result in an injury or illness requiring the person to have immediate treatment for a spinal injury? □ Did the incident result in an injury or illness requiring the person to have immediate treatment for the loss of a bodily function? □ Did the incident result in an injury or illness requiring the person to have immediate treatment for serious lacerations? □ Did the incident result in an injury or illness requiring the person to have medical treatment within 48 hours of exposure to a substance? □ Did the incident result in any infection to which the carrying out of work is a significant contributing factor, including any infection that is reliably attributable to carrying out work with microorganisms?

□ Did the incident result in any infection to which the carrying out of work is a significant contributing factor, including any infection that is reliably attributable to carrying out work that involves providing treatment or care to a person? □ Did the incident result in any infection to which the carrying out of work is a significant contributing factor, including any infection that is reliably attributable to carrying out work that involves contact with human blood or body substances? □ Did the incident result in any infection to which the carrying out of work is a significant contributing factor, including any infection that is reliably attributable to carrying out work that involves handling or contact with animals, animal hides, skins, wool or hair, animal carcasses or animal waste products? □ Did the incident result in Q fever contracted in the course of work involving handling or contact with animals, animal hides, skins, wool or hair, animal carcasses or animal waste products? □ Did the incident result in Anthrax contracted in the course of work involving handling or contact with animals, animal hides, skins, wool or hair, animal carcasses or animal waste products? □ Did the incident result in Leptospirosis contracted in the course of work involving handling or contact with animals, animal hides, skins, wool or hair, animal carcasses or animal waste products? □ Did the incident result in Brucellosis contracted in the course of work involving handling or contact with animals, animal hides, skins, wool or hair, animal carcasses or animal waste products? □ Did the incident result in Hendra Virus contracted in the

course of work involving handling or contact with animals, animal hides, skins, wool or hair, animal carcasses or animal waste products? □ Did the incident result in Avian Influenza contracted in the course of work involving handling or contact with animals, animal hides, skins, wool or hair, animal carcasses or animal waste products? □ Did the incident result in Psittacosis contracted in the course of work involving handling or contact with animals, animal hides, skins, wool or hair, animal carcasses or animal waste products? □ Did the incident expose a worker or any other person to a serious risk to a person’s health or safety emanating from an immediate or imminent exposure to an uncontrolled escape of a substance? □ Did the incident expose a worker or any other person to a serious risk to a person’s health or safety emanating from an immediate or imminent exposure to an uncontrolled spillage of a substance? □ Did the incident expose a worker or any other person to a serious risk to a person’s health or safety emanating from an immediate or imminent exposure to an uncontrolled leakage of a substance? □ Did the incident expose a worker or any other person to a serious risk to a person’s health or safety emanating from an immediate or imminent exposure to an uncontrolled implosion? □ Did the incident expose a worker or any other person to a serious risk to a person’s health or safety emanating from an immediate or imminent exposure to an uncontrolled explosion?

□ Did the incident expose a worker or any other person to a serious risk to a person’s health or safety emanating from an immediate or imminent exposure to an uncontrolled fire? □ Did the incident expose a worker or any other person to a serious risk to a person’s health or safety emanating from an immediate or imminent exposure to an uncontrolled escape of gas? □ Did the incident expose a worker or any other person to a serious risk to a person’s health or safety emanating from an immediate or imminent exposure to an uncontrolled escape of steam? □ Did the incident expose a worker or any other person to a serious risk to a person’s health or safety emanating from an immediate or imminent exposure to an uncontrolled escape of a pressurised substance? □ Did the incident expose a worker or any other person to a serious risk to a person’s health or safety emanating from an immediate or imminent exposure to electric shock? □ Did the incident expose a worker or any other person to a serious risk to a person’s health or safety emanating from an immediate or imminent exposure to the fall or release from a height of any plant, substance or thing? □ Did the incident expose a worker or any other person to a serious risk to a person’s health or safety emanating from an immediate or imminent exposure to the collapse, overturning, failure or malfunction of, or damage to, any plant that is required to be authorised for use in accordance with the WHS Regulations? □ Did the incident expose a worker or any other person to a serious risk to a person’s health or safety emanating from an immediate or imminent exposure to the collapse or partial

collapse of a structure? □ Did the incident expose a worker or any other person to a serious risk to a person’s health or safety emanating from an immediate or imminent exposure to the collapse or failure of an excavation, or of any shoring supporting an excavation? □ Did the incident expose a worker or any other person to a serious risk to a person’s health or safety emanating from an immediate or imminent exposure to the inrush of water, mud or gas in workings, in an underground excavation or tunnel? □ Did the incident expose a worker or any other person to a serious risk to a person’s health or safety emanating from an immediate or imminent exposure to the interruption of the main system of ventilation in an underground excavation or tunnel?

Note: Environmental reporting obligations Environmental incident reporting obligations may also impose relevant obligations to report incidents. In New South Wales, this includes notification to SafeWork NSW and/or the NSW Environment Protection Authority.63

Notify your insurer Incidents will trigger various notification requirements under insurance policies which, if not undertaken, may void the insurance. Furthermore, where the incident results in any injury to an employee, there are legal requirements under workers compensation legislation to notify the insurer.

Stakeholder communication The company should notify the next of kin of any worker seriously injured or killed in an accident. It should also communicate the basic known events to its staff through an internal communication. Usually such communications will be limited to notifying or confirming that an incident has taken place at a particular site, that the incident involved a particular category of worker (employee, contractor, subcontractor, labour hire worker, etc), the process involved, if known, and the fact that the incident is under investigation and that the company is cooperating with the regulatory investigators, if any. Depending on the extent to which the workforce is unionised, it may be appropriate to notify the union of the incident. Unions have powers of investigation under the WHS Act. Any such notification will result in an investigation but where unions are involved in the workplace, such an investigation is inevitable. It is better in the circumstances to be proactive. Regulatory response to notification The categories of incidents which are notifiable under WHS legislation are in the serious end of incidents. Not surprisingly therefore, notification of incidents will generally result in a visit by the WHS regulator. Given this, where an incident is a notifiable incident, legal representation is necessary to protect the legal interest of the PCBU and officers and workers of the PCBU.

Checklist for the immediate incident response Checklist for emergency plan □ Is your incident management plan site-specific? □ Is your incident management plan adequately resourced? □ Have you considered risks to rescue workers? □ Is your incident management plan well-drilled?

□ Does your plan adequately address the site preservation legal requirements? □ Does your plan adequately address the legal requirement to notify incidents? □ Does your plan mobilise your legal team, where appropriate? Checklist for immediate response □ Did you notify the regulator? □ Did you notify your lawyers? □ Did you notify the insurer? □ Did you preserve the site? □ Did you notify next of kin? □ Did you notify staff? □ Have you prepared your communication plan?

Footnotes 18

Ministerio de Planificación, Chile (Ministry of Planning, Chile), “Encuesta Post Terremoto: Principales resultados Efectos en la calidad de vida de la población afectada por el terremoto/tsunami”, 2010.

19

Times Topics, “Chile Mining accident”, New York Times (12 October 2011).

20

A Soto, “Chile sets sight on escape shaft for trapped miners”, Reuters (24 August 2010).

21

Times Topics, above n 19.

22

Ibid.

23

See G Han, M Bruno, K Lao and Terralog Technologies USA, Inc, “Percussion Drilling in Oil Industry: Review and Rock Failure Modelling”, AADE 2005 National Technical Conference and Exhibition (Wyndam Greenspoint, Houston, Texas, 5–7 April 2005) for a review of the history and explanation of the technique.

24

“NASA-designed capsule helps free Chilean miners”, The Engineer (13 October 2010) available at www.theengineer.co.uk/design-engineering/news/nasadesigned-capsule-helps-free-chileanminers/1005467.article#ixzz1vNRYKmx2.

25

Ibid.

26

F Rashid, A C Edmondson and HB Leonard, “Leadership Lessons from the Chilean Mine Rescue”, Harvard Business Review (August 2013).

27

J Davitt McAteer and Associates, “Sago Mine Disaster: A preliminary report to Governor Joe Manchin III” (July 2006) 35.

28

Ibid.

29

Ibid 12.

30

Ibid 88.

31

Ibid 90.

32

Ibid 11.

33

Ibid 57.

34

Ibid 11.

35

Ibid 49.

36

National Commission on the Deepwater Horizon Oil Spill and Offshore Drilling, Report to the President, National Commission on the Deepwater Horizon Oil Spill and Offshore Drilling (11 January 2011) 133.

37

National Commission on the Deepwater Horizon Oil Spill and Offshore Drilling, Deepwater: The Gulf Oil Disaster and the Future of Offshore Drilling — Recommendations (2011) 32.

38

Ibid 17.

39

“Death toll rises to 104 in coal mine blast”, China Daily (23 November 2009).

40

M Duncan, “China mine explosion death toll reaches 92”, Reuters (22 November 2009) available at www.reuters.com/article/idUSTRE5AK08Y20091122.

41

Ibid.

42

China Daily, above n 39.

43

M Barriaux, “Depths of despair as Chinese mine toll rises and home fades”, Sydney Morning Herald (24 November 2009) available at www.smh.com.au/world/depths-ofdespair-as-chinese-mine-toll-rises-and-hope-fades-

20091123-iy6l.html. 44

“China coal mine explosion death toll up to 107”, The Australian (25 November 2009) available at www.theaustralian.com.au/news/world/china-coal-mineexplosion-death-toll-up-to-107/story-fn3dxix61225803793386.

45

M Duncan, above n 40.

46

Ibid.

47

“Learn mine safety lessons”, People’s Daily Online (Source: China Daily) (24 November 2009) available at english.peopledaily.com.cn/90001/90782/90872/6821524.html.

48

China Daily, above n 39.

49

Ibid.

50

Ibid.

51

See OSHA dedicated online page at www.osha.gov/oilspills/index.html.

52

S K Skinner and W K Reilly, “The Exxon Valdez Oil Spill: A Report to the President”, The National Response Team (May 1989) 1.

53

Work Health and Safety Act 2011 s 39.

54

Ibid s 39(2).

55

Ibid s 38.

56

Ibid s 198.

57

Ibid s 201.

58

Ibid s 38.

59

Ibid s 38(2).

60

Ibid s 38(3).

61

[2015] NSWDC 254.

62

SafeWork New South Wales v Waycon Bulk Pty Ltd [2015] NSWDC 254 [4]–[10].

63

See above n 58.

CHAPTER 3 LAWYERING UP

Key messages • Managing legal risks begins in the first 24 hours of an incident. • Early legal intervention is critical to effective legal risk management. • Objective and methodical evidence gathering is key to future incident prevention. • Know your rights and obligations. • Do not put up the shutters.

Case example

Winning a battle but losing the war The 21 August 2009 oil spill from the Montara Wellhead Platform (WHP) was the worst oil spill of its kind in Australia’s offshore petroleum industry history in over 20 years and Australia’s third largest oil spill in history overall. For a period of just over 10 weeks, oil and gas continued to flow unabated into the Timor Sea, approximately 250 kilometres off the northwest coast of Australia. Patches of sheen or weathered oil could have affected at various times, an area as large as 90,000 square kilometres. In the early hours of 21 August 2009, a small “burp” of oil and gas was reported as having escaped from the H1 Well at the Montara WHP. The oil and gas had travelled a distance of over four kilometres from the reservoir beneath the sea bed. While the initial “burp” subsided, approximately two hours later the H1 Well kicked with such force that a column of oil, fluid and gas was

expelled from the top of the well, through the hatch on the top deck of the WHP, hitting the underside of the West Atlas drilling rig and cascading into the sea. The Blowout occurred when hydrocarbons entered the H1 Well through the 9⅝” cemented casing shoe and flowed up the inside of the 9⅝” casing. The primary well control barrier — the 9⅝” cemented casing shoe — failed. None of the well control barriers complied with PTTEP Australasia’s (PTTEPAA’s) Well Construction Standards or with sensible oilfield practice. The 9⅝” cemented casing shoe had not been pressure tested in accordance with the company’s Well Construction Standards, despite major problems having been experienced with the cementing job. The cement in the casing shoe was likely to have been compromised as it had been substantially over-displaced by fluid, resulting in what is known as a “wet shoe”. None of this was understood by senior PTTEPAA personnel at the time, even though the company’s contemporaneous records, such as the Daily Drilling Report (DDR), clearly indicated what had happened. The multiple problems in undertaking the cement job — such as the failure of the top and bottom plugs to create a seal after “bumping”, the failure of the float valves and an unexpected rush of fluid — should have raised alarm bells. Those problems necessitated a careful evaluation of what happened, the instigation of pressure testing and, most likely, remedial action. No such careful evaluation was undertaken. Compounding the initial cementing problem was the fact that while two secondary well control barriers chosen by PTTEPAA — pressure containing anti-corrosion caps (PCCCs) — were programmed for installation, only one was ever installed. Further, the PCCC that was installed (the 9⅝” PCCC) was not tested and verified in situ as required by the Well Construction Standards. In any event, the manufacturer of the PCCCs (GE Oil & Gas) gave evidence to the inquiry that while the PCCC may contain pressure, it is not intended as a barrier against an uncontrolled release of hydrocarbons and has not been designed for that purpose. Yet when PTTEPAA submitted an application to

suspend the H1 Well utilising PCCCs rather than a cement plug, it received preliminary approval in 30 minutes notwithstanding that they were not intended to be used as barriers against a blowout. Key personnel working for PTTEPAA, both on the rig and onshore, were under the mistaken impression that the fluid left in the casing string was overbalanced to pore pressure and would therefore act as an additional barrier, even though the fluid was not monitored and overbalanced significantly to pore pressure as required by the Well Construction Standards in order to be regarded as a proper barrier. That is, as at April 2009 when the H1 Well had been suspended and the West Atlas rig had departed from the Montara WHP to undertake other work, not one well control barrier in the H1 Well had been satisfactorily tested and verified, and one barrier that should have been installed was missing. In other words, the H1 Well was suspended without regard to PTTEPAA’s own Well Construction Standards or sensible oilfield practice. When the West Atlas rig returned to the WHP in August 2009, it was discovered that the 13⅜” PCCC had never been installed. The absence of this PCCC had resulted in corrosion of the threads of the 13⅜” casing and this, in turn, led to the removal of the 9⅝” PCCC in order to clean the threads. This was viewed by PTTEPAA personnel as a mere change of sequence that simply involved bringing forward the time of the removal of the 9⅝” PCCC. PTTEPAA’s Well Construction Manager, Mr Duncan, took a positive decision not to reinstall the 9⅝” PCCC. This meant that, according to PTTEPAA’s operational forecast and drilling program, the H1 Well would have been exposed to the air without any secondary well control barrier in place for some four to five days, with sole reliance on an untested primary barrier (the cemented 9⅝” casing shoe) that had been the subject

of significant problems during its installation. After the 9⅝” PCCC had been removed, the H1 Well was left in an unprotected state (and relying on an untested primary barrier) while the rig proceeded to complete other planned activities as part of batch drilling operations at the Montara WHP. The Blowout in the H1 Well occurred 15 hours later. A Commission of Inquiry was called into the oil spill. As part of the inquiry, production of documents was sought from the operator, PTTEPAA, including a copy of the incident investigation report. PTTEPAA claimed legal professional privilege (LPP) over the document. The Commission of Inquiry observed at [7.77]–[7.79]: “The Inquiry is concerned that PTTEPAA might have manoeuvred itself into a position whereby LPP could be claimed over this report. In the face of a request for information from NOPSA [National Offshore Petroleum Authority], PTTEPAA’s in-house counsel sent an email to Mr Jacob and Mr Duncan on 27 August 2009 which stated: Please don’t commence any internal investigation of the incident (including actioning of this request from NOPSA) until legal professional privilege between the company and Mallesons is formally established (which is imminent — I will receive the retainer letter from Mallesons shortly). This email is consistent with the unsurprising possibility that PTTEPAA intended, immediately after the Blowout, to conduct an investigation into its causes for all sorts of purposes — for example, it needed to understand what might have caused the Blowout in order to plan how to kill the H1 Well, which was a major priority at that time. Yet PTTEPAA now claims that its dominant purpose in carrying out this investigation was simply to protect its legal interests. In the end, the Inquiry did not need to finally resolve whether the report which resulted from this investigation was privileged or not (noting that any such resolution may

ultimately have required judicial adjudication). The Inquiry notes and accepts that PTTEPAA was within its rights to agitate a claim of privilege.” But the Commission of Inquiry concluded that “the way that PTTEPAA operated the Montara Oilfield did not come within a ‘bulls roar’ of sensible oilfield practice”. The Inquiry determined that: “The Blowout was not a reflection of one unfortunate incident, or of bad luck. What happened with the H1 Well was an accident waiting to happen; the company’s systems and processes were so deficient and its key personnel so lacking in basic competence, that the Blowout can properly be said to have been an event waiting to occur.”

So was putting up the shutters the right strategy? To answer that question we would need to know what was in that report. What is clear is that the manner in which lawyers are engaged and their strategy upon their engagement has an impact not only on the legal liability question, but reputational matters as well. Legal liability and legal professional privilege Fear of legal liability is often cited as the reason why incidents are not properly investigated or why learnings from incidents are not widely shared.64 Indeed, Decker (2007) argues that the judicial process is bad for safety.65 According to Decker, “the sheer threat of judicial involvement is enough to make people think twice about coming forward with information about an incident that they were involved in”.66 Reflecting on a case study of a nurse who was prosecuted for an error in providing medication that caused the death of a child, he further observes that “so long as there is fear that information provided in good faith can end up being used by a legal system, practitioners are not likely to engage in open reporting”.67 For Decker, the involvement of regulators in investigations, regulatory investigations themselves and/or the use of investigation reports in legal

proceedings are all examples of judicial involvement which “engenders a climate of fear and silence”.68 This inhibits proper investigation of the causes of incidents and the dissemination of the learnings from incidents to prevent their recurrence.69 Dekker’s conclusion is that criminalisation of human error is “troublesome” and that the “long term consequence for society of turning errors into crimes or culpable malpractice could be less safe systems”.70 In other words, it is all the lawyers’ fault! Lawyers are the professionals that people love to hate. Everyone has a tale of a multimillion dollar suit that someone has unfairly suffered at the hands of some clever but unscrupulous lawyer. No matter that those tales are probably fictional, spread through serial email chains. No matter that they are compensation claims for which businesses can be, and are, insured against. The fear of the legal liability is said to motivate people to suppress information about incidents. Of course that fear is largely misguided. Claims for compensation are for the most part automatic, and do not require such elaborate revelations of negligence. That is because in Australia we operate a no fault workers compensation regime. Negligence claims can be made by third parties but they are usually covered by insurance. Although lawyers will trawl over every document to gain an advantage for their client, in most cases, liability is obvious and readily conceded and the contest is one of questions of quantum of liability. The real risk of legal compromise in fact does not arise from civil claims but rather from the potential for the use of information by regulators in a prosecution for breach of the WHS legislation. But far from being fatal to the cause of open and transparent reporting and investigation of information, this risk merely grounds a legitimate basis for the use of legal professional privilege — a fact recognised in the legislative regime itself. Despite the scope of the powers of inspectors to seek information and demand the production of documents, the WHS Act provides an express protection of documents which are subject to legal

professional privilege.71 Information and documents will be privileged if they were created for the dominant purpose of providing legal advice or in contemplation of legal proceedings. It is now common practice for companies to engage lawyers to advise them in relation to their legal liability arising from an incident. It is common practice for lawyers to be engaged to conduct incident investigations because of their specialist inquisitive and interrogation skills. Provided that the dominant purpose of such reports or advices is the provision of legal advice in relation to liability, those documents will be privileged. Regulators are used to claims of privilege in relation to investigation reports and legal advices properly commissioned. What is legal professional privilege? Despite its prevalence, legal professional privilege is not well understood in the context of safety. It is seen as some trick — either a magic wand that you wave over documents or some black magic that one should not engage in if they are “serious about safety”. Neither is true. Writing “privileged” over a document which is otherwise not privileged does not render it so. Conversely, failing to write it does not make it not privileged. Legal professional privilege is a protection afforded by the law to the confidential communication between a client and their lawyer. It applies to documents which have been created for the dominant purpose of obtaining legal advice or in contemplation of legal proceedings. Given the regulatory context of WHS incidents, a proper investigation of the causes of the incidents is necessary for the purpose of advising in relation to liability under the WHS legislation. Furthermore, most serious incidents result in legal proceedings such as coronial inquests, WHS prosecutions and civil litigation. As such, an investigation report may also meet the second alternative limb of the test for privilege. Investigations required under a policy or law

An investigation report prepared in compliance with a requirement of a corporate policy can, however, never meet the dominant purpose test, since its dominant purpose will be compliance with the corporate policy rather than the provision of legal advice. Indeed, even if the report was brought into existence for two purposes which were of equal weight, such as compliance with an internal policy and obtaining legal advice, one would not be dominant over the other, and therefore the document would not be privileged.72 The same is true of the report that was prepared for the dominant purpose of complying with a statutory reporting obligation, as was the case in Perry & Sagar v Powercor Australia Limited ([2011] VSC 308), where a report prepared pursuant to an obligation under the electricity supply statute was found not to be for the dominant purpose of obtaining legal advice or in contemplation of litigation and therefore not privileged. Privilege is not a trick — it is a fundamental to the law The High Court of Australia noted in Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission: “Legal professional privilege is not merely a rule of substantive law. It is an important common law right or, perhaps, more accurately, an important common law immunity.”73 As the majority of the High Court noted in Esso Australia Resources Ltd v Commissioner of Taxation of the Commonwealth of Australia, the “privilege exists to serve the public interest in the administration of justice by encouraging full and frank disclosure by clients to their lawyers”.74 The protection of the communications between a client and their lawyer fosters a candid relationship.75 Regulator suspicion of privilege is misconceived. If we want to create the sort of conditions that Dekker (2007) craves where witnesses can freely disclose what really happened to investigators without an eye over their shoulder for the consequences, internally and externally, the proper use of legal professional privilege should be encouraged. As the High Court of Australia noted, “[t]he raison d’etre of legal professional privilege is the furtherance of the administration of justice

through the fostering of trust and candour in the relationship between lawyer and client”.76 Role of legal professional privilege in addressing the fear of liability from full disclosure On the other hand, the negative perception of the invocation of privilege is unwarranted. Safer companies are companies that interrogate the causes of accidents to get to the root causes — the system deficiencies and organisational factors that caused the absence or failure of defences or controls. The exercise of embarking upon this inquiry exposes the company and its officers to significant penalties. By involving lawyers and commissioning a privileged investigation, the company can embark on such a soul searching inquiry without fear or favour. That is, in the language of the High Court, privilege facilitates “full and frank disclosure” and “trust and candour” in the investigation. These are the qualities which are needed in order to learn from incidents. Internal or external advice? In Sydney Airports Corporation Ltd v Singapore Airlines Ltd & Qantas Airways Ltd, Spigelman CJ made the following observations: “An in-house solicitor is, by reason of his or her position, more likely to act for purposes unrelated to legal proceedings than an external solicitor who, in the normal course, has no relevant functions other than that involving legal proceedings and/or legal advice. An in-house solicitor may very well have other functions. Accordingly, in determining whether or not a document was brought into existence for a purpose which was both privileged and dominant, the status of the legal practitioner is not irrelevant.”77 In that case Sydney Airports Corporation’s in-house counsel commissioned a report on an accident in which an aerobridge collided with a door of a plane at Sydney Airport. Sydney Airport claimed legal privilege over the report on the basis that it was prepared in contemplation of litigation. In the Supreme Court of New South Wales, McDougall J held that the report had not been created for the

dominant purpose of use in likely litigation and was therefore not privileged, finding that although one purpose of the report was in anticipation of “likely” litigation, there were other purposes, such as to assist in determining what went wrong in an operational sense in order to understand what caused the issue, and to allay the concerns of a body known as the Airline Operations Committee.78 Waiver Privilege attaches only to confidential information. As such, privileged documents must remain confidential and must not be disclosed to third parties. That includes unions. Disclosing the substance of an advice can also waive privilege over the advice. So does the common managerial practice of relying on the legal advice as the basis for justifying a decision. All these behaviours are inconsistent with the maintenance of the confidence of the information and therefore the protection afforded by the law for such documents. Because the privilege belongs to the company or, in case of other PCBUs, the person who engages the lawyer, they have the right to waive it if they wish. That is, they may decide that even though a document is privileged, they want to nevertheless disclose it. This is not only permissible but, much to the horror of lawyers, very common. In that context it is said that privilege has been waived. But a waiver of privilege can also be implied in conduct. A waiver of privilege — or loss of privilege — can occur where the party entitled to the privilege acts in a way that is inconsistent with the maintenance of the privilege. Waiver can occur even in circumstances where the disclosing party has no subjective intention to waive privilege. Disclosing the substance of an advice can also waive privilege over the advice.79 This can occur even though the person expressly purports to maintain the privilege over the advice. That means that the common managerial practice of relying on the legal advice as the basis for justifying a decision is a dangerous one. Fundamentally, the issue comes down to the fact that privilege attaches only to confidential information. It is an immunity from disclosure of certain information to facilitate frank and fearless

communication and advice. Intentionally failing to maintain that confidentiality, or acting in a manner inconsistent with that confidentiality, therefore renders the claim for immunity from disclosure hollow. Behaviours such as relying on an advice for justifying to a third party the making of a decision, or disclosing the advice or the substance of the advice to a third party are behaviours that are inconsistent with the maintenance of the confidence of the information and therefore the protection afforded by the law for such documents. If privilege is to be maintained, privileged documents must remain confidential and must not be disclosed to third parties. That includes unions. Legal professional privilege and notices The regulator cannot compel disclosure of privileged documents such as confidential investigation reports commissioned for the dominant purpose of obtaining legal advice or statements taken by lawyers. The right is so fundamental to our legal system that even subpoenas — which are court orders for production of documents — cannot compel disclosure of truly privileged information, let alone regulatory notices such as “section 155 notices”. In Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission, the High Court held that: “It is now well settled that statutory provisions are not to be construed as abrogating important common law rights, privileges and immunities in the absence of clear words or a necessary implication to that effect.”80 In that case, the Australian Competition and Consumer Commission (ACCC) served a notice on the applicant’s solicitors requiring the production of certain documents pursuant to s 155 of the then Trade Practices Act 1974 (Cth). The solicitors produced some of the documents specified under the notice but claimed legal professional privilege on behalf of their client with respect to the remainder of the documents. The ACCC brought an application to the Federal Court seeking orders

requiring the applicant to comply with the notice. The question whether legal professional privilege applied to the notice was referred to the Full Court of the Federal Court for determination. At first instance, the Full Court held that it did not. The High Court unanimously overturned the Full Court’s decision, holding that in the absence of provisions to the contrary, legal professional privilege may be availed of to resist the giving of information or the production of documents in accordance with investigatory notices such as section 155 notices.81 Strategy with legal professional privilege Legal professional privilege is just that — a privilege. It is the client’s privilege and it is their right whether to maintain it or waive it by disclosing the document. It is the client’s choice. But once the privilege is waived, you cannot get it back. So just because you have invoked privilege over something, it does not mean that you must maintain the privilege forever. You can waive it at any time if you so choose. That happens often. Reports are commissioned by lawyers in the course of litigation. They prove favourable to the case. They are disclosed or even served on the opponents and relied upon. So a privileged investigation report is privileged for so long as you wish it to be. You can disclose the document to the regulator, union or the public at any point in time if you so choose. You just cannot undo that decision once made. In the aftermath of an incident, there is an insatiable appetite for information by stakeholders including regulators, the media, clients, workers and the broader community. As such, people expect there to be a report into the incident. When lawyers get involved, their instincts are to put up the shutters because they are singularly focused on their brief of minimising legal liability. But that is not the only factor at stake. Prevention of the recurrence of the incident and prevention of further harm to people and the environment is a paramount ethical, corporate and legal consideration. Furthermore, without a narrative for the media on how the incident occurred, how it is being addressed and how future incidents will be prevented, the court of public opinion may convict long before the company sets foot in court. Put simply, there

may not be a company to defend if stakeholders perceive the issue to be bigger than it is or management to be incapable of addressing it. The immediate reaction to the Deepwater Horizon incident was a “run on the shares” of BP with just under half the value of the company wiped off within days. As a matter of strategy, it is often better to have some investigation report over which privilege will be waived — a public report. This addresses the appetite for information by regulators and other stakeholders. That does not prevent a more detailed privileged report to be in existence dealing with questions of legal liability and more profound systemic and cultural causes that should be addressed. But the public report satisfies the need for disclosure of basic information about the incident until the company is ready to address other issues. Figure 6 — Flowchart: is a document privileged?

Footnotes 64

See M Tooma, OHS Manager (CCH).

65

S Dekker, Just Culture — Balancing Safety and Accountability (Ashgate Publishing, 2007) 91–103.

66

Ibid 91.

67

Ibid 92.

68

Ibid 93.

69

Ibid.

70

Ibid 101.

71

Work Health and Safety Act 2011 s 251.

72

Sparnon v Apand Pty Ltd (1996) 68 FCR 322. See also Wingeairribee Shire Council v Lehman Brothers Australia Limited (in liq) (No 5) [2011] FCA 245 [27] and Perry & Sagar v Powercor Australia Limited [2011] VSC 308.

73

[2002] HCA 49; (2002) 77 AL JR 40 [11].

74

[1999] HCA 67 [35].

75

Australian Law Reform Commission, Privilege in Perspective: Client Legal Privilege in Federal Investigations (ALRC Report 107, 2008) 50.

76

Attorney-General for the Northern Territory v Maurice (1986) 161 CLR 475 [487] (Mason and Brennan JJ).

77

[2005] NSWCA 47 [24].

78

[2004] NSWSC 380.

79

Secretary, Department of Justice v Osland [2007] VSCA 96 [49] (Maxwell P [29]–[36]). Maxwell P set out the basis for not accepting the following statement of Gyles J in the Full Court in Bennett v Chief Executive Officer of the Australian Customs Service (2004) 140 FCR 101. Gyles J in the Full Court stated (at [65]) as a general rule: “The voluntary disclosure of the gist or conclusion of the legal advice amounts to waiver in respect of the whole of the advice to which reference is made including the reasons

for the conclusion.” The reasoning of Maxwell P in relation to waiver of privilege was confirmed by the High Court in Osland v Secretary, Department of Justice (2008) 234 CLR 275 [44]–[50] in the joint judgment of Gleeson CJ, and Gummow, Heydon and Kiefel JJ. 80

[2002] HCA 49; (2002) 77 AL JR 40, Gleeson CJ, and Gaudron, Gummow and Hayne JJ [11].

81

Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission [2002] HCA 49; (2002) 77 AL JR 40 (Gleeson CJ, and Gaudron, Gummow and Hayne JJ [10]); McHugh J [39]; Kirby J [111] and Callinan J [132]. See M Tooma, Tooma’s Annotated Occupational Health and Safety Act 2000: NSW (Thomson Reuters, Sydney, 3rd ed, 2009) [1.62.10] and following. See also M Tooma, Tooma’s Annotated Work Health and Safety Act 2011: The Model Work Health and Safety Laws (Thomson Reuters, Sydney, 2012) [155.10] and following.

CHAPTER 4 WHAT TO DO WHEN AN INSPECTOR CALLS   Key messages • Serious incidents will result in investigations by regulators. • Regulators have broad powers. • Co-operation and communication management is key to success.

An inspector visits An inspector will usually attend the site of a reported serious incident. Their powers of entry under the WHS Act are broad.82 They may enter premises that are, or they reasonably suspect are, “workplaces”. “Workplace” means “a place where work is carried out for a business or undertaking”.83 Even in relation to residential premises, an inspector may enter the premises for the purpose of gaining access to a suspected workplace.84 They may certainly do so with the consent of the occupier of the premises85 or with a search warrant.86 If upon entry they discover it is not a workplace, they are required to leave immediately.87 Does an inspector have to give notice of entry? The inspector is not required to give notice prior to entry but must do so as soon as reasonably practicable. The notice needs to be given to: • the person who is or appears to be in charge of the workplace • any person conducting a relevant business or undertaking at the

workplace being investigated, and • any health and safety representative for workers carrying out work for that business or undertaking at the workplace. However, an inspector is not required to notify any person if to do so would defeat the purpose for which the place was entered or cause unreasonable delay. What are the inspector’s powers? Once on site, inspectors have very broad investigation powers.88 They may: • inspect, examine and make inquiries at the workplace • inspect and examine any thing (including a document or record) at the workplace • bring to the workplace and use any equipment or materials that may be required • take measurements, conduct tests and make sketches or recordings (including photographs, films, audio, video, digital or other recordings) • take and remove for analysis, a sample of any substance or thing without paying for it • require a person at the workplace to give the inspector reasonable help to exercise the inspector’s powers • exercise any compliance power or other power that is reasonably necessary to be exercised by the inspector for the purposes of the Act • require a person to tell the inspector who has custody of, or access to, a record or document • require a person who has custody of, or access to, a record or

document to produce that record or document to the inspector while the inspector is at that workplace or within a specified period89 • require a person at the workplace to answer any questions put by the inspector90 • make copies of, or take extracts from, a record or document given to the inspector in accordance with a requirement under the Act • keep that record or document for the period that the inspector considers necessary91 • seize any thing (including a document or record) at the place if the inspector reasonably believes the thing is evidence of an offence against the Act • take and remove for examination, analysis or testing a sample of any substance or thing without paying for it.92 An inspector will usually use their initial site visit in the aftermath of an incident to gather forensic evidence of the scene and identify key witnesses. For example, inspectors will often take photographs of the scene, take measurements of distances and relevant plant, identify plant and structures involved in the incident including make, model and registration details, and seize certain equipment directly involved (such as harnesses, for example). While an inspector will usually take a brief statement from eye witnesses, this will be recorded in the inspector’s notebook and is often restricted to identifying key events to better prepare the inspector for further interviews and inquiries. An inspector can have a person assist them in exercising their powers, including an interpreter.93 The key role of the company representative in that process is not only to co-ordinate and facilitate the inspection, but to anticipate the issues and present them truthfully but in context — that is the manner in which you present yourself in the favourable light within the confines of the facts. Lies and half-truths will make a bad situation worse.

Equally, an incomplete picture at this juncture is rarely undone. Inspectors are inherently suspicious. If you did not have the document when they asked for it, they assume it did not exist. Explaining the correct corporate structure or engagement of workers can be critical to questions of liability. They are difficult questions to answer on the run but sadly often are. But these answers shape the direction of the investigation. It is also important that the company representative keep an accurate record of what was observed, seized or taken including documents, which witnesses were spoken to and which were not. Notices An inspector will typically issue a series of notices at the conclusion of their preliminary site inspection.94 An inspector may issue a nondisturbance notice to the person with management or control of a workplace if the inspector reasonably believes that it is necessary to do so to facilitate the exercise of his/her compliance powers.95 An inspector will typically also issue one or several improvement notices. An inspector may issue an improvement notice if the inspector reasonably believes that a person is contravening or has contravened a provision of the Act in circumstances that make it likely that the contravention will continue. The notice may direct the person to: • remedy the contravention, or • prevent a likely contravention from occurring, or • remedy the things or operations causing the contravention or likely contravention.96 In most serious incidents, the inspector will also issue a prohibition notice. An inspector may issue a prohibition notice if an inspector reasonably believes that an activity is occurring or may occur at a workplace that involves or will involve a serious risk to the health or safety of a person emanating from an immediate or imminent exposure to a hazard; the inspector may give a person who has control over the activity, a direction prohibiting the carrying on of the

activity, or the carrying on of the activity in a specified way, until an inspector is satisfied that the matters, that give or will give rise to the risk, have been remedied.97 If a person to whom a prohibition notice is issued fails to take reasonable steps to comply with the notice, the regulator may take any remedial action it believes reasonable to make the workplace or situation safe, after giving written notice to the person to whom the prohibition notice was issued, of the regulator’s intention to take that action; and the owner’s or person’s liability for the costs of that action.98 The regulator may recover the cost of the remedial action from the person who failed to comply with the prohibition notice.99 If the regulator reasonably believes that circumstances in which a prohibition notice can be issued exist and a prohibition notice cannot be issued at a workplace because, after taking reasonable steps, the person with management or control of the workplace cannot be found, the regulator may take any remedial action necessary to make the workplace safe.100 The regulator may recover the cost of taking that remedial action from the person on whom the notice would have been issued.101 It is an offence to fail to comply without reasonable excuse with a nondisturbance notice, improvement notice or prohibition notice and therefore failure to comply may attract further enforcement action such as a prosecution. In addition, the regulator may also apply to a court for an injunction compelling a person on whom a non-disturbance, improvement or prohibition notice has been issued, to comply with the notice.102 Regulatory notices An inspector may issue a non-disturbance notice to the person with management or control of a workplace if the inspector reasonably believes that it is necessary to do so to facilitate the exercise of his/her compliance powers.103 An inspector may also issue an improvement notice and/or prohibition notice. The aim of issuing improvement and prohibition notices is to ensure that non-compliance with WHS laws and serious risks are

remedied.104 Improvement notices An inspector may issue an improvement notice if the inspector reasonably believes that a person is contravening or has contravened a provision of the WHS Act in circumstances that make it likely that the contravention will continue. The notice may direct the person to: • remedy the contravention • prevent a likely contravention from occurring, or • remedy the things or operations causing the contravention or likely contravention.105 The National Compliance and Enforcement Policy (the Policy) provides that inspectors may issue an improvement notice in any circumstance where they form a reasonable belief regarding a contravention “unless some other appropriate action is considered by the inspector to achieve the desired outcome”.106 An improvement notice is strategically significant because it discloses the regulator’s perspective in relation to the relevant failure on the part of the duty holder. The inspector has to firstly form the view that there is a breach of the law and identify this in the notice. Then, they identify what they require the duty holder to do to remedy the contravention. This is what the regulator perceives should have been done in the first place and, should the matter proceed to a prosecution, will be the basis on which the case will be brought (ie the particulars of the offence). In that context, accepting a notice is accepting for the purpose of the investigation that the direction required by the notice should have been taken and was reasonably practicable to take. If that is not the case, it is crucial that the notice is appealed. If the notice is not appealed, compliance with the notice may be used against the company in any subsequent prosecution for the incident. Case example

Admissibility of steps taken regarding an improvement notice The issue of the admissibility of steps taken in response to an improvement notice was considered in SafeWork NSW v Tamex.107 That case related to an injury to a truck driver employed by a contractor of the defendant, while his truck was being unloaded by an employee of the defendant at the defendant’s premises. In the aftermath of the incident, a SafeWork NSW inspector attended the site and issued two improvement notices. The first notice directed the defendant to “ensure so far as is reasonably practicable the health and safety of workers/other persons by implementing a safe work procedure to manage the risks associated with persons being struck by moving plant and/or loads being moved at the workplace”.108 The second notice directed the defendant to “eliminate the risks associated with metal gates falling from cages, where this is not reasonably practicable you must minimise the risks so far as is reasonably practicable by developing and implementing a system for ensuring the gates are secured in position during transport”.109 The defendant took certain steps in compliance with those notices which were set out in a revised Safe Work Method Statement for the unloading process. Those steps were later abandoned as being impracticable. The defendant was prosecuted in relation to the incident. The particulars of the charge reflected the very steps that were identified by the defendant in its revised post-incident Safe Work Method Statement. No evidence was led by the prosecutor in relation to the reasonable practicality of the particulars of the charge other than the post-incident compliance by the defendant with its improvement notices. The defendant argued that the court can have no regard to steps taken by the defendant post-incident under compulsion of a statutory notice. Scotting J reasoned as

follows: “The defendant contended that the Court could not consider any of the steps taken by the defendant after the incident because it was legally compelled to take those steps by the issue of the Improvement Notices. The defendant did not cite any authority for that proposition. The argument can be simply disposed of on the basis that the Improvement Notices did not require the defendant to take the particular steps taken by it after the incident. The Improvement Notices required it to take steps that were reasonably practicable as required by the Act. The defendant chose to take the particular steps that it did. I can see no reason why the taking of the particular steps by the defendant cannot be some evidence of the fact that they were reasonably practicable. When the Court comes to apply section 18 of the Act, that evidence may not be determinative of the issue. At that point, I must be satisfied beyond reasonable doubt that the steps were reasonably practicable to achieve the provision of a safe working environment at the time leading up to the incident and not with the benefit of hindsight.”110

Appeals against improvement notices An improvement notice can be appealed by the person to whom the notice was issued. This person may be: • a PCBU whose interests are affected by the decision • a worker whose interests are affected by the decision, or • a health and safety representative who represents a worker whose interests are affected by the decision. Figure 7 — Persons with standing to appeal an improvement notice

The first step in the appeal process is to apply to the regulator for an internal review of the notice.111 The application must be made in the manner and form required by the regulator.112 An appeal against a notice must be lodged within the period specified in the notice for compliance with the notice or 14 days, whichever is the lesser.113 An application for an internal review of an improvement notice stays the operation of the notice.114 The person who made the original decision does not review that decision.115 Typically, the process is entrusted to a dedicated team of reviewers, but some regulators use the supervisor of the division for that purpose. Reviewers aim to be consistent in their approach.116 All decisions must provide procedural fairness to all the parties, and deal with any real or perceived conflict of interest.117 Reviewers must act independently and exercise their own judgment while having regard to the WHS Act, relevant regulatory policies and (where relevant) accepted technical standards or guidance material.118 They must provide written reasons for their decisions.119 The review considers all the material that was available to the original decision-maker at the time the decision was made, and any new relevant information that has become available since that decision,

including information provided by the applicant.120 The reviewer may contact the applicant to seek clarification or additional information.121 If the internal reviewer seeks further information from the applicant, the 14-day period ceases to run until the applicant provides the information to the internal reviewer.122 In these circumstances, the reviewer will indicate the timeframe to provide the information and the review process stops until the applicant provides the information.123 The applicant must provide the further information within the time (being not less than seven days) specified by the internal reviewer in the request for information.124 If the applicant does not provide the further information within the required time, any decision will be taken to have been confirmed by the internal reviewer at the end of that time.125 A reviewer can also speak to the original decision-maker, as well as other relevant people, including experts if it is a technical issue.126 They may also refer to written documents, such as codes of practice or industry standards.127 Sometimes a reviewer might arrange a meeting with the applicant or a visit to the workplace if they think it is necessary to help them make their decision and if it can be done within the timeframe.128 The reviewer then decides, in light of all the material, what decision is the most appropriate — by confirming the original decision, or varying the original decision, or setting aside the original decision and substituting another decision.129 The applicant is advised in writing of the reviewer’s decision and the reasons for the decision.130 The internal reviewer must review the reviewable decision and make a decision as soon as is reasonably practicable and within 14 days after the application for internal review is received.131 If the reviewable decision is not varied or set aside within the 14-day period, the decision is taken to have been confirmed by the internal reviewer.132 An applicant can appeal the internal review decision by making an external review application. The forum for those applications differs

from jurisdiction to jurisdiction. In New South Wales, it involves an application to the Industrial Relations Commission (IRC). The application must be made within 14 days. There is no automatic stay of the notice. As such, the applicant must, at the time of making the application, apply for a stay. Case example

Essential Energy The first case under these provisions involved the New South Wales state-owned energy utility, Essential Energy. Essential energy is one of three Distribution Network Service Providers in New South Wales. To drive competition in an otherwise stateowned industry, and in relation to certain categories of work, such as network connections of customers, these service providers are required to give their customers a choice. Customers may either use their services or use other private electrical service providers (approved by the Department of Fair Trading) to perform that work. Those private providers are called Accredited Service Providers (ASP). On 11 April 2012, an ASP called Ronin Pty Limited was undertaking a network connection on behalf of one of its customers, Hibbard Pty Ltd, when one of its apprentices received an electric shock. The incident was investigated by a WorkCover NSW inspector who issued an improvement notice on Essential Energy. Essential Energy appealed the notice to WorkCover NSW via the internal review process but the notice was confirmed. Essential Energy then appealed the decision to confirm the notice to the IRC. The first step in that process was to seek a stay of the notice. What one needs to show is that there is a serious issue to be decided and the balance of convenience favours giving the stay. Backman J stayed the notice on that basis. WorkCover

subsequently withdrew the notice. Essential Energy’s only involvement was to issue an access permit in relation to the work, providing access to a part of its network consisting of electrical conductors which it had deenergised. The electrical conductors which the worker came into contact with were not subject to the access permit — that is, they were not an area for which access to the network had been authorised.133

Figure 8 — Improvement notice review process

Prohibition notices In most serious incidents, the inspector will also issue a prohibition notice. The Policy describes a prohibition notice as: “a direction to prohibit an activity until the inspector is satisfied that the risk has been remedied”. It also requires an inspector to issue prohibition notices “where there is a serious risk which emanates from an immediate or imminent exposure to a hazard”.134 The WHS Act itself provides that an inspector may issue a prohibition notice if they reasonably believe that an activity is occurring (or may occur) at a workplace that involves (or will involve) a serious risk to the health or safety of a person — emanating from an immediate or

imminent exposure to a hazard. The inspector may give a person who has control over the activity a direction prohibiting the carrying on of the activity, or the carrying on of the activity in a specified way, until such time as the inspector is satisfied that the matter(s) that give (or will give) rise to the risk have been remedied.135 The direction may be given orally, but must be confirmed in a written notice.136 If a person to whom a prohibition notice is issued, fails to take reasonable steps to comply with the notice, the regulator may take any remedial action it believes reasonable to make the workplace or situation safe. Prior to any action occurring, the regulator will give written notice to the person (to whom the prohibition notice was initially issued) of its intention to take that action. The written notice will contain the owner’s or person’s liability for the costs of that action.137 The regulator may then recover the costs associated with remedial action set out in the written notice from the person who failed to comply with the prohibition notice.138 If the regulator reasonably believes that circumstances in which a prohibition notice can be issued exist and a prohibition notice cannot be issued at a workplace because, after taking reasonable steps, the person with management or control of the workplace cannot be found, the regulator may take any remedial action necessary to make the workplace safe.139 The regulator may recover the cost of taking that remedial action from the person on whom the notice would have been issued.140 Appeals against prohibition notices Inspectors will issue prohibition notices in the most serious of cases. As such, the remedial action required in a prohibition notice usually indicates a serious breach by the duty holder. If the duty holder disagrees with the prohibition notice, they should appeal it. An application for internal review of a prohibition notice can be made by the person to whom the notice was issued; the person with management or control of the workplace, plant or substance which is the subject of the notice; a PCBU whose interests are affected by the decision; a worker whose interests are affected by the decision; a

health and safety representative who represents a worker whose interests are affected by the decision and a health and safety representative who gave a direction to cease work,141 that is relevant to the prohibition notice.142 Figure 9 — Standing to appeal a prohibition notice

Much like the appeal against the improvement notice, the first step in the appeal process is to apply to the regulator for an internal review of the notice.143 The application must be made in the manner and form required by the regulator, and must be lodged within 14 days.144 Unlike the internal review of an improvement notice, an application for an internal review of a prohibition notice does not automatically stay the operation of the notice.145 The reviewer may stay the operation of the notice.146 They can do so at their own initiative or on the application of the applicant for review.147 The reviewer must make a decision on an application for a stay within one working day after receiving the application.148 If the reviewer has not made a decision to stay a decision within one working day, he/she is taken to have made a decision to grant a stay.149 A stay of the

operation of a decision continues until the end of the prescribed period for applying for an external review of the decision.150 The process for internal review of a prohibition notice is the same as that for an improvement notice. The person who made the original decision does not review that decision but may be consulted by the reviewer. The applicant is entitled to procedural fairness. That means only relevant information is considered. Matters to be taken into account must be put to the applicant, and the applicant must be given an opportunity to respond to them. If the internal reviewer seeks further information from the applicant, the 14-day period ceases to run until the applicant provides the information to the internal reviewer.151 The applicant must provide the further information within the time (ie not less than seven days) as specified by the internal reviewer in the request for information.152 If the applicant does not provide the further information within the required time, the decision will be taken to have been confirmed by the internal reviewer at the end of that time.153 The internal reviewer must review the reviewable decision and make a decision as soon as is reasonably practicable and within 14 days after the application for internal review is received.154 The decision may be to confirm or vary the reviewable decision, or to set aside the reviewable decision and substitute another decision that the internal reviewer considers appropriate.155 If the reviewable decision is not varied or set aside within the 14-day period, the decision will be taken to have been confirmed by the internal reviewer.156 An applicant can appeal the internal review of the decision by making an external review application. The forum for those applications differs from jurisdiction to jurisdiction. In New South Wales, it involves an application to the IRC. The application must be made within 14 days. As with the internal review application for a prohibition notice, it is necessary to apply for a stay of the notice. Compliance with notices It is an offence to fail to comply without reasonable excuse with a nondisturbance notice, improvement notice or prohibition notice. Failure to comply may attract further enforcement action, such as a prosecution.

In addition, the regulator may also apply to a court for an injunction compelling a person on whom a non-disturbance, improvement or prohibition notice has been issued, to comply with the notice.157 Where there is a failure to comply with an inspector’s notice, the regulator may prosecute. Or, if there is a serious risk to health and safety, the regulator may seek an injunction against the person to whom the notice was directed.158 It is a common misconception that improvement and prohibition notices are punitive enforcement measures. Improvement and prohibition notices are remedial measures,159 not punitive measures.160 This is why in most cases, where improvement notices and prohibition notices are issued, some other form of enforcement measure is used. For minor offences, this is a penalty notice. For more serious offences, a prosecution is initiated.161 That is, rarely will the issuing of improvement notices be the end of a regulatory investigation. Quite the opposite — it is usually the beginning of a journey which ends in a prosecution. Footnotes 82

See R Johnstone and M Tooma, Work Health and Safety Laws (Federation Press, 2012). The information in this section is based on Chapter ¶5 of that book.

83

Including any place where a worker goes or is likely to go while at work. See s 8 of the Work Health and Safety Act 2011.

84

Work Health and Safety Act 2011 s 170(c).

85

Ibid s 170(a).

86

Ibid s 170(b).

87

Note an inspector may enter any place if the entry is

authorised by a search warrant. They may also enter a residential premises to gain access to a workplace. 88

Work Health and Safety Act 2011 s 165, 171, 174, 175.

89

By written notice unless the circumstances require the inspector to have immediate access to the record or document.

90

An interview conducted by an inspector must be conducted in private if the inspector considers it appropriate; or the person being interviewed so requests. This does not limit the operation of s 166 or prevent a representative of the person being interviewed from being present at the interview.

91

While an inspector retains custody of a record or document, the inspector must permit the person who produced the record or document and any person authorised by them to inspect or make copies of the record or document, at all reasonable times.

92

See s 175 of the Work Health and Safety Act 2011 in relation to restrictions on seizure where entry gained by consent of occupier. See s 175 in relation to seizure of dangerous workplaces or parts of workplaces. Note the broad definition of workplace and note that this may include a vehicle. Section 177 provides powers supporting seizure. Section 178 requires the provisions of a receipt in relation to any exercise of the power of seizure. Sections 180 and 181 deal with return of seized things and access to seized things, respectively.

93

Workplace Health and Safety Act 2011 s 166.

94

R Johnstone and M Tooma, Work Health and Safety Laws

(Federation Press, 2012). 95

Workplace Health and Safety Act 2011 s 198. Section 199 prescribes the minimum content of that notice. Section 209 deals with service of notices. Note Pt 12 in relation to review of notices. Note also that subsequent notices may be issued pursuant to s 201.

96

Workplace Health and Safety Act 2011 s 192 prescribes the minimum content of improvement notices. Section 194 provides a mechanism for seeking of extension of time to comply with the notice. Section 209 deals with service of notices. Note Pt 12 in relation to review of notices.

97

Workplace Health and Safety Act 2011 s 195. Section 196 prescribes the minimum content of prohibition notices. Section 208 deals with service of notices. Note Pt 12 in relation to review of notices.

98

Workplace Health and Safety Act 2011 s 211.

99

Ibid s 213.

100

Ibid s 212.

101

Ibid s 213.

102

Ibid s 214–215.

103

See above n 95.

104

Safe Work Australia, National Compliance and Enforcement Policy (2011) 7, available at www.safeworkaustralia.gov.au.

105

See above n 96.

106

Safe Work Australia, see above n 104, 8.

107

[2016] NSWDC 295. The author acted for Tamex in relation to this matter. The commentary is based only on material in the judgment itself.

108

SafeWork (NSW) v Tamex Transport Services P/L t/as Tamex [2016] NSWDC 295 [48].

109

Ibid [49].

110

Ibid [76].

111

Work Health and Safety Act 2011 s 224(1).

112

Ibid s 224(2).

113

Ibid s 224(3).

114

Ibid s 228(1).

115

WorkSafe NT, Guide for Applications for Internal Review Decisions (January 2012) 2.

116

Ibid.

117

Ibid.

118

Ibid.

119

Ibid.

120

Ibid.

121

Ibid.

122

Work Health and Safety Act 2011 s 226(3).

123

WorkSafe NT, above n 115.

124

Work Health and Safety Act 2011 s 226(4).

125

Ibid s 226(5).

126

WorkSafe NT, above n 115.

127

Ibid.

128

Ibid.

129

Ibid.

130

Ibid.

131

Work Health and Safety Act 2011 s 226(1).

132

Ibid s 226(6).

133

Essential Energy (ACN 37 428 185 226) and WorkCover Authority of New South Wales [2012] NSWIRComm 83 [14].

134

Safe Work Australia, above n 104, 8.

135

See above n 97.

136

Safe Work Australia, above n 104, 8.

137

Work Health and Safety Act 2011 s 211.

138

Ibid s 213.

139

Ibid s 212.

140

Ibid s 213.

141

Ibid s 85.

142

Ibid s 223.

143

Ibid s 224(1).

144

Ibid s 224(3).

145

Ibid s 228(1).

146

Ibid s 228(2).

147

Ibid s 228(3).

148

Ibid s 228(4).

149

Ibid s 228(5).

150

Ibid s 228(6).

151

Ibid s 226(3).

152

Ibid s 226(4).

153

Ibid s 226(5).

154

Ibid s 226(1).

155

Ibid s 226(2).

156

Ibid s 226(6).

157

Ibid s 214–215.

158

Safe Work Australia, above n 104, 8.

159

Ibid.

160

Ibid.

161

Ibid.

CHAPTER 5 THE COURT OF PUBLIC OPINION

Key messages • The story is running with or without you — prepare for it. • No comment is no strategy. • What you say may be used against you.

Case example

Myth of Beaconsfield The 25 April 2006 multiple falls of ground at the Beaconsfield gold mine in North Launceston in Tasmania killed one miner and trapped two others for 14 days in what was undoubtedly one of the highest profile industrial accidents in Australia in recent years. The rescue efforts monopolised mainstream media for 14 days. Daily media scrum, live from the mine, became a regular feature of the period. The story behind the rescue also attracted a great deal of attention, with the rescued miners securing exclusive media deals to tell their stories. Incident The ground fall was caused by a local magnitude 2.3 seismic event. Multiple falls of ground occurred, significantly on the 925 m level of the mine. At the time of the fall, miners Mr Knight, Mr Todd Russell and Mr Brant Webb were working underground, erecting a mesh wall above a bund of waste rock. Mr Knight was operating a

telehandler fitted with an open metal cage. Mr Webb and Mr Russell were working from the cage. The largest of the falls of ground, weighing around 800 tonnes, engulfed the telehandler and entrapped Mr Russell and Mr Webb. Mr Knight was buried by a separate fall of ground at the rear of the telehandler, containing an estimated 120 tonnes of rock. The seismic event was caused by the mining activities at the mine.162 Rescue efforts A remote controlled bogger was used to remove the material from the falls of ground in the area where Mr Knight and his coworkers had been working and transport it to a stockpile where it was closely inspected. On the morning of 27 April 2006, bogger operator, Mr Walter Hvala used the bogger to convey one bucket load of the fallen material to the stockpile. Mr Hvala had mechanical difficulties with the bogger. Before he was able to resume bogging, he was informed that a body had been found in the stockpile. He was then directed to return to the surface. The body was identified to be that of Mr Knight.163 On Sunday 30 April, the underground manager, Mr Ball, walked to the rear of the rock fall containing the telehandler. Mr Ball spontaneously called out, “hello”. He then heard a “hello” in reply. He then quickly established that both Mr Russell and Mr Webb were alive but were trapped within the rock fall. They were both successfully freed nine days later via a purpose-built rescue tunnel. Safety lessons from Beaconsfield One of the findings of the Coroner following a 2008 inquest was that Beaconsfield Gold Mine (BGM) had been aware that seismic activity was being generated by the mining, especially at lower levels.164 In October 2005, Beaconsfield had experienced rockfalls, and as part of its risk assessment strategy, it sought assistance and advice from appropriate consultants. Despite obtaining advice, there was no analysis, resolution or

management of these issues by BGM.165 The Coroner observed: The risk assessment process was particularly deficient in that it failed to ensure that a comprehensive and independent reassessment of the ground support system was undertaken.166 The Coroner further found that: … the likelihood of Mr Knight’s death would have been significantly reduced had BGM adopted and applied a more thorough and rigorous risk assessment process. This is so in particular because such process would have, in all likelihood, identified the inadequacy of the ground support system and led to either that system being varied or the mining method being changed before the mining resumed.167 On the issue of learning from previous incidents, the Coroner made the following comments: The mine’s rockfall history up to an including October 2005 made it glaringly obvious that a ground support system based upon the compressive arch was not performing satisfactorily and that the entire system required a comprehensive and independent re-assessment.168 Media management lessons from Beaconsfield169 The extent of the media coverage of the Beaconsfield disaster was in part a reflection of the unfolding human interest story of rescue and heroism and in part, coincidental. While local Tasmanian media interest in the mine disaster was to be expected and had occurred in previous mine accidents in Tasmania, the extent of “mainland” media interest in the disaster had more to do with the fact that the media was already there. The incident occurred just three days prior to the tenth anniversary of the Port Arthur massacre. A number of mainstream news and current affairs crews were already in Tasmania setting up for coverage of the event when news of the disaster reached them.

The height of the media frenzy came when it was discovered that Mr Webb and Mr Russell were alive. Channel Seven’s Melissa Doyle and David Koch presented their morning show “Sunrise” on location from a steep bank overlooking the mine. Nine’s Karl Stefanovic did his crosses to the “Today” show also near the mine. As did Tracey Grimshaw and Naomi Robson for their evening current affairs shows. While the mine erected large tarpaulins around the boundary fences to limit media access to photographs and footage, the major networks reacted by having helicopters hover over the mine and by taking up elevated positions on nearby sites. There were rumours of television stations offering large fees to miners for images of the underground rescue area. As such, the bags of all miners were searched, prior to the commencement of each shift. The Beaconsfield media management was to be later universally praised. In an article regarding the media management of the incident, experienced media professional Constable Phil Pike concluded that “the media management of the Beaconsfield Mine collapse was a success”.170 Experienced international journalist, Hugh Williams from CNN, also praised the media management process adopted in relation to the incident.171 What worked at Beaconsfield was the facilitation approach to media liaison. Recognising media interest in the incident, Beaconsfield mine provided a constant stream of information either directly or indirectly to the media while at the same time restricting other access to information and images. What was published was, in every respect, controlled. During the initial stages of rescue, Beaconsfield mine simply generated media releases. This was in part because the management structure at the mine was efficient which meant that whatever management was there, had its hands full in the rescue efforts. This was certainly the case for Matthew Gill, the Mine Manager. In part, the silence was imposed by the mine administrator who was present at the mine offices. Nevertheless, the media releases were constant, providing the media what they

needed. The Australian Workers Union (AWU) were also provided with daily, detailed briefings. This allowed the union to become the media face of the disaster. Because the union relied on management for those briefings, it was measured in its comments. The union’s focus throughout the disaster was on the rescue efforts and getting the trapped miners out and not on attributing blame to the mine or its management. However, as the rescue efforts developed, that strategy was supplemented by regular media interviews by Matthew Gill. Ultimately, access to footage of the rescued miners emerging from the opening of the mine was carefully negotiated and orchestrated to minimise the potential chaos associated with such an event. Management of the public image of the mine was to continue throughout the subsequent investigation and inquest into the death of Larry Knight. Despite the shortcomings identified above in relation to the management system in operation, the enduring image of the Beaconsfield mine disaster remains the image of Todd Russel and Brand Webb emerging from the opening of the mine, having been rescued.

Initial media statement One of the first tasks, that must be embarked upon after notifications are made to regulators, is the drafting of a media statement to be released should there be a media enquiry. Such an initial media release will usually confirm the accident, confirm that it is under investigation and confirm that the company is co-operating with authorities. One of the important debates that take place in relation to such media releases is whether an expression of contrition increases liability. There is no doubt that expressed in a certain way, an expression of regret will be an indirect or in some cases, direct admission of liability and such words may come back to haunt the company. But carefully

expressed, leaders of companies can show their humanity and express the thoughts of the workers of the company. Expressions such as “our thoughts are with the family” are hardly admissions. Yet by neglecting to say something to that effect, the company will be perceived as callous or heartless, damaging its reputation. Ultimately, there needs to be a balancing act between what you compromise by way of legal liability to protect the corporate image knowing that the company may be long gone before the lawyers get the chance to defend a claim if the corporate reputation is not protected. Take global accounting firm Arthur Andersen as an example. Once a top five accounting firm, the mere laying of charges by US prosecutors in relation to allegations of obstruction of justice, brought about its demise. Several years later, the firm was cleared of all wrong doing. Too late for its 90,000 global employees. Feed the beast If the story is big enough, they will be writing about it. You might as well be part of the story and controlling the message rather than at the sidelines watching your reputation trashed. Supplying factual and reliable information about the incident, expressed in the right way, can often be an effective means of controlling the media coverage. Remember the strategy in Beaconsfield? Regular flow of information to the media helped turn a disaster into a heroic rescue. Little was subsequently reported about the causes of the incident and the coronial findings. Prepare Media preparation happens long before an incident. Every site manager, middle manager and senior manager should receive media training. What is said and done in those crucial first hours can do irrevocable damage. Remember former BP CEO Phil Hayward’s gaff about wanting “his life back” after the Deepwater Disaster? More recently, the handling of the Dreamworld tragedy by Ardent Leisure and its management team, has become the poster-child of

what “not to do in a disaster”.172 Among the string of miss steps by the operator was the decision to immediately re-open the theme park, days after the incident that claimed four lives on the Thunder River Ride, a move that gave the appearance of preferring profits over safety. The decision to go ahead with an annual general meeting where the CEO, Deborah Thomas was given an $843,000 bonus did not help either.173 Nor did the false claim by Ms Thomas that Dreamworld and Ardent Leisure had reached out to all of the families of the victims and offered to pay for their funerals, only to be contradicted by one of the families saying that they had had no communication with Dreamworld or Ardent Leisure.174 Whatever the findings of the many inquiries that will be instituted as a result of this incident, the enduring public image of Dreamworld and its owner is that of a company that has no regard for safety. Footnotes 162

Findings, Recommendations and Comments of Coroner Rod Chandler following an inquest held in Launceston (22 July to 25 September and 11 November 2008) 82.

163

The coroner found that Mr Knight died shortly after the falls of ground on Anzac Day and that his death did not occur at or about the time the body was recovered with the remote bogger. The coroner’s findings were based on the post-mortem investigation of the State Forensic Pathologist, Dr Christopher Lawrence. It was the opinion of Dr Lawrence that Mr Knight had died as a result of multiple injuries sustained in a rock fall. Specific injuries to Mr Knight’s head, upper neck and chest were all consistent with having been sustained in a rock fall.

164

Findings, Recommendations and Comments of Coroner Rod Chandler, above n 162.

165

Ibid 85.

166

Ibid.

167

Ibid 72–73.

168

Ibid 72.

169

This section is based on information and analysis contained in P Pike, The Australian Journal of Emergency Management (Vol 21 No 3, August 2006).

170

Ibid 11.

171

Ibid.

172

See P Farrell “Dreamworld boss Deborah Thomas regrets company’s response to fatal ride”, The Guardian (27 October 2016).

173

Ms Thomas later donated the $167,500 cash component of that bonus to charity after intense criticism for the decision to award the bonus.

174

R Wilson, “One month anniversary of Dreamworld’s indefinite closure”, Parkz (25 November 2016) available at www.parkz.com.au.

CHAPTER 6 ARE ACCIDENTS PREVENTABLE?

Key messages • All accidents are preventable. • Probing investigations of incidents is key to avoiding their recurrence. • We need to rethink investigation techniques. • Search for singular causes in a complex world is dangerous. • The investigation process must ensure that the necessary data is captured. • Do not make assumptions. Verify everything.

Minimising liability at what cost?

The Westray story At approximately 5.20 am on 9 May 1992, an explosion in the Westray underground coal mine in Pictou County, Nova Scotia, killed all 26 miners who were underground at the time of the explosion.175 The incident was caused by the ignition of accumulated methane gas in the underground mine. The ignition caused a rolling methane flame to travel away from the working face of the mine consuming all the oxygen in the roadways and leaving deadly quantities of carbon monoxide in its place. The rolling flame then ignited accumulated coal dust in the mine causing a coal dust explosion. The source of ignition that caused the methane accumulation to catch fire, most probably, was the cutting mechanism or picks of

the continuous miner, which, when they struck either pyrites or sandstone, caused sparks of sufficient intensity to light the gas. Methane is a natural component of coal, a by-product of the decomposition of the plant matter from which coal is formed. Methane is released as the coal-cutting machines break coal away from the face. As methane continues to emerge from the coal, it moves through fissures in the coal that remains after mining, and it can escape into the active roadways from abandoned or mined-out sections, depending on the effectiveness of the stoppings constructed at the entrances to abandoned sections. The risk of an explosion due to methane gas accumulation or coal dust accumulation in an underground coal mine is well known. It was the cause of the Moura No 4 disaster, an underground coal mine explosion in 1986 which claimed the lives of 12 miners in Queensland, Australia. This was tragically the second such disaster in the mine; the first in 1975 had claimed 13 lives.176 One of the principal functions of a ventilation system is to clear the methane at the working face of the mine and to exhaust it from the mine in non-explosive concentrations. It is clear that the Westray ventilation system was grossly inadequate for this task. The combination of poor ventilation pressure, small ducting, lack of bratticing, and deficient ventilation controls made it almost impossible to clear methane from the working faces of the mine.177 Barometric pressure in the mine was not adequately monitored178 and there was no water gauge to monitor the ventilation conditions of the mine from the surface.179 Methane layering was permitted to propagate virtually undetected, throughout the Southwest section of the Westray mine. It provided a rich source of fuel for any ignition source to feed upon.180 Workers without adequate coal mining experience were promoted to newly created supervisory positions. Workers were not trained by Westray in safe work methods despite a major roof collapse in

August. Basic safety measures were ignored or performed inadequately. Stonedusting, a critical and standard practice that renders coal dust non-explosive, was only carried out sporadically by volunteers on overtime following their 12-hour shifts. Four more roof falls were reported in September and October. There was a series of near misses at the mine, the warnings from which went unheeded. The Inquiry into the disaster found that management trivialised the constant safety concerns of workers. Although the mine inspectors asked the company for roof support plans as well as stonedusting plans, it repeatedly deferred supplying them. In delivering his findings, Richard J observed that “Westray is a stark example of an operation where production demands resulted in the violation of the basic and fundamental tenets of safe mining practice”.

Is disaster analysis too convenient? The challenge for everyone involved in incident management and investigation is that we fall victim to that mindset of oversimplifying causes of disasters. Disaster reports are starting to sound the same. They all tell the tale of a company that preferred profit over safety. They make recommendations for greater safety leadership, the need for a safety culture and for a more effective regulator. We analyse things in the same way, make the same recommendations and somehow expect the result next time around to be different. We do this at a smaller scale also. The imperative in the aftermath of an incident is to minimise the impact of the incident. That means reducing shutdown time associated with damaged equipment, regulatory notices or industrial action. This often leads to reactive and narrow focused decision-making on corrective actions — a new safe working procedure and training course, for example, is the most popular corrective action. The assumption is that if we identify the cause of the incident, we can simply develop a procedure for addressing it, train workers in the procedure and require them to follow it. That thinking

satisfies the regulators, they being more eager than most to move on to the next incident being investigated. It limits liability in that it is usually accompanied by a third feature — the implicit or explicit blame of the workers involved, either for needing a procedure or for failing to follow it. It also satisfies the conscious of managers who feel they have addressed the issue as soon as it came onto their radar. Crucially, it is cost effective. A procedure is relatively cheap compared to an engineering solution. Of course, if that procedure works and will be followed, then the problem is truly solved and all objectives have been met. In a perfect world, that would be the case since, for example, it is in the best interest of the company to ensure that the procedure is comprehensive and effective. It is in the best interest of the workers to understand the procedure and follow it; after all, it is there for their health and safety. But the world we live in is far more complex than that. Dekker (2011) observes: Rational decision-making requires a massive amount of cognitive resources and plenty of time. It also requires a world that is, in principle, completely describable. Complexity denies the possibility of all of these. In complex systems (which our world increasingly consists of) humans could not or should not even behave like perfectly rational decisionmakers. In a simple world, decision-makers can have perfect and exhaustive access to information for their decisions, as well as clearly defined preferences and goals about what they want to achieve. But in complex worlds, perfect rationality (that is, full knowledge of all relevant information, possible outcomes, and relevant goals) is out of reach … In complex systems, decision-making calls for judgments under uncertainty, ambiguity and time pressure. In those settings, options that appear to work are better than perfect options that never get computed. Reasoning in complex systems is governed by people’s local understanding, by their focus of attention, goals, and knowledge, rather than some (fundamentally unknowable) global ideal. People do not make decisions according to rational theory. What matters for

them is that the decision (mostly) works in their situation.181 Dekker (2011) goes on to explain that this perfectly normal reaction to the rules being imposed on us at a local level can accumulate at an organisational level with harmful consequences. He explains: Local decisions that made sense at the time given the goals, knowledge and mindset of decision-makers, can cumulatively become a set of socially organized circumstances that make the system more likely to produce a harmful outcome. Locally sensible decisions about balancing safety and productivity — once made and successfully repeated — can eventually grow into unreflective, routine, taken-for-granted scripts that become part of the worldview that people all over the organization or system bring to their decision problems. Thus, the harmful outcome is not reducible to the acts or decisions by individuals in the system, but a routine by-product of the characteristics of the complex system itself.182 A new paradigm for incident investigations So how do we factor that into incident investigations? By accepting that faced with the same facts, people will not necessarily behave in the same way. This is a challenge to the conventional wisdom around incident investigation which is typically concerned with uncovering “the truth” and indeed, more so “the root cause” of an incident. Consider the pioneering approach of James Reason in the Swiss Cheese theory — a theory on which most modern incident investigation techniques are based. Figure 10 — Reason Swiss Cheese model

The theory is that, like holes in Swiss Cheese slices, all systems have deficiencies or inadequate defences. The causal trajectory of an incident leads to an incident when those deficiencies in the system line up. It follows then that proactively, increasing the defence layers reduces the likelihood of an incident. It also follows that in attempting to analyse an incident, a better understanding of that trajectory will uncover the absent or failed defences which enabled the system failure. Logically then, in the aftermath of an incident, those system deficiencies are identified and addressed through corrective actions, reducing the holes on the Swiss Cheese slices and therefore reducing the likelihood of a recurrence of the incident. But complex systems’ incident trajectories are often unique. That is, addressing what went wrong in a particular incident will only help prevent that exact sequence from recurring. But the likelihood of the planets or Swiss Cheese slices aligning in exactly the same way is very remote. It is more likely that the next incident will involve a different trajectory and different holes on the Swiss Cheese slices. Addressing the specific sequence that caused the incident will not address potential paths that the incident trajectory could have taken, but for certain events. We often look at an incident sequence, amazed but relieved, that things were not much worse and that they could have been, had it not been for some “lucky” event. But other than such a casual

observation, or a remark in an incident investigation report, little is done about those “other” non-causal events. That is, events that either prevented the incident from being of greater impact or the possible trajectory that did not occur — the road not travelled but which could have been travelled. Reason (1990) himself observes that “most of the root causes of serious accidents in complex technologies are present within the system long before an obvious accident sequence can be identified”.183 That is, the holes are there, if only our investigation techniques could uncover all of them and not just those involved in the incident. Yet most investigation techniques are linear in their approach, seeking out the exact causal sequence — the truth of what happened — and then uncovering the root cause(s) which lead to that factual sequence. But is it appropriate in a complex world to maintain a linear view of incident causation? Isn’t the road not travelled just as instructive to further incident prevention as the road actually travelled? Indeed, in many respects, the “lucky” control is more instructive for incident prevention than the failed or absent control. If we adopt that approach, building system resilience is not simply achieved by adding Swiss Cheese layers as the orthodox view of the theory may suggest, but also by uncovering and plugging holes within each layer that are reasonably related to the incident but not causally connected to it. A new investigation methodology If we are to appreciate the importance of the alternate trajectory of an incident, we need to adapt our approach to traditional incident investigation methods. Take, for example, the popular incident investigation technique adapted from the quality assurance techniques of Sakichi Toyoda for the Toyota Motor Company — the five “why’s”. The technique consists of asking why five times to get to the root cause of an event. For example, (1) Why did the incident happen? Because a worker did not follow procedure.

(2) Why did the worker not follow procedure? Because they were not trained in the procedure? (3) Why were they not trained in the procedures? Because training needs of workers were not systematically identified? (4) Why are training needs of workers not systematically identified? Because there is no system for training needs analysis to be undertaken. (5) Why was there no system for training needs analysis to be undertaken? Because training is inadequately addressed in the safety management system. Overlay this technique now with a new set of questions for every factual scenario to uncover the alternate trajectory of the incident by asking five what if questions. Through that process, the investigator can uncover any holes not otherwise identified on each Swiss Cheese slice and also which controls are in fact working. The latter category is useful to the analysis of “what went right?” as opposed to just “what went wrong?”. Figure 11 — Alternate trajectory model

Why find out about what went wrong?

The proper investigation of incidents is a core part of developing a safety culture. All systems, even the best systems, fail from time to time. The test of an effective management system is not its lack of failure but rather what is done in the aftermath of that failure. Every incident, no matter how small, represents a learning opportunity. If we properly investigate the incident and get to its root causes — the system failures or deficiencies that permitted the incident to occur — we have a chance to put in place the corrective actions necessary to avert a repeat of the incident and improve the resilience of the system against further failure. That commitment to constant and continuous reflection, analysis and review is the essence of an effective management system and critical to achieving a positive safety culture within the business or undertaking. Four key elements of that safety culture are: (1) an informed culture — a culture in which those who manage and operate the system have current knowledge about human, technical, organisational and environmental factors that determine the safety of the system as a whole184 (2) a reporting culture — a climate in which people are prepared to report their errors and near misses185 (3) a just culture — the environment of trust in which people are encouraged, even rewarded, for providing essential safety-related information through sharing of incidents and near miss information but expect to be held accountable for unacceptable behaviour,186 and (4) learning culture — the willingness and competence to draw the right conclusions from the safety information system to address system deficiencies and the will to implement major reform when they are needed.187 Many disasters of the past show us that near misses must be investigated. Failing to investigate near misses can result in learning opportunities being missed and, ultimately, an incident occurring with

the attendant loss of life, injury and economic and reputational costs. Near miss investigations The seriousness and the learning opportunities which can be garnered from an event should not be downplayed just because an event does not itself result in injury or damage to plant. To the contrary, near misses present valuable opportunities to learn from mistakes and system deficiencies. In order to avoid disaster, it is necessary to understand the risks that arise within an organisation. To allow this, a culture of reporting must be encouraged within an organisation. Without a reporting culture, an organisation will be unable to gather information of incidents that have occurred and will be unable to discover the cause of incidents. Underreporting of near misses will hide issues that can be remedied before the problem develops into a disaster. As Kletz (2001) observes: we should investigate all accidents, including those that do not result in serious injury or damage, as valuable lessons can be learnt from them. “Near misses”, as they are often called are warnings of coming events. We ignore them at our peril, as next time the incidents occur the consequences may be more serious.

188

Part of the difficulty of encouraging incident reporting and thereby creating a reporting culture is that incident investigation findings are invariably negative in outlook and approach. No matter the rhetoric around “just culture”, a finding of an error, even an expected and understandable one which is caused by system deficiencies, is a negative finding for the individual concerned. Surrounding that single error were a number of steps correctly followed and many controls which operated effectively, both prior to and following the incident. Those effective controls are taken for granted. It is the lack of attention given to those effective controls that undermines the resilience of a system. That vulnerability in the traditional approach is the motivation behind exploring a new technique in the next section. Why find out about what went right? What went right in an incident can be just as instructive as what went wrong. By identifying effective control features, they can be replicated across the system. Controls that work at a local level — that are accepted by operators and fit into other complex systems — are rare. Their effectiveness should be celebrated. That is particularly the case in near misses where had it not been for those controls, an incident would have occurred. Indeed, even if what went right was not a control at all but a “lucky event”, an analysis of this may be instructive to the type of controls that might work, as a final barrier to the incident causal trajectory. The reality is we have been attempting to learn the negative lessons from disasters since the inception of safety science as a discipline. Major disaster report after major disaster report sets out the facts of the incident, the deficiencies in the system, expresses outrage as to how society can allow these conditions to exist, and makes recommendations in relation to safety leadership and safety culture with some specific design recommendations for industry consumption. This was the case in the Columbus, Piper Alpha, Exxon Valdez, BP Texas Refinery, Upper Big Branch and Deepwater Horizon reports, to name a few. The problem with that approach is that it is entirely negative.

If it was that simple to learn the lessons from disasters, surely we would have learnt them by now. The legal and commercial consequences of failing to do so are very significant globally. We have to assume that most leaders are at worst, agnostic towards safety. Some may be passionate about safety but certainly none display the psychotic behaviour which would mean that lessons, if capable of being easily applied, would be ignored. I have never encountered any managing director who wakes up in the morning wanting to hurt their people, yet even in Australia which prides itself on its safety standards, we kill one person every working day on average. Globally, the figure is much worse. The reality is that the lessons from disasters, instructive as they may be, are entirely superficial. Traditional linear incident investigations have limited ability to impact incident prevention because lightning does not strike twice. As Dekker (2011) observes: Reconstructing events in a complex system, then, is nonsensical: the system’s characteristics make it impossible. Investigations of past failures thus do not contain much predictive value for a complex system. After all, things rarely happen twice in exactly the same way, since the complex system itself is always in evolution, in flux.189 The utility of the lessons therefore is translated into motherhood statements about safety leadership and safety culture without any specific means of achieving that in the localised context. That is not to say that those lessons have no value or meaning. They do. The issue is, can we extract more from our incident investigations. Can we derive practical lessons of real meaning, value and application and can we do this on a regular and systematic basis? It may be more useful to find out how a potential serious incident became a near miss. Or how consequences of an incident were tempered, rather than just finding out what caused the incident. A better understanding of “what went right” can assist in creating a more resilient system. The attraction with asking “what went right” is its positive character. We know that reinforcement is the most important principle of

behaviour and a key element of most behaviour change programs.190 We also know that positive reinforcement is far more powerful than negative reinforcement. We say someone has received positive reinforcement if a desired behaviour they display has been followed with a reward or stimulus. Negative reinforcement is when someone receives punishment; an aversive stimulus or a withholding of a stimulus after displaying certain behaviour, usually undesirable behaviour. People are more likely to adjust their behaviour to seek out praise and acceptance than out of fear of punishment. We understand this well in our private lives. When people do things we like, we reward them with expressions of gratitude so that such behaviour is repeated. We avoid rewarding people for negative or undesired behaviour but with few exceptions, punishment of people for such behaviour will rarely be effective. Harsh words directed at a fellow motorist who cuts you off on the road is unlikely to alter their driving behaviour. That is because they receive an immediate reward for their bad behaviour in reaching their destination sooner and the added attention received from you as a fellow motorist, over time, is either ignored or becomes associated with the positive reward — beating traffic. At work, people do their jobs well every day. They follow safety procedures. They engage in safety programs required of them. For that, we seem to think they deserve no reward or recognition. Indeed, people strongly believe that it is wrong to reward them for “doing their job” as if to single out that conduct would undermine the integration of safety into operational requirements. By contrast, if they take a short cut, they are rewarded immediately by being able to do their job faster and depending on the employment terms, either going home sooner, being recognised by their superiors or, in the case of contractors, making more money. Yet we are surprised why over time, people gravitate towards short cuts. The same is true of managers. Beyond a certain threshold, improved productivity with no additional innovation or capital expenditure comes at the cost of the health and safety of workers. But no such distinction is made in relation to managerial recognition and reward. Managers receive instant positive reinforcement for day-to-day decisions they make which improve shareholder value such as staff reductions and

productivity improvements. Doing more with less has become a management mantra — a boast of success. That assumes that the status quo has inefficiencies. But where no such buffers exist, the value is derived at the long-term expense of current workers and future shareholders. That was the experience of the BP Texas refinery as discussed in the first book of this series — Due Diligence: Duty of Officers. In that context, it is remarkable to me that when a near miss occurs, we do not pause to recognise the positive behaviour exhibited by people that may have averted a disaster. That behaviour may well be expected because it is consistent with the system, but so is much of every day private behaviours for which we receive an acknowledgement or other positive reaction. As a society, we expect that positive reinforcement in our private lives. We regard it as part of our culture. We drum it into our children. But in our working lives, we seem to take safe behaviour for granted. In incident investigations, we regard it as irrelevant. How can that be? That is the moment when we are most vulnerable. When we all feel we are to blame. That we have somehow contributed to the incident. Pausing to recognise what we did right, can ease much of that. It is about pulling together at a time of crisis. If the focus of incident investigation remains solely on what went wrong, it is inevitable that it is about blame. Even in organisations where a just culture is in place, the singular focus on the negative behaviour can be detrimental to the overall functioning of the system. It is also a missed opportunity. As Dekker (2011) observes: Complex systems can remain resilient if they retain diversity: the emergence of innovative strategies can be enhanced by ensuring diversity. Diversity also begets diversity: with more inputs into problem assessment, more responses get generated, and new approaches can even grow as the combination of those inputs.191 Even if someone did something wrong that worked, we need to understand why it worked so we can capture its positive features. That in essence is what Reason (1997) was describing in the flexible culture component to safety culture discussed above; the

empowerment of well-trained workers to make decisions that deviate from normal procedures but that are consistent with the objectives of the procedures. Once those decisions are made, we need to then understand why they worked. That is where asking “what went right”, comes in. For the most part, we do not really understand what has happened in the aftermath of an incident because we are all engaged in a level of revisionism; some deliberate and some subconscious. For example, the threat of blame, whether through litigation or disciplinary action, plays a significant part in the distortion of information. Misplaced camaraderie and loyalty also have the same effect, particularly in Australia where “dobbing in a mate” is culturally frowned upon. While these can be ameliorated through increasing trust and using protections afforded through legal professional privilege,192 some residual of that issue remains by the very nature of the process, ie an inquiry by an investigator armed with the wisdom of hindsight, which has the effect of putting the spotlight on the inferiority of the workers concerned for failing to have such wisdom. No matter how “justly” you ask the “why did it go wrong” questions, you are, in effect, judging the person concerned. Their natural instinct would be to justify and explain, rather than to recount accurately their process. Revisionism is the great curse of incident investigations. The flip side of the exercise is the simplicity of the investigation techniques. With the benefit of hindsight, we can see the trajectory of the incident clearly. We begin to cherry-pick events to fit a narrative we have chosen. We place importance on events that fit that narrative that may not have had that importance at the time. We single out signs along the way which (now with the benefit of knowing how the story ends) seem like strong signals, and we ponder how they could have been missed, no matter how weak they actually were as signals in real time. We do all this and yet wonder why we do not learn the lessons from accidents. Figure 12 — Limitations of incident analysis techniques

The reality is that incidents play out in the real world and not in some theoretical, rational world where everyone has perfect knowledge and unlimited time. If we had perfect knowledge and unlimited time, we would make the “rational decisions” that the investigators expect of us. In the real world, though, we do not have that luxury, which makes the condescending judgments of investigators who are obsessed with what went wrong in an incident, utterly useless. Figure 13 — Why don’t we learn?

If we are to learn anything from an incident, it is that we should be mindful of the circumstances in which the incident occurred. No one turns up to work wanting to injure themselves or injure their

colleagues. Whatever they did that caused that must have seemed like a good idea at the time. Understanding why that was the case may be far more instructive than judging them for failing to follow the correct process or procedure. Figure 14 — Why find out what went right?

Investigation team It is critical that the business or undertaking allocates sufficient resources (human, financial and equipment) to an incident investigation. An investigation team should be appointed in the aftermath of an incident once the immediate rescue and recovery has been completed. Such a team must have a cross-section of skills necessary to identify the underlying systemic issues that caused or contributed to the incident. Investigation methodology Like any other process within a system, investigations require wellstructured and effectively implemented procedures, adequate resources including competent personnel, training and workflow tools (such as electronic incident reporting databases). Below is a simplified methodology based on the approach taken in this book — the iABC methodology. Figure 15 — iABC methodology

• Identify • Arrange • Benchmark • Causation. Identify In conducting an investigation, we often forget that evidence we collect, or fail to collect, influences the conclusion we arrive at. We perceive evidence collection as being an objective science. In truth, there are built-in prejudices in every step of that process. Take incident photographs. Unless taken in a forensic manner, they risk being part of a pictorial narrative that the photographer is trying to convey. For example, lighting, angles, distances are important to the reliability and utility of photographs. Photographs should be taken from several angles and the position of the photographer clearly recorded. Photographs should always have a scale — an item in the photo for which the measurement is known such as a ruler or measuring tape or even a defined standard item such as a standard pen of a certain popular make. Similarly with measurements taken. Investigators often decide on a causal narrative and then proceed to take the measurements necessary to prove that narrative. But that forecloses other competing possibilities. It is preferable that everything in the incident scene is

measured and logged for formal identification, in some cases by witnesses. It follows therefore that the first step of incident investigation should be the forensic cataloguing of the scene, plant and substances, people involved and the processes they were engaged in. People All people involved in the incident must be identified. That is, direct workers, suppliers, customers, their respective reporting lines, persons who may have been able to influence or control the work being done (such as people who planned, allocated or supervised the work), as well as actual witnesses. All these people must be identified for interview, if necessary. Not every person on that list will necessarily be interviewed. But unless identified at an early stage, the exercise will lose objectivity. Interviews with relevant personnel are a critical part of the investigation. The interview process following an incident should be structured and systematic and conducted as soon as possible after the incident; at the most within a few days of the incident unless this is not possible due to the witness being in a serious condition in hospital. At the commencement of an interview, interviewees must be advised of the procedures concerning interviewing of witnesses. This includes informing them of the support systems available to them and any rights and protections they have under legislation in relation to confidentiality and protection of witnesses from legal proceedings. The business or undertaking may have a specific procedure which will be relevant to the information to be provided to the witness prior to the commencement of questioning. Adopt a “Questions and Answers” format for the interview and record the interview as direct documentation of the “Questions and Answers”. The interview questions should be as objective as possible. Rather than focus on the incident itself, start with the “usual” approach to the witness. Ask about what resources and processes are normally provided for that work. Ask about what resources and processes are required for the work (they are different questions). Ask about the

day’s events. Start from the beginning of the shift and work your way to the incident and its aftermath. Ask open questions and allow the interviewee to tell their story with minimal interruption. Use their answers to refine your understanding. Have the witness explain technical concepts (even if you understand them). Do not assume anything. A common mistake in interviewing witnesses is that the interviewer believes that there is a common understanding of what happened or what was supposed to happen. That belief in the common understanding is borne of the corporate expectation or understanding of how work is to be done — captured in corporate procedures. This is work as imagined by management. However, it is rare for “work as imagined” to reflect “work as done”. That is firstly because, work as imagined assumes perfect conditions where the necessary resources are available when required. Secondly, because work as imagined is by necessity, incomplete in its prescription and workers are expected to bridge the gap between the recorded process and what is required to deliver the outcome. Thirdly, because work imagined is sometimes not the most efficient, practicable, or convenient manner of performing the work, with workers left with pressing delivery deadlines to which they are held accountable and an inefficient process for meeting those deadlines — the outcome of that combination is the creation of short cuts to facilitate delivery of the outcomes. Hollnagel (2015) summarises the issue as follows: When it comes to describing and understanding why things work and why actions succeed, everyone at the sharp end knows that it is only possible to work by continually adjusting what they do to the situation … But the same work looks quite different when seen from the blunt end. Here there is a tendency to emphasise work as it should be done.193 The assumption of investigators therefore is often flawed. What is sometimes identified as a root cause of an incident, a deviation from the prescribed process, is often no more than the identification of the normal process which produced success many more times than the failure identified on the particular occasion under investigation. It

would therefore be unhelpful to conclude, without further analysis, that the deviation was causative of the incident on that particular occasion when it was not on every other occasion. Further analysis is required to identify whether the normalised deviation is indeed unsafe or represents a risk that simply manifested itself on that particular occasion. The converse is also true. When investigating an incident, a witness may well embellish how often things are done in a particular way to normalise their actions on the relevant day. It is rather unhelpful in that context to assume that the work “should” be done in a particular manner or that it is being done by others in a particular manner. It is equally unhelpful to assume, without testing, that the individual’s actions on a particular day represents their normal practice. The key is to remain neutral on what things should have been and to focus on how they were on that day. This is important so that the investigator is not seen to be passing judgment on the workers involved in the incident. It is preferable for a base list of questions relevant to the incident to be prepared before the interview and additional questions included where necessary. The “Questions and Answers” record of interview should preferably be recorded on a laptop at the time of the interview. If possible, the witness should be invited to review and sign the record. Premises The second category that needs to be identified is the place itself where the incident took place. The investigator needs to record the measurements of the premises, the features of the premises, identify any relevant architectural or design drawings of the premises including any access and exit to and from the premises. These matters may be relevant to related inquiries in the “what if” scenarios, even if they do not appear relevant in the context of what may seem to have transpired. Plant

The third category that needs to be identified is any plant involved. Involvement in that context must be taken broadly. Any plant at the scene may provide a clue to what happened or what could have happened. It may also provide a clue regarding what controls should have been in place or may practicably be put in place. Substances Similarly, all substances involved in the incident must be identified and a material safety data sheet for any hazardous chemical, collected. Causal relationships involving fumes from hazardous chemicals are subtle and unless substances are identified at the outset, incident causation may be misidentified. Processes and resources Finally, the investigator needs to identify all the processes and resources involved in the activities leading up to the incident. This is necessary to identify the relevant procedures, if any, that apply to these processes. Furthermore, given the more proactive approach advocated in this book, the logging of processes invites a review of the safe working procedures associated with those processes, regardless of their contribution to the incident. There is also an opportunity to consider whether the process itself — the work as imagined — can be improved to match how work is actually done. An incident offers the opportunity to better understand the challenges and obstacles driving that deviation from procedures so they can be addressed, and procedures adjusted to better reflect reality. Arrange Once all relevant persons, premises, plant, substances and processes have been identified, it is then necessary to understand the relationships between each of the persons concerned. That means within organisations, understanding the organisation chart to understand the relevant reporting lines and for contractors, the nature of the contractual relationships. It is important to identify who requested the work to be done, who funded it and who benefited from it, to better understand what

contribution they made to the events leading to the incident. Given the “what if” approach discussed above, even if there is no relevant contribution from the upstream entities such as customers and financiers, it may be appropriate to identify what controls were in place to prevent such involvement becoming a factor in future incidents. Chronology The centrepiece of any evidentiary analysis is a chronology. Once the relationship tree has been identified, it is usual to map out a chronology of events or timeline. A technique often used in this context is to write events onto post-it notes and create an evolving timeline by posting those notes on a wall. One technique that may be useful in undertaking such a chronology is the “Events and Causal Factors Charting” method. While it is regarded as a causal analysis technique, the simplicity of its approach makes it a useful complement to any investigation method. The Events and Causal Factors Charting is a graphical display of the incident’s chronology in a manner that exposes gaps in the evidence and highlights causally related factors. Figure 16 — Events and causal factors charting

Events are charted working backwards from the incident event. In relation to each event, the condition that permitted the event is recorded above it. The benefits of this approach is that it illustrates and validates the sequence of events leading to the incident and identifies visually, the conditions affecting these events, thus making the causal relationships more obvious. It also promotes better evidence collection to validate the sequence and conditions permitting the event. There is no reason to regard this approach as assuming singular causes of event sequences. Where there are secondary events, they may also be recorded on a parallel path to the primary event sequence and condition relevantly related to them, recorded in the same manner above the events. The sequence of events flowchart shows what events happened prior to and leading up to the incident, and considers why those events occurred. The sequence of events flowchart assists in directing the attention of the investigation team to the core issues and causal factors involved in the incident.

Validation of causal relationships It is important when preparing an event and causal factors sequence flowchart to constantly validate the cause and effect findings made, to ensure that further analysis of the event sequence and causal factors is valid. One method that can be used for that purpose is the “change analysis method”. The “change analysis” method focuses on the change as an indicator of causation. It identifies the incident event, identifies a comparative incident-free event, then compares the two events. Identified differences are then analysed for effect on the incident. Figure 17 — Change analysis

Benchmark Once the relevant processes involved in the incident have been catalogued, it is then necessary to benchmark these against internal procedures, relevant laws, codes of practice and Australian and international standards. Procedures In relation to internal procedures, it is important to identify interdependencies in the operation of these procedures. That is, if a procedure refers to another procedure in relation to site inspections,

for example, then it will also be necessary to identify the later procedure. Once the relevant procedures have been identified, a copy of each needs to be obtained. It will be necessary as part of the incident investigation process, for each of these procedures to be reviewed to ensure their effectiveness both in light of the incident but also more broadly. Legislative provisions Consider if there are any relevant legislative provisions which will affect the conduct of the investigation. For example, if the incident involves hazardous chemicals, it is necessary to have regard to the hazardous chemicals regulations. Similarly, in relation to incidents involving plant and structures. Furthermore, given the prominence of the horizontal consultation obligation in the WHS legislation, any incident investigation must have regard to the extent to which any overlap in activities between duty holders was subject to consultation, co-operation and co-ordination and the effectiveness of that process. Codes of practice In addition, the investigator must have regard to any relevant code of practice. Codes of practice are admissible in legal proceedings under the WHS legislation and may be taken into account in relation to what was reasonably practicable in the circumstances. Other material In addition to having regard to any relevant legislative provisions and codes of practice, the investigator should, with some caution, have regard to relevant Australian and international standards. The reason that this should be done with caution is because such documents are useful guides only based on the collective wisdom of their respective authors. While they should not be dismissed lightly, they equally should not be automatically used as a substitute to properly considered site-based risk management solutions. Causation The final step of the incident investigation process is to identify the

causes of the incident. This of course is not the final step in the process, given that corrective actions need to be identified and implemented in relation to the incident causes. However, it is the last step in the investigation itself — that is the uncovering of the causes of the incident. There are various causal analysis techniques that are regularly used in industry. A study by Andersson and Menckel (1995) identified 11 different models.194 These range from those that focus on one accident, one factor or one individual to those that adopt a more multidimensional approach analysing disorders, multifactorial relationships, multiple persons and the environment as whole. Furthermore, the trend in incident analysis is to increase the time span of the behaviour and system under consideration. Barrier analysis The most popular causation analysis techniques rely on an adaptation of the barrier analysis approach, building on the pioneering work of Reason (1997). The “barrier analysis” method analyses incident events by reference to the barriers or controls that should have operated to prevent the incident from happening. The “Swiss Cheese” model, developed to explain accident causation, has been adapted to analyse incidents and is an example of this technique. The approach is to identify the holes in the Swiss Cheese representing the failed or absent defences which permitted the incident to take place. The Incident Causal Analysis Method (ICAM) is another adaptation of this technique. ICAM is an adaptation of the Reason (1997) model which systematically seeks to draw out the latent conditions which lead to organisational accidents. Event and causal factor analysis The event and causal factor analysis method, used to map out a chronology of events, can also be used effectively to identify root causes of incidents. The “5 why?” incident investigation method is an adaptation of that technique. Once the event and its associated conditions are identified, the causal factor enabling that condition is then identified by repeatedly asking “why?”. That is, “why did this event occur?” gives you the condition. Why did the system allow that

condition to exist?” gives you a root cause. Figure 18 — Event and causal factors analysis with root causes

Preparation of investigation report An investigation report must be prepared, which records the findings of the incident investigation team. The report should include the following components: • Scope and purpose • Executive summary • Relevant background information • Contractual arrangements at the site • Investigation • Injured worker information

• List of witnesses (including organisational information and occupation) • Witness statements/interviews • Photographs • Physical evidence • Training records • Sequence of events (flowchart summary) • Factual findings • Relevant OHS management system documentation • Risk assessments • Safe work method statements • Job safety and environment analysis • Relevant procedures • Any other relevant site-based documentation • Post-incident response • Incident causal factors analysis • Overview of controls failures (see Swiss Cheese model diagram) • Potential liability • Future investigation by the regulator • Recommended actions • Schedules — should include copies of witness

statements/interviews, site photographs, equipment information, incident site diagram. Management review Each member of company personnel who has been allocated responsibility for closing out on proposed corrective actions should be consulted to ensure the proposed corrective actions are appropriate and feasible. It may be necessary to conduct an open discussion with relevant client personnel regarding the investigation report once a first draft is complete. Implementation of improvements Following the finalisation of the investigation report, a review of the implementation of the actions specified in the risk management action plan should be scheduled. Footnotes 175

The following information comes from KP Richard, The Westray Story: A Predictable Path to Disaster, Report of the Westray Mine Public Inquiry (Canada, 1997). For further discussion of the Westray Mine Disaster and its lasting implications to the regulatory framework in Canada, see M Tooma, Safety Security Health and Environment Law (Federation Press, Sydney, 2nd ed, 2011).

176

Another disaster was to follow two years after the Westray disaster in Moura No 2 in 1994. That disaster claimed the lives of 11 miners.

177

KP Richard, The Westray Story: A Predictable Path to Disaster, Report of the Westray Mine Public Inquiry (Canada, 1997) 220.

178

Ibid 218.

179

Ibid 219.

180

Ibid 217.

181

S Dekker, Drift into Failure (Ashgate Publishing, 2011) 13.

182

Ibid 14.

183

J Reason, Human Error (Cambridge University Press, 1990).

184

J Reason, Managing the Risk of Organizational Accidents (Ashgate Publishing, 1997) 195.

185

Ibid 195.

186

Ibid.

187

Ibid 196.

188

T Kletz, Learning from accidents (Gulf Professional Publishing, 3rd ed, 2001) 13.

189

Dekker, above n 181, 170–171.

190

J Cooper, T Heron and W Heward, Applied Behavior Analysis (Pearson, New Jersey, 2007) 36.

191

Dekker, above n 181, 175.

192

See the discussion in Chapter ¶3.

193

E Hollnagel, Safety — I and Safety — II: The Past and Future of Safety Management (Ashgate Publishing, 2015) 40.

194

R Andersson and E Menckel, “On the prevention of accidents and injuries. A comparative analysis of conceptual frameworks”, Accident Analysis and Prevention (Vol 27 No 6, 1995) 757–768.

CHAPTER 7 POSITIVE INVESTIGATION METHODOLOGY: WHAT WENT RIGHT?

Key messages • What goes right is as instructive as what goes wrong. • An inquiry into what went right promotes a positive safety culture.

QF32: How the world’s worst air disaster was averted On 4 November 2010, 469 people on a flight from Singapore to Sydney were in the centre of dramatic events that had the potential to go down as one of the world’s worst air disasters. Shortly after leaving Changi Airport, an explosion shattered Engine 2 of Qantas Flight QF32 — an Airbus A380. Hundreds of pieces of shrapnel ripped through the wing and fuselage, creating chaos as vital flight systems and back-ups were destroyed or degraded. The crisis showed every sign of ending tragically. Instead, the plane landed safely a few hours later at Changi Airport in Singapore with all people on board unharmed. At the height of the crisis, the A380’s electronic centralised aircraft monitoring system (ECAM) was spitting out hundreds of alerts on what was wrong with the plane and instructions on what the pilots were required to do to address those defects. It was at this pivotal moment that Captain Richard de Crespigny made a profound decision. As he recalls in his book on the crisis: I was growing tired of being reactive to the ECAM and I wanted something positive to focus on. There were too many alerts, too many things broken and not much to be achieved

by dwelling on them.195 At that moment, Captain de Crespigny had what he called an epiphany: I inverted the logic. I remembered what Gene Kranz, NASA’s Flight Director said during the Apollo 13 mission: ‘Hold it, gentlemen, hold it! I don’t care what went wrong. I need to know what is still working on that space craft.’ We went back to basics and it became easy.196 Captain de Crespigny’s actions in focusing on what was right with the plane on that day rather than what was wrong with it, allowed him and his crew to land the plane safely, saving the 469 lives on board.

Positive investigation methodology: what went right? How do we learn from what went right? Let’s take the example of a high potential incident or a serious near miss. The reason such incidents are a concern is because a serious adverse outcome, typically a fatality or serious injury, was narrowly averted. There are typically many absent or failed defences which led to the incident. However, the adverse outcome was averted. That is something(s) intervened to shift the trajectory of the incident from one where the adverse injury causing outcome would occur, to the one where the outcome was averted, albeit narrowly. Those things may be effective defences. They may be unplanned or unintended defences. Understanding which defences, planned or unplanned, work, and harnessing them, may be as instructive as understanding which defences failed or were absent. The investigation of these effective or unplanned defences begins with firstly identifying what happened. The next line of inquiry in a near miss is understanding what could have happened but did not happen — the adverse outcome associated with the “high potential incident”. Next we need to discover

what “went right” to allow that adverse outcome to be averted. This is achieved by asking “what went right?” repeatedly until the possibilities have been exhausted. The aim is to do so five times but in certain circumstances it may be appropriate to do this more and in others, the inquiry will be exhausted sooner. Figure 19 — Near miss

Systematically adopting that approach, however, requires validation that the “accidental control” is indeed universally valid, such that including it in a system will increase its resilience. As such, the control needs to be tested through a series of “what if” scenarios to test its resilience in changed conditions. These changed conditions include: • change in the natural environment, such as extreme weather

• change in the plant being used • change in the process being adopted • change in the consequences, such as the height at which the work is performed, or the speed at which the vehicle is travelling • change in the feature of the worker, such as weight, height, literacy or language skills. Such a process will promote greater resilience in the safety management system. It will capture the controls that work and systematically implement them to improve the system. Only then can we guarantee that the systematic learning and improvement are part of the fabric of the organisation. Only then can we claim that we are ensuring the health and safety of workers and other people that may be affected by the conduct of our business or undertaking. Figure 20 — Positive investigations methodology diagrams

In adopting this positive methodology, we can capture the practical lessons of what actually works, rather than the theoretical lesson of what should be working, but is not working. This creates more powerful feedback loops. Reinforced through key performance indicators for undertaking such positive investigations, and identifying what went right and converting those lessons into appropriate controls, can create a system that is a very powerful tool in incident prevention. When identifying controls under that methodology, however, innovation is critical. The idea is that you take what accidentally occurs and systematise it. That is typically achieved through technology not procedures. Positive investigation methodology: what if? The positive investigation methodology (PIM) can also be useful in the context of serious incidents. Even in serious incidents, there is often something worse that could have occurred that did not occur because of effective mitigation factors or an effective incident response. It is useful to recognise this in the context of an investigation because it is a recognition of the efforts of the individuals involved.

The focus in this approach is two-fold. Firstly, understanding what could have happened if circumstances were different as well as recognising and learning from what made the incident less serious. Secondly, verifying that whatever controls are being implemented would be effective in different circumstances. If we build on the approach developed above, an incident event occurred because of a series of primary events leading up to it, each causally related to the incident event. These are the direct causes of that event. By asking why these events happened, we uncover the root causes of that event. In the “5 why’s” model, “why?” is asked five times. As we have discussed, for every event sequence, there is a road not travelled because of some control that worked or some other barrier, whether intended or unintended. That alternate path can be uncovered by asking “what if”. This would disclose an alternate event sequence, together with its own root cause factors. Figure 21 — Causal analysis: actual

Figure 22 — Causal analysis: first what if?

Figure 23 — Causal analysis: second what if?

Figure 24 — Causal analysis: third what if?

Figure 25 — Causal analysis: fourth what if?

Figure 26 — Causal analysis: fifth what if?

If we ask the “what if” question four additional times, we get four alternate realities in addition to the actual sequence which occurred. That provides a much richer tapestry of system deficiencies and therefore recommendations for system improvements. To explain the process, each sequence in the linear incident trajectory and the four alternate trajectories can be linked back to the event and causal factor analysis diagram with each dot on the diagram representing an actual failed or absent defence; or, in the alternative trajectory, a point of vulnerability. The investigation report is then not just about linear causes but about vulnerability to future events which may adopt a different trajectory. The investigation is therefore not simply a root cause analysis, but a vulnerability analysis where the

aim is to build resilience in the system to safeguard against an unpredicted and unexpected future event. Identification of corrective actions and completion of Risk Mitigation Action Plan It is critical to identify corrective actions throughout the incident investigation and to develop a corrective action plan or “Risk Mitigation Action Plan” (RMAP). This should include consideration of actions which were taken immediately following the incident and proposed actions as identified throughout the investigation. Any identified corrective actions should be captured in a table format in the investigation report with allocations for client personnel responsibilities for completion of corrective actions. It is crucial in that context to avoid the “knee jerk” reaction to incidents. Consider the response in the aftermath of the 11 September 2001 attacks on the United States. Boeing and United Airlines were criticised and sued for failing to have a mechanism for locking the cockpit of the plane from the inside, to prevent an attacker from accessing the cockpit. The lawsuits were settled at a significant expense no doubt, and Boeing and other aeroplane manufacturers such as Airbus made modifications to their planes, allowing the cockpit to be locked from the inside. On 24 March 2015, a pilot of Germanwings flight 9525, in command of an Airbus A320, safely locked in the cockpit, took down the plane with its 144 passengers and six crew, killing himself and 149 others. Had that feature not been introduced, the passengers on that Germanwings flight would still be alive today. Footnotes 195

De Crespigny, QF32 (McMillan, 2012) 218.

196

Ibid 198.

CHAPTER 8 BUSINESS CONTINUITY

Key messages • Maintaining business continuity despite a major disaster is critical to the survival of a company. • Business continuity planning begins long before an incident.

Glasgow Airport incident At 3.11 pm on Saturday 30 June 2007, during the busy summer holiday period, a Jeep Cherokee 4X4 vehicle gained unauthorised access to the inner forecourt of Glasgow Airport, Scotland. The vehicle attempted to gain access to the main check-in area of the terminal building. Flames were seen issuing from the vehicle and onto the front of the building and the canopy above the doors. Two males exited the vehicle, with the driver on fire. The perpetrators were wrestled to the ground by police officers, assisted by members of the public and airport staff. The fire alarm was activated and an evacuation of the terminal followed. Smoke permeated through the building and activated additional fire alarms, causing additional areas of the building to be evacuated. Local and airport fire services attended the incident, the fire was brought under control within 15 minutes and all fires were extinguished within 30 minutes of the incident. All planes were grounded, with approximately 1,100 passengers held aboard aircraft. The police evacuated all travellers to a local conference centre, where each person was interviewed prior to

being released home or to a hotel for the night. Around 4,500 passengers were evacuated to the conference centre. The first flight arrived on Sunday 1 July: 16 hours and 26 minutes after the initial fire. The main terminal building reopened 23 hours and 59 minutes after the incident occurred. The key question to answer is “how did the airport manage to reopen within 24 hours of the incident?” The owners of the airport, BAA, had in place plans for a crisis management team and a business recovery team. The crisis team managed the tactical command of the recovery — the team was assembled and was operational within 45 minutes of the incident. The business recovery team was responsible for strategic command — the team was assembled and was operational within 1 hour 45 minutes of the incident. Off-duty staff were immediately called in to support BAA’s operations. Clear critical success factors were outlined — broken down into the short, medium and long term. The existing business continuity management strategy was put into place. BAA’s strategy has been described as the “Seven R’s”: • Risk • Resilience • Rehearse • Response • Recovery

• Review, and • Reputation.197 Leadership came from the top, with BAA’s Managing Director briefing stakeholders and supporting response staff. Co-ordination and communication with all airlines operating from the airport was required — existing emergency plans were focused on incidents involving a single airline, not involving all airlines operating from the airport. Co-ordination with the emergency services was managed to ensure that the terminal building was handed back to BAA as soon as possible — the crime scene was handed back to BAA within 54 hours. A media strategy was implemented. The PR team was assembled and handled over 800 calls in the first 24 hours. A “business as usual” message was communicated through various channels with an ongoing campaign in the media for four weeks after the incident. Resources, both economic and personnel, were mobilised. Maintenance crews were empowered to use procurement cards to obtain necessary materials to make the airport forecourt secure, and assist in securing the terminal building. Trained counsellors were on site from Sunday, 1 July. Counselling was offered to BAA staff and business partners. The following key lessons can be taken from the incident at Glasgow Airport: • a business continuity plan was in place. Personnel and resources were mobilised to respond to the incident • the emergency response plan was triggered as soon as the incident occurred — teams were assembled and operational within very short timeframes

• the importance of the first 24 hours was recognised • stakeholders and the media were managed to limit damage to BAA’s reputation, and • a culture of safety leadership was demonstrated, with leadership of the incident coming from the top.

What is business continuity? The continuation of commercial activities after an incident is a critical component of incident damage control. But effective strategies for business continuity begin long before an incident. Much like emergency preparedness, business continuity management requires careful planning and extensive training to ensure its effectiveness, once deployed. The leading reference to business continuity management in Australia is HB 221 — 2004 Business Continuity Management and supporting documents HB 292 — 2006 A Practitioners Guide to Business Continuity Management and HB 293 — 2006 Executive Guide to Business Continuity Management. Business continuity management can be defined as the availability of processes and resources in order to ensure the continued achievement of critical objectives.198 It requires a systematic identification of critical business processes and/or assets, an assessment of the vulnerability of the business to those assets or processes being disrupted or lost, and the development of continuity strategies and recovery procedures. Figure 27 — Business continuity process

• Risk and vulnerability analysis — This involves an environmental analysis to obtain an understanding of the external and internal business drivers and constraints and a risk and vulnerability analysis to identify the risks requiring mitigation through the business continuity management strategy.199 • Business impact analysis — This is a seven-fold process which involves: (i) defining the technical and operational requirements within the business continuity plan — this is called impact analysis (ii) identifying the critical business functions and processes that support the achievement of key business objectives

(iii) in relation to each critical business function, identifying the resource requirements that will allow a minimum acceptable level of operation (iv) identifying potential major disruption scenarios (v) in relation to each critical business function, defining the maximum period of time that processes can operate before the loss of the critical business function affects overall operations — this is called Maximum Acceptable Outage (MAO) (vi) determining the amount of time, cost and resources required to clear backlogs resulting from the disruption — this is called backlog impact (vii) identifying and documenting existing workarounds and continuity arrangements.200 • Response strategies — This includes emergency response, continuity response, and recovery response plans and the alignment of those plans to minimise conflicts.201 • Resource and interdependency requirements — This requires confirming the minimum resourcing requirements identified and identifying the approach to meeting these requirements. It also requires identifying the range and nature of external interdependencies.202 • Continuity plans for chosen strategy — This requires the development of plans to cover the specialist and organisation requirements for continuity and recovery. Continuity plans must be developed and documented in a comprehensive and simple manner that allows the organisation to respond flexibly to a wide variety of disruption scenarios.203 • Communication strategy — This involves:

(i) identifying the stakeholders’ requirements for communication and assessing the extent of the organisation’s capacity to meet those requirements (ii) determining types of communications required and developing pro-forma content for each identified category, and (iii) identifying the means by which the different types of messages will be communicated, having regard to the potential disruption of communication channels through the emergency event itself.204 • Training, maintenance and testing plans — This step is concerned with reviewing, testing, training and maintenance of the continuity plans. Regular testing of the plans provides opportunities for plan inadequacies and deficiencies to be identified and corrected. It also allows for the feasibility of the plan components to be assessed. Resource requirements can also be confirmed through a testing process, in a way not apparent in a planning setting. Furthermore, as with any plans, it is necessary to train all stakeholders in the plans to ensure that they are implemented efficiently and effectively in the event of a disruption. Plans must be reviewed and revised on a regular basis to ensure that they remain current, and to identify opportunities for improvement.205 • Activation and development of plans — Specific triggers or criteria must be set for activation of plans. These triggers must be clearly documented. Post-activation governance requirements must also be clearly documented.206 • Monitor and review — The business continuity management strategy and associated plans must be regularly reviewed to ensure that critical business objectives remain current and are comprehensive and that the processes and procedures set out in the plans are current. Footnotes

Footnotes 197

G Crichton, “Case Study: The Glasgow Airport Attack from a business continuity and crisis management point of view”, The Business Continuity Journal (Vol 2, Issue 3) 18.

198

HB 221 — 2004 Business Continuity Management, 2.

199

Ibid 16.

200

Ibid 17.

201

Ibid 20.

202

Ibid 21.

203

Ibid 22.

204

Ibid 23.

205

Ibid 24–26.

206

Ibid 27.

CHAPTER 9 INTERRELATIONSHIPS AND INTERDEPENDENCES — WHY ADOPT A HOLISTIC APPROACH?

This book has argued that effective incident management requires a balancing of competing considerations. Mapping the phases of incident management against those considerations, it is possible to see the emphasis one gives each consideration at the various phases. These are captured in the diagram below. A subsequent book in this series, Due Diligence: Dealing with Regulators, picks up where this book leaves off in addressing the practical challenges of regulatory investigations into incidents, including investigation powers, regulatory interviews and prosecutions, and other enforcement actions. Resilience and incident management Incidents, particularly major disasters, test organisational resilience. They are, by definition, unexpected events. Incidents rarely follow the same trajectory and, even if they did, the most rudimentary incident investigation approach sufficiently addresses such a possibility. Having experienced an incident, it forms part of the corporate experience and therefore its recurrence is anticipated. The key to incident management is preparing for the unanticipated. This relies on building system resilience. The approach of this book has been to explore the practical means of building such resilience through company and business continuity planning, incident management, stakeholder communication and incident investigation. Role of officers As we have seen in Due Diligence: Duty of Officers, an officer has a duty to take reasonable steps to monitor the incidents and risks occurring in their company or organisation and to respond

appropriately to the incidents and risks. This book provides a blueprint for the corporate response that should be mandated by every officer as part of that duty through discharging a critical element of due diligence. Figure 28 — Flowchart: incident management lifecycle

Part IV Horizontal and Vertical Consultation

CHAPTER 1 INTRODUCTION TO SAFETY CONSULTATION DUTIES

Key messages • Consultation is a key feature of work health and safety legislation. • Consultation extends to all workers, not just to employees. • Consultation is not limited to workers but extends to other duty holders.

Case example

Bank robbery On 21 September 2004, three men entered the Westpac Avalon branch; one of them climbed onto the counter and over the antijump barrier (a barrier intended to protect staff and cash from armed offenders in the event of a hold-up) and bulkhead, to the employee side of the counter and demanded access to the cash handling area. A second man then gained access to that area and took money from the safe and removed money from three teller drawers. In total, approximately $25,000 was stolen. No employees were injured in the robbery. All employees who were present during the incident received trauma counselling after the robbery. These same employees all returned to work the day after the robberies and had no time off. There were no workers compensation claims associated with the incident. Westpac was prosecuted and convicted for breach of its duty of care to the employees in relation to this incident. For a number of years before the robbery, the Finance Sector

Union and Westpac had been corresponding and discussing in security work group meetings, security issues — including antijump barriers, their design and employee safety. There had been a number of bank hold-ups at various branches throughout New South Wales and the Australian Capital Territory between 1999 and 2002. Twenty-three letters were exchanged between the Finance Sector Union and Westpac from 1998 to 2002, discussing security issues such as anti-jump barriers at various locations around New South Wales. A common element of many branch hold-ups had been counter jumping. In a letter to Westpac in relation to an armed hold-up of its Cronulla branch, the Finance Sector Union stressed the need for anti-jump barriers to extend all the way to the ceiling to prevent bandits from climbing over them. A risk assessment was undertaken in response to these concerns. That assessment concluded that there was little to no risk of anyone climbing over the gap to gain access to the area behind the counter, because of the presence of the side and horizontal cross bars known as “WSSC bars” and the bulkhead. That assessment subsequently proved to be incorrect. Westpac was convicted and fined $145,000.1

Consultation Consultation has been a foundation stone of modern work health and safety regulation for nearly four decades. Yet, despite being a consistent feature of the regulatory regime in Australia and internationally, in practice, effective work health and safety consultation is rare. Most companies view consultation as a compliance exercise. Workers are not effectively engaged in consultation. While a health and safety representative or committee might be elected and might meet on a regular basis, committee deliberations and health and safety discussions will rarely advance to critical safety issues. Indeed, policies and procedures are routinely developed and implemented without input from such worker safety representatives, despite a legal requirement for such consultation. In

some companies, it is difficult to co-opt people to take up worker safety representation roles, as many people view such roles with cynicism. There is good reason for this — consultation is seen by businesses and workers as merely a legal requirement. Indeed, there is far too much law on this topic. Every aspect of consultation from the definition of what is consultation to the mechanism for consultation, to the functions and powers of worker representatives, even down to the frequency of meetings, is tightly regulated. In the process of ensuring compliance, we have lost sight of the rationale behind the consultation obligations. Professor James Reason (1997) argues that a key component of safety culture is creating what he calls an informed culture — a culture in which those who manage and operate the system have current knowledge about human, technical, organisational and environmental factors that determine the safety of the system as a whole.2 The vertical and horizontal consultation requirements discussed in this book are aimed at arming management with that information. There is a reason consultation has been a feature of the regulatory regime for decades. This is because it is now well recognised that people at the “coal face” have more intimate knowledge and insight into the hazards they encounter in their daily activities and also the effective manner in which to control them. But in order to extract and exploit that knowledge to further the safety objective, the consultation arrangements must be genuine and effective. The experience of most businesses and workers would indicate that such consultation arrangements are rare. While the Work Health and Safety Act 2011 (Cth) has widened the scope of consultation, it has not addressed this fundamental flaw in the operation of the legislation in practice. The duties to consult under the Work Health and Safety Act 2011 require consultation with workers and not just employees. “Workers” means anyone performing work, including contractors, subcontractors, employees of contractors or subcontractors, labour hire workers, apprentices and trainees, outworkers, students on work experience and volunteers. That is, the definition is not limited to employees. This is an important expansion of the consultation duty which had previously applied. Businesses have to consult with contractors and

subcontractors in relation to matters affecting their health and safety. If consultation is to be through health and safety representatives and health and safety committees, contractors and subcontractors must be represented in that consultation mechanism. The Act also introduces a new consultation duty operating at a business to business level. The duty — dubbed the horizontal consultation duty — requires overlapping duty holders to consult, cooperate and co-ordinate with each other in relation to the manner in which they will respectively comply with their duties. This means that businesses have to engage with suppliers, controllers of premises, adjoining businesses and service providers in relation to the interface between their respective activities and the risks arising from that interface. Such a legal obligation cannot exist in a vacuum. It traverses commercial arrangements that are now well settled between landlord and tenant, principal and contractor, and supplier and customer. As such, corresponding adjustments are required in the contractual arrangements underpinning those relationships to enable the smooth implementation of such a duty. Figure 1 — Consultation duty extends to all workers: employees, contractors, subcontractors, employees of contractors or subcontractors, labour hire workers, apprentices, trainees, students on work experience, outworkers and volunteers

If we accept that the rationale for these consultation obligations is to foster the conditions for an informed culture to develop in the business, then the measures taken to give effect to these obligations have to go beyond mere compliance. Those measures have to give effect to the intent of the legislative provisions. That is the approach taken in this book. Relationship with due diligence duty As we have seen in the first book of this series, Due Diligence: Duty of Officers, officers are required to put in place corporate governance arrangements to interrogate their business’ systems; to maintain a current understanding and appreciation of the health and safety challenges, to monitor performance and verify that adequate resources and processes are deployed and implemented to ensure compliance with the legal obligations imposed on the business. This can be called a due diligence framework — corporate governance protocols for training, information gathering, decision-making, reporting, auditing and review, with each addressing the six elements

of due diligence. The components of such a framework were discussed in the first book of this series, Due Diligence: Duty of Officers. However, effective consultation assists in compliance with each of the elements. The first element of due diligence requires officers to acquire knowledge in relation to work health and safety matters. Effective consultation with other duty holders — horizontal consultation — assists in maintaining knowledge of relevant work health and safety matters, particularly in relation to developments in the industry, and work health and safety research relating to plant and substances supplied to the business. The second element requires the officers to gain an understanding of the nature of the operations and the risks associated with those operations. Effective consultation with workers — vertical consultation — assists officers to gain an understanding of the nature of the operations and the risks faced by workers at the “coal face”. The third element requires officers to ensure that there are adequate resources and processes to discharge the duties and obligations of the business under the legislation, and the sixth element reinforces that requirement by requiring officers to verify that this and other elements are complied with. Effective consultation provides a “reality check” on whether the processes which have been implemented are effective to ensure health and safety to the requisite standard. It also allows a mechanism through which resource concerns can be expressed and elevated to officers. The fourth element requires officers to monitor the performance of the business from a health and safety perspective. Effective consultation facilitates this by providing a forum for review and monitoring of health and safety performance on the ground, which can then serve as the basis for further analysis at higher levels. The fifth element requires officers to ensure legal compliance and specifically identifies consultation requirements for that purpose, underscoring the importance of the obligations to the due diligence framework set out of the officer duty.

Finally, as mentioned above, the sixth element requires officers to verify that the balance of the elements, particularly elements three, four and five are implemented. Clearly, consultation has a role to play in that verification exercise. Figure 2 — Relationship between due diligence and consultation

What is contemplated therefore is firstly, that officers will ensure they acquire knowledge in relation to work health and safety matters including their company’s consultation duties — both horizontal and vertical. Horizontal consultation will assist in maintaining that knowledge. Secondly, that officers will utilise consultation mechanisms to gain an understanding of the nature of their operations and the risks associated with those operations. Again, such an understanding requires both horizontal as well as vertical consultation. Thirdly, that the officers will ensure there are adequate processes for horizontal and vertical consultation, and to the extent resources are required to

implement such processes, that those resources are deployed. Fourthly, that, where incidents or risk assessments uncover risks to the health and safety of workers, officers would respond appropriately to such incidents or risks by ensuring workers and other duty holders are adequately consulted in relation to health and safety matters arising from that information. Fifthly, that the officers will ensure that the processes implemented comply with the legal obligations for consultation. Finally, it is contemplated that the officers will verify that such processes and systems are being implemented. Approach of this book This book provides practical guidance on harnessing the potential of consultation, and the checks and balances needed by officers to ensure that these legal duties are being discharged by their company. The lived experience with consultation of most workers suggests that current arrangements are not achieving the desired objective of fostering a sharing of information to facilitate more effective decisionmaking. As such, Due Diligence: Horizontal and Vertical Consultation explores how such practical obstacles may be overcome. The emphasis of this book is on the “nuts and bolts” required to enable consultation to work effectively, both with workers and other duty holders. Figure 3 — Consultation Model

Note: “PCBU” is a person conducting a business or undertaking.

The Model recommended in this book embraces the interrelationship between the vertical and horizontal consultation obligations. In any contracting chain, contractors and subcontractors may be both overlapping duty holders and therefore owed a horizontal consultation duty, and workers, and therefore owed a vertical consultation duty. The difference between the two designations has implications from a compliance perspective, but in practice, the aim of both duties is to ensure effective communication of activities and therefore a better quality analysis and management of the risks arising from those activities. The better way to look at the consultation obligations therefore is as part of a single framework where workers are represented and engaged through work group representatives — health and safety representatives3 — and overlapping duty holders are represented and engaged through working groups — interface coordination representatives.4 Each consultation representative will access subject matter experts to inform their participation in consultation. In the case of the worker representatives, the health and

safety representatives, this will be workers themselves or third party experts including union officials. In the case of overlapping duty holder representatives, the interface co-ordination representatives, this will be internal subject matter experts; workers of the duty holder (either directly or through their health and safety representatives) as well as third party experts. Therefore, there will be occasions where it is indeed beneficial to have a forum through which the worker representatives of each of the overlapping duty holders can meet to share information and co-ordinate their respective approaches. This will assist with compliance with both the horizontal and vertical consultation obligations. More importantly, it will improve safety outcomes. Footnotes 1

Derrick v Westpac Banking Corporation [2006] NSWIRComm 76.

2

J Reason, Managing the Risks of Organizational Accidents (Ashgate Publishing, 1997) 195.

3

This is a defined position created by the legislation which requires election by the work group.

4

This is not a legislatively imposed position but arises from a practical application of the obligations.

CHAPTER 2 WHY INDUSTRIAL RELATIONS MATTERS

Key messages • The industrial context to consultation matters. • Fostering a positive relationship with workers and their representatives on safety matters adds to the authenticity of consultation arrangements. • Union rights of entry are limited — those limitations should be strictly enforced.

Industrial context The effectiveness of work health and safety consultation is often contingent on the state of industrial relations in the business or undertaking. The legislation provides a limited mechanism for union involvement in health and safety consultation. But the effect of industrial relations on work health and safety consultation and outcomes goes well beyond those limited powers. There is little doubt that unions have a constructive role to play in work health and safety consultation. There is also no denying that safety has frequently been used by unions as a pretext to further an industrial agenda. That has undermined the credibility of the union movement in relation to safety matters. Reported abuses have created suspicion among businesses about union involvement in health and safety. When it works however, it works extremely well. Unions can provide support to the business based on their industry-wide exposure. Where union officials are experienced and well-trained in health and safety principles, they can add value to business decisionmaking on health and safety matters and can provide an independent corroboration to recommendations made by the business to workers. In theory, there is an alignment of interests when it comes to work health and safety between unions and businesses. In practice, that

state of industrial harmony is rare to achieve and in any event, sustain. Any strategy dealing with work health and safety consultation has to recognise that influence, particularly in highly unionised industries. An important aspect of any relationship is boundaries, however. An industrial relationship is no exception. Setting the boundaries based on legal rights and obligations is an appropriate way to develop and maintain a mutually respectful and constructive relationship. Right of entry Authorised trade union officers or employees may enter workplaces to investigate suspected work health and safety offences or to consult and advise workers.5 The latter category is designed to supplement the vertical consultation obligations by promoting union-led consultation. In workplaces where there is a constructive industrial culture, this can be beneficial. A well-trained union official can offer an independent perspective and be able to share information acquired at an industry-wide level. This can improve safety outcomes. In workplaces where the industrial culture is less than healthy, this can be problematic, as safety consultation can be used as a pretext for a broader industrial agenda. The challenge for all businesses is to create the pre-conditions of industrial harmony and trust between management and workers, at least in relation to work health and safety matters. This will facilitate a constructive dialogue on work health and safety issues and create a degree of organisational resilience to any external agenda that may emerge. The legislation sets out detailed requirements that need to be satisfied for a person to become a WHS entry permit holder. WHS entry permit holders have the right to enter workplaces and exercise specific powers while at those workplaces. The authorising authority is required to maintain a register of WHS entry permit holders.6 This register must be published on the authority’s website and include the date on which the register was last updated.7 Understanding the basis on which a permit holder is seeking to enter the workplace is crucial to being able to know the extent of their right

to do so and what powers are available to them on entry. It is therefore useful to ask that question. The permit holder must have their WHS entry permit and photographic identification available for inspection by any person on request.8 It is therefore useful to seek to inspect this identification, as a matter of course when entry is sought. Entry for consultation A WHS entry permit holder can enter a workplace to consult on work health and safety matters with, and provide advice on those matters to, one or more relevant workers who wish to participate in the discussion.9 To do so however, they must give notice of the proposed entry to the relevant person conducting the business or undertaking (PCBU) during the usual working hours at that workplace at least 24 hours, but not more than 14 days, before the entry. Once they have entered the workplace, the WHS permit holder may warn any person of a risk if they reasonably believe the person to be exposed to a serious risk to their health or safety, emanating from an immediate or imminent exposure to a hazard.10 There are restrictions on this otherwise broad right, however. Firstly, the permit holder may exercise entry rights only during the usual working hours at the workplace.11 Secondly, they may only exercise a right in respect of the area of the workplace where the relevant workers work or any other work area that directly affects the health or safety of those workers.12 Importantly, the WHS permit holder must comply with any reasonable request by the relevant business or the person with management or control of the workplace to comply with any work health and safety requirement that applies to the workplace and any other legislated requirement that applies to that type of workplace.13 Practically, this includes requirements in relation to induction, wearing of personal protective equipment and following other site rules. The permit holder is not required to disclose to the relevant business or the person with management or control of the workplace, the name of any worker at the workplace, unless the worker so consents.14

Investigation of contravention In addition to the right of entry for consultation, there is also a right of entry for investigating suspected contraventions. If entry is sought based on the investigation limb of the right of entry, it is useful to understand and seek details of the contravention alleged to have occurred. The right of entry in this respect is limited to a situation where a WHS entry permit holder reasonably suspects before entering the workplace, that a contravention of the Act has occurred or is occurring. If so, they may enter a workplace for the purpose of inquiring into the suspected contravention but only if it relates to, or affects, a relevant worker.15 If this suspicion is disputed by the PCBU, the onus is on the permit holder to prove that the suspicion was reasonable.16 Unless the WHS entry permit holder is entering the workplace to inspect or copy documents, they are not required to give advance notice of entry. However, they must, as soon as is reasonably practicable after entering a workplace, give notice of the entry and the suspected contravention to the relevant PCBU and to the person with management or control of the workplace, unless giving notice would defeat the purpose of the entry or unreasonably delay the permit holder in an urgent case.17 If the WHS entry permit holder is entering the workplace for the purpose of inspecting or making copies of employee records that are directly relevant to a suspected contravention, or other documents that are directly relevant to a suspected contravention and that are not held by the relevant PCBU, the permit holder must give at least 24 hours, and no more than 14 days, notice18 of the proposed entry. The notice must be given during usual working hours at that workplace.19 Powers upon entry for investigation While at the workplace, the permit holder entering may: • inspect any work system, plant, substance, structure or other thing relevant to the suspected contravention

• consult with the relevant workers in relation to the suspected contravention • consult with the relevant PCBU about the suspected contravention • require the relevant PCBU to allow them to inspect, and make copies of, any document that is directly relevant to the suspected contravention and that is kept at the workplace or is accessible from a computer that is kept at the workplace • warn any person whom the WHS entry permit holder reasonably believes to be exposed to a serious risk to their health or safety emanating from an immediate or imminent exposure to a hazard, of that risk.20 The right of entry for contravention presents a challenge for businesses in practice because it often adds an additional layer of “regulators” to manage in the event of an incident. Two books in the Due Diligence series may provide guidance — Due Diligence: Incident Notification, Management and Investigation explores the complexity of managing incidents and liaising with regulators in that context and Due Diligence: Dealing with Regulators explores the liaison with regulators in more detail. The challenge from a consultation perspective is to ensure that a WHS permit holder’s investigation of a suspected contravention does not become a wedge that is used to undermine constructive consultation channels operating in the business. In that respect, the business needs to take a long-term strategic approach to these inspections and look for opportunities to engage with the union without compromising its legal rights. This is important because in New South Wales, the union still retains a right to prosecute for breaches of the Act.21 Obstruction of permit holders It is an offence to refuse or unduly delay entry into a workplace by a permit holder who is entitled to enter the workplace, without reasonable excuse. The burden of proving reasonable excuse is with the person claiming it.22 It is also an offence to intentionally and

unreasonably hinder or obstruct a permit holder in entering a workplace or in exercising any rights at a workplace.23 Permit holder conduct On the other hand, a permit holder exercising or seeking to exercise rights must not intentionally and unreasonably delay, hinder or obstruct any person or disrupt any work at a workplace, or otherwise act in an improper manner.24 A person must not take action with the intention of giving the impression, or reckless as to whether the impression is given, that the doing of a thing is authorised if it is not so authorised. But there is no contravention if the person has a reasonable belief that the doing of the thing is authorised.25 A person must not use or disclose information or a document obtained in an inquiry into a suspected contravention for a purpose that is not related to the inquiry or rectifying the suspected contravention, unless: • the person reasonably believes that the use or disclosure is necessary to lessen or prevent a serious risk to a person’s health or safety or a serious threat to public health or safety • the person has reason to suspect that unlawful activity has been, is being or may be engaged in, and uses or discloses the information or document as a necessary part of an investigation of the matter or in reporting concerns to relevant persons or authorities • the use or disclosure is required or authorised by or under law • the person reasonably believes that the use or disclosure is reasonably necessary for one or more of specified actions by, or on behalf of, an enforcement body26 (within the meaning of the Privacy Act 1988), or • if the information is, or the document contains, personal information, the use or disclosure is made with the consent of the individual to whom the information relates.27

A contravention of any of these provisions triggers civil penalty provisions of $10,000 for an individual and $50,000 for a corporation. Footnotes 5

Work Health and Safety Act 2011 s 117(1), 121(1).

6

Ibid s 151.

7

Work Health and Safety Regulations 2011 reg 31.

8

Work Health and Safety Act 2011 s 125.

9

Ibid s 121(1), 122.

10

Ibid s 121(2).

11

Ibid s 126.

12

Ibid s 127. But not a part of the workplace used only for residential purposes.

13

Work Health and Safety Act 2011 s 128. Section 142 of the Act allows the authorising authority to deal with a dispute about whether such a request was reasonable.

14

Ibid s 130.

15

Ibid s 117.

16

Explanatory Memorandum, Model Work Health and Safety Bill [439].

17

Work Health and Safety Act 2011 s 119.

18

Regulation 27 and 29 of the Work Health and Safety Regulations 2011 set out the requirements for such notices.

19

Work Health and Safety Act 2011 s 120.

20

Ibid s 118(1).

21

The right is unfettered in relation to minor contraventions but is more restricted in relation to serious contraventions.

22

Work Health and Safety Act 2011 s 144.

23

Ibid s 145.

24

Ibid s 146.

25

Ibid s 147.

26

For details, see s 148(d) of the Work Health and Safety Act 2011.

27

Work Health and Safety Act 2011 s 148.

CHAPTER 3 UNDERSTANDING HORIZONTAL CONSULTATION

Key messages • Duties imposed by work health and safety laws are overlapping. • Duty holders must consult, co-operate and co-ordinate in the manner in which they discharge their duties with other duty holders. • Horizontal consultation duty is a supplementary and separate duty to primary duty.

Case example

What happens when overlapping duty holders do not consult? A trafficable suspended ceiling collapse on a construction site serves as a salient reminder of the need for horizontal consultation. Three workers were injured when the ceiling they were standing on collapsed. The three workers were employees of an electrical contractor, Kennedy-Taylor (NSW) Pty Ltd, which had been subcontracted by Mainbrace Constructions Pty Ltd to carry out electrical work at the premises of Chisholm Manufacturing, a division of Woolworths Ltd. Mainbrace, in turn, had been contracted by Pinnacle Pacific Pty Ltd, the project manager appointed by Chisholm, to carry out building renovation work on sections of a meat processing facility which was owned and occupied by Chisholm in Blacktown. Mainbrace had earlier on the relevant day, demolished a dust wall supporting the trafficable ceiling but had not notified Kennedy-Taylor. Mainbrace was prosecuted for, among other things, failing to

instruct all persons engaged in construction works at the site, that the suspended ceiling was not to be entered or used as an access way until its structural integrity for such purposes was adequately assessed, and failing to notify employees of KennedyTaylor of the demolition of the dust suppression wall and of the potential effect of this on the structural integrity of the trafficable suspended ceiling.28 The Full Bench of the New South Wales Industrial Relations Commission held at [73]–[76]: “… a proper risk assessment would have also focused on the work associated with the demolition and re-construction of the northern wall — including the removal of the dust wall — and how it might affect the ceiling as a means of access and egress. This would have revealed that the ceiling would, for a period of time, be detached from the northern wall and, therefore, one of the main supports of the ceiling removed. It would also have revealed that the dust wall would necessarily become load bearing. Finally, it would have highlighted the need as an elementary safety precaution to ensure that there was no person in the ceiling at the time the dust wall and acrow props were removed and that no person entered the ceiling space until such time as it had been properly inspected to determine its safety. … It follows, we think … a failure to instruct persons that the ceiling space above the Hanging Area was not to be entered or used as an access until its structural integrity had been adequately assessed. The appellant had submitted that there was no evidence that it had control over access to the ceiling space and, therefore, was not in a position to instruct persons not to enter the space. If an employer is conducting an undertaking and has a statutory duty to ensure that persons not in its employment are not exposed to risks to health or safety, that employer is under an obligation to stipulate whatever conditions are needed to avoid those

risks. The employer cannot, having omitted to do so, say that he was not in a position to exercise control … The evidence is that there were no instructions given to any persons that the ceiling space above the Hanging Area was not to be entered or used as an access way until its structural integrity had been adequately assessed. It appears that the appellant was not even aware of the risk. But it is not a matter whether the appellant was or was not aware. It is a matter of whether the appellant should have been aware … If the appellant had been aware, as it should have been, instructions not to use the trafficable ceiling until its safety was assured would have prevented the risk to safety arising.”29

Why consult other duty holders? Complexity is a feature of modern business arrangements. Over several decades, businesses around the world have refined the nature of their business undertakings and trimmed their activities to core activities where they have a competitive advantage. In relation to other activities, alliance partners, joint venture partners and contractors are enlisted to complement the required service or product offering. That is, in a modern business or undertaking, the overlap between duty holders is common and significant. Such an overlap brings risks in its own right. That is, if each business is only focused on its own activities and the risks to its workers from its own activities, the interaction between the workers of other businesses operating in the same space or having an overlap or point of interface, will be missed. Add to this risk the potential for controls put in place by one duty holder to affect the controls put in place by another at the point of interface, and there is a real potential for disaster in some circumstances. The requirement to consult, co-ordinate and co-operate in these circumstances is fundamental to diffusing the potential risk to workers and others arising from that interface or overlap in business activities. What are the horizontal consultation obligations?

Duty holders have an obligation to consult, co-operate and co-ordinate their activities with other duty holders who have duties that overlap with them. This duty is in addition to the primary duty of care imposed on each of them as PCBUs. As discussed in the first book of this series, Due Diligence: Duty of Officers, the work health and safety legislation imposes duties on any PCBU. The definition of “person conducting a business or undertaking” is deliberately broad, as is the primary duty of care imposed on such persons. The breadth of the duty is intended to capture every business or “business-like” activity. The definition includes employers, controllers of premises used as a workplace, controllers of plant, fixtures and fittings used at work, and designers, manufacturers, importers, suppliers and installers of plant, substances and structures. A person may conduct a business or undertaking alone or with someone else. They may do so for profit or gain, or not for profit or gain. They can do so as partners in a partnership or an unincorporated association, in which case each partner will be a PCBU. But a person is not conducting a business or undertaking merely because they are a worker or an officer of an entity which is conducting a business or undertaking. Such persons, workers and officers have duties of their own.30 The duty of officers is explored in the first book of this series, Due Diligence: Duty of Officers. The duty of workers is investigated in the fourth book of this series, Due Diligence: Worker Rights and Duties. PCBUs have a duty to ensure, so far as is reasonably practicable, the health and safety of workers while the workers are at work in the business or undertaking. That includes workers who are not directly engaged by the PCBU but are caused to be engaged by them, or whose activities in carrying out work are influenced or directed by the person. A PCBU must also ensure, so far as is reasonably practicable, that the health and safety of other persons is not put at risk from work carried out as part of the conduct of the business or undertaking. Figure 4 — Primary duty of care

At its broadest, a PCBU has a duty to ensure, so far as is reasonably practicable, that other persons are not put at risk from work carried out on their behalf. That means a company has to ensure that it does not create a risk to health and safety to anyone in the conduct of its business activities. The company also has a duty to its workers and other workers it causes to be engaged. That includes contractors, subcontractors and employees of contractors and subcontractors. It also has a duty to other workers whose activities are influenced or directed by it. That includes labour hire workers that its subcontractors may use for example, or subcontractors of its subcontractors. The duty is very broad and is not limited to what happens at the company’s workplace. “Workers” means anyone performing work, including contractors, subcontractors, employees of contractors or subcontractors, labour hire workers, apprentices and trainees, outworkers, students on work experience and volunteers; not just employees. Figure 5 — Definition of worker

Figure 6 — Elements of liability

Note: “PCBU” is a person conducting a business or undertaking. Duties are subject to reasonable practicability.

As broad as it is, the duty of the company is still limited by reasonable practicability. Reasonable practicability is a balancing exercise. It means doing what is reasonably able to be done in relation to ensuring health and safety, taking into account and weighing up all relevant matters including, on the one hand, the likelihood of the hazard or the risk concerned occurring, the degree of harm that might result from the hazard or the risk, what the person concerned knows or ought reasonably to know about the hazard or the risk, and ways of eliminating or minimising the risk; and, on the other, the availability and suitability of ways to eliminate or minimise the risk and the cost associated with available ways of eliminating or minimising the risk. The concept is not new in the law. It has been around for over a century and there is a large body of law interpreting that weighing-up exercise. It is a point-in-time assessment. That is, the weighing-up exercise is considered from the perspective of what was known about the risk (both in terms of likelihood and consequences) and the relevant controls and costs at the point-in-time that the relevant decision was made, giving rise to the alleged breach. The assessment therefore is not retrospective.

Figure 7 — Reasonable practicability

Given the breadth of these duties, there is a high degree of overlap in practice in the duties owed by PCBUs. In any given situation, there will usually be several companies conducting a business or undertaking, each with relevant duties in relation to the health and safety of persons which they must respectively discharge to the extent of their capacity to influence and control.31 Figure 8 — Overlapping primary duty holders in business or undertaking

Consequences of breach of duty to horizontally consult Failure to comply with the duty to horizontally consult is an offence in its own right, attracting a maximum penalty of $100,000 for companies and $20,000 for individuals. In addition to the penalties that may be imposed upon conviction, an offender may be subject to a number of other orders, such as adverse publicity orders, restoration orders, training orders and orders to undertake a project. These additional orders are more likely to be used in the context of consultation breaches because they align more closely to the objectives of those provisions. For example, if a convicted defendant is ordered to provide training to their management team on consultation or to implement a

project-based horizontal consultation framework, this aligns more closely with the objects of the consultation provisions than a mere fine. Case example

Labour hire firm prosecuted for failure to consult Boland v Trainee and Apprentice Placement Service Inc32 was the first prosecution of a company for breach of the horizontal consultation duty. Mr Jack Reynolds, an apprentice employed by Trainee and Apprentice Services Inc (TAPS) and placed at Shear Edge Roofing, was seriously injured when guttering he was handling, came into contact with overhead low voltage and high voltage wires.33 Shear Edge Roofing was engaged by Inspire Construction Services Pty Ltd. No job safety analysis was done by TAPS prior to placing Mr Reynolds on the job site. In relation to the risk, Industrial Magistrate Ardlie observed: “There were no safety measures in place on the site. The site involved a high risk with the proximity of the powerlines. It was surely not rocket science that an employer and also the person in control, or the company in control of the site, which I am told is the third defendant, Inspire Construction Services Pty Ltd, which is now in liquidation, could have seen, as I can see from the photographs, that the powerlines presented a real and present danger.”34 On the consultation obligation, Industrial Magistrate Ardlie observed: “The defendant, prior to this incident, certainly had an awareness of work health and safety issues. It had three field officers on site who attempted to attend the various sites

every eight weeks. … nevertheless there remained the duty to consult with other duty holders, and that is made clear by s 46 which is the basis upon which the prosecution proceeds.”35 TAPS was convicted and fined $12,000.36

Three components of horizontal consultation There are three separate and interrelated components of the horizontal consultation duty. These components are: • consultation • co-operation, and • co-ordination. A duty holder does not comply with the horizontal consultation duty unless they comply with all three components of the duty to the requisite standard of reasonable practicability. Consultation The first component of the horizontal consultation duty is to consult other duty holders in relation to the manner in which each will discharge their respective duty. That means there is a duty to take counsel, provide relevant information, refer to the other duty holder for information and have regard to the other duty holder’s interests or convenience in making plans. The Work Health and Safety Consultation, Co-operation and Coordination Code of Practice provides that: “The objective of consultation is to make sure everyone associated with the work has a shared understanding of what the risks are, which workers are affected and how the risks will be controlled. The exchange of information will allow the duty holders to work together to plan and manage health and safety.”

In that regard, the Code provides that consultation should include: “• what each will be doing, how, when and where and what plant or substances may be used • who has control or influence over aspects of the work or the environment in which the work is being undertaken • ways in which the activities of each duty holder may affect the work environment • ways in which the activities of each duty holder may affect what others do • identifying the workers that are or will be involved in the activity and who else may be affected by the activity • what procedures or arrangements may be in place for the consultation and representation of workers, and for issue resolution • what information may be needed by another duty holder for health and safety purposes • what each knows about the hazards and risks associated with their activity • whether the activities of others may introduce or increase hazards or risks • what each will be providing for health and safety, particularly for controlling risks • what further consultation or communication may be required to monitor health and safety or to identify any changes in the work or environment”. In relation to the interrelationship between consultation, co-operation and co-ordination, the Code provides that:

“consultation will determine which health and safety duties are shared and what each person needs to do to co-operate and coordinate activities with each other to comply with their health and safety duty”. Co-operation The second component of the horizontal consultation duty is a duty to co-operate with other duty holders in the manner in which each will respectively discharge their duty. That means working or acting together or jointly. The Work Health and Safety Consultation, Cooperation and Co-ordination Code of Practice provides that cooperation: “may involve implementing arrangements in accordance with any agreements reached during consultation with the other duty holder and involve not acting in a way that may compromise what they are doing for health and safety. Co-operation also means that, if you are approached by other duty holders wanting to consult with you on a health and safety matter, you should: • not obstruct communication • respond to reasonable requests from other duty holders to assist them in meeting their duty.” Co-ordination The third component of the horizontal consultation duty is a duty to coordinate the manner in which each duty holder goes about discharging their respective duty. That means a duty to harmonise and combine the respective efforts of the duty holders. At the very least, the duty to co-ordinate means that the respective duty holders must ensure that any risks arising from the interaction of controls they have put in place, are managed effectively. The Code provides that: “The co-ordination of activities requires duty holders to work together so that each person can meet their duty of care

effectively without leaving any gaps in health and safety protection … This will include making sure that the measures you each put in place work effectively together to control the risks. You should: • identify when and how each control measure is to be implemented • ensure control measures complement each other. Co-ordination of activities may include the scheduling of work activities so that each duty holder carries out their work separately. It may require work to be arranged in a way that will allow for necessary precautions to be in place or pre-conditions met before particular work is done.” In addition, the Code provides that where work is not effectively coordinated, the parties should consult further to determine what should be changed. Figure 9 — Components of horizontal consultation

Horizontal consultation in practice In practice, horizontal consultation requires vigilant planning and monitoring. Scoping phase The first phase of horizontal consultation relates to scoping of activities undertaken by the company. While this seems basic, it rarely occurs in practice. Core activities are readily identifiable but peripheral activities are more likely to present the vulnerabilities in relation to horizontal consultation. This is why a scoping exercise, where all activities of the company are identified, is a necessary first step. Once those activities have been identified, it is then possible to ascertain the extent of overlap or interface with other duty holders. Contractual arrangements can provide a useful prompt for duty holder activities that may overlap with the activities of the company. For example, leases, licenses, supply agreements, maintenance agreements and contracts for supply of services, all evidence a

relationship that will require an interface with other duty holders. This may be temporary or it may be permanent. It is that interface with which the horizontal consultation duty is concerned. It should be noted that the duty is not limited to situations where there is a contractual relationship between the parties. It is possible to have an interface in the absence of such a relationship. Neighbouring commercial enterprises will have an interface at their common boundary, where the activities of one duty holder may impact the workers of the other duty holder and vice versa. That interface would be caught by the horizontal consultation duty. Consultation phase Once the interface is identified, it is necessary to engage in the consultation phase. This requires the collection of all relevant information from the other duty holder and the provision of all relevant information in relation to the company’s activities to that duty holder. Where contractual arrangements are in place, it is crucial that such contracts enable this sharing of information for the purpose of the horizontal consultation duty. Co-ordination phase — risk assessment The next step in the horizontal consultation process is to conduct a risk assessment of the interface. This can be conducted separately and shared or it can be conducted jointly. A joint risk assessment is the preferred approach but this will not always be practicable. The purpose of the risk assessment is to identify the risks arising from the interaction between the relevant activities at the point of interface and the interaction of the relevant control measures mobilised by each duty holder. Where risks are identified, they must be minimised, so far as is reasonably practicable, through the identification of relevant controls for each risk identified. The responsibility for the implementation and monitoring of each control must be agreed between the parties. It is conceivable that the responsibility for some controls may be shared. Co-ordination phase — interface management plan The agreement in relation to the controls, including the responsibility

for implementing and monitoring them, should be recorded in writing in the form of an interface management plan. The plan should not only identify the controls and responsibilities with respect to the implementation of the controls, it should also establish arrangements for monitoring the effectiveness of those controls and a dispute resolution mechanism, to allow health and safety issues arising at the point of interface to be resolved effectively. Co-operation phase The interface management plan must be subject to periodic review and, if necessary, revision. It should also be audited as part of the compliance audits of each of the duty holders. Where an audit by either party identifies a deficiency, such a finding would trigger the need for further consultation. A working group must be established to monitor the interface management plan. This working group may tap into subject matter expertise from each of the duty holders on a needs basis. It may also interconnect its activities periodically with the activities of consultation forums established for vertical consultation purposes such as health and safety committees. Figure 10 — Phases of horizontal consultation

Horizontal consultation and designers Designers of workplaces have a duty to ensure, so far as is reasonably practicable, that the workplace they design is safe and free from risks to health and safety for persons who construct, use, maintain or demolish the workplace. A developer of a workplace must therefore consult, co-operate and co-ordinate with the designer regarding the way they will respectively discharge their duties. This would include providing all relevant information in relation to the intended use of the workplace so that information may be included in

the risk assessment for the design. It also includes ensuring that they receive a report from the designer in relation to features to address risks arising from the use and maintenance of the workplace. Case example

Failure to consult designer kills woman Simpson Design Associates Pty Ltd v Inspector Ching37 is a good example of a situation where the failure by a designer and its client to consult, co-ordinate and co-operate in relation to their respective activities, resulted in tragedy. Simpson Design Associates (SDA) was engaged to design a system for electrically operated bi-fold steel gates for a concrete batching facility. SDA produced the structural design for the steel frames and gates on the basis of instructions from the facility’s construction project manager. What went wrong? The gates’ electronic mechanism failed regularly, which meant that the gates had to be opened and closed manually by workers. This frequently required more than one worker, due to the weight of the gates. In October 2003, a worker who was responsible for closing the gates at the end of the day, had to manually shut the gates. His friend arrived to meet him and assisted. One of the gate leaves slid beyond its midpoint, fell and crushed the worker’s friend, causing her fatal injuries. Why? No provision was made in SDA’s design for gate stops, nor for manual operation of the gates should the electronic mechanism fail. Ultimately, a number of different entities were involved in the design, supply and installation of various components of the gate system. During installation in November 2002, a worker narrowly escaped injury when one of the gate leaves slipped through its portal and fell. After this near hit and repeated recommendations

from the installation company, stops were fixed to some of the gate leaves. SDA was not involved in the specification, design or installation of the stops. Inspection of the gates after the incident showed that no further stops were fixed to the gates after November 2002. The bolted stop on the gate leaf which fell and caused the death was viewed to be grossly inadequate and not strong enough to stop movement of the gate, whether powered by the electric system or operated manually. Consequences for the designer At first instance, the New South Wales Industrial Court found that the relevant design duty required SDA to make enquiries as to the purpose of the item to be designed, and ensure the safety of the relevant part of the structure. This meant that SDA was required to enquire as to how the gates would be moved during day-to-day use, the type of electric mechanism to be used for the gate, and whether there would be a manual override. Essentially, SDA failed to consider how the gates would work — or fail to work — in practice. Having established this, SDA would then have needed to either advise the client that a stop would be necessary to prevent the gate drawing out of the portal, or specify a stop in the design. Fundamentally, the court found that SDA should have conducted a risk analysis as part of the design process. This would have drawn SDA’s attention to the fact that sole reliance could not be placed on the electric components of the system and that provision would need to be made for safe manual operation of the gates. SDA was not entitled to ignore the future use or method of operating the gates just because it was responsible for structural elements of the design. The court found that it did not matter that others had designed and installed the inadequate stops after SDA provided its design; the inadequate stop was fixed on the gate because SDA had omitted to specify a stop or similar device in the initial design in

the first place. The court convicted SDA of the charge and imposed a fine of $185,000. Other entities involved in the design, fabrication and installation of the gates were also convicted and fined separately. SDA appealed this decision before the Full Bench of the Industrial Court and again before the New South Wales Court of Appeal. Each court dismissed SDA’s appeal and upheld the judgment at first instance. The Court of Appeal observed that the risk to health and safety was precisely the risk that was created by SDA’s design failure. The fact that a third party had an opportunity to eliminate that risk but did not do so successfully, meant that someone else also contributed to the existence of the risk. This did not mean that SDA’s design failure did not substantially contribute to the risk.

Horizontal consultation and suppliers A supplier of plant used at a workplace must ensure, so far as is reasonably practicable, that the plant is safe and free from risks to health and safety. A business acquiring such plant has a duty to ensure, so far as is reasonably practicable, that workers are provided with plant which is safe and free from risks when properly used. The respective duty holders must therefore consult, co-operate and coordinate regarding the manner in which they will respectively discharge their duties. The business acquiring the plant must provide all relevant information in relation to the use of the plant, and the working environment and conditions in which the plant will be put to use. This is a critical information flow to ensure that they are supplied with plant that is fit for purpose and has the lowest health and safety risk profile associated with its intended use, storage, maintenance, transportation and disposal. The supplier must consider the information provided, recommend suitable plant having regard to that information and provide all relevant

information in relation to the safe use, maintenance, storage, transportation and disposal of that plant. Co-ordination may also be required in relation to the delivery of plant including any visits by workers of the supplier to the customer site, and the manner in which the health and safety of such workers will be protected. Where an incident or risk assessment reveals a risk to health and safety arising from the plant, the supplier must co-operate with the customer’s reasonable efforts to control such risks. In order to enable such arrangements, it is necessary for supply agreements to impose obligations on the supplier and customer for the provision and maintenance of the relevant information. Case example

Failure to consult suppliers leads to incident Inspector Lewis v Northern Sydney and Central Coast Area Health Service38 is a good illustration of how things can go wrong without effective consultation, co-ordination and co-operation between suppliers and their customers. In this case, Northern Sydney and Central Coast Area Health Service was prosecuted in relation to an incident at Wyong Hospital, concerning a substance supplied by Fujifilm for use in X-ray development. What went wrong? Employees of the Northern Sydney and Central Coast Area Health Services were affected by fumes from the Fuji Hunt Automatic X-ray Developer Replenisher, substances used in Xray development. The product contained Glutaraldehyde and was labelled incorrectly as containing Glutaraldehyde at a concentration of 50–55%. This would have made the concentration 10-fold the concentration of comparative products. The Material Safety Data Sheet (MSDS) was provided to Wyong

Hospital two months after the initial supply of the substance. Glutaraldehyde was shown on the MSDS to be at a lower concentration than indicated on the label. The MSDS was Singapore based and did not conform with Australian law. The mixer plates which were designed to prevent the product from splashing from the mixer were not supplied with the product, by the supplier. A technical officer using the new product experienced a strong smell. His eyes began stinging and his skin began to burn. He recorded the incident in the communication book. A registered nurse at the hospital, whose workstation was about 45 centimetres from the processor tank, noticed a strong smell. Within a few hours she had a headache, felt nauseous and developed rhinitis, and her eyes stung. She reported the incident in the hazard register. A radiographer also detected a “very odorous” smell in the medical imaging department. The smell made him light headed and “blurry eyed”. He also made an entry in the hazard register. Another radiographer who used the product the next day experienced runny eyes. She also noticed the product had formed a foam. She reported the incident in the hazard register. Approximately two weeks after its initial use, the technical officer purged and cleaned the chemicals from the X-ray processing machine. As he did this, he noticed scum forming in the tanks which later formed into granules. He was wearing protective clothing and a face mask, but despite this, he felt a burning sensation on his skin. He developed a bad headache and was admitted into casualty where he was diagnosed with high blood pressure. Other hospital staff reported to casualty complaining of feeling ill. Common symptoms included nausea, headaches and burning skin. As a result, the department was shut down. The supplier was called and was asked to remove the product from the premises. A representative from the supplier attended

the hospital and flushed the system through to remove the product. He then replaced it with the old product used on the machine. But, contrary to his instructions, he did not remove the product from the premises and assumed someone else would do so. Oblivious to the events of the previous week, weekend staff at the hospital again used the product to top-up the mixing tanks. They suffered similar symptoms to those of their colleagues the previous week. Consequences for the hospital and the supplier Northern Sydney and Central Coast Area Health Service was convicted and fined $100,000 in relation to the incident. In separate proceedings, the supplier, Fujifilm Australia, was convicted and also fined $100,000.39

Horizontal consultation and commercial tenancies Landlords of commercial premises have a duty to ensure, so far as is reasonably practicable, that those premises and anything arising from the workplaces are safe and free from risks to health and safety. Tenants of commercial premises owe a duty to their workers and other persons at the premises. Tenants and landlords must therefore consult, co-ordinate and cooperate regarding the way in which they will respectively discharge their duties. This includes how common areas, such as the loading dock and the car park, are to be used. It includes information regarding maintenance, cleaning and security arrangements. Conversely, the tenants must provide relevant information in relation to any contractors they intend to engage to perform work whether for fit out, maintenance or repair work. In office buildings, courier access and maintenance of slip and trip hazards in lobbies on wet days may be relevant issues.

Case example

Ensuring the effective isolation of electricity is a controller’s responsibility In Inspector Mayell v New South Wales Land and Housing Corporation,40 the NSW Land and Housing Corporation was convicted and fined $97,500 in relation to a fatal incident at one of its premises during routine maintenance before letting to a tenant. In its capacity as a statutory authority, NSW Land and Housing Corporation owns properties which it makes available for occupation under lease by public housing tenants. The property where the incident occurred — a two-storey attached townhouse with a rear concrete courtyard in Glenfield — was one such property. The NSW Land and Housing Corporation entered into a multitrade contract with Crossley McLean and Associates Pty Ltd for maintenance work on residential premises owned by it in the south-west Sydney region, which included the relevant property.41 Crossley McLean had been involved in providing maintenance services to the NSW Land and Housing Corporation for at least 10 years prior to the incident in 2002 and had been selected on the basis of a tender process. As part of the tender process, Crossley McLean was required to lodge documents concerning its quality control systems, inspection and test plans, occupational health and safety management systems and environmental systems. Crossley McLean engaged Fayon Holdings Pty Ltd as a plumbing contractor on the job. Mr McLean was a director of both Crossley McLean and Fayon Holdings. Fayon Holdings in turn engaged Mr Robert Chaytor, a licensed plumber, as a subcontractor on the job and Mr David Laukaitis as a third year apprentice.42 Crossley

McLean also engaged Joy Bond Pty Ltd to remove old floor coverings in the kitchen and dining room, and to supply and install new vinyl floor tiles in those areas. Mr Craig Foreshew was a self-employed vinyl tiler engaged by Joy Bond to perform that work. The site was vacated by its then public housing tenant in early August 2002. On 4 August 2002, David Thomas, an employee of the NSW Land and Housing Corporation, conducted an inspection of the site for the purpose of identifying the repairs and refurbishment work that needed to be done before the premises could be re-let. During the inspection, Mr Thomas noted that the electrical installation in the premises had been illegally modified, in that additional wiring had been wired into the back of a power point in the laundry to provide an additional power source at the rear of the premises. He did not take any steps to ascertain whether the electrical power supply to the premises had been disconnected.43 The next day, he issued a work order to Crossley McLean with respect to work to be performed on the site. The works were to be completed before the premises would be made available to a new tenant.44 When a work order is issued by the NSW Land and Housing Corporation, the keys to the property are collected by Crossley McLean and are only returned to the NSW Land and Housing Corporation when all the maintenance work is completed. The NSW Land and Housing Corporation then undertakes a final inspection to ensure the property has been repaired, before allowing occupation by the incoming tenant.45 On 10 August 2002, David McKinnon, the supervisor of the maintenance works contracted by Crossley McLean, conducted a risk assessment of the site and identified the rubbish on site as a potential hazard. Following this assessment, the site was vandalised, but no further assessments of the risks at the site were performed.46 Two days later, Paul Morrow and Kathleen Morrow, cleaners working for the company Two Morrows Pty Ltd, contracted by

Crossley McLean, attended at the site to perform cleaning work. While at the premises, they observed that the hot water heater and stove were missing. The wires from the stove were exposed and lying on the floor of the kitchen. The wires from the hot water unit protruded from the conduit in the rear courtyard, with three bare wires exposed and uncapped. Paul Morrow advised Robert Thomas and also David McKinnon about the missing items. Robert Thomas visited the site on a second occasion before going on leave on 17 September 2002 and noted that the stove was missing. While Mr Thomas was on leave, Russell Baker took over management of the site on behalf of his employer, the NSW Land and Housing Corporation. Mr Baker visited the premises during the first week of Mr Thomas’ leave. During that visit, Mr Baker observed that the switches on the power sub-board in the kitchen were in the “off” position and concluded that the electrical installation had been disconnected from the mains supply. Mr Baker did not check the mains connection, nor did he check the electrical installation on site to ensure that the electrical supply had been disconnected from the mains.47 On 25 September 2002, a carpenter employed by Crossley McLean attended the site to repair the front door. In order to make the repair, he plugged in and used an electric planer.48 On 27 September 2002, William McLean from Crossley McLean, contacted Russell Baker and was given approval to replace the missing hot water heater. At 8.40 am, Paul Morrow and Kathleen Morrow arrived at the site to perform cleaning work. The fluorescent light in the kitchen was on when they arrived so that they were aware that the site had not been disconnected from the mains power supply. At 9.00 am, Robert Chaytor arrived at the site to install a water-saving shower rose. While present on the premises, Mr Chaytor was asked about the hot water service and he went into the kitchen, where the exposed and/or uncapped wires were located. At 10.00 am, William McLean arrived at the site and saw that the hot water heater was missing. At 10.30 am, Whetu McDonald, the prospective tenant for the site, arrived at the site after signing the lease at the Macquarie Fields office of

the NSW Land and Housing Corporation, as she had been advised by them to pick up the key from the locksmith at the site. The NSW Land and Housing Corporation had not performed a final inspection of the site to ensure all repairs had been undertaken before Ms McDonald accessed the site. While at the premises, Ms McDonald arranged for one of the cleaners to turn the electricity on so that she could put the kettle on, using the power point in the kitchen. Ms McDonald also noticed the exposed wires for the electric stove. While in the rear courtyard, she saw a white cable for the hot water service with exposed wires at its end.49 Mr Craig Foreshew arrived at the site at about midday to lay new vinyl tiles in the kitchen and the dining room. While working at the site, Mr Foreshew attempted to plug a fan into the power point in the laundry, which was hanging down from the wall, when sparks came out of the power point. Mr Foreshew then informed David Laukaitis not to use the power point in the laundry and Mr Laukaitis suggested to Mr Foreshew that he try using the power point in the kitchen instead. Mr Laukaitis assisted Mr Foreshew to pass the power lead for the fan through the kitchen window.50 At approximately 2.30 pm, David Laukaitis was working alone in the rear courtyard of the site, installing a replacement hot water heater. Craig Foreshew heard a scream and a loud thump and ran into the courtyard. He found Mr Laukaitis lying on his back in front of the hot water heater, with exposed electric wires situated close to his feet. Mr Laukaitis was holding a piece of copper pipe in his right hand and a power drill was lying on the ground approximately two metres from his head. Mr Foreshew also saw the conduit with the three exposed, uncapped wires near Mr Laukaitis’ feet. He kicked Mr Laukaitis’ right leg away from the wires before rolling him onto his side.51 Mr Foreshew went to a neighbouring premises and called an ambulance. He then returned to the site and provided assistance to Mr Laukaitis until the ambulance arrived. Mr Laukaitis was taken by ambulance to Liverpool Hospital and died later that

day.52 Investigations revealed that the mains fuses had been removed from the mains switchboard and that an illegal connection had been made that bypassed the mains fuses so that, despite their removal, electricity to the premises was still available and connected to the mains supply.53 William McLean later stated that he had been advised by Paul Morrow when he arrived at the site, that the power had been turned off at the electrical sub-board in the kitchen. However, neither Crossley McLean nor Fayon Holdings had in place work systems requiring that the electrical circuits be disconnected at the mains and tested before work commenced on the site. Nor did they have work systems that made provision for tagging out switches to ensure that electrical circuits that have been disconnected are not returned to service until all work has been completed and it is safe to do so. Mr McLean did not check that power to the wiring had been isolated. Nor did he take any steps to ensure that the electrical installation had been de-energised, such as testing the installation himself, or checking that David Laukaitis had appropriately isolated and tested for the isolation of electrical power before working on the installation of the new hot water service.54 In sentencing the NSW Land and Housing Corporation, Haylen J said ([28]): “[T]he existence of a reasonably foreseeable risk of injury would necessarily result in the offence being more serious in nature. Here, the risks associated with electricity were obvious, were well known and involved a clear potential for grave, if not fatal, injury. The evidence showed that the subject risks were known to the defendant. In addition, the defendant reserved to itself control of the premises during the performance of the maintenance work as part of its management system. This management system was not only aimed at ensuring good workmanship but was also aimed at securing compliance by its contractors with Occupational

Health and Safety legislation. Here, the death of Mr Laukaitis was manifest evidence of the gravity of the detriment to safety involved in this operation. … The risks were capable of being overcome by the simple expedient of ensuring that the power supply was, in fact, disconnected before work on the site commenced.”55 Crossley McLean was prosecuted and convicted in relation to this incident and fined $105,000.56 Mr McLean was also personally prosecuted and charged for three separate charges arising from this incident. He was convicted and fined a total of $17,500.57

Horizontal consultation and clients Clients are often neglected in safety management system development and management. Yet clients are as likely to be at the root cause of an incident as any other member of the supply chain, including contractors. Effective consultation, co-ordination and cooperation between companies and their clients is critical to ensuring safe outcomes. This includes a clear definition of roles and responsibilities at the outset of the relationship. Case example

Lane Cover Tunnel and consultation, co-operation and coordination Inspector Hamilton v Parsons Brinckerhoff Australia Pty Limited58 is a good example of what could happen when roles and responsibilities are not adequately defined. Thiess John Holland Joint Venture (TJH), responsible for design and construction of the Lane Cove Tunnel (LCT), engaged Parsons Brinckerhoff (PB) to provide design and construction services for the LCT project. PB designed the tunnels and

associated works for the LCT, conducted inspection and monitoring activities during the construction phase of the LCT project, and engaged others to provide geological mapping, analysis and other services. A key purpose of PB’s involvement in the construction phase was to ensure that PB’s design continued to be valid, particularly in respect of conditions encountered during construction. Under its agreement with TJH, PB was expected to work with other members of the LCT project team, including TJH and a number of other geological, geotechnical and engineering experts, and conform to contractual information and communication protocols within the project team. What went wrong? During excavation work being carried out in construction of the LCT, a large section of the tunnel roof over an intersection collapsed. Workers in the area escaped without injury. Why? TJH workers experienced difficulties with installing rock bolts over the intersection, due to the type of equipment they had to use and characteristics of the roof strata they encountered. Rock bolts recovered after the incident revealed problems with anchorage of the bolts. The New South Wales Industrial Relations Commission heard that there was no documented evidence that PB was informed of problems with installing the rock bolts. Most importantly, PB did not make any inquiries as to whether the rock bolts were being properly installed. Consequences for the designer The charge brought against PB did not allege any flaws in PB’s design for the LCT. Rather, the communication failure between PB, TJH and others in the project team meant that PB was culpable for the incident (other parties, including Thiess and John Holland, were also prosecuted separately for the incident). Terms of PB’s contract with TJH stipulated certain information sharing and communication procedures. Effectively, PB was

required to respond to requests for information and advice if asked by TJH. In addition, a “non-compliance/conformance procedure” was in place, through which the installation problems could have been reported to TJH engineers and PB designers. This procedure was never used. Interestingly, the Commission heard differing opinions from TJH project and construction managers, the TJH quality coordinator and PB designers as to whether the reporting procedure should or should not have been used in the circumstances. The Commission found that, despite the contractual arrangements, PB had an obligation to make appropriate inquiry. The risks inherent in the work being undertaken and the environment it was being conducted in were both reasonably foreseeable and known to PB at the time. The Commission found that the risks could have been easily avoided if PB had enquired of TJH whether installed rock bolts were properly tensioned and grouted, and advised its design team that installed rock bolts were not properly tensioned and grouted. PB was convicted and fined $105,000. The Commission noted that although PB was a specialist contractor and was required to work within TJH’s systems, the penalty imposed was partly intended to draw to the attention of those operating in the tunnelling, excavation and construction industries, the necessity of engaging in practices that conform to the requirements of the Act.

Checklist for horizontal consultation □ Identify scope of activities. □ Identify areas of interface with other duty holders. □ Collect relevant information in relation to activities of other duty holders.

□ Conduct risk assessment of interface. □ Agree and document controls for interface including responsibilities for each control. □ Agree to monitoring arrangements. □ Agree to dispute resolution arrangements. □ Document the arrangements in an interface management plan. □ Review and revise the interface management plan.

Footnotes 28

Mainbrace Constructions Pty Ltd v Workcover Authority of New South Wales (Inspector Charles) [2000] NSWIRComm 239.

29

Ibid [73]–[76].

30

There is a limited exemption for volunteer associations, which are a group of volunteers working together for one or more community purposes, where none of the volunteers employs any person to carry out work for the volunteer association.

31

Work Health and Safety Act 2011 s 16.

32

Boland v Trainee and Apprentice Placement Service Inc [2016] SAIRC 14.

33

Ibid [1]–[5].

34

Ibid [6].

35

Ibid [8].

36

Ibid [14].

37

[2011] NSWIRComm 7.

38

[2006] NSWIRComm 61.

39

Inspector MacKenzie v Fujifilm Australia Pty Ltd (ACN 000 064 433) (formerly Hanimex Pty Limited) [2006] NSWIRComm 74.

40

[2006] NSWIRComm 92.

41

Ibid [10].

42

Ibid [6].

43

Ibid.

44

Ibid.

45

Ibid.

46

Ibid.

47

Ibid.

48

Ibid.

49

Ibid.

50

Ibid.

51

Ibid.

52

Ibid.

53

Ibid [23].

54

Ibid [6].

55

Ibid [28].

56

See Inspector Mayell v McLean and Ors [2006] NSWIRComm 93.

57

Ibid.

58

[2012] NSWIRComm 28.

CHAPTER 4 VERTICAL CONSULTATION

Key messages • Vertical consultation includes consulting with workers not just employees. • Make-up of work groups is critical to effective consultation. • Health and safety representative engagement is a powerful tool for better safety outcomes.

Why consult workers? While companies may have an understanding of how processes are designed to work, they will rarely have a complete understanding of how they actually work in practice. It stands to reason therefore that companies will rarely have full knowledge of the risks that emanate from production and the measures required to most effectively reduce those risks. Worker consultation assists companies to develop better approaches to work health and safety. Conversely, a company’s impression of how work is done and how work is actually done is not the same. That is, there is a gap between “work as imagined” by the company and “work as done” by workers. That gap often means that companies rarely understand the ingredients of success. As Erik Hollnagel observes: When it comes to describing and understanding why things work and why actions succeed, everyone at the sharp end knows that it is only possible to work by continually adjusting what they do to the situation … But the same work looks quite different when seen from the blunt end. Here there is a tendency to emphasise work as it should be done … given some general assumptions about what working conditions should be like, or are assumed to be.59

Vertical consultation is designed to close the gap between “work as imagined” and “work as done”. By closing that gap, companies can better understand the ingredients of success, so that they can replicate it for greater system resilience. Consultation also serves to foster the conditions of trust and confidence necessary to secure worker commitment and engagement in health and safety initiatives. People are more likely to embrace an initiative that they have been involved in developing and refining than one that is imposed on them without consultation. Engagement of workers is a condition precedent for safety culture. As the report of the independent review panel into the BP US Refineries, commissioned in the aftermath of the 2005 Texas Refinery explosion and chaired by former US Secretary of State, James Baker, observed: In a positive process safety culture, all constituencies of the refinery’s workforce — from the plant managers to superintendents to HSSE professionals to hourly employees and contractors — regard safety as a core value, and all the levels of the workforce appreciate that process safety expectations are not considered secondary to productions goals, budgetary objectives, or other competing considerations.60 That engagement can only occur if workers feel included in the process through which policies and procedures are arrived at and feel that their concerns in relation to work health and safety matters are heard by management. Vertical consultation enables this to occur. What are the vertical consultation obligations? The PCBU must, so far as is reasonably practicable, consult with workers who carry out work for the business or undertaking who are, or are likely to be, directly affected by a matter relating to work health or safety. A breach of that duty is an offence in its own right, attracting a maximum penalty of $100,000 for companies and $20,000 for individuals.61 Like the horizontal consultation duties, additional or alternative sentencing orders are also available such as publicity orders, orders for a WHS project, training orders and community

service orders. These are likely to be used in the context of a failure to consult, since they more closely align with the object of the duty than a mere fine. Meaning of consultation The courts have consistently said of consultation that: “Consultation is not perfunctory advice on what is about to happen. This is [a] common misconception. Consultation is providing the individual, or other relevant persons, with a bona fide opportunity to influence the decision maker.”62 Consultation means provision of relevant information about the matter with workers, and giving the workers a reasonable opportunity to express their views and to raise work health or safety issues in relation to the matter, and to contribute to the decision-making process relating to the matter.63 Consultation requires that the views of workers are taken into account by the PCBU and that the workers consulted are advised of the outcome of the consultation in a timely manner. This goes to the heart of the desire to engage with workers on work health and safety initiatives. It is not simply a matter of collecting information, or seeking out views but also closing the communication loop so that workers feel that they were part of the process; that they were heard on the issue even if the ultimate decision was not the one for which they advocated. It follows therefore that consultation does not mean negotiation. The views of the worker need not be adopted. The duty merely requires those views to be taken into account by the duty holder — the relevant PCBU. Figure 11 — Meaning of consultation

Reasonable practicability in consultation The duty to consult is qualified by reasonable practicability. But reasonable practicability does not have the same meaning as it does in the context of the primary duty of care. The qualification in this context requires the level of consultation to be proportionate to the circumstances, including the significance of the workplace health or safety issue in question.64 This is an important qualification because strict compliance with the duty to consult in the context of the broad definition of workers is largely unworkable in practice. The reasonable practicability qualification therefore has a lot of work to do in smoothing out the operation of the obligations. What is reasonably practicable will depend on the circumstances surrounding each situation. The urgency of the need to implement a change in the system of work and the availability of workers to effect consultation with them on those issues may mean that consultation may not be reasonably practicable in relation to that initial urgent decision, for example. However, even in those circumstances, it will be reasonably practicable to discuss the decision with the workers, the reason for the urgent initial decision which has been taken and to consult with them on whether the decision should be retained or modified in some way.65 The extent of consultation that is reasonably practicable must be that

which will ensure that the relevant PCBU has all relevant available information, including the views of workers, and can therefore make a properly informed decision. The more serious the health or safety implications of a decision, the more extensive will be the level of consultation required.66 The extent of consultation should be sufficient so as to allow workers to understand the reasons for the decisions made by the PCBU, even if they do not agree with them.67 Figure 12 — Extent of consultation required

When is vertical consultation required? Vertical consultation is required when: • identifying hazards and assessing risks to health and safety arising from the work carried out or to be carried out by the business or undertaking • making decisions about ways to eliminate or minimise those risks • making decisions about the adequacy of facilities for the welfare of workers • proposing changes that may affect the health or safety of workers • making decisions about the procedures for consulting with workers • making decisions about the procedures for resolving work health or safety issues at the workplace • making decisions about the procedures for monitoring the health of workers • making decisions about the procedures for monitoring the conditions at any workplace under the management or control of the PCBU • making decisions about the procedures for providing information and training for workers.68 The broadest trigger for consultation will therefore be making changes that affect the health and safety of workers. Almost every managerial decision has that potential impact and therefore it is important to create consultation arrangements that suit the relevant business. Manner of consultation The work health and safety legislation contemplates that consultation with workers — vertical consultation — will be effected through health and safety representatives. Those representatives are given powers

and functions to facilitate that role. Sadly, the model in contemplation is an adversarial model where health and safety representatives are established as an almost private inspectorate with the role of conducting inspections, providing representation to workers in interview with the business and with regulators, and indeed to issue notices. An issue resolution mechanism is also prescribed in anticipation of such disputes between businesses and their workers’ health and safety representatives. However, that model is not conducive to safety outcomes. The reality is that save for a few industrially militant workforces, notices are rarely issued by health and safety representatives. Where such notices are issued, they are a reflection of the state of industrial harmony and are used in furtherance of industrial agendas rather than for safety purposes. A business that relies on the checks and balances contemplated by the work health and safety legislation is doomed from a safety perspective. As such, the powers and function of health and safety representatives discussed below are overlayed with practical suggestions on fostering a positive relationship on safety matters between workers and the business. How to get started Any worker who carries out work for a business or undertaking may initiate the establishment of consultation arrangements at their workplace by asking the PCBU at that workplace, to facilitate the conduct of an election for one or more health and safety representatives to represent workers who carry out work for the business or undertaking.69 The request does not need to be in any particular form, as long as it is sufficiently clear.70 Once a request is made, the business must facilitate the determination of one or more work groups of workers for the purpose of electing a health and safety representative.71 It is important to remember that once workers are represented by a health and safety representative, consultation must involve that representative. It is important therefore for businesses not to be reactive on this issue. A business should engage in a communication and consultation campaign based on a continuous learning framework on the issue of vertical consultation.

Workers need to understand the options available to them, the business objectives and benefits of consultation, the alignment of values on this issue and the support that representatives will receive. That engagement with workers will foster the right environment for any consultation framework. The key question is, “what consultation arrangements will work for our business?” Remember, there is always an option to consult differently than anticipated by the legislation, provided the arrangements are consistent with the requirements. If the business and the workers agree to procedures for different consultation arrangements, it is those arrangements which will apply. The engagement campaign recommended above is important because the making of decisions about the procedures for consultation with workers is itself a trigger for consultation. As part of that process therefore, the workers need all relevant information to make an informed decision. The decision in relation to the composition of the work group is pivotal to the quality of consultation which will be achieved in that workplace. The purpose of work groups is to facilitate the representation of workers in the work group on work health and safety matters.72 A work group may be determined for workers at one or more workplaces.73 The work group is to be determined by negotiation and agreement between the business and the workers who will form the work group, or their representatives.74 It is important here to make the linkages between the vertical consultation and the horizontal consultation requirements. There will, in practice, be a significant overlap between the two obligations because contractors may be both workers and other duty holders and must therefore be consulted in both capacities. A recognition of those overlaps is critical to making complex modern work arrangements fit into the consultation duties. While work groups are established for the vertical consultation arrangements, in effect horizontal consultation will be effected through working groups with business representation. Allowing for those consultation forums to conduct periodic joint meetings and to have mutual representation, can facilitate effective

consultation. Workers may request that their union represent them in the consultation negotiations.75 Where union representation is high in a workplace, it makes sense for this to occur and the business should encourage it to make the process more efficient. However, the involvement of a union is not a substitute to direct engagement with the workers on the broader approach. The union’s role is simply limited to the negotiation of the work group. In any event, the PCBU must not exclude the representative from these negotiations. A breach of this obligation is an offence attracting a maximum penalty of $10,000 in the case of an individual and $50,000 in the case of a corporation. A PCBU must take all reasonable steps to commence negotiations with the workers within 14 days after a request is made.76 All workers must be consulted and negotiations should take place in meetings, face-to-face conversations or through indirect contact (for example, telephone or email).77 The purpose of negotiations is to determine the number and composition of work groups, the numbers of health and safety representatives and deputy health and safety representatives to be elected, the workplace(s) to which the work groups will apply, and the businesses and undertakings to which the work groups will apply.78 Figure 13 — Establishment of consultation agreements

Note: “PCBU” is a person conducting a business or undertaking. “HSR” is a health and safety representative.

The Work Health and Safety Regulations 2011 specify that negotiations forming or varying work groups “must be directed at ensuring that the workers are grouped in a way that: (a) most effectively and conveniently enables the interests of the workers, in relation to work health and safety, to be represented; and (b) has regard to the need for a health and safety representative for the work group to be readily accessible to each worker in the work group”.79 A key criterion for determining work groups is to ensure that workers have convenient access to their health and safety representative. The factors that workers and the PCBU must take into account in determining work groups, include:

“(a) the number of workers; (b) the views of workers in relation to the determination and variation of work groups; (c) the nature of each type of work carried out by the workers; (d) the number and grouping of workers who carry out the same or similar types of work; (e) the areas or places where each type of work is carried out; (f) the extent to which any worker must move from place to place while at work; (g) the diversity of workers and their work; (h) the nature of any hazards at the workplace or workplaces; (i) the nature of any risks to health and safety at the workplace or workplaces; (j) the nature of the engagement of each worker, for example as an employee or as a contractor; (k) the pattern of work carried out by workers, for example whether the work is full-time, part-time, casual or short-term; (l) the times at which work is carried out; (m) any arrangements at the workplace or workplaces relating to overtime or shift work”.80 Languages spoken in the workplace should also be considered when determining work groups and, if there are volunteers working in the workplace, the pattern, frequency and type of their work should also be considered.81 Case example

Language barrier results in incident In Awwad v Manuele Engineers Pty Ltd,82 a South Australian Magistrates Court observed that it may be necessary to utilise an interpreter in circumstances when training employees with language difficulties. The case involved an incident where an employee, an Afghani refugee who had been employed for a period of 16 months, was seriously injured when a 1.6 tonne, 21-metre steel beam fell on him as he attempted to roll it over using an overhead gantry crane and a sling with shortening hooks. On the day of the incident, the employee, who was employed as a welder but whose duties included slinging, lifting and rolling of steel beams, had been welding cleats end-on to the steel beam. The steel beam was placed on a number of welding stands that were about 800 mm high. The employee had to complete the welding work on both sides of the beam. The method used for the process of turning the beam over involved an overhead gantry crane and a chain and hook sling. The hook sling prevented the beam from rolling too far by supporting the beam as it rolled, and this enabled the crane operator to lower it onto its other side. However, the hooks of the shortening chain became caught on the flange of the beam before the beam was taken up, and imparted a rotational movement that rolled the beam off the ends of the welding stands towards the employee, who was trapped beneath it. The employee sustained injuries to his left leg, which was broken in three places, as well as broken bones in his right foot, and he required a skin graft and hospitalisation for 12 days. The employer was convicted and fined $17,229.

The PCBU and the relevant workers or their representative83 are able

to negotiate a variation of the agreement.84 The PCBU must, as soon as practicable after negotiations are completed or a variation has been made, notify workers of the outcome of the negotiations or of the variation.85 Where there is a deadlock in the negotiations, the regulator can be brought in to break the deadlock by appointing an inspector to determine the relevant matters.86

Multiple-business work groups It is also possible to have multiple-business work groups.87 This is particularly useful for franchise arrangements and labour hire arrangements where multiple duty holders are required to consult in relation to the same issues. The particulars of the work groups are determined by negotiation and agreement between each of the persons conducting the businesses or undertakings and the workers.88 Negotiations concerning work groups must be directed only at:89 • the number and composition of work groups to be represented by health and safety representatives • the number of health and safety representatives and deputy health and safety representatives (if any) for each work group • the workplace or workplaces to which the work groups will apply • the businesses or undertakings to which the work groups will apply. Multiple-business work groups can only be established by agreement between each of the persons conducting the businesses or undertakings and their workers. It is appropriate to

set out in any such agreement the arrangements in relation to meeting the reasonable costs of consultation including labour costs, given that workers of one PCBU will be engaged in consultation activities which, at least in part, are for the benefit of other persons conducting the businesses or undertakings.

Electing health and safety representatives Once work groups have been negotiated, workers can then elect health and safety representatives and deputy health and safety representatives for each work group. A work group may elect a member of that work group as a health and safety representative for that work group.90 The workers in the work group determine how the election is to be conducted.91 The Work Health and Safety Regulations 2011 specify that the minimum procedural requirements to be followed by a person conducting an election are that: “(a) each person conducting a business or undertaking in which a worker in the work group works is informed of the date on which the election is to be held as soon as practicable after the date is determined; (b) all workers in the work group are given an opportunity to: (i) nominate for the position of health and safety representative; and (ii) vote in the election; (c) all workers in the work group and all relevant persons conducting a business or undertaking are informed of the outcome of the election”.92 If a majority of the workers in a work group wish, the election may be conducted with the assistance of a trade union or other person or

organisation such as the Australian Electoral Commission.93 The PCBU to which the work group relates must provide any resources, facilities and assistance reasonably necessary to enable elections to be conducted.94 It is an offence for a PCBU to unreasonably delay the election of a health and safety representative.95 A health and safety representative for a work group is to be elected by the members of that work group, and all members of that work group are entitled to vote.96 If the number of candidates for election equals the number of vacancies, no election is required and each candidate is taken as elected.97 A health and safety representative holds office for three years,98 but ceases to hold office if they: • resign by written notice given to the PCBU • cease to be a worker in the relevant work group • are disqualified under s 65, or • are removed by majority of members of the work group if the members sign a written declaration that the health and safety representative should no longer represent the work group.99 A health and safety representative is eligible for re-election.100 A health and safety representative may be disqualified from holding office. The regulator or any person adversely affected by the exercise of a power or the performance of a function of the health and safety representative, or their use or disclosure of information, may make an application to the designated court or tribunal to disqualify the representative on the ground that they have exercised a power or performed a function of their role for an improper purpose, or used or disclosed any information acquired in their role for a purpose other than in connection with their role of health and safety representative. If the tribunal is satisfied that a ground is made out, it may disqualify the

health and safety representative for a specified period or indefinitely.101 A deputy health and safety representative may be elected to a work group in the same way as a health and safety representative is elected.102 If the health and safety representative for a work group ceases to hold office or is unable (because of absence or any other reason) to exercise their powers or perform their functions under the Act, the powers and functions may be exercised or performed by a deputy health and safety representative for the work group; and the Act applies in relation to the deputy accordingly.103 The provisions governing health and safety representatives regarding their term,104 disqualification,105 immunity106 and training,107 apply to deputy health and safety representatives in the same way.108 Alternative consultation arrangements While the work health and safety legislation contemplates a particular approach to consultation and prescribes in great detail the requirements in relation to that approach, there is a mechanism by which the business and workers can arrive at consultation arrangements that better suit their needs. If the business and workers choose that path and agree to procedures for consultation, the consultation must be in accordance with those procedures. However, the agreed procedures must not be inconsistent with the consultation obligations. Unfortunately, despite being a mandatory feature of the law for over 30 years, vertical consultation is hopelessly ineffective in ensuring safety outcomes.109 It is therefore crucial that companies consider alternative ways to meaningfully engage with workers, taking advantage of the “other agreed arrangements” option. For small companies, direct consultation with workers may well be more effective and cost efficient than consulting with a health and safety representative. Such consultation may take place face-to-face or through electronic communication. Office-based or smartphone-enabled businesses may also consider

the use of social media for the purpose of consultation. Subject to their terms and conditions of use, Facebook, Linkedin, Instagram and Twitter can all be used as platforms for such consultation. Where the workforce is younger or more technologically savvy, such consultation will be far more effective and engaging than traditional, meeting-based consultation. Indeed, with the prevalence of smartphones, email or text message driven based consultation may prove to be more popular than traditional consultation in most businesses. The advantage that this approach has over the traditional approach is not just efficiency, but the timely and widespread feedback on the matters that are the subject of consultation. This will engender greater buy-in to the safety agenda in the long run, provided the feedback loop is closed as required by the duty. Small businesses operating in a single industry may well wish to have shared consultation arrangements that make use of social media. A hazard affecting a commercial cleaner, for example, may be prevalent across the industry. By relying on the combined resources of the industry rather than the resources of the individual PCBU, such hazards may be better detected and risks more effectively controlled. A similar scenario applies to electrical contractors. The resources that would otherwise be required to maintain face-toface consultation arrangements may be better deployed to develop industry wide apps that industry members can use to effect consultation. Given the horizontal consultation obligation, there may also be an interest from their clients in supporting or facilitating such arrangements as part of discharging their own duties. Functions and powers of health and safety representatives The primary function of a health and safety representative is to represent workers in their work group in relation to work health and safety matters.110 Health and safety representatives are intended to be the primary vehicle for consultation at the workplace. To carry out this function, health and safety representatives may: • monitor the measures taken by the PCBU or that person’s representative in compliance with the work health and safety legislation in relation to workers in the work group

• investigate complaints from members of the work group relating to work health and safety, and • inquire into anything that appears to be a risk to the health or safety of workers in the work group, arising from the conduct of the business or undertaking.111 Health and safety representatives have the power to issue provisional improvement notices and give a direction that work cease.112 These powers will be discussed below. The health and safety representative for a work group can exercise powers and perform functions only in respect of matters that affect, or may affect, workers in that group.113 This is important to remember for the purpose of setting the composition of work groups. The exception is in relation to issuing a provisional prohibition notice — where there is a serious risk to health or safety emanating from an immediate or imminent exposure to a hazard that affects or may affect a member of another work group, or where a member of another work group asks for the representative’s assistance, and the health and safety representative and any deputy health and safety representative for that other work group is unavailable.114 While a health and safety representative can exercise a power, they have no obligation to do so.115 This is important because a business cannot simply “outsource” its health and safety responsibilities to its health and safety representatives. The exercise of a health and safety representative’s rights and powers is entirely at their discretion. The ultimate remedy in relation to a health and safety representative’s failings in the exercise of their powers is the right to have them removed by a petition of a majority of the workers they represent.116 The key from a business perspective is to continue to engage with, encourage and empower the health and safety representative in their role so that they can assist the business in improving safety standards. That means constant dialogue, training and support. That may not be quite what the legislation contemplates, but that is what must be done in practice to make consultation work. The health and safety representative should become an extension of the health and

safety function of the business with not only access to relevant information but the level of engagement in decision-making to allow them to credibly communicate the intended approach to workers. Figure 14 — Functions of health and safety representatives

Note: “PCBU” is a person conducting a business or undertaking.

Inspection of workplace The health and safety representative has the right to inspect the workplace or any part of the workplace at which a worker in the work group works.117 In practice, they should be encouraged to do so and assisted to arrange such periodical inspections so that the results of those inspections can be fed back into the monitoring of the implementation of the safety management system in the business. The results of those inspections should also be provided as part of officer reporting under the fourth element of due diligence to assist officers to get a first-hand, unedited account of what safety performance is in the workplace. Because the health and safety representative’s right relates to

inspection of the place where any work group worker carries out work, it extends to all workplaces and not just the permanent commercial premises of the business. That is, it may be a place outside the permanent office or commercial address of the business. It may, for example, be a client site where workers in the work group are performing work. As such, a business would need to enable such inspections in its commercial arrangements with its clients, suppliers and other business partners. A health and safety representative may inspect the workplace at any time after giving reasonable notice to the PCBU at that workplace.118 The business should actively engage with the health and safety representative to facilitate this. This will minimise the disruptive effect of such inspections but importantly will increase their frequency. Inspections of this kind can be a very effective mechanism for identifying risks to health and safety, unsafe behaviour or systems of work that have evolved unchecked and foster a safety culture in the business. The better the training of the health and safety representative and their level of engagement, the better the quality of the inspections. By investing in the health and safety representative’s training and fostering a positive relationship with the health and safety representative, the business can reap the rewards of better quality systems of work, devised directly by the workers themselves. That sense of ownership of the processes cannot be easily replicated through other means, which is why effective consultation can be a powerful tool for the business. The inspection regime should allow for routine inspections. This will also give the health and safety representatives the access they need to the workers in their work group. Additional consultation forums can also be facilitated for that purpose. The health and safety representative may also inspect the workplace at any time without notice, in the event of an incident.119 They can also do so in any situation involving a serious risk to the health or safety of a person emanating from an immediate or imminent exposure to a hazard.120 This inspection right enables a health and safety representative to inspect the workplace in an emergency.

Indeed, as discussed in the second book of this series, Due Diligence: Incident Notification, Management and Investigation, the emergency response procedures should build in the role of health and safety representatives. Health and safety representatives can be particularly useful when using the “what if?” incident investigation techniques set out in that book. At the end of an inspection, the health and safety representative should be encouraged to generate a report and to provide a formal debrief to the management of the business. This will ensure that the outcomes of the inspection are harnessed effectively and any risks eliminated or minimised as far as reasonably practicable. The report should not be limited to identifying risks. The health and safety representative may request the PCBU to review a particular control measure that is no longer effective, for example.121 Where a workplace change is proposed, the health and safety representative may request a review of the proposed change based on that inspection.122 This is particularly valuable because the health and safety representative and workers will be in a better position to assess the practical impact of a change than management, provided they are armed with all the relevant information. Control measures must be reviewed,123 and the Work Health and Safety Regulations 2011 also set out specific circumstances where a health and safety representative can request the review of control measures for hazardous chemical, lead, asbestos and major hazard facilities.124 Accompanying an inspector The health and safety representative of a work group has the right to accompany an inspector during an inspection of the workplace or part of the workplace at which a worker in the work group works.125 Where the business has fostered a good working relationship with the health and safety representative, this can be a powerful legal risk mitigation strategy. As discussed in book five of this series — Due Diligence: Dealing with Regulators, the impression that an inspector forms in their inspection of a workplace goes a long way towards influencing the exercise of their discretion as to what enforcement tools they will use, if any. While the inspector will be interested in the account of

safety management systems which the business is putting forward, including the evidence provided to reflect that account, they will inevitably be suspicious of that account. The corroboration of the health and safety representative in that context is crucial to whether the inspector will be inclined to enforce the legislation through a prosecution or adopt a lesser enforcement tool. Obviously there are other factors that are considered in that decision including the seriousness of the incident and whether the consequences of the incident, for example, give rise to a community expectation of more rigorous enforcement of the law. However, positive feedback about the safety culture in the business provided by the health and safety representative will make a difference at the margins. In any event, the PCBU is required to permit the health and safety representative to accompany the inspector during an inspection of any part of the workplace where a worker in the work group works.126 Attend interviews The health and safety representative has a right to be present at interviews concerning work health and safety between a worker of the work group provided that the worker consents.127 This applies to both interviews with inspectors as well as internal interviews with the management of the business. Practically, the workers should be told of that right, preferably in writing so they can give their instruction in writing. The involvement of health and safety representatives in interviews can be beneficial as it facilitates the flow of information regarding health and safety issues and makes the health and safety representative part of the deliberations about the relevant issue. It is important, however, that the health and safety representative becomes engaged in the investigation rather than being seen as a mere representative of the relevant worker. If the worker has engaged in wrongdoing, consistent with the requirements of a just culture, the message can be reinforced by the health and safety representative and as such, they must be brought into the confidence of the business representatives and made to see the relevant issue from the perspective of the balance of the work group rather than the individual worker concerned. That is, if a well-trained and adequately resourced worker decides to not follow the safe working procedure, it is not

simply a matter that impacts them, it impacts all other workers in the work group. Receiving information One of the key features of the health and safety role is the right to receive information concerning the work health and safety of workers in the work group.128 The business is required to allow the health and safety representative access to that information.129 This is consistent with the duty to consult. It is also crucial to the engagement with the health and safety representative, which is recommended in this book. Businesses are often frustrated by the quality of the feedback they receive from health and safety representatives, ignoring their role in that process in failing to educate the representatives on the relevant issues and providing them with the information they need to make an informed decision. Safe Work Australia recommends that the health and safety representative request access to the following information: “• information relating to any work-related incident or disease, including statistical records, such as an injury register • an asbestos register and asbestos management plan, which a person with management or control of a workplace must ensure ready access to the [health and safety representative] at any time • health and safety policies and procedures, including Safe Work Method Statements • safety data sheets for the chemicals that are used in the workplace • technical specifications for equipment regarding noise, vibration or radiation emission • results of occupational hygiene measurements, including dust levels, noise levels or chemical fumes

• reports on work health and safety matters, including reports prepared by consultants for the [person conducting the business or undertaking] • minutes of [health and safety committee] meetings • information provided by manufacturers and suppliers about plant, equipment or substances at the workplace • health monitoring information that does not contain personal or medical information about a worker”.130 Request assistance A health and safety representative may request the assistance of any person.131 This enables the health and safety representative to seek the help of persons with technical expertise in health and safety issues, or persons who have technical skills that might assist the health and safety representative in inspecting the workplace, advise them on ways of managing a particular hazard or enable them to negotiate particular issues. Where the third party expert is engaged, the PCBU must allow the person providing assistance to have access to the workplace if that is necessary to enable the assistance to be provided, but is not required to pay for the assistance.132 Most businesses are unjustifiably suspicious of these provisions. If the health and safety representatives feel that they need expert assistance to understand an issue or to be comfortable with a recommended control, that is in the best interest of the business, from both a safety perspective as well as a long term cultural perspective. Rather than object to it or be suspicious of it, businesses should embrace such external involvement, facilitate and fund it. That will avoid unnecessarily pushing the health and safety representative into the welcoming arms of a union official. While unions have an important role to play in relation to safety, that role should be at an enterprise level where it can mobilise the workforce behind the health and safety initiatives of the business. Ideally, health and safety

representatives should feel sufficiently supported by the business so that the additional assistance of unions at that level becomes unnecessary. The health and safety representative does not have to give the PCBU notice of the entry by the assistant, but a person assisting a health and safety representative would need to meet any of the relevant site policies or procedures that are applicable to workplace visitors.133 It is an offence for the PCBU to refuse access to a person providing assistance without reasonable grounds. What might constitute reasonable grounds is discussed below. This issue is an important issue because of the potential interaction between this provision and the right of entry provisions for unions and the potential for abuse of such provisions where there is a lack of industrial harmony in the workplace. As foreshadowed above, the technical expert may be employed by a relevant union. But they attend the workplace in their professional capacity to provide technical assistance and expertise. There are two grounds upon which a PCBU could refuse access to an assistant. Firstly, the access may be refused on reasonable grounds.134 Access may be refused, for example, if the assistant had previously intentionally and unreasonably delayed, hindered or obstructed any person, disrupted any work at a workplace or otherwise acted in an improper manner.135 Secondly, access may be refused if the assistant has had a WHS entry permit revoked, or access is sought during a period when the permit has been suspended or the person is disqualified from holding a permit.136 Revocation of WHS permits does not occur lightly; where the person has found themselves in that predicament, it usually indicates a history of abuse of powers of entry and therefore refusing entry in those circumstances is consistent with the objects of the legislation. Obligations to health and safety representatives A PCBU must, so far as is reasonably practicable, consult a health

and safety representative regarding work health and safety matters affecting the work group they represent.137 How the business will go about doing this will depend on the nature and scale of the business and what communication arrangements are in place. Even where there is no health and safety committee in the workplace, a regular scheduled meeting between management and the health and safety representative will foster the systematic engagement with the health and safety representative that is necessary to achieve better safety outcomes. A PCBU must provide any resources, facilities and assistance to a health and safety representative for a work group that are reasonably necessary to enable the representative to exercise their powers or perform their functions.138 These might include: “• access to a private room, desk and chair for discussions or interviews • a computer with internet and email access • access to a telephone • facilities for photocopying and filing, including a lockable filing cabinet and shelves • access to a room for work group meetings • access to relevant technical equipment, for example, a noise meter • the use of notice boards • if required, transport or travel expenses to commute between workplaces.”139 A PCBU must allow a health and safety representative to spend such time as is reasonably necessary to exercise their powers and to perform their functions.140 The Worker Representation and Participation Guide suggests that in negotiating the time needed for a

health and safety representative to fulfil their role, parties should consider: “• the type of work or proposed work in the workplace • the level of risk involved in the work • the effectiveness of risk controls • the individual needs of workers in the work group relevant to their health and safety, for example, people who have disabilities or who communicate in different languages • attendance at meetings, for example, [health and safety committee] meetings, work group meetings and meetings with people assisting a [health and safety representative] • the size and complexity of the work group • the size and complexity of the workplace • the number of [health and safety representatives] in the workplace and in the work group”.141 The health and safety representative is entitled to carry out their powers with the pay that the health and safety representative would be entitled to if performing their normal duties.142 List of representatives A PCBU must ensure that a list of health and safety representatives and deputy health and safety representatives for each work group is prepared, kept up-to-date and displayed at the workplace and a copy provided to the regulator as soon as practicable after it is prepared.143 Training The PCBU must, if requested by a health and safety representative for a work group for that business or undertaking, allow the health and safety representative to attend a course of training in work health and

safety that is approved by the regulator.144 The Work Health and Safety Regulations 2011 provide that a health and safety representative is entitled to attend “an initial course of training of 5 days” and “one day’s refresher training each year” at least one year after the initial training.145 It is advisable to develop a program of training for health and safety representatives. The better trained the representatives, the better the quality of their decision-making and therefore the more effective the consultation arrangements. There are specific requirements in relation to training. The PCBU must as soon as practicable within the period of three months after the request is made, allow the health and safety representative time off work with normal pay,146 to attend the course of training. They must also pay the course fees and any other reasonable costs associated with the health and safety representative’s attendance at the course of training.147 If agreement between the PCBU and the health and safety representative cannot be reached within three months about the course to be attended, enabling the health and safety representative to attend the course or the payment of course fees and reasonable costs of attendance, either party may ask the regulator to appoint an inspector to decide the matter in accordance with the legislation.148 If a health and safety representative represents a work group of the workers of more than one business or undertaking, and any of the relevant PCBUs has complied with the requirements in respect of the representative, then each of the duty holders are taken to have complied with those provisions in respect of the representative.149 If a health and safety representative or a deputy represent work groups spanning multiple-businesses or undertakings, all the relevant duty holders must share equally the costs of health and safety representative training and the cost of the representative exercising functions or powers, unless the duty holders otherwise agree.150 Establishment of a health and safety committee The health and safety representative can request the establishment of

a health and safety committee.151 In large workplaces, they should be encouraged to do so to facilitate effective consultation. Consideration should also be given to the involvement of representatives from overlapping duty holders in such committees. The PCBU must establish the committee within two months of being requested to do so by either the health and safety representative or on the request of five or more workers.152 Of course, a business may establish a health and safety committee on its own initiative.153 In practice, that is the preferred course but any decision in that regard triggers the consultation requirements and therefore must involve the health and safety representatives. The constitution of the health and safety committee may be agreed between the PCBU and the workers at the workplace. If there are health and safety representatives at the workplace, however, they must choose one of their number as a member and at least half of the members of the committee must be workers who are not nominated by the PCBU.154 The regulator may assist to resolve any deadlock on the arrangements for health and safety committees.155 Functions of a health and safety committee The functions of a health and safety committee are to: • facilitate co-operation between the business and workers in instigating, developing and carrying out measures designed to ensure the workers’ health and safety at work, and • assist in developing standards, rules and procedures relating to health and safety that are to be followed or complied with at the workplace.156 The Worker Representation and Participation Guide157 provides the following suggestions on what a health and safety committee may be involved in: “• the formulation of agreed procedures, such as issue resolution procedures and the committee’s own procedures

• analysing reports of hazards, work-related incidents and statistical trends, so that reports can be made to management • making recommendations for corrective action • examining health and safety audit or monitoring reports • considering reports and information provided by inspectors • considering reports that [health and safety representatives] may wish to submit • developing procedures for selecting new plant for the workplace • assistance in the development of safe working procedures • linking with workers’ compensation and return to work programs • the selection of consultants”.158 Meetings of the health and safety committee The Worker Representation and Participation Guide recommends that the health and safety committee consider the following factors when deciding on the frequency of meetings: “• the expected volume of work to be handled by the [health and safety committee] • the size and location of the workplace • the number of workers and composition of the workers at the workplace • the nature of the work being carried out • the nature of the hazards at the workplace”.159 However, at a minimum, a health and safety committee must meet at least once every three months and at any reasonable time at the

request of at least half of the members of the committee.160 In practice, health and safety committees meet on a monthly basis. The health and safety committee may choose to determine its own procedures for organising and conducting meetings. But dates of the meetings should be arranged well in advance — usually a year ahead.161 The Worker Representation and Participation Guide recommends that notices of the dates of meetings should be published where all workers can see them. The Guide also recommends that committee members get a copy of the agenda and accompanying papers at least one week before each meeting to give committee members an opportunity to properly consider the issues and collect any feedback.162 Reasonable time should be allowed during each meeting to ensure discussion of all business. The committee should develop procedures and rules for the planning and conduct of meetings. Issues the committee should consider include: “• who will chair the meeting • whether there will be a quorum for meetings • who will take the notes or minutes of the meetings • who will issue the notes or minutes • who will draw up and issue the agenda • how long items will remain on the agenda • processes by which decisions will be made”.163 It may be appropriate for the committee to appoint subcommittees to consider and report on particular health and safety issues as a one off, or consider certain issues with greater depth on a regular basis. The link between health and safety committees and board and executive committees charged with overseeing health and safety, must also be

established. It is beneficial, for example, that management committees have access to the minutes of the health and safety committees and that the effectiveness of the operation of health and safety committees be incorporated in any monitoring of the implementation of health and safety processes as part of initiatives put in place under the fourth element of due diligence. Minutes of committee meetings should be kept. The minutes should detail the issues considered and the decisions made, including who is responsible for carrying out these decisions and the timetable for action. A copy of the minutes of each meeting should be supplied as soon as possible after the meeting to each member of the committee and a copy sent to each health and safety representative for the work groups covered by the committee.164 The committee may also consider use of modern technology in that regard. For example, provided consent of all committee members is given for doing so, the proceedings of the committee meetings could be digitally recorded, including video recording and streamed on the intranet as a podcast. This will make the committee’s activities more accessible to workers. Indeed, better use of technology could make the meetings interactive with the workers in the work group, thus fostering better engagement. For example, live questions could be posted to the committee during its meetings if the meetings were live streamed, thus simulating townhall-style engagement on key issues. The Guide also recommends that a copy of the minutes of committee meetings be sent to officers of the company to ensure that they are kept informed generally of the work of the committee.165 This would form part of their due diligence duty. Copies of the minutes should also be displayed for the information of workers or made available to them by other means if displaying them is not appropriate (such as circulating or posting them electronically). Cost of participation in activities of health and safety committee Each member of the committee may spend time as is reasonably necessary to attend meetings of the committee or to carry out functions as a member of the committee. The business must pay the usual entitlements for any time that a member of a committee spends

for these purposes.166 Access to information by health and safety committee The PCBU must allow the committee to have access to information that the person has relating to hazards at the workplace and the health and safety of the workers at the workplace.167 The PCBU cannot give the committee access to any personal or medical information concerning a worker without the worker’s consent unless the information is in a form that does not identify the worker, and could not reasonably be expected to lead to the identification of the worker.168 Dispute resolution While consultation does not require agreement, any conflict regarding the existence of a health and safety risk requires a mechanism for its resolution. The work health and safety legislation provides this mechanism. In order to take advantage of this, the legislation encourages businesses to agree with their workers in relation to the dispute resolution procedures that apply to work health and safety disputes. If no such agreement exists, the minimum procedures below become the default provisions. The procedures must be written and must be communicated to all workers in the relevant work group. The procedures must include the following: • Any party to the issue may commence the procedure by telling each other party that there is an issue to be resolved, and the nature and scope of the issue. • As soon as parties are told of the issue, all parties must meet or communicate with each other to attempt to resolve the issue. • The parties must have regard to all relevant matters including the degree and immediacy of risk to workers or other persons affected by the issue; the number and location of workers and other persons affected by the issue; the measures (both temporary and permanent) that must be implemented to resolve

the issue; and who will be responsible for implementing the resolution measures. • A party may, in resolving the issue, be assisted or represented by a person nominated by the party. • If the issue is resolved, details of the issue and its resolution must be set out in a written agreement if any party to the issue requests this. • If a written agreement is prepared, all parties to the issue must be satisfied that the agreement reflects the resolution of the issue. • A copy of the written agreement must be provided to all parties to the issue and, if requested, to the health and safety committee for the workplace. • Nothing in this procedure prevents a worker from bringing a work health and safety issue to the attention of the worker’s health and safety representative. If the issue is not resolved after reasonable efforts, a party to the issue may ask the regulator to appoint an inspector to attend the workplace to assist in resolving the issue.169 Provisional prohibition notice A health and safety representative may give a direction to cease work if they have a reasonable concern that to carry out the work would expose the worker to a serious risk to the worker’s health or safety, emanating from an immediate or imminent exposure to a hazard.170 The health and safety representative is required to consult with the PCBU before issuing that direction, except where the risk is so serious and immediate or imminent that it is not reasonable to consult before giving the direction. If a matter is not resolved after consultations with the PCBU and after attempting to resolve the issue, a health and safety representative, who has completed work health and safety training as required,171

may direct a worker who is in a work group represented by the representative, to cease work. They must then inform the business of the direction.172 Where it is not practicable to consult prior to issuing the direction, the health and safety representative must do so after giving the direction to cease work.173 Figure 15 — Notice to cease work

Note: “PCBU” is a person conducting a business or undertaking.

While there is a great deal of anxiety in relation to these provisions, there is nothing particularly controversial about them. A business that already values health and safety, empowers workers to cease work that they reasonably regard as exposing them to a serious risk to their health and safety. Indeed, workers have a common law right to do so. In high reliability organisations, all workers are encouraged to cease work and stop processes they regard as unsafe. Indeed, even where such apprehension proves to be incorrect, such workers are congratulated and their courage celebrated because it is that conduct

which averts disasters. Empowering health and safety representatives to do so, serves the health and safety purposes of the business and as such, health and safety representatives should be encouraged to exercise that power. There are issue resolution mechanisms in place, culminating in the involvement of inspectors, which allows checks and balances on abuses to such powers. Provisional improvement notices The other enforcement tool available to health and safety representatives is the provisional improvement notice (PIN). A health and safety representative can only issue a PIN if the health and safety representative has completed the requisite training. The health and safety representative must consult the person to whom they propose to issue the PIN before issuing the PIN.174 They can issue it if they reasonably believe that a person is contravening a provision of the Act or has contravened a provision of the Act in circumstances that make it likely that the contravention will continue or be repeated.175 A PIN cannot be issued by a health and safety representative if an inspector has already issued, or has decided not to issue, an improvement notice or prohibition notice in respect of the same matter.176 The PIN must be in writing177 and may require the person to remedy the contravention, prevent a likely contravention from occurring or remedy the things or operations causing the contravention or likely contravention.178 The PIN may include directions as to the measures to be taken to remedy or prevent the contravention or the matters or activities causing the contravention to which the notice relates.179 These directions may refer to a code of practice and may offer the person to whom it is issued, a choice of ways in which to remedy the contravention.180 The business can, within seven days, ask the regulator to appoint an inspector to review the notice. As part of that process, they request a

stay of the operation of the PIN.181 An inspector will attend the workplace as soon as practicable after a request is made. The inspector must review the PIN and inquire into the circumstances that are the subject of the PIN.182 After reviewing the PIN, the inspector can confirm, change or cancel the PIN. The inspector must give a copy of their decision to the applicant and to the health and safety representative issuing the notice.183 A PIN that is confirmed by an inspector is taken to be an improvement notice issued by the inspector.184 If the person issued with a PIN has not asked for a review of the notice within seven days of its issue, the person must comply with the PIN within the time specified in the notice. It is an offence to fail to comply with a valid PIN. The maximum penalty for a contravention is $50,000 for an individual and $250,000 for a corporation.185 Figure 16 — Provisional improvement notices

Immunity from liability of health and safety representative A health and safety representative is immune from personal liability for anything done or omitted to be done in good faith in exercising a power or performing a function under the Act; or in the reasonable

belief that the thing was done or omitted to be done in the exercise of a power or the performance of a function under the Act.186

Checklist for vertical consultation □ Are you identifying hazards in the working environment of the business or undertaking? □ Are you assessing risks to health and safety arising from the work carried out or to be carried out by the business or undertaking? □ Are you making decisions about ways to eliminate or minimise risks? □ Are you making decisions about the adequacy of facilities for the welfare of workers? □ Are you proposing changes that may affect the health or safety of workers? □ Are you making decisions about the procedures for consulting with workers? □ Are you making decisions about the procedures for resolving work health or safety issues at the workplace? □ Are you making decisions about the procedures for monitoring the health of workers? □ Are you making decisions about the procedures for monitoring the conditions at any workplace under your management or control? □ Are you making decisions about the procedures for providing information and training for workers?

□ Are you making decisions regarding consultation?

Footnotes 59

E Hollnagel, Safety I and Safety II: The Past and the Future of Safety Management (Ashgate Publishing, 2014) 40.

60

J A Baker, F L Bowman, S Gorton, D Hendeshot, N Leveson, S Priest, I Rosenthal, P Tebo, D Wiegmann and L D Wilson, The Report of The BP US Refineries Independent Safety Review Panel (2007) 60.

61

The duty to consult does not apply to workers who are in lawful detention or custody.

62

CPSU v Vodafone Network Pty Ltd [2001] AIRC 1189 [25].

63

Work Health and Safety Act 2011 s 48.

64

Explanatory Memorandum, Model Work Health and Safety Bill [197].

65

Ibid [198].

66

Ibid [199].

67

Ibid [200].

68

Work Health and Safety Act 2011 s 49.

69

Ibid s 50.

70

Explanatory Memorandum, Model Work Health and Safety

Bill [210]. 71

Work Health and Safety Act 2011 s 51(1).

72

Ibid s 51(2).

73

Ibid s 51(3).

74

Ibid s 52(1).

75

Ibid s 52(5).

76

Ibid s 52(2).

77

Safe Work Australia, Worker Representation and Participation Guide (2016) Ch 2 s 2.1.

78

Work Health and Safety Act 2011 s 52(3).

79

Work Health and Safety Regulations 2011 reg 16.

80

Ibid reg 17.

81

Safe Work Australia, above n 77.

82

[2006] SAIRC 75.

83

Work Health and Safety Act 2011 s 52(5).

84

Ibid s 52(4).

85

Ibid s 53.

86

Ibid s 54.

87

Explanatory Memorandum, Model Work Health and Safety Bill [232].

88

Work Health and Safety Act 2011 s 55(2).

89

Ibid s 56(1).

90

Ibid s 60.

91

Ibid s 61.

92

Work Health and Safety Regulations 2011 reg 18(2).

93

Work Health and Safety Act 2011 s 61(3).

94

Ibid s 61(4).

95

Work Health and Safety Regulations 2011 reg 19.

96

Work Health and Safety Act 2011 s 62.

97

Ibid s 63.

98

Ibid s 64(1).

99

Work Health and Safety Act 2011 s 64(2) and Work Health and Safety Regulations 2011 reg 20.

100

Work Health and Safety Act 2011 s 64(3).

101

Ibid s 65.

102

Ibid s 67(1).

103

Ibid s 67(2).

104

Ibid s 64.

105

Ibid s 65.

106

Ibid s 66.

107

Ibid s 72.

108

Ibid s 67(3).

109

This summary is based on R Johnstone and M Tooma, Work Health and Safety Regulation in Australia (Federation Press, Sydney, 2012) 143–146.

110

Explanatory Memorandum, Model Work Health and Safety Bill [269] and s 68(1)(a) of the Work Health and Safety Act 2011.

111

Work Health and Safety Act 2011 s 68(1)(b)–(d).

112

Ibid s 68(2).

113

Ibid s 69(1).

114

Ibid s 69(2).

115

Ibid s 68(4).

116

R Johnstone and M Tooma, Work Health and Safety Regulation in Australia (Federation Press, Sydney, 2012) 154.

117

Work Health and Safety Act 2011 s 68(2)(a).

118

Ibid s 68(2)(a)(i).

119

Ibid s 68(2)(a)(ii).

120

Ibid.

121

See Safe Work Australia, Worker Representation and Participation Guide (2016) Ch 4 and Work Health and Safety Regulations 2011 reg 38(4).

122

Ibid.

123

Work Health and Safety Regulations 2011 reg 38.

124

Ibid reg 401, 430, 433, 559, 570.

125

Work Health and Safety Act 2011 s 68(2)(b).

126

Ibid s 70(1)(h).

127

Ibid s 68(2)(c).

128

Ibid s 68(2)(f).

129

Ibid s 70(1)(c), 71(2).

130

Safe Work Australia, Worker Representation and Participation Guide (2016) Ch 4.

131

Work Health and Safety Act 2011 s 68(2)(g).

132

Ibid s 70(1)(g), 71(3).

133

Explanatory Memorandum, Model Work Health and Safety Bill [283].

134

Work Health and Safety Act 2011 s 71(5).

135

Explanatory Memorandum, Model Work Health and Safety Bill [290].

136

Work Health and Safety Act 2011 s 71(4).

137

Ibid s 70(1)(a).

138

Ibid s 70(1)(f).

139

Safe Work Australia, Worker Representation and Participation Guide (2016) Ch 5 s 5.1.

140

Work Health and Safety Act 2011 s 70(2).

141

Safe Work Australia, above n 130.

142

Work Health and Safety Act 2011 s 70(3).

143

Ibid s 74.

144

Work Health and Safety Act 2011 s 72(1). Note that reg 21(2) of the Work Health and Safety Regulations 2011 provides that “the regulator may have regard to all relevant matters including: (a) the content and quality of the curriculum, including its relevance to the powers and functions of a health and safety representative; (b) the qualifications, knowledge and experience of the person who is to provide the course”.

145

Work Health and Safety Regulations 2011 reg 21(1).

146

Work Health and Safety Act 2011 s 72(2)(a).

147

Ibid s 72(2)(b).

148

Ibid s 72(5), (6), (7).

149

Ibid s 72(3).

150

Ibid s 73(1).

151

Ibid s 68(2)(e).

152

Ibid s 75(1).

153

Ibid s 75(2).

154

Ibid s 76(1)–(4).

155

Ibid s 76(5)–(7).

156

Ibid s 77.

157

Safe Work Australia, Worker Representation and Participation Guide (2016).

158

Ibid Ch 6 s 6.2.

159

Ibid.

160

Work Health and Safety Act 2011 s 78.

161

Safe Work Australia, above n 158.

162

Ibid.

163

Ibid.

164

Ibid.

165

Ibid.

166

Work Health and Safety Act 2011 s 79(1)–(2).

167

Ibid s 79(3).

168

Ibid s 79(4).

169

Ibid s 82.

170

Ibid s 85(1), (2).

171

Ibid s 85(6).

172

Ibid s 85(5).

173

Ibid s 85(4).

174

Ibid s 90(3). See Safe Work Australia, Worker Representation and Participation Guide (2016) 18–19.

175

Work Health and Safety Act 2011 s 90(1).

176

Ibid s 90(5).

177

Ibid s 91.

178

Ibid s 90(3).

179

Ibid s 93(1).

180

Ibid s 93(2).

181

Ibid s 100.

182

Ibid s 101.

183

Ibid s 102 (1), (2).

184

Ibid s 102(3).

185

Ibid s 99.

186

Ibid s 66.

CHAPTER 5 CONSULTATION IN PRACTICE — CONTRACTOR MANAGEMENT

Key messages • Consultation can be a powerful tool in managing contractor safety. • Categorising the type of contractor used, assists in determining the method of consultation which should be primarily relied upon. • Building consultation at every stage of the contracting relationship addresses many of the common safety pitfalls of contractor management.

Case example

Contractors and consultation In Inspector Page v Redlan Pty Ltd,187 Westfield Shopping Centre Management Co Pty Ltd engaged Redlan Pty Ltd to de-fit Shop 1112 at the Westfield Shopping Centre at Tuggerah. Westfield leased and managed the shopping centre at Tuggerah. Redlan engaged Mr Glen Viegas to undertake the de-fit work. Mr Viegas and a Director of Redlan, Mr Brendon Mulkearns, attended the “Westfield Design and Construction Site Induction” and developed a written work method statement and risk assessment for the de-fit work. The work method statement and Redlan’s Safety Management Plan did not refer to the removal of electrical wiring. Mr Viegas and Mr Mulkearns did not have any qualifications to perform electrical work. Mr Mulkearns arranged for the power to the shop to be terminated by DNA Electrical which was confirmed in writing as follows: “The electrical disconnection of sub-circuits to this

shop, except for one GPO under the switchboard is completed to AS 3000. And is ready for demolition.” The remaining electrical source in the shop was a double power point which contained live circuits, needed to allow power tools and lighting. Mr Mulkearns was also verbally informed by the two electricians from DNA Electrical that after disconnection there were live circuits in the ceiling, including data cables and emergency lighting connections; none of which had been removed. This information was not in the certificates from DNA Electrical. Mr Mulkearns advised Mr Viegas that it was safe to commence the de-fit work. However, Mr Mulkearns failed to advise that there were live circuits in the ceiling. The de-fit work commenced, and while it was being completed, Mr Viegas met with a cement renderer at the shop for a quote. While inspecting the shop, Mr Viegas used an aluminium ladder to cut down some wires and was electrocuted. After the incident, it was discovered that there were several live cables in the shop that supplied light to an adjacent shop, which appeared similar to the wiring left for the power tools and lighting. Redlan were charged for breach of their duty of care for failing to provide a safe system of work with respect to the removal of electrical wiring of the shop and fined $65,000. In sentencing, Kavanagh J said at [24]: “While the defendant had a comprehensive work method programme in place and had risk assessed its normal work procedures, that work method statement and risk assessment did not refer to the removal of electrical cabling. It also failed to identify the risk which arose when energised electrical cables were left in a ceiling during a shop refit. Westfield had been provided with a copy of the work method statement and the corporate defendant’s safety management plan. It also failed to identify the risk.” Her Honour further observed at [25]–[26]:

“In circumstances where the work involves the removal of electrical cabling there is an obvious risk. The concern of the court is that there seems to be no existing standard within the electrical industry which allows for the identification of each set of wiring. That is, after wiring is disconnected, identification tags are needed to determine which wires were live and which wires were disconnected. … In the circumstance, there was a complete failure to appropriately communicate the knowledge of the danger of electrified cable still being in the ceiling. The work method statement also failed to recognise and assess the identified risk.”

Challenge posed by contractors The use of contractors creates unique challenges for work health and safety management. While contractors are often engaged to perform work by organisations because of their specialised knowledge or expertise, their involvement can often create health and safety risks. There are a number of factors that contribute to this increased exposure to risk. Contractors are typically new to the work site; as such they are not familiar with the work site, its peculiar hazards, site rules, activities on site, position of amenities and emergency procedures. Because they are outsiders to the organisation, they do not have immediate access to the flow of information and communication that an employee would have about activities on the site. In those respects, effective consultation arrangements are at the core of strategies for managing contractor safety. In addition, contractors are often remunerated based on the project. That is, they have an economic incentive in completing the project as quickly as possible. This creates economic pressures on processes that are perceived as “slowing down” the project such as work health and safety requirements. This attitude can be expected to be inversely correlated with the size of the contractor. The smaller the contractor, the more likely it is that they are juggling several projects at the same time. At best they may only perceive safety controls as being there for

their own protection only and as such are more prepared to take short cuts because they perceive the only person being at risk is themselves. In contrast to this increased risk, because of the nature of the relationship, the organisation has less control over the activities of a contractor than it would otherwise have, had the work been done by its own employees. In these respects also, the consultation arrangements have a role to play in adjusting the effect of these drivers on behaviour.188 Similar issues arise in relation to labour hire workers. The 2005 report of the Victorian Parliamentary Inquiry into Labour Hire Employment in Victoria identified a range of factors affecting the workplace health and safety of labour hire workers.189 The report was cited in the StewartCrompton (2008) Review as an example of the changing nature of work. The factors identified by the Victorian Parliamentary Inquiry included economic pressures on labour hire workers, fragmented lines of responsibility and communication, uncertainty with the delineation of occupational health and safety responsibilities between labour hire agencies and host employers and limited provision of training by labour hire agencies or host employers. Against this background of increased risk, there is an unprecedented increase in the use of contractors and labour hire workers. As the Stewart-Crompton Review (2008) observed, the Productivity Commission estimated that there were approximately 843,900 independent contractors in 1998, dropping to 787,600 in 2004 — a reduction from 10.1% in 1998 to 8.2 % of total employed persons in 2004.190 Since 2004, the proportion of independent contractors has remained at 8.2% of total employment, indicating that the numbers of independent contractors have grown at a similar rate to other forms of employment in this period. Australian Bureau of Statistics data indicates that 3.9% of employees were on-hired through agencies in 2002.191 This represents a tripling of the proportion of labour hire employees from 1.3% in 1998 and a quadrupling from 0.8% in 1990.192 Contractor management, safety management and consultation There are six pillars to effective contractor management:

• Scoping • Selection • Onboarding • Planning • Operations • Completion. Scoping The first step of effective contractor safety management is appropriate classification of the contractor. This is even more pertinent under the work health and safety legislation where the distinction between employee and contractor has been completely blurred, with both designated as “workers” for the purpose of the legislation. There is little benefit under the legislation in attempting to label an employee as a contractor since they are both workers, owed the same duty of care and consultation duty. The exercise of classification is required, not for the purpose of delineating legal responsibility, but rather formulating an effective strategy for discharging the duty. That is, the reasonably practicable steps taken to eliminate or minimise the risk. Three categories of contractors are commonly used: (i) contractors that operate within the principal’s safety management system (ii) contractors with specialist skill or expertise such as electricians, plumbers or consulting engineers, and (iii) major project contractors such as construction contractors. Each of these are discussed below, including practical strategies on discharging the vertical and horizontal consultation strategies. Contractors controlled by the principal

Contractors who are controlled by the principal have more in common with employees than independent contractors. Typically, the principal controls the day-to-day activities of the relevant workers. The workers will be working in an environment where they will integrate with direct employees of the principal. In some cases, employees of the principal will be performing equivalent or comparable work or the principal has had such capability previously, but has decided to outsource that work. These may include labour hire workers or outsourced plant or facilities maintenance services by a single provider, usually with onsite presence. In relation to this category, it is vertical consultation which will be the key issue. These contractors must be considered in formulating the composition of the work groups for the purpose of consultation. Indeed, even more complex contracts for the supply of services can also be structured in a way that resembles these arrangements. Often the degree of control exercised by the principal on the relevant workers in those arrangements and the manner of remuneration, which often amounts to essentially an hourly or daily rate for labour, suggests that such workers have more in common with employees than independent contractors. Some consulting engineering contracts on manufacturing sites can fall within this category. Large maintenance contracts on infrastructure controlled by the principal may similarly fall within this category. The principal and contractor’s agreement is usually no more than a schedule of rates with specific work directed by the principal when it arises. This category of workers is rarely considered when contemplating the composition of a work group. It is important that they receive appropriate representation in any consultation arrangements. This will have benefits beyond mere consultation in that effective consultation with such workers is crucial to the strategy for the effective management of the risks to which they may be exposed in the workplace. Figure 17 — Contractor consultation model for contractors operating under principal’s system

Construction project contractors The second category of contractors is construction contractors undertaking major projects. Such work is typically work that can be isolated from the balance of the workplace, fenced-off by hoarding and in relation to which the principal will often have no relevant expertise. As such, the consultation requirements that are more relevant from the principal’s perspective will be the horizontal consultation obligations.

“Construction work” means any work carried out in connection with the construction, alteration, conversion, fitting-out, commissioning, renovation, repair, maintenance, refurbishment, demolition, decommissioning or dismantling of a structure. It includes: • any installation and testing carried out in connection with an activity • the removal from the workplace of any product or waste resulting from demolition • the prefabrication or testing of elements, at a place specifically established for the construction work, for use in construction work • the assembly of prefabricated elements to form a structure, or the disassembly of prefabricated elements forming part of a structure • the installation, testing or maintenance of an essential service in respect of any structure • any work connected with an excavation or any preparatory work or site preparation (including landscaping as part of site preparation) carried out in connection with construction activity, and • construction work that is carried out on, under or near water, including work on buoys and obstructions to navigation. It does not include: • the manufacture of fixed plant • the prefabrication of elements as standard stock for sale • testing, maintenance or repair work of a minor nature carried out in connection with a structure, or • mining or the exploration for or extraction of minerals. Typically, the main construction contractor will be appointed the

principal contractor for the work for the purposes of the work health and safety regulations. This will require them to develop a work health and safety management plan for the construction work. It will also require them to collect safe work method statements from subcontractors they engage to perform the work on site and to ensure that the subcontractors have the relevant general construction safety induction. Importantly, it will identify them as the person who is responsible for co-ordinating and supervising the construction activities on the site and as such, having primary responsibility for health and safety. The principal, however, still has an obligation to consult, co-operate and co-ordinate with them in relation to how they propose to discharge their duties and on the areas of overlap between their respective activities. In relation to the project, the principal contractor must undertake the vertical consultation required in relation to the work at the project. Although contractors engaged on the project under the supervision of the principal contractor are technically duty holders in their own right and therefore entitled to be consulted as part of the horizontal consultation requirements, in practice, it is more effective to consult such workers under vertical consultation arrangements. Importantly, a construction project has only one principal contractor at any specific time. This facilitates the vertical consultation approach in that the responsibility for co-ordinating activities on site will fall on the principal contractor, and the focus of consultation will be on providing relevant information in relation to the safety management system and collecting relevant information about the risks associated with the effectiveness of that system. The work health and safety legislation does not require appointment of a principal contractor. It deems the PCBU that commissions a construction project, as the principal contractor unless they make an appointment of another person. If they engage a PCBU as principal contractor for the construction project and authorise the person to have management or control of the workplace to the extent necessary to discharge the duties imposed on a principal contractor, the person so engaged is the principal contractor for the project. An exemption operates for owners of residential premises. If the owner of residential

premises is an individual who engages a PCBU to undertake a construction project in relation to the premises, the person so engaged is the principal contractor for the project if the person has management or control of the workplace. A PCBU that commissions construction work on a structure must, so far as is reasonably practicable, consult with the designer of the whole or any part of the structure about how to ensure that risks to health and safety arising from the design during the construction work are eliminated, so far as is reasonably practicable or, if it is not reasonably practicable to eliminate the risks, minimised so far as is reasonably practicable. Consultation must include giving the designer any information that the PCBU that commissions the construction work has in relation to the hazards and risks at the workplace where the construction work is to be carried out. The designer of a structure or any part of a structure that is to be constructed must give the PCBU that commissioned the construction work a written report that specifies the hazards associated with the design of the structure that create a risk to the health or safety of persons who are to carry out construction work on the structure or part; and are associated only with the particular design and not with other designs of the same type of structure. If a PCBU that commissions a construction project engages a principal contractor for the project, the person must give the principal contractor any information the person has in relation to hazards and risks at or in the vicinity of the workplace where the construction work is to be carried out, including a copy of the report given to them by the designer. The principal contractor for a construction project is required to erect appropriate signage that shows their details and the details of the site office. The signage must be clearly visible from outside the workplace where the construction project is being undertaken. The principal contractor for a construction project must prepare a written WHS management plan for the workplace before work on the project commences. A WHS management plan must include the following: • the names and positions of all persons at the workplace whose

positions or roles involve specific health and safety responsibilities in connection with the project • the arrangements in place, between any PCBUs at the workplace where the construction project is being undertaken, for consultation and co-operation in relation to compliance with their duties under the Act and the Regulations • the arrangements in place for managing any work health and safety incidents that occur • any site-specific health and safety rules, and the arrangements for ensuring that all persons at the workplace are informed of these rules • the arrangements for the collection and any assessment, monitoring and review of safe work method statements at the workplace. The principal contractor for a construction project must ensure, so far as is reasonably practicable, that each person who is to carry out construction work in connection with the project is, before commencing work, made aware of the content of the WHS management plan for the workplace, to the extent that it relates to the work to be carried out by the person and the person’s right to inspect the WHS management plan. The principal contractor for a construction project must review and as necessary, revise the WHS management plan to ensure that it remains up-to-date. They are also required to ensure, so far as is reasonably practicable, that each person carrying out construction work in connection with the project is made aware of any revision to the WHS management plan that is relevant to the construction work being carried out by the person. The principal contractor for a construction project must, before any high risk construction work commences, take all reasonable steps to obtain from each PCBU that is to carry out high risk construction work, a copy of the safe work method statement relating to that work.

The principal contractor for a construction project must ensure that a copy of the WHS management plan for the project is kept for the life of the project and in any event, for two years from the date of any notifiable incident. The principal contractor for a construction project must ensure that a copy of the WHS management plan for the project is made available to any person who is to carry out construction work in connection with the construction project, on request. The principal contractor also has an obligation to ensure • the safe storage, movement and disposal of construction materials and waste at the workplace • the safe storage at the workplace of plant that is not in use • traffic safety in the vicinity of the workplace that may be affected by construction work carried out in connection with the construction project • adequate essential services at the workplace, and • site security. The appointment of a principal contractor does not mean that subcontractors are absolved of responsibilities. Subcontractors continue to have duties under the work health and safety legislation. These include obligations with respect to the preparation, implementation and review of safe work method statements. Subcontractors are required to prepare a safe work method statement for the proposed work. A safe work method statement must: • identify work that is high risk construction work • specify hazards associated with that high risk construction work and risks associated with those hazards • describe the measures to be implemented to control those risks, and

• describe how the risk control measures are to be implemented, monitored and reviewed. A safe work method statement must take into account all relevant matters including: (i) circumstances at the workplace that may affect the way in which the high risk construction work is carried out, and (ii) if the high risk construction work is carried out in connection with a construction project, the WHS management plan that has been prepared for the workplace. The safe work method statement must be set out and expressed in a way that is readily accessible and comprehensible to persons who use it. The safe work method statements must be reviewed if the risk control measures are revised. Subcontractors must ensure compliance with the safe work method statement. Figure 18 — Contractor consultation model for construction work

Specialist contractors The most common category of contractors are specialist contractors engaged by the principal to perform work that the principal is neither qualified to perform nor has a sufficient competence to supervise. Examples of these types of contractors include electricians, plumbers, geotechnical engineering services and mechanical services. However, the specialist expertise of such contractors does not render them outside the operation of the duty of care of the principal. They are workers just the same and are owed a duty of care in that capacity. To effectively manage such contractors, the principal must adopt a “whole relationship” approach to create safeguards and additional controls to compensate for its lack of ability to effectively scrutinise the technical component of the services. Consultation is the mechanism by which this is achieved with emphasis on horizontal consultation. Selection The most critical aspect of contractor safety management in this

context is contractor selection. The key to selecting contractors is to select contractors that share the values of the PCBU when it comes to health and safety. It is this alignment of values that makes the process of contractor management more efficient and effective in that the contractor will be more willing to co-operate with the PCBU on safety initiatives, both proactively and in the event of an incident. The horizontal consultation duty plays a key role in that context. Effective contractor selection can shield the organisation from safety risks that would otherwise have eventuated had it not been for the quality of the contractor. To address the administrative burden of contractor selection and assessment, many companies have created pre-approved contractor panels. This is also necessary to address urgent needs for services where the pre-qualification process simply cannot be accommodated in a practical way. Once a panel is appointed, it is critical that consultation channels be established to ensure that the panel receives timely information in relation to the relevant safety management systems in place at the business of the principal and any material changes to the operations, processes or premises. Onboarding Before engaging contractors, it is important that a high level risk assessment of the project is undertaken to determine what risks associated with the project and what information, instructions and resources are required by the contractor. This risk assessment then forms the basis of the consultation with the contractor prior to engagement and commencement of work. The purpose of the initial consultation is to provide the contractor with adequate information in relation to matters affecting safety risks so that they may formulate their safe work method statement. Particular emphasis needs to be placed in such consultation on project- or sitespecific risks which may not otherwise be known to the contractor and on the nature of the undertaking at the site. The consultation must extend to all personnel performing work on behalf of the contractor.

It is important that the onboarding be specific and not generic. It must be engaging and mindful. The PCBU may wish to consider the use of technology such as virtual reality or animations or simulations. These methods are to be preferred to classroom-based generic MS PowerPoint presentations where the aim is to secure a signature for compliance rather than imparting any meaningful knowledge. References to legal provisions are not only unnecessary, they are counterproductive. The focus should not be on planning for failure — having proof of induction in the event of an incident — but rather planning for success. Consideration should also be given to the language and literacy skills of the workers being onboarded. Planning Each contractor must be required to undertake a risk assessment and to provide a written safe work method statement setting out how they intend to perform the work safely, including what controls will be implemented and the responsibility for implementing those controls. The safe work method statement or equivalent may be developed jointly. It should be done or verified through consultation with the workers performing the task and be based on “work as done” and not “work as imagined” or planned to be done. It should be brief and concise. It should be written in plain language that workers can relate to and understand. Contrary to common belief, the safe work method statement is not written for the regulator or the judge; it is written for the workers. The emphasis should not be on compliance but rather on protection of workers. The development of the safe work method statement provides another trigger for horizontal consultation, as this is the point where, having considered the information provided, the contractor is informing the principal of the scope of their activities and the controls they intend to put in place to address risks arising from those activities. The interface between the proposed activities and controls with the activities and controls of the principal is an issue for consultation. This is the opportunity to discuss the critical risks and what resources are required to address them.

A safe work method statement must be reviewed whenever the circumstances underlying the safe work method statement change and at the beginning of each new working day to ensure its effectiveness. Operations Some degree of supervision of the contractor is required. The supervision need not be adversarial. It may be focused on enabling success by asking the workers what resources, processes or tools they require to be successful. The principal’s representative can be a coach and a facilitator in that context, rather than an auditor. The aim is to prevent incidents. Paper compliance alone is of no assistance legally and in practice. Completion At the conclusion of the project, a formal handover must take place to ensure that the contractor has completed the project and that the site is safe and free from risks. This also provides an opportunity for a briefing by the contractor on the safe use of any plant installed or modified as part of the works — the fourth and final consultation step. The handover also allows an assessment to be made by the organisation on the safety performance of the contractor. This assessment can then provide feedback for the purpose of future selection of the contractor. The “debrief” should also seek out feedback in relation to the aspects of the system that worked and those that did not. If the project was a success, it should be focused on what made the project successful. Figure 19 — Specialist contractor consultation model

Note: “SWMS” is a safe work method statement.

Checklist for contractor management consultation □ Categorise the type of contractor you are dealing with. □ For contractors working under the principal’s system, vertical consultation is critical. □ For contractors engaged in construction work, appoint a principal contractor and horizontally consult with them. □ For specialist contractors, horizontal consultation at each juncture in the contracting relationship is required.

Footnotes 187

[2007] NSWIRComm 91.

188

See further M Tooma, Safety Security Health and

Environment Law (Federation Press, 2nd ed, 2011). 189

Parliament of Victoria Economic Development Committee, Final Report: Labour Hire Employment in Victoria, State of Victoria (2005).

190

Productivity Commission, The Role of Non-Traditional Work in the Australian Labour Market (Australian Government, Canberra, 2006); see also StewartCrompton et al, National Review of Model Work Health and Safety Laws, First Report (October 2008) 10–11.

191

House of Representatives Standing Committee on Employment, Workplace Relations and Workforce Participation, Making it Work: Inquiry into independent contracting and labour hire arrangements (Australian Government, Canberra, 2005).

192

ABS, Australian Social Trends 2000 (Cat No 4102.0) (Australian Government, Canberra, 2000); House of Representatives Standing Committee on Employment, Workplace Relations and Workforce Participation, Making it Work: Inquiry into independent contracting and labour hire arrangements (Australian Government, Canberra, 2005).

CHAPTER 6 PROTECTION AGAINST VICTIMISATION AND CONSULTATION

Key messages • There are protections afforded to health and safety representatives in the exercise of their duties. • Victimisation provisions are broad and can be enforced by affected persons, not just the regulators.

Protections against victimisation The effectiveness of the consultation arrangements is underpinned by provisions protecting health and safety representatives and workers from being victimised for exercising their rights or performing their functions. These provisions operate by prohibiting certain conduct — discriminatory conduct — which is undertaken for a reason that includes a prohibited reason. As an additional measure to increase deterrence and facilitate enforcement of these protections, the onus of proving that the discriminatory conduct was for a reason that included a prohibited reason is shifted to the accused. That is, if a person engages in discriminatory conduct, they have to prove that the conduct was not for a reason that included a prohibited reason. Nevertheless, logically not all discriminatory conduct will be unlawful. The termination of the employment of a health and safety representative may, for example, be completely justified. However, the shifting of the onus of proof in relation to the reason for that termination means that businesses have to be meticulous in the manner in which they engage in such activities, carefully documenting their rationale at every stage and taking external legal advice. Figure 20 — Protections against victimisation

Discriminatory conduct Conduct which is considered discriminatory conduct is to: • dismiss a worker, or • terminate a contract for services with a worker, or • put a worker to their detriment in the engagement of the worker, or • alter the position of a worker to the worker’s detriment, or • refuse or fail to offer to engage a prospective worker, or • treat a prospective worker less favourably than another prospective worker would be treated in offering terms of engagement, or • terminate a commercial arrangement with another person, or • refuse or fail to enter into a commercial arrangement with another person.193 If the person organises to take any of the above actions or threatens to organise or take that action, they have also engaged in discriminatory conduct.

Engaging in discriminatory conduct includes requesting, instructing, inducing, encouraging, authorising or assisting another person to engage in such conduct.194 Figure 21 — Discriminatory conduct

Prohibited reason Conduct is engaged in for a prohibited reason if it is engaged in because the worker or prospective worker or relevant person: • is, has been or proposes to be a health and safety representative, or • exercises a power (or has or proposes to exercise) or performs a function (or has or proposes to) as a health and safety representative, or • is, has been or proposes to be a member of a health and safety committee, or

• exercises a power (or has or proposes to exercise) or performs a function (or has or proposes to) as a member of a health and safety committee, or • undertakes, has undertaken or proposes to undertake another role under the Act, or • exercises (or has or proposes to exercise) a power under the Act in a particular way, or • performs (or has or proposes to perform) a function under the Act, or • performs (or has or proposes to perform) a function under the Act in a particular way, or • refrains (or has or proposes to refrain) from exercising a power or performing a function under the Act in a particular way, or • assists (or has or proposes to assist), or gives (or has or proposes to give) any information to any person exercising a power or performing a function under the Act, or • raises (or has or proposes to raise) an issue or concern about work health and safety with the PCBU, or • raises (or has or proposes to raise) an issue or concern about work health and safety with an inspector, or • raises (or has or proposes to raise) an issue or concern about work health and safety with a work health and safety entry permit holder, or • raises (or has or proposes to raise) an issue or concern about work health and safety with a health and safety representative, or • raises (or has or proposes to raise) an issue or concern about work health and safety with a member of a health and safety committee, or

• raises (or has or proposes to raise) an issue or concern about work health and safety with another worker, or • raises (or has or proposes to raise) an issue or concern about work health and safety with any other person who has a duty under the Act in relation to the matter, or • raises (or has or proposes to raise) an issue or concern about work health and safety with any other person exercising a power or performing a function under the Act, or • is involved (or has been or proposes to be involved in) resolving a work health and safety issue under the Act, or • is taking action (or has or proposes to take action) to seek compliance by any person with any duty, etc, under the Act. Figure 22 — Prohibited reason

Note: “HSR” is a health and safety representative. “HSC” is a health and safety committee.

Furthermore, a person must not take action, or organise or threaten to organise to take any action against another person with intent to coerce or induce the other person or a third person to exercise a power under the Act or to perform a function under the Act or refrain from seeking or continuing to do so.195 A person must not knowingly or recklessly make a false or misleading representation to another person that the person would be expected to rely upon about that other person’s: • rights or obligations under the Act or an instrument made under the Act, or • ability to initiate, or participate in, a process or proceedings under the Act or an instrument made under the Act, or • ability to make a complaint or inquiry to a person or body empowered under the Act to seek compliance with this Act. These provisions can be enforced through criminal or civil proceedings. An affected person may also seek an injunction and/or compensation for being victimised contrary to those protections. Role of grievance policy in addressing victimisation A practical way of addressing these obligations and ensuring that the workers have confidence in management’s approach to consultation is to have in place a grievance policy dealing with work health and safety. Such a policy must be made available to both workers as well as prospective workers. It must be contractually imposed on contractors and agents such as recruiters and labour hire companies. It must also be contractually imposed on clients and suppliers. This can be done as part of the horizontal consultation process. A grievance policy can allow persons who regard themselves as being affected persons to lodge complaints and for those complaints to be properly investigated before the concerns become litigious. The business would then report its findings to the aggrieved person, including outlining what steps will be taken by it to address any underlying issue or remedy a breach of the victimisation provisions.

To enable such a process to operate effectively, the business must contractually secure the rights necessary to allow it to investigate such complaints. This would include the right to have access to relevant documents and the right to interview witnesses engaged by contractors, suppliers and clients, with the consent of the relevant witness. Footnotes 193

Work Health and Safety Act 2011 s 105.

194

Ibid s 107.

195

Ibid s 108.

CHAPTER 7 MAKING SENSE OF CONSULTATION

Substance matters In considering communication of lessons learnt in the aftermath of an incident, Professor Andrew Hopkins observes: For a message to be successfully communicated, it must be both transmitted and received. Many large companies devote the necessary resources to ensuring that messages are transmitted, but they do not devote comparable resources to ensuring that it is received.196 That observation is equally apt for consultation arrangements. A great deal of resources are deployed to creating and maintaining the infrastructure of consultation but comparatively little is done to improve the quality of that consultation. Messages are transmitted but not received on either side. There are a number of reasons for this. Firstly, the consultation process is often conducted in an artificially formal manner — formal meetings to discuss a production process may seem appropriate to the management representatives but for worker representatives, this may be an unfamiliar setting. Secondly, consultation often takes place through discussion of reports and policies which may lack authenticity for worker representatives living with these risks being discussed. Discussions on the shop floor around the relevant plant or production process may prompt a richer, more practical discussion. Modern technology allows such discussions to be effectively video recorded and digitally embedded into minutes of meetings, for example, through the use of devices such as Flip Cameras or video cameras on smartphones. Thirdly, there is too often an information asymmetry. Management want to disclose as little as possible on the broader context or

commercial benefits of an initiative. Workers guard actual practices — how things are really done rather than how things are supposed to be done — very jealously for fear of recrimination or criticism. Creating the right setting for the discussion begins with setting the clear objectives of the consultation, providing all the relevant information in its context and being clear about the use to which the information which is collected through consultation will be put. That is, the business may consider creating protections in relation to reliance on the information for disciplinary purposes. On certain issues, the discussion may feed into broader compliance strategies and therefore greater protections may be warranted. In the second book of this series, Due Diligence: Incident Notification, Management and Investigation, for example, we discussed the use of legal professional privilege where appropriate, to facilitate frank and fearless disclosure of certain information for the purpose of obtaining legal advice. This approach may be appropriate in certain circumstances. Paradigm shift Businesses have failed to embrace the full potential of genuine worker participation as a tool for achieving better safety outcomes. In its recommendations in relation to the 2010 New Zealand underground mine disaster that killed 29 workers, the Royal Commission on the Pike River Coal Mine Tragedy observed: “Workers sometimes do not understand health and safety rules or ignore them to get the job done. They should be entitles to receive key information on health and safety risks without having to ask for it.”197 The Royal Commission went on to recommend that the position of Check Inspectors be reinstated, provided that they are appropriately trained in underground coal mine safety. No doubt this recommendation will be controversial, as is recognised in the report itself. But the resistance to it by business is itself, instructive. The recommendation is not favoured by business because businesses are unduly suspicious of worker participation as a mechanism for improving health and safety outcomes and especially about the role of unions in that context.

Objectively speaking however, there is no doubt that a body of welltrained industry experts can be a tremendous resource for anyone interested in improving safety outcomes. Leaving aside those industrial concerns, they can assist businesses to meet the common objective of accident prevention. If businesses embrace the role that such experts can play by way of support, and engage with them, and if those experts can be prevailed upon to separate industrial agendas from safety agendas, effective worker participation may be achievable. This is the paradigm shift that is needed and everyone has a role to play in making that happen. In the meantime, businesses need to facilitate the environment that will allow worker participation to flourish. That means more extensive training. That means better thought — through structures including the interaction between vertical and horizontal consultation. That means use of modern technology to facilitate the process and get greater worker involvement. Finally, that means tying together the threads between safety leadership and due diligence at the officer level with the worker participation at the coal face. Footnotes 196

A Hopkins, Disastrous Decisions — The human and organisational causes of the Gulf of Mexico Blowout (CCH Australia, 2012) 115.

197

Royal Commission on the Pike River Coal Mine Tragedy, 33.

Part V Worker Rights and Duties

CHAPTER 1 NATURE AND SCOPE OF WORKER DUTIES   Key messages • Workers have an important role in ensuring work health and safety. • Worker duties are in addition to company duties. • Worker duties complement officer duties. • Breach of worker duties is a criminal offence attracting significant penalties including gaol of up to five years in serious cases.

Case examples

Worker gaoled for breach of duty of care In September 2011, a roof tiler was convicted and sentenced to four months gaol after shooting an apprentice with a nail gun, causing him to lose the sight in one eye.1 On 27 May 2009, the 19-year-old roof tiler and other employees of a roofing company were working at a new housing estate in Melton, Victoria. The tiler worked for No Worries Roofing when he fired a nail gun at an 18-year-old apprentice. He was standing on the roof of a house when he pointed the gun at the apprentice.2 He fired several nails at the apprentice, who was standing up to 20 metres away.3 The apprentice ran behind a ute parked on the building site to take cover but when he stood up again, the tiler fired the nail gun

at him.4 A nail hit the apprentice in the eye and bounced out. The injury left him blind in his left eye.5 The tiler had been told by his employer never to fire the nail gun at anyone.6 The nail guns at the site were tested by the manufacturer and were found to be operating correctly.7 The nail gun had not misfired. It had been operated deliberately by the tiler “as a weapon”.8 Had he done that outside of the workplace, he would have been charged with serious offences under the criminal law. Sadly, this was not an isolated or unusual incident. Conviction and fine for firing of nail gun In June 2012, a 34-year-old labourer was convicted and fined at the Wodonga Magistrates’ Court after shooting an apprentice with a nail gun, fracturing his arm.9 On 22 September 2011, the labourer fired a 38 mm long nail into a third-year apprentice’s arm. The nail penetrated his bone and required surgery to remove it. The apprentice returned to work on restricted duties for five weeks after the surgery. The labourer’s fine required him to pay $3,000 in monthly instalments of $200. In sentencing, Magistrate Ian Von Einem described the labourer’s behaviour as “silly”. “In fact it’s almost beyond belief. It’s lucky the young man wasn’t more seriously injured. The thought of a nail gun being fired into one’s arm sends shivers down one’s spine,” he said.

Context of worker duties within overall legislative framework

As Magistrate Von Einem observed above, the conduct of the workers concerned beggars belief. Both acts were deliberate acts aimed at young apprentices. They would be regarded as criminal offences under the general criminal law. Because they occurred in the workplace, they were prosecuted as offences under work health and safety legislation. Work health and safety laws have, since their inception, imposed duties on workers. In the modern era, since the late 1970s, that took the form of a general duty of care; a duty to take reasonable care with respect to the health and safety of other workers. This is an important piece of the work health and safety matrix of obligations. Businesses develop safe systems of work — a set of policies and procedures for ensuring, so far as is reasonably practicable, the health and safety of workers and other persons in relation to the business’ activities. Officers of the business — usually directors and senior managers in the business — have a duty to exercise due diligence to ensure that these systems are developed, implemented and resourced.10 But even the best systems cannot be effective without the co-operation and engagement of workers. While that engagement must be cultivated and fostered by officers, workers have the most critical role to play in delivering safety outcomes. For historical reasons, it is often provocative to emphasise the role of workers and the burden that they bear in ensuring the safety of their fellow workers. The sensitivity around this is for good reason. As the treatment of workers during the industrial revolution demonstrates, overemphasising the role of workers in industrial accidents at the expense of the responsibilities of the businesses themselves, is cowardly and cruel. At the height of the industrial revolution, the typical factory worker, usually a child, worked up to 20 hours a day.11 Accidents were common, as most moving machinery was belt-driven and unfenced. Every advance in technology enabled the machines to be driven faster, the thinner driving shafts and smaller drums or pulleys revolving at an ever increasing rate. With no precautions taken to fence the moving parts of machinery, the dangers to which workers were exposed increased. These risks were aggravated by the congested working environment in these factories, with factory

masters seeking to pack the maximum number of machines into the available space. Yet the prevailing view was that it was the responsibility of the workers to watch out for the moving parts of the unfenced machines. Times have changed and thankfully the pendulum has swung away from those harsh working conditions. Tougher work health and safety standards guarantee workers safer working conditions. But workers still have an important role to play to fully realise the benefits of these improved standards. Almost 200 Australian workers were killed at work in 2009–2010, according to the Safe Work Australia Notified Fatalities Statistical Report. When work-related deaths through industrial disease is added, the average rate of compensable fatalities in Australia is approximately one every business day.12 According to the Australian Bureau of Statistics, of the 12 million people who worked in 2010, 5.3% experienced a workplace injury or illness.13 Indeed, there were 8.1 compensable injuries for every million hours worked in Australia in 2009–2010.14 While these figures are an improvement on the records of the 1970s and 1980s, they are still unacceptably high. The employer-centric approach has delivered results but if we are to see a further significant shift in these accidents, it will require the engagement of all duty holders, including workers themselves. It is workers and their families who bear the brunt of these statistics. Businesses have a legal and ethical responsibility to improve systems to ensure that people who work for them, go home safely to their families. But that does not mean that workers themselves have no role in effecting that outcome. Once a system is developed, the people best placed to assess its effectiveness are the workers themselves. Similarly, even if the system is sound in theory, unless it is implemented by the workers, it cannot be effective. While a great deal has been written about the duties and obligations of “employers” and other persons conducting businesses or undertakings, comparatively little is written about the duties and obligations of workers. This book is concerned with the role of workers in securing safer workplaces. In that respect, it deals both with their duties and obligations as well as the rights afforded to them by work health and safety legislation.

Who is a worker? “Worker” means anyone performing work; including contractors, subcontractors, employees of contractors or subcontractors, labour hire workers, apprentices and trainees, outworkers, students on work experience and volunteers, not just employees. This is important because, while there has been a great deal of discussion about the implications of this expanded definition on the scope of the duties of a person conducting a business or undertaking (PCBU), there has been comparatively little discussion of the implication of this definition on the scope of the duty of “workers”. A volunteer is a worker and therefore owes a duty of care as much as any other worker (such as employees or contractors). A subcontractor is a worker owing the same duty. Furthermore, managers, in their capacity as employees, are also workers owing the same duty. As discussed below, the restricted definition of officer will mean that greater use will be made of that fact in future enforcement. So what then is this duty which workers owe? Figure 1 — Definition of worker

Duties of workers Workers are required by law to take reasonable care for their own health and safety and take reasonable care for the health and safety of others. They are also required to follow the reasonable directions of the PCBU who engages them.15 The rationale for this duty was set out in the National Review into Model Occupational Health and Safety Laws which was conducted in 2008, as follows at [9.18]–[9.19]: “The objective of the duty of care placed on a worker is to ensure that the conduct or omissions of the worker do not expose any person to a risk to their health or safety. The role of the worker is more limited than that of the person for whom, or in whose

business, the work is being undertaken. The worker has less ability to take active measures for health and safety. The worker’s ability to put themselves or others at risk is usually limited to their immediate conduct in acting in their role within the business or undertaking. The risk associated with the conduct of a worker is usually associated with a want of care or, occasionally, misconduct or failure to co-operate in relation to health and safety (e.g. a failure to follow instructions). We therefore consider the duty of care to be owed by a worker should have three elements: • to take care of himself or herself; • take care for other persons who may be affected by what the worker does or fails to do at work; and • cooperate with reasonable action taken by the person conducting the business or undertaking (or the relevant person) in complying with the model Act.” The standard of that duty is taking reasonable care. The worker is required to take reasonable care for themselves, their fellow workers and other persons, such as members of the public, who may be affected by their activities at work. The reasonable care expected of a worker is only in their individual capacity as a worker. This is to be distinguished from the wider liability of individuals in other capacities and that of the PCBU.16 The worker is not to be taken as a “surrogate” for the responsibilities of their employer, for example, in situations where members of the public are injured.17 The duty is not a strict or absolute duty.18 It requires only that a worker take “reasonable care” for the health and safety of persons at work who may be affected by their acts and omissions at work.19 The test to be applied in determining whether or not a worker has failed to take reasonable care in any act or omission which may affect another’s health or safety, is an objective test: What would a reasonable person in the worker’s circumstances have done?20 The actual intent by the worker is not relevant. There is no need for the act or omission to be a

deliberate one.21 All relevant circumstances are taken into account in determining whether “reasonable care” was taken. For example, matters such as the worker’s state of knowledge, training, qualifications, expertise, experience and seniority (for example, whether they were a foreman, site supervisor or manager) are relevant issues to consider when deciding whether the duty was breached.22 Relationship between duty of workers and other duties While the duty imposed on workers is important, it must be put into context. The primary duty of care under work health and safety laws is imposed on persons conducting a business or undertaking (PCBUs). The definition of PCBU is deliberately broad, as is the primary duty of care imposed on such persons. The breadth of the duty is intended to capture every business or “business-like” activity. In addition, officers of PCBUs have a duty to exercise due diligence to ensure that the PCBU — usually a company — complies with their duties and obligations. The worker duty sits at the bottom of that hierarchy of duty holders as “the last line of defence”. If officers do as is required of them, the company will have developed and implemented systems and processes, and consulted with workers and other duty holders. The duty imposed on workers is to ensure that the system is implemented and that workers respond appropriately, having regard to their training, qualifications and experience, to any circumstances within their control which the company failed to foresee in its system design. Who is a person conducting a business or undertaking? A person may conduct a business or undertaking alone or with someone else. They may do so for profit or gain or not for profit or gain. They can do so as partners in a partnership or unincorporated association, in which case each partner will be a PCBU. But a person is not conducting a business or undertaking merely because they are a worker or an officer of an entity which is conducting a business or undertaking. Such persons, workers and officers have duties of their own. This book is obviously concerned with the duty of workers. Another book of this series, Due Diligence: Duty of Officers, deals with

the duty of officers. There is a limited exemption for volunteer associations, which are a group of volunteers working together for one or more community purposes where none of the volunteers employs any person to carry out work for the volunteer association. But even in those circumstances, whereas the volunteer association itself may be exempt, volunteers working for the association are workers owing the duty of care of workers. What is the duty of a person conducting a business or undertaking? Persons conducting a business or undertaking have a duty to ensure, so far as reasonably practicable, the health and safety of workers while the workers are at work in the business or undertaking. That includes workers who are not directly engaged by the PCBU but are caused to be engaged by them, or whose activities in carrying out work are influenced or directed by the person. A PCBU must also ensure, so far as is reasonably practicable, that the health and safety of other persons is not put at risk from work carried out as part of the conduct of the business or undertaking. Figure 2 — Relationship between worker duty, company duty and officer duty

The PCBU also has a duty to its workers and other workers it causes to be engaged. That includes contractors, subcontractors and employees of contractors and subcontractors. They also have a duty to other workers whose activities are influenced or directed by them. That includes labour hire workers that their subcontractors may use, for example, or subcontractors of their subcontractors, such as transport companies used to deliver plant or components for the services of their contractors. They must ensure, so far as is reasonably practicable, the health and safety of workers engaged directly or indirectly by them and workers whose activities are influenced or directed by them. The duty is very broad and is not limited to what happens at the workplace. Another book of the series, Due Diligence: Persons Conducting a Business or Undertaking, explores the duty of PCBUs in more detail. The PCBU also has a duty to consult workers in relation to matters affecting their health and safety. They are required to consult, cooperate and co-ordinate with other duty holders in relation to discharging the respective duties in areas of overlap. They have obligations in relation to reporting of incidents. There is also an

extensive regime aimed at protecting workers and prospective workers against victimisation on safety grounds. The duty to consult is discussed in another book of this series, Due Diligence: Horizontal and Vertical Consultation. Figure 3 — Primary duty of care of company

The legislation creates powers for inspectors and union officials in relation to entry to workplaces and, in relation to inspectors, extensive investigatory powers. The obligation is therefore imposed on the PCBU to ensure that they do not obstruct or hinder the regulator in the exercise of those powers. The powers of inspectors is discussed in another book of this series, Due Diligence: Dealing with Regulators. The work health and safety regulations impose specific obligations on the PCBU in relation to the management of risks generally and the risks associated with certain common hazards, such as the management of chemicals, plant and fixtures, electrical work, construction work and work involving hazardous manual handling or the risk of a fall, for example. The PCBU must have a comprehensive system to manage the risks associated with their operations in order to discharge the above

obligations. Breaches of the duties of the company are criminal in nature and attract a maximum penalty of up to $3m for serious offences. Reasonable practicability As broad as it is, the duty of the PCBU is still limited by reasonable practicability. Reasonable practicability is a balancing exercise. It means doing what is reasonably able to be done in relation to ensuring health and safety, taking into account and weighing up all relevant matters including, on the one hand, the likelihood of the hazard or the risk concerned occurring, the degree of harm that might result from the hazard or the risk, what the person concerned knows, or ought reasonably to know about the hazard or the risk and ways of eliminating or minimising the risk; and, on the other, the availability and suitability of ways to eliminate or minimise the risk and the cost associated with available ways of eliminating or minimising the risk. The concept is not new in the law. It has been around for over a century and there is a large body of law interpreting that weighing-up exercise. It is a point in time assessment. That is, the weighing-up exercise is considered from the perspective of what was known about the risk (both in terms of likelihood and consequences) and the relevant controls and costs, at the point in time that the relevant decision was made giving rise to the alleged breach. The assessment therefore is not retrospective. Figure 4 — Reasonable practicability

Relationship between the company duty and the worker duty The fact that the company may have a duty on the same issue to which the worker has a duty does not mean that the worker can wash their hands of responsibility. The work health and safety legislation expressly provides for the contrary.23 The fact that a person may have a duty or obligation in relation to a matter does not exonerate another person from their own duty on that same matter. To the contrary, they are each required to discharge their duty to the extent of their influence or control. That means that workers must take reasonable care with respect to the health and safety of other workers and other persons who may be affected by the conduct of their work, regardless of the duty of care of the PCBU to do the same. Case examples

Foreman convicted for failure to address faulty handbrake In Inspector Martin v Larkham,24 an employee was convicted of breaching the duty of care of an employee under predecessor laws for failing to address a faulty brake on a water tanker truck. The case related to an accident at a roadwork construction site at

the Ewingsdale Interchange, adjacent to the Pacific Highway, at Byron Bay, New South Wales. The defendant, an employee of Ridge Consolidated Pty Limited, was the foreman on the site. He was aware that a water tanker truck, used for spraying freshly graded sections of road, had faulty brakes but had not taken the truck out of use or notified the project manager on site. On the day of the accident, an employee was asked to drive the truck by an operator also employed by Ridge. The employee parked the truck slightly uphill, stopped the truck, applied the handbrake and exited the truck to walk down to speak to another employee who was in another water truck. As the two employees were speaking, the truck rolled downhill towards the driver’s side of the truck where the employees were standing. Another employee called out to them to “look out”. The employee ran to the truck, opened the door, reached in and grabbed the steering wheel with one hand and pulled the handbrake on. The truck collided with the other truck. The employee was caught in the door. He then fell on the ground, between the two vehicles. He suffered a dislocated hip and lacerations to his scrotum and groin area. Boland J held at [14]: “The defendant’s failure to take any steps to effect repairs to the handbrake and his failure to prevent persons from operating the truck until the handbrake was repaired amounts to a relatively serious offence. That persons might be injured as a consequence of these failures was, as I have said, reasonably foreseeable. Moreover, simple, straightforward steps were available to remedy the defective handbrake and to prevent persons from operating the truck until the handbrake was repaired.” His Honour also noted that the defendant was aware of the defective handbrake on the water tanker truck but that he took no action to have it repaired because he presumed it “was someone else’s responsibility”. His Honour also noted that the defendant failed to prevent employees from operating the truck while the handbrake was

defective or indeed inform the employee concerned of the defect. His Honour said at [12]–[13]: “That the health and safety of persons at the defendant’s place of work might be endangered by a defective handbrake was reasonably foreseeable on objective standards … [The tanker] was used nearly every day for the two months prior to the accident. The defendant was aware of the defective handbrake, having signed off on checklists indicating the defect on a weekly basis. The fact that Ridge had no policy or system in place to repair defective vehicles did not, given all of the circumstances, relieve the defendant of his duty to take reasonable care that persons at his place of work would not be injured by a vehicle with a defective handbrake …” His Honour found the defendant guilty. Co-worker electrocuted Similarly, in Inspector Jones v Challita,25 a worker, Mr Buddy Challita, was convicted and fined for breach of his duty of care in relation to a fatal accident involving a co-worker. Buddy Challita was employed by Mr Pump Pty Ltd as a boom pump operator. In that role, he was required to drive a concrete placing boom. Marcel Budwee was employed to assist him. On 8 January 2003, the two workers were on site in Putney, New South Wales, pouring concrete during a severe storm. Buddy Challita was operating the boom. The boom made contact with swinging power lines. As a result, Marcel Budwee was electrocuted. Buddy Challita had operated the boom within the three metre clearance of the power lines, contrary to the safe work method statement provided to him by his employer. He was fined $600.

Relationship between worker duty and officer duty As indicated above, a person will not be a PCBU if they are merely

conducting the business or undertaking in their capacity as a worker or officer. That is, in most cases, the “person conducting the business or undertaking” is the corporate entity carrying on the business or, in the case of the public sector, the agency conducting the undertaking. That is because once you strip away officers and workers from a corporate structure, all that remains is the corporate entity — the legal fiction carrying on the business. It follows therefore that people carrying out the day-to-day activities of that corporation will fall into one of two categories — officers or workers. Officers are the people that direct the activities of the company — what worker representatives often call collectively and unflatteringly the “bosses” to distinguish them from the “workers” who actually carry out the work at the direction of those officers. Who is an officer and who is a worker? Officer of a corporation means: • director of the corporation • secretary of the corporation • a person who makes decisions that affect the whole of the business of the corporation • a person who makes decisions that affect a substantial part of the business of the corporation • a person who participates in making decisions that affect the whole of the business of the corporation • a person who participates in making decisions that affect a substantial part of the business of the corporation • a person who has the capacity to affect significantly the corporation’s financial standing • a person in accordance with whose instructions or wishes the

directors of the corporation are accustomed to act (excluding advice given by the person in the proper performance of functions attaching to the person’s professional capacity or their business relationship with the directors or the corporation) • a receiver, or receiver manager of the property of the corporation • an administrator of the corporation • an administrator of a deed of company arrangement executed by the corporation • a liquidator of the corporation • a trustee or other person administering a compromise or arrangement made between the corporation and someone else. In a company, everyone who does not meet any of the above categories but otherwise performs work for the company is therefore a worker. As discussed above, a worker is defined as anyone who performs work. Officers include directors, shadow directors, company secretaries, insolvency practitioners (exercising the role of receivers, receiver managers, administrators, liquidators and trustees of a company arrangement or compromise made with creditors), chief financial officers (in their capacity to influence the financial standing of a company), and chief operating officers and general counsel (in their respective capacity as persons making or participating in making decisions that affect the whole or a substantial part of the business or the corporation).26 Generally, officers will be the people involved in policy making and decisions that affect the whole or a substantial part of the business of the corporation.27 However, the reach of the officer definition will be determined on a case-by-case basis depending on the organisational structure and practices of the relevant company or entity.

The High Court of Australia set out the following principles for determining whether a person is a person who makes, or participates in making, decisions affecting the whole or a substantial part of the business of a company and is therefore an officer: “First, the inquiry required … must be directed to what role the person in question plays in the corporation. It is not an inquiry that is confined to the role that the person played in relation to the particular issue in respect of which it is alleged that there was a breach of duty. … Second, … where the breaches of duty alleged were omissions to provide advice, it is evident that determining how a reasonable person occupying the same office and having the same responsibilities would exercise the powers and discharge the duties of that office may be assisted by consideration of how the officer in question acted on occasions other than the one which is alleged to give rise to a breach of the duties … Third, each of the three classes of persons described in par (b) of the definition of ‘officer’ is evidently different from (and a wider class than) the persons identified in the other paragraphs of the definition. … Fourth, sub-par (i) of par (b) distinguishes between making decisions of a particular character and participating in making those decisions. Contrary to [the appellant’s] submissions, participating in making decisions should not be understood as intended primarily, let alone exclusively, to deal with cases where there are joint decision makers. The case of joint decision making would be more accurately described as ‘making decisions (either alone or with others)’ than as one person ‘participating in making decisions’. Rather, as the Court of Appeal rightly held, the idea of ‘participation’ directs attention to the role that a person has in the ultimate act of making a decision, even if that final act is undertaken by some other person or persons. The notion of participation in making decisions presents a question of fact and degree in which the significance to be given to the role played by the person in question must be assessed.”28

Applying those principles, the category of people caught by the definition of officers is likely to be wider than most people appreciate. The rhetoric at present by regulators seeks to emphasise that they regard officers as being the directors and senior managers of companies and other duty holder organisations.29 Continuum of duty While some people are obsessed with determining whether or not they are officers, often naïvely manipulating the reality of their role and responsibilities to achieve an outcome where they are not regarded as officers, the tag is best understood as being part of a continuum of responsibilities, the nature of which changes depending on the position. If a person is an officer, they are required to exercise due diligence to ensure that the company for which they are an officer complies with its duties and obligations. “Due diligence” is defined as taking reasonable steps with respect to the following six matters: • Knowledge of work health and safety matters — first element of due diligence. • Understanding of the nature of the operations of the business and the hazards and risks associated with those operations — second element of due diligence. • Resources and processes — third element of due diligence. • Information regarding incidents, hazards and risks and responding in a timely way to that information — fourth element of due diligence. • Legal compliance — fifth element of due diligence. • Verify the provision and use of these resources and processes — sixth element of due diligence. The due diligence duty of officers is discussed in the first book of this series — Due Diligence: Duty of Officers. As discussed in that book, in

practice, what is required under each element depends on the role and responsibility of the individual officer. That is, what is required of a managing director is different from what is expected of a chief operating officer and what is expected of a chief financial officer. Similarly, what is expected of a worker under the duty of care imposed on the worker depends on their role, responsibilities, skills and experience. The greater their responsibilities, the greater the duty expected of them under the duty of care of workers. Case example

What is the appropriate standard of care expected of an employee? In Inspector Thomas v Cruden,30 Marks J considered the appropriate standard of care which is to be expected of an employee — the relevant duty holder under the legislation at the time — for the purposes of the duty of care. His Honour concluded that an objective standard should be applied. His Honour said: “[T]he requisite standard to be applied is that which should reasonably in all the circumstances have been expected of an employee carrying out the duties and discharging the responsibilities in a manner appropriate to the skills and expertise expected of a person holding himself or herself out to be able to undertake that work.”31 In this case, the defendant was a lift mechanic employed by Boral Johns Perry Industries Pty Ltd trading as Boral Elevators. Boral Elevators was called to release two people who had been trapped in a lift during a power failure which left a lift stranded between two floors. The defendant was dispatched to carry out the rescue. During the rescue, one of the people trapped in the lift was seriously injured when he fell in the lift shaft. One of the issues in the case was the inadequacy of the training and instructions given to the defendant by his employer in relation to the proper

procedures for releasing people trapped in lifts.

All that workers can do is take reasonable care, given their qualifications, experience and training, with regard to the health and safety of people at their place of work. The worker’s culpability arises only to the extent that the standard of care they provide falls short of the standard to be expected of a person possessing similar experience, qualifications and training. But the more senior the worker, and the more experienced and skilled they are, the greater that expectation. Figure 5 — Continuum of personal liability

Consequences of breach of duty of workers A breach of the duty of a worker is a criminal offence attracting a maximum penalty of $300,000 and up to five years imprisonment for serious offences. In addition, workers may be subject to other orders including training orders where they may be made to undergo a training course as part of sentencing. They can be given a community service order. They can be required to undertake a specific work health and safety project. They can even be “named and shamed” through a publicity order where their name is published in newspapers together with the details of the offence committed. They can also be ordered to undertake restorations related to their offence. Figure 6 — Penalties for breach of duty of workers

Footnotes 1

WorkSafe Victoria 2011, “Nail gun shooting takes apprentice’s eye” (12 September 2011). The roof tiler was charged and pleaded guilty to reckless endangerment causing serious injury under the Occupational Health and Safety Act 2004 (Vic). He served the sentence as an intensive corrections order by way of 12 hours work per week over four months.

2

M Ainsworth, “Nail gun attacker who blinded fellow worker has walked free”, (Herald Sun, 2 September 2011).

3

WorkSafe Victoria, above n 1.

4

M Ainsworth, above n 2.

5

Ibid.

6

WorkSafe Victoria, above n 1.

7

Ibid.

8

WorkSafe’s submission in the sentencing hearing of the

matter cited in M Ainsworth, above n 2. 9

WorkSafe Victoria 2012, “Worker fined over nail gun incident” (12 June 2012).

10

See the first book of this series, Due Diligence: Duty of Officers (CCH Australia, 2017).

11

The following paragraph is based on M Tooma, Safety, Security, Health and Environment Law (Federation Press, 2nd ed, 2011).

12

Productivity Commission 2004, National Workers’ Compensation and Occupational Health and Safety Frameworks, Report No 27, Canberra (16 March 2004).

13

Australian Bureau of Statistics, Work Related Injuries, Australia, 2009–10, Cat no 6324.0, Canberra (December 2010).

14

Safe Work Australia, Compendium of Workers’ Compensation Statistics, Australia, 2009–10, Canberra (March 2012) viii. This figure is down from 10.2 in 2000– 2001. It has been suggested that these figures are likely to understate the true picture of workplace injuries. According to the ABS, of the 640,700 people who experienced a work-related injury in 2009–2010, only 388,300, or 61%, received some sort of financial assistance. Of those who received financial assistance, 59% received workers compensation, 36% did not apply for workers compensation and 5% applied for and did not receive workers compensation. See Australian Bureau of Statistics, Work Related Injuries, Australia, 2009–10, Cat no 6324.0, Canberra (December 2010).

15

Work Health and Safety Act 2011 s 28.

16

WorkCover Authority (NSW) v Wallis [1994] NSWIRComm 163.

17

Stevenson v Hoggard [1992] SAIRC 41.

18

WorkCover Authority (NSW) v Wallis (unreported, CT 1011 of 1995, 14 August 1996), 7–8 (Fisher P, Glynn and Hill JJ).

19

Ibid.

20

Ibid.

21

Ibid.

22

See M Tooma, Tooma’s Annotated Work Health and Safety Act 2011 (Thomson Reuters, 4th ed, 2012) [28.10] and following.

23

Work Health and Safety Act 2011 s 16.

24

[2003] NSWIRComm 31.

25

[2005] NSWIRComm 385.

26

M Tooma, above n 22 [27.10] and following.

27

Australian Securities and Investments Commission v Citigroup Global Markets Australia Pty Limited (No 4) [2007] FCA 963 [490].

28

Shrafon v Australian Securities and Investments Commission [2012] HCA 18 [23]–[26] (French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ).

29

See Safe Work Australia, Interpretive Guideline — Model Work Health and Safety Act — The Health and Safety Duty of an Officer under section 27 (2011).

30

(1996) 67 IR 469.

31

Ibid 475.

CHAPTER 2 WHAT DOES THE WORKER DUTY INVOLVE?   Key messages • The duty of care of workers requires the worker to know their duty, learn the health and safety requirements of their activities, engage with the person who engaged them on work health and safety matters, report incidents and risks, and verify that their working environment is safe for them to undertake their activities. • The duty of workers is related to but different from the duty of officers.

Case examples

Bullying is the clearest example of a breach of worker duty Workers who subjected a 16-year-old labourer to a cruel initiation ordeal, learned the hard way the scope of the duty of care they owed to their fellow workers. No doubt at the time they thought they were just having fun. But had they reflected on it for a moment, they would have realised that what they were doing was wrong. As they ultimately discovered, it was also a criminal offence. The 16-year-old labourer was physically restrained and wrapped in plastic from head to toe. Glue and sawdust was also shoved in his mouth and clothing. The entire incident lasted half an hour. The ordeal came perilously close to being a tragedy. Unbeknown to the workers, the young labourer was asthmatic. He suffered respiratory complications as a result of the incident. He also suffered psychiatric problems as a result of the bullying.

Six workers involved in the bullying were charged in relation to the incident for breaching their duty as employees to take care for the safety of others. One employee was fined $500 while the other five received 12month good behaviour bonds.32 They got off lightly. It is important to appreciate that under the law as it applied at the time in New South Wales, the maximum penalty they could have received was $3,300. Now the maximum penalty is $300,000 and/or five years imprisonment. This incident is not an isolated incident. Nor is it peculiar to the construction industry. There are many examples of this type of behaviour across industries. Technician sets apprentice alight For example, a technician at a car yard thought it was funny to tape and bind a 16-year-old apprentice to a pole, and later place him into a 60 litre oil drum and spray his boots with “carby clean”, a highly flammable substance, and set him alight. He was convicted of a breach of the duty of care of employees and fined $2,000.33 Again, he got off lightly. A similar incident under the new laws would attract a much higher penalty. Apprentice attacked as initiation In another initiation incident, two workers attacked an apprentice, grabbing the apprentice by the genitals and buttocks, thrusting a screw driver into the apprentice’s behind through his clothing, exposing their genitals to the apprentice, verbally abusing him and firing grease at the apprentice from a pressurised air gun.34 The main culprit was convicted of breaching his duty of care and fined $4,000.35

Elements of duty of workers The duty of care of workers is to take reasonable care in relation to

their health and safety and the health and safety of others.36 While bullying is the clearest example of a breach of that duty, it is not the only example. Nor does the conduct have to physically harm the person. Psychological harm is as much an offence as physical harm.37 Workers also have additional duties to follow the reasonable directions of the PCBU in relation to work health and safety matters.38 But exactly what is involved in the duty to take reasonable care with respect to the health and safety of others is not further defined in the legislation — unlike the duty of officers where each of the minimum requirements of due diligence are defined. The case law on worker duties however, offers some guidance on what that duty involves. While a duty of care is by its nature fluid in its scope, we are able to identify some components of that duty, giving it structure. Figure 7 — Elements of duty of workers

There seem to be at least six elements of the worker duty: • Know — a worker must know their legal obligations. They should also know what rights they have available, such as the right to stop work if it is unsafe. • Learn — an obligation to participate in the training provided by the PCBU and to acquire the relevant knowledge, skill or instruction provided. • Engage — an obligation to engage with the PCBU in relation to work health and safety matters. This may include participating in consultation arrangements or participating in risk assessments of the relevant working environment. • Report — an obligation to report risks and report incidents.

• Comply — an obligation to comply with the requirements of any safety management system that is in place. That is, to comply with any relevant work health and safety policies and procedures that the PCBU has in place. • Verify — an obligation to inspect and verify that their immediate working environment is safe before commencing work activities. Case example

Worker negligence not responsibility of employer At about 2.30 pm on 6 March 2013, a worker was assisting another worker to lean forward, a number of glass sheets stacked on an A-frame trolley, to allow him to remove one of the sheets stored behind them, when the sheets fell on him and killed him. The glass sheets were 2,306 mm high by 2,100 mm wide and weighed approximately 80 kg each.39 The worker had approached his colleague, Mr Pham — who was cutting glass sheets for an order which needed to be loaded onto a truck that day for delivery to a customer the following morning, — regarding his also using the overhead crane that Mr Pham was using. Mr Pham refused. The deceased worker then offered to help his colleague complete his work so he could use the crane. After refusing at first, the colleague acceded to the deceased’s offer of assistance. The deceased then said “I give you a hand to hold your glass for you”. To which Mr Pham replied, “We need more people”. The deceased then said, “No, no, no we can do it. I’m okay I can do it”. Mr Pham replied, “You need more people” and called out “Ralph”, trying to get the attention of his supervisor. The deceased placed his right leg between the bars of the A-frame trolley so that his right foot was on the factory floor and held up one or two hands at about a 45 degree angle from his shoulders.

Mr Pham flipped over a glass sheet with his left hand away from the centre of the A-frame trolley, leaving it to rest on the hands of the deceased. Mr Pham also held out his right hand, in which he held the crane controller, so that the controller touched the glass panels in an effort to assist the deceased in supporting the glass. After Mr Pham flipped the first glass sheet onto the deceased, he told the deceased, “We need more people”, to which the deceased replied “I’m okay”. Mr Pham continued to call out “Ralph” on a number of occasions. Mr Pham then flipped the second glass sheet in the same manner and it was supported by the deceased and partially by Mr Pham with the crane controller in his right hand. After the second glass sheet was flipped, Mr Pham continued to call out “Ralph”. Mr Pham then flipped the third and fourth glass sheet towards the deceased in the same manner. Mr Pham continued to call out to Ralph because he thought he needed help. The deceased complained to Mr Pham that the glass was becoming too heavy and Mr Pham told him to run. The deceased still had his foot through the bottom of the Aframe trolley. The glass sheets that the deceased had been supporting, fell onto him. Mr Pham gave evidence that prior to the date of the incident, he had never moved glass by leaning it against another person who was standing in front of the glass, and had never seen other employees adopt such a practice. If the glass was less than about 750 mm high, glass could be flipped on an A-frame trolley by two people with one person at either end of the glass panel. He gave evidence that the reasons he said “no” to the deceased on the day of the incident was because he knew the procedure being adopted was unsafe. Mr Pham described the deceased as impatient and he gave evidence that he had agreed to do what the deceased suggested, so as not to upset him.40 At the time, the deceased worker was under the influence of cannabis to the extent that the deceased’s perceptions, judgement, decision-making processes, vigilance, appreciation of dangers, concentration and reaction times were significantly

impaired.41 The workers were employed by Wollongong Glass Pty Ltd. As a result of the incident, they were prosecuted for breach of their duty of care to the deceased worker. They pleaded not guilty and were acquitted. His Honour, Scotting J held: “At the time of the incident, Mr Pham knew that the safe way to access the required glass sheet was to use the crane to transfer the obstructing glass sheets to another A-frame trolley. He was involved in that process when approached by the deceased. He knew that the way that the deceased approached the task was unsafe, because the glass was too heavy and the procedure involved the deceased standing in the fall zone. He said no to the deceased on a number of occasions and he sought to dissuade the deceased from the procedure. He called out to the supervisor on multiple occasions to get help and/or I infer to have the supervisor intervene. Mr Pham’s participation was necessary for the incident to occur. He failed to use the crane to lift and move the glass sheets that presented the risk of a crush injury, but he knew that the crane was required. He had commenced the work with that state of mind and sought to convince the deceased to allow him to continue using the crane.”42

Synergies between worker duty and officer duty There are obvious synergies between those six elements and the definition of due diligence. Figure 8 — Relationship between officer duty and worker duty

The knowledge elements of each duty are in common. Each duty holder must acquire knowledge about their work health and safety obligations. The greater the individual’s responsibilities, the greater the onus there is on them to acquire that knowledge. However, ignorance of the law is not an excuse at any level. The roof tiler in the case discussed in Chapter ¶1 could not say that he was not aware of his duty to take reasonable care for his fellow worker. That is simply no excuse. The verification element is in common also but operates in a different way. While an officer is required to verify that the obligations imposed by the third, fourth and fifth elements of due diligence — resources, monitoring and legal compliance, respectively — are being implemented, a worker is merely required to verify that their working environment is safe for them to undertake their activities. A worker could not blindly follow a procedure in wilful ignorance of the danger it would present in the circumstances. A worker can’t light a match in a room full of petrol and say “the procedure made me do it”. The duty of care requires the worker to consider the implications of lighting that match in that environment. While compliance also appears to be a common element, it also applies differently. The officer is required to ensure that their systems

and processes comply with the legal obligations imposed by work health and safety legislation. A worker is required to comply with those systems and processes applicable to them. An officer is required to gain an understanding of the nature of their undertaking and the risks arising from that undertaking. A worker, being closer to the “coal face” has that understanding. Their circumstances are different. What the worker is required to do is receive and understand the health and safety instructions provided to them by the PCBU. The effectiveness of any system is dependent on this. An officer is required to ensure that there are adequate processes and resources for discharging the health and safety duties of the business or undertaking. A worker is required to engage with the PCBU in relation to those processes to ensure their adequacy and effectiveness. An officer is required to monitor the incident and risks to ensure the effectiveness of the system and to react appropriately to those incidents and risks. A worker is required to report incidents and risks to the PCBU. Without the reporting of the incidents in the first place, the monitoring obligation would be ineffective. While officers are required to create an environment that encourages that reporting, workers are required to report. Seen in that way, the worker duty and the officer duty are flip sides of the same coin — they are related but different; with each dependent on the other. Footnotes 32

Inspector Maddaford v Coleman & Anor [2004] NSWIRComm 317.

33

VWA v Chambers (unreported, Frankston Magistrates’ Court, 22 February 2000, Magistrate Harber).

34

VWA v De Sensi (unreported, Dandenong Magistrates’

Court, 14 July 2000, Magistrate Bolster). 35

See also VWA v Phillipson (unreported, Dandenong Magistrates’ Court, 25 February 2000).

36

Work Health and Safety Act 2011 s 28(a)–(b).

37

In VWA v Scicluna (unreported, Sunshine Magistrates’ Court, 13 October 2000) the defendant was convicted and fined $1,000 for subjecting a junior employee to continuous verbal abuse. See also Stevenson v Hardy (1994) 57 IR 348.

38

Work Health and Safety Act 2011 s 28(c).

39

Safe Work NSW v Wollongong Glass P/L [2016] NSWDC 58 [2].

40

Ibid [49]–[58].

41

Ibid [3].

42

Ibid [83]–[84].

CHAPTER 3 KNOW YOUR OBLIGATIONS   Key messages • Ignorance of the law is no excuse. • Workers have rights and obligations — they need to know both. • Workers have a right to refuse to perform unsafe work. • Workers have a right to consultation. • Worker health and safety representatives have the right to stop unsafe work and to require a risk to be remedied.

Case example

Lessons for workers from the DuPont explosion A tragic accident in New York in 2010 provides valuable lessons for workers about their role in delivering safety outcomes. On 9 November 2010, two workers went to work to perform what was for them, a routine task. One was a contract welder, the other his foreman. They were performing welding on a tank at a DuPont plant. The two workers followed all the procedures and performed their jobs impeccably. They got a permit to work on the tank. It cleared them to do the hot work. They wore all the right gear. They performed all the checks that were expected of them. As part of the permit to work process, the outside area of the tank was checked for and cleared, for flammable vapours. The contract welder started the welding and his foreman

supervised. Shortly after commencing the work, there was a large explosion. The contract welder was killed instantly from blunt force trauma. The foreman suffered first degree burns.43 The explosion was caused by the ignition of flammable vinyl fluoride (VF) vapour which had flowed into the tank from interconnected, in-service process tanks, and was ignited from the sparks from the welding being done on the tank. No one checked the inside of the tank before the welding commenced because it was believed that the slurry tank was free from flammable vapours. A few days prior to the incident, the adjacent tank was internally inspected by DuPont engineers. The engineers discovered that a U-leg seal loop on the flash tank overflow line had a “fishmouth” split in the pipe, likely the result of the polyvinyl fluoride water slurry freezing in the line. The engineers concluded that the slurry tank could be returned to service without repairing the split. The “fishmouth” split proved to be fatal as it was the source of the leak of flammable vapours in the adjacent tank. There is no doubt that DuPont’s processes were deficient. But the engineers were also negligent in giving the pipes the all clear. They were no doubt focused only on the impact of the split on the tank itself and the operational impact rather than any secondary outcome. The engineers did not recognise that flammable VF gas now had a pathway into the slurry tanks, an area classified as “low hazard” and not expected to contain any flammable materials. The engineers scheduled a repair on the seal loop during the next planned unit outage. No change management risk assessment was carried out for the process to continue with the compromised seal loop. A DuPont lab technician tested the area around the top of the slurry tanks for flammable vapour concentration. The testing indicated there were no flammables present around the top of the

slurry tanks. Continuous air monitoring was also present near the top of the tank, but the lab technician never tested the atmosphere inside the tank. The lab technician did not test and was not asked to test, the air inside the tank for flammable chemicals even though the repair work involved significant grinding and welding directly on the tank top. As is common practice, all hot work (that is, any flame or spark producing operation including welding, grinding and riveting) required a permit to work. The two contractors who performed the hot work on the slurry tank completed a hot work permit prior to starting work. The purpose of the permit was to ensure that, prior to any hot work, communication between the supervisor of the hot work and a proprietor of the area44 where the work was to be performed, was appropriate, and to ensure the hot work was carried out safely. The permit indicated the scope of the work and listed the required safety precautions. As part of the hot work permitting procedure, contractors were required to complete a safety task assignment (STA) to address potential hazards in the hot work area. All employees doing the hot work were required to read this STA and sign that they had read it. After the contractor completed the STA, the area proprietor would sign the permit and notify the contractor of any process changes or safety information that might affect the job. This required the area proprietor to be knowledgeable about processes going on in the area. This is because the contractor may be unfamiliar with process safety or activities in the area they would be working. DuPont determined that the construction field engineer and the area proprietor would be responsible for helping the contractor understand potential hazardous conditions. On the day of the incident, however, neither the construction field engineer nor the employee signing off as the area proprietor had an understanding of the area, the process or potential hazardous conditions. They signed off anyway. The work started at 9 am. Two hours later, the welding contractor was dead.

Know your legal obligations A worker must know their legal obligations. While the PCBU has the primary duty of care under work health and safety legislation, the duty of workers is a critical plank of the structure of the work health and safety legislation. The problem is that most workers wrongly believe that health and safety is the responsibility of the “bosses” or that health and safety initiatives are there to “cover the bosses’ backsides” rather than being there for the benefit of workers. Even if that assertion is true — which it rarely is — that does not diminish in any way the responsibilities of workers with respect to their own health and safety or that of fellow workers and others who may be affected by their activities. The contractor welder at DuPont would still be alive if either the engineers that identified the leak in the pipe or the workers that signed off on the permit to work, had cared about the responsibility to the health and safety of others involved in his sign off of the permit. Each of the relevant engineers and workers would have had a duty in Australia to take reasonable care with respect to the health and safety of the contract welder. Each fell well short of that standard in their respective conduct. There is no doubt that DuPont also breached its duty of care — its systems were found by the US Chemical Safety Board (an investigative body set up to investigate causes of major chemical accidents and make recommendations to prevent them from re-occurring) to have been significantly lacking. But that does not diminish the responsibility of those workers entrusted with safety critical tasks. Signing something you don’t understand is inexcusable. We would not tolerate it in relation to financial accountability; why would we tolerate it when it comes to people’s lives? If we are to improve safety standards, we all need to take responsibility for them. Knowing your obligations is therefore a good start. That means knowing what is expected of you by the law and what rights are available to you to help you achieve the objective of the legislation — the protection of the health and safety of people from work activities. Chief among these rights is the right to refuse to

perform unsafe work. Stopping unsafe work Workers have a common law right to refuse to perform unsafe work. In safety conscious companies, workers are encouraged to cease work and stop processes they consider unsafe. In addition, a health and safety representative may give a direction to cease work if they have a reasonable concern that to carry out the work would expose the worker to a serious risk to the worker’s health or safety, emanating from an immediate or imminent exposure to a hazard.45 The health and safety representative is required to consult with the PCBU before issuing that direction, except where the risk is so serious and immediate or imminent that it is not reasonable to consult before giving the direction.46 If a matter is not resolved after consultation with the PCBU and after attempting to resolve the issue, a health and safety representative who has completed work health and safety training as required47 may direct a worker who is in a work group represented by the representative, to cease work. They must then inform the business of the direction.48 Where it was not practicable to consult prior to issuing the direction, the health and safety representative must do so after giving the direction to cease work.49 Remedying unsafe situations A health and safety representative can issue a provisional improvement notice (PIN) if they reasonably believe that a person is contravening a provision of the work health and safety legislation or has contravened a provision in circumstances that make it likely that the contravention will continue or be repeated.50 A health and safety representative can only issue a PIN if they have completed the requisite training.51 The health and safety representative must consult the person to whom they propose to issue the PIN before issuing the PIN.52 A PIN cannot be issued by a health and safety representative if an inspector has

already issued, or has decided not to issue, an improvement notice or prohibition notice in respect of the same matter.53 The PIN must be in writing54 and may require the person to remedy the contravention, prevent a likely contravention from occurring, or remedy the things or operations causing the contravention or likely contravention.55 The PIN may include directions as to the measures to be taken to remedy or prevent the contravention or the matters or activities causing the contravention to which the notice relates.56 These directions may refer to a code of practice and may offer the person to whom it is issued, a choice of ways in which to remedy the contravention.57 The business can, within seven days of a PIN being issued, ask the regulator to appoint an inspector to review the notice. As part of that process, they request a stay of the operation of the PIN.58 An inspector will attend the workplace as soon as practicable after a request is made. The inspector must review the PIN and inquire into the circumstances that are the subject of the PIN.59 After reviewing the PIN, the inspector can confirm, change or cancel the PIN. The inspector must give a copy of their decision to the applicant and to the health and safety representative who issued the PIN.60 A PIN that is confirmed by an inspector is taken to be an improvement notice issued by the inspector.61 If the business or person issued with a PIN has not asked for a review of the notice within seven days of its issue, they must comply with the PIN within the time specified in the notice. Right to be consulted Workers have a right to be consulted in relation to matters affecting their health and safety. The PCBU must, so far as is reasonably practicable, consult with workers who carry out work for the business or undertaking who are, or are likely to be, directly affected by a

matter relating to work health or safety.62 That consultation has to be real. The courts have consistently said of consultation that: “Consultation is not perfunctory advice on what is about to happen. This is common misconception. Consultation is providing the individual, or other relevant persons, with a bona fide opportunity to influence the decision maker.”63 Consultation means providing relevant information about the matter to workers, and giving the workers a reasonable opportunity to express their views and to raise work health or safety issues in relation to the matter, and to contribute to the decision-making process relating to the matter.64 Consultation requires that the views of workers are taken into account by the PCBU and that the workers consulted are advised of the outcome of the consultation in a timely manner.65 Workers have a right to be consulted when the PCBU is: • identifying hazards and assessing risks to health and safety arising from the work carried out or to be carried out by the business or undertaking • making decisions about ways to eliminate or minimise those risks • making decisions about the adequacy of facilities for the welfare of workers • proposing changes that may affect the health or safety of workers • making decisions about the procedures for consulting with workers • making decisions about the procedures for resolving work health or safety issues at the workplace • making decisions about the procedures for monitoring the health of workers • making decisions about the procedures for monitoring the

conditions at any workplace under the management or control of the PCBU • making decisions about the procedures for providing information and training for workers.66 In most cases, consultation with workers will be achieved through the health and safety representative elected by them for that purpose. Those representatives are given powers and functions to facilitate that role. Selecting the right person for that role is therefore important if the workers are to get the most from that right to be consulted. How to get started Any worker can initiate the establishment of consultation arrangements at their workplace by asking the PCBU at that workplace to facilitate the conduct of an election for one or more health and safety representatives to represent workers who carry out work for the business or undertaking.67 The request does not need to be in any particular form, as long as it is sufficiently clear. You can simply put the request in an email or have a conversation with your manager and take a note of it.68 Once a request is made, the business must facilitate the determination of one or more work groups of workers for the purpose of electing a health and safety representative.69 Make sure the work group proposed makes practical sense. Does it adequately cover the geographical locations of the workers? Are there enough representatives for the number of workers involved in the work group? Does it sufficiently cater for part-time, casual and contract workers as well as full-time permanent workers? Does it adequately cover the span of shifts? Does it adequately cater for the different needs of workers in terms of type of work, age, skills and language?70 If there are volunteers working in the workplace, does the proposed working group adequately cater for the pattern, frequency and type of work the volunteer workers are performing?71 The work group is determined by negotiation and agreement between the business and the workers who will form the work group or their

representatives.72 Workers may request that their union represent them in the consultation negotiations.73 A PCBU must take all reasonable steps to commence negotiations with the workers within 14 days after a request is made.74 Don’t get sidetracked in negotiations — negotiations forming or varying work groups “must be directed at ensuring that the workers are grouped in a way that: (a) most effectively and conveniently enables the interests of the workers, in relation to work health and safety, to be represented; and (b) has regard to the need for a health and safety representative for the work group to be readily accessible to each worker in the work group.”75 The key criterion for determining work groups is to ensure that workers have convenient access to their health and safety representative. The PCBU must notify workers of the outcome of the negotiations as soon as practicable after negotiations are completed.76 Where there is a deadlock in the negotiations, the regulator can be brought in to break the deadlock by appointing an inspector to determine the relevant matters.77 Electing health and safety representatives Once work groups have been negotiated, it is up to workers to elect their health and safety representatives and deputy health and safety representatives. The work group elects a member of that work group as a health and safety representative for that work group.78 The workers in the work group may determine how the election is to be conducted.79 The minimum procedural requirements to be followed are that: “(a) each person conducting a business or undertaking in which

a worker in the work group works is informed of the date on which the election is to be held as soon as practicable after the date is determined; (b) all workers in the work group are given an opportunity to: (i) nominate for the position of health and safety representative; and (ii) vote in the election; (c) all workers in the work group and all relevant persons conducting a business or undertaking are informed of the outcome of the election.”80 If a majority of the workers in a work group wish, the election may be conducted with the assistance of a trade union or other person or organisation such as the Australian Electoral Commission.81 The PCBU to which the work group relates must provide any resources, facilities and assistance reasonably necessary to enable elections to be conducted.82 But the election is conducted by the workers themselves. A health and safety representative for a work group is to be elected by the members of that work group, and all members of that work group are entitled to vote.83 If the number of candidates for election equals the number of vacancies, no election is required and each candidate is taken as elected.84 A health and safety representative holds office for three years,85 but ceases to hold office if they: • resign by written notice given to the PCBU • cease to be a worker in the relevant work group • are disqualified, or • are removed by a majority of members of the work group if the

members sign a written declaration that the health and safety representative should no longer represent the work group.86 A health and safety representative is eligible for re-election.87 A deputy health and safety representative can be elected for a work group in the same way as a health and safety representative is elected.88 If the health and safety representative for a work group ceases to hold office or is unable to exercise their powers or perform their functions, the deputy steps in and performs their role.89 Functions and powers of health and safety representatives The primary function of a health and safety representative is to represent workers in their work group in relation to work health and safety matters.90 Health and safety representatives are intended to be the primary vehicle for consultation at the workplace. To carry out this function, health and safety representatives may: • monitor the measures taken by the PCBU or that person’s representative in compliance with the work health and safety legislation in relation to workers in the work group • investigate complaints from members of the work group relating to work health and safety, and • inquire into anything that appears to be a risk to the health or safety of workers in the work group, arising from the conduct of the business or undertaking.91 Inspection of workplace The health and safety representative has the right to inspect the workplace or any part of the workplace at which a worker in the work group works.92 A health and safety representative may inspect the workplace at any time after giving reasonable notice to the PCBU at that workplace.93 The health and safety representative may also inspect the workplace

at any time without notice, in the event of an incident.94 They can also do so in any situation involving a serious risk to the health or safety of a person emanating from an immediate or imminent exposure to a hazard.95 This inspection right enables a health and safety representative to inspect the workplace in an emergency. Accompanying an inspector The health and safety representative of a work group has the right to accompany an inspector during an inspection of the workplace or part of the workplace at which a worker in the work group works.96 Attend interviews The health and safety representative has a right to be present at interviews concerning work health and safety with a worker of the work group, provided that the worker consents.97 This applies to both interviews with inspectors as well as internal interviews with the management of the business. Receiving information One of the key features of the health and safety role is the right to receive information concerning the work health and safety of workers in the work group.98 The business is required to allow the health and safety representative access to that information.99 Health and safety representatives should request access to the following information: “• information relating to any work-related incident or disease, including statistical records, such as an injury register • an asbestos register and asbestos management plan, which a person with management or control of a workplace must ensure ready access to the [health and safety representative] at any time • health and safety policies and procedures, including Safe Work Method Statements

• safety data sheets for the chemicals that are used in the workplace • technical specifications for equipment regarding noise, vibration or radiation emission • results of occupational hygiene measurements, including dust levels, noise levels or chemical fumes • reports on work health and safety matters, including reports prepared by consultants for the [PCBU] • minutes of [health and safety committee] meetings • information provided by manufacturers and suppliers about plant, equipment or substances at the workplace • health monitoring information that does not contain personal or medical information about a worker”.100 Request assistance A health and safety representative may request the assistance of any person.101 This enables the health and safety representative to seek the help of persons with technical expertise in health and safety issues, or persons who have technical skills that might assist the health and safety representative in inspecting the workplace, advise them on ways of managing a particular hazard or enable them to negotiate particular issues. Where a third party expert is engaged, the PCBU must allow the person providing assistance to have access to the workplace if that is necessary to enable the assistance to be provided, but is not required to pay for the assistance.102 The health and safety representative does not have to give the PCBU, notice of the entry by the assistant, but a person assisting a health and safety representative would need to meet any of the relevant site policies or procedures that are applicable to workplace visitors.103

Immunity from liability of health and safety representative A health and safety representative is immune from personal liability for anything done or omitted to be done in good faith in exercising their powers or functions.104 Rights of health and safety representatives A PCBU must, so far as is reasonably practicable, consult a health and safety representative regarding work health and safety matters affecting the work group they represent.105 A PCBU must provide any resources, facilities and assistance to a health and safety representative for a work group that are reasonably necessary to enable the representative to exercise their powers or perform their functions.106 These might include: “• access to a private room, desk and chair for discussions or interviews • a computer with internet and email access • access to a telephone • facilities for photocopying and filing, including a lockable filing cabinet and shelves • access to a room for work group meetings • access to relevant technical equipment, for example, a noise meter • the use of notice boards • if required, transport or travel expenses to commute between workplaces”.107 A PCBU must allow a health and safety representative to spend such time as is reasonably necessary to exercise their powers and to perform their functions.108

The health and safety representative is entitled to carry out their function with the pay that the health and safety representative would be entitled to receive if performing their normal duties.109 Know your health and safety representative Workers should know who their health and safety representative is. A PCBU is required to display an up-to-date list of health and safety representatives and deputy health and safety representatives for each work group.110 Training If a health and safety representative requests, the PCBU must allow the health and safety representative to attend a course of training in work health and safety that is approved by the regulator.111 Health and safety committees The health and safety representative can request the establishment of a health and safety committee.112 The PCBU must establish the committee within two months of being requested to do so by either the health and safety representative or on the request of five or more workers.113 The constitution of the health and safety committee may be agreed between the PCBU and the workers at the workplace. If there are health and safety representatives at the workplace, however, they must choose one of their number as a member, and at least half of the members of the committee must be workers who are not nominated by the PCBU.114 The regulator may assist to resolve any deadlock on the arrangements for health and safety committees.115 What are the functions of a health and safety committee? The functions of a health and safety committee are to: • facilitate co-operation between the business and workers in instigating, developing and carrying out measures designed to ensure the workers’ health and safety at work, and • assist in developing standards, rules and procedures relating to

health and safety that are to be followed or complied with at the workplace.116 A health and safety committee may be involved in: “• the formulation of agreed procedures, such as issue resolution procedures and the committee’s own procedures • analysing reports of hazards, work-related incidents and statistical trends, so that reports can be made to management • making recommendations for corrective action • examining health and safety audit or monitoring reports • considering reports and information provided by inspectors • considering reports that [health and safety representatives] may wish to submit • developing procedures for selecting new plant for the workplace • assistance in the development of safe working procedures • linking with workers’ compensation and return to work programs • the selection of consultants”.117 Access to information by health and safety committee The PCBU must allow the committee to have access to information that the person has relating to hazards at the workplace and the health and safety of the workers at the workplace.118 The PCBU cannot give the committee access to any personal or medical information concerning a worker without the worker’s consent unless the information is in a form that does not identify the worker

and could not reasonably be expected to lead to the identification of the worker.119 How do you resolve disputes? While consultation does not require agreement, any conflict regarding the existence of a health and safety risk requires a mechanism for its resolution. The work health and safety legislation provides this mechanism. The legislation encourages businesses to agree with their workers in relation to the dispute resolution procedures that will apply to work health and safety disputes.120 If no such agreement exists, the minimum procedures outlined below, become the default provisions.121 The procedures must be written and must be communicated to all workers in the relevant work group.122 The procedures must include the following: • Any party to the issue may commence the procedure by telling each other party that there is an issue to be resolved, and the nature and scope of the issue. • As soon as parties are told of the issue, all parties must meet or communicate with each other to attempt to resolve the issue. • The parties must have regard to all relevant matters, including the degree and immediacy of risk to workers or other persons affected by the issue; the number and location of workers and other persons affected by the issue; the measures (both temporary and permanent) that must be implemented to resolve the issue; and who will be responsible for implementing the resolution measures. • A party may, in resolving the issue, be assisted or represented by a person nominated by the party. • If the issue is resolved, details of the issue and its resolution must be set out in a written agreement if any party to the issue requests this.

• If a written agreement is prepared, all parties to the issue must be satisfied that the agreement reflects the resolution of the issue. • A copy of the written agreement must be provided to all parties to the issue and, if requested, to the health and safety committee for the workplace. • Nothing in this procedure prevents a worker from bringing a work health and safety issue to the attention of the worker’s health and safety representative.123 If the issue is not resolved after reasonable efforts, a party to the issue may ask the regulator to appoint an inspector to attend the workplace to assist in resolving the issue.124 Footnotes 43

The discussion of the DuPont incident is based on the US Chemical Safety and Hazard Identification Board investigation and report, CSB 2011, Final Report into the E.I. DuPont de Nemours & Co Inc., Buffalo, New York, Flammable Vapor Explosion, No 2011-01-I-NY, 9 November 2010.

44

A proprietor of an area is the DuPont employee who is knowledgeable about the area where the work would be done and is taking responsibility for it.

45

Work Health and Safety Act 2011 s 85(1).

46

Ibid s 85(2), (3).

47

Ibid s 85(6).

48

Ibid s 85(5).

49

Ibid s 85(4).

50

Ibid s 90(1).

51

Ibid s 90(4).

52

Ibid s 90(3). See Safe Work Australia, Worker Representation and Participation Guide (2016) Ch 4 s 4.1.

53

Work Health and Safety Act 2011 s 90(5).

54

Ibid s 91.

55

Ibid s 90(2).

56

Ibid s 93(1).

57

Ibid s 93(2).

58

Ibid s 100.

59

Ibid s 101.

60

Ibid s 102(1), (2).

61

Ibid s 102(3).

62

Ibid s 47(1).

63

CPSU v Vodafone Network Pty Ltd [2001] AIRC 1189, [25].

64

Work Health and Safety Act 2011 s 48(1)(a), (b).

65

Ibid s 48(1)(c), (d).

66

Ibid s 49.

67

Ibid s 50.

68

Explanatory Memorandum, Model Work Health and Safety Bill [210].

69

Work Health and Safety Act 2011 s 51(1).

70

Work Health and Safety Regulations 2011 reg 17.

71

Safe Work Australia, Worker Representation and Participation Guide (2016) Ch 2 s 2.1.

72

Work Health and Safety Act 2011 s 52(1).

73

Ibid s 52(5).

74

Ibid s 52(2).

75

Work Health and Safety Regulations 2011 reg 16.

76

Work Health and Safety Act 2011 s 53(1).

77

Ibid s 54.

78

Ibid s 60.

79

Ibid s 61.

80

Work Health and Safety Regulations 2011 reg 18(2).

81

Work Health and Safety Act 2011 s 61(3).

82

Ibid s 61(4).

83

Ibid s 62.

84

Ibid s 63.

85

Ibid s 64(1).

86

Work Health and Safety Act 2011 s 64(2) and Work Health and Safety Regulations 2011 reg 20.

87

Work Health and Safety Act 2011 s 64(3).

88

Ibid s 67(1).

89

Ibid s 67(2).

90

Explanatory Memorandum, Model Work Health and Safety Bill [269] and s 68(1)(a) of the Work Health and Safety Act 2011.

91

Work Health and Safety Act 2011 s 68(1)(b)–(d).

92

Ibid s 68(2)(a).

93

Ibid s 68(2)(a)(i).

94

Ibid s 68(2)(a)(ii).

95

Ibid.

96

Ibid s 68(2)(b).

97

Ibid s 68(2)(c).

98

Ibid s 68(2)(f).

99

Ibid s 70(1)(c), 71(2).

100

Safe Work Australia, Worker Representation and Participation Guide (2016) Ch 4.

101

Work Health and Safety Act 2011 s 68(2)(g).

102

Ibid s 70(1)(g) and 71(3).

103

Explanatory Memorandum, Model Work Health and Safety Bill [283].

104

Work Health and Safety Act 2011 s 66.

105

Ibid s 70(1)(a).

106

Ibid s 70(1)(f).

107

Safe Work Australia, Worker Representation and Participation Guide (2016) Ch 5 s 5.1.

108

Work Health and Safety Act 2011 s 70(2).

109

Ibid s 70(3).

110

Ibid s 74.

111

Work Health and Safety Act 2011 s 72(1). Note that reg 21(2) of the Work Health and Safety Regulations 2011 provides that “the regulator may have regard to all

relevant matters including: (a) the content and quality of the curriculum, including its relevance to the powers and functions of a health and safety representative; (b) the qualifications, knowledge and experience of the person who is to provide the course”. 112

Work Health and Safety Act 2011 s 68(2)(e).

113

Ibid s 75(1).

114

Ibid s 76(1)–(4).

115

Ibid s 76(5)–(7).

116

Ibid s 77.

117

Safe Work Australia, Worker Representation and Participation Guide (2016) Ch 6 s 6.2.

118

Work Health and Safety Act 2011 s 79(3).

119

Ibid s 79(4).

120

Ibid s 81(1).

121

Work Health and Safety Act 2011 s 81(2) and Work Health and Safety Regulations 2011 reg 23.

122

Work Health and Safety Regulations 2011 reg 22(3).

123

Ibid reg 23.

124

Work Health and Safety Act 2011 s 82.

CHAPTER 4 YOU NEED TO GET IT   Key messages • An obligation to train without a reciprocal duty to learn is meaningless. • If you are not sure, ask. • You need to know the reason behind a rule, not just what the rule is.

Case example

Understand why the policy is in place In 2005, two contractors died from asphyxiation while preparing to reassemble a pipe on a pressure vessel while it was being purged with nitrogen at the Valero Delaware City refinery in the United States.125 The first worker — who entered the vessel in an attempt to retrieve a roll of tape — was overcome by nitrogen, collapsed and died. The roll of duct tape was lying on the distribution tray about five feet from the opening. Reactor cleanliness criteria prohibited leaving the tape inside the reactor. The worker had apparently initially considered entering the reactor to retrieve the tape but had decided against it because it would have required an entry permit and a trained crew, which would have delayed the work beyond the shift. Instead, he decided to attempt to retrieve the tape using a wire hook. He was observed moments before the incident kneeling near the studs surrounding the manway trying to retrieve the tape. It is not clear whether the worker fell into the vessel or

intentionally went inside. On observing the worker overcome inside the vessel, the crew foreman urgently called for help on his radio and then entered the vessel in an attempt to rescue his colleague, but he was also overcome and died of asphyxiation.

Why learning matters There is no doubt that the duty of care of a business or undertaking includes an obligation to provide adequate information, instruction and training to workers on safe systems of work. The difficulty is that such a requirement will be ineffective if it is not matched by a desire on the part of the worker to learn. That is, induction of workers should not be brief passive events. They should be engaging, with workers asking many questions — indeed as many questions as it takes for them to understand every aspect of the requirements placed on them. The workers in Delaware should have understood the reason for the permit to work requirement — it was not just red tape to be circumvented by sitting at the edge and “fishing” the duct tape out. The second worker at Delaware clearly did not understand the requirements in relation to rescue of persons in confined spaces; otherwise he would not have gone in after his colleague only to inevitably perish the same way. They were, no doubt, well-intentioned workers. The first worker was conscious not to leave the tape behind as it would be a breach of the reactor cleanliness policy. The second worker entered the confined space in a heroic but misguided attempt to rescue his colleague. Good people who would have acted differently if they had known better. The business that employed them had a duty to explain the requirements to them — to provide them with information and training, not just instructions on rules. But the workers also had an obligation to make sure they understood the requirements put in place for their health and safety. The problem is that by not asking the questions, you are taking the risk. That risk is either a legal risk of being found to have breached your duty of care as a worker to a fellow worker or another person who may be affected by your work or, worse still, the risk of death or

serious injury in performing the work in an unsafe manner. The reason that there are relatively few prosecutions of workers for breach of their duty of care is because, more often than not, they pay the ultimate price for their negligence. It is worth asking a few more questions in the training sessions to avoid that horrific outcome. Figure 9 — Steps for gaining an understanding of safety rules

Case example

Lessons for workers from Pike River On 19 November 2010, a series of underground explosions at the Pike River coal mine killed 29 workers.126 The immediate cause of the tragedy was a large methane explosion. Effective methane management is essential in an underground coal mine. Methane is found naturally in coal. It is released during mining and also accumulates in mined out areas. The area most likely to contain a large volume of methane was a void (goaf) formed during mining of the first coal extraction panel in the mine. A roof fall in the goaf could have expelled sufficient methane into the mine roadways to fuel a major explosion. It is also possible that methane which had accumulated in the working areas of the mine fuelled the explosion, or at least contributed to it. Methane is explosive only when diluted to within the range of 5% to 15% in volume of air. Following a roof fall, methane would be diluted as it was carried through the mine by the ventilation system. It is not possible to be definitive, but potential ignition sources include

arcing in the mine electrical system, a diesel engine overheating, contraband taken into the mine, electric motors in the nonrestricted part of the mine and frictional sparking caused by work activities. Undoubtedly there was a failure to control methane at Pike River on 19 November 2010.127 There were many systemic deficiencies that contributed to this tragedy. The Royal Commission concluded that this was a process safety accident that occurred during a drive to achieve coal production in a mine with leadership, operational systems and cultural problems.128 While the blame for this tragedy lay squarely at the feet of the company and its leadership, the Royal Commission was also critical of worker behaviour and attitudes. There were obvious warning signals that things were amiss at the mine.129 The most alarming warning signs were the reports made by the underground deputies and workers. For months they had reported incidents of excess methane (and many other health and safety problems). In the 48 days prior to the explosion, there were 21 reports of methane levels reaching explosive volumes, and 27 reports of lesser, but potentially dangerous, volumes. The reports of excess methane continued up to the very morning of the tragedy. The warnings were not heeded.130 In fact, the mine manager attended a board meeting four days before the explosion and told the directors that gas management was “more a nuisance and daily operational consideration than a significant problem or barrier to operations”.131 Equally as alarming was worker attitude to safety systems. Analysis of the incident reports exposed episodes of deliberate bypassing of safety systems and tampering with safety locks or covers, rendering them inoperable. A worker taped a plastic bag over a methane monitor on the morning shift on 19 November 2010.132 In its recommendations in relation to the disaster, the Royal Commission observed: “Workers sometimes do not understand health and safety

rules or ignore them to get the job done.”133 The Royal Commission went on to say that workers are nevertheless entitled to receive key information on health and safety risks without having to ask for it.134 Then there were issues with bringing contraband underground. Certain material is banned in the mine because it is recognised as a potential ignition source.135 Yet, contraband incidents were reported and tool box talk safety advisory and newsflash notices were circulated throughout the Pike workforce. Random searches for contraband began in late 2009, and occurred frequently throughout 2010. Contraband was also addressed in Pike’s induction and in-house training, and Pike had signs around the site and at the portal entrance, reminding workers of the prohibitions underground. Although there are no completed incident/accident forms regarding contraband after April 2010, statements obtained from workers during the joint investigation suggested that the problem of workers taking contraband underground, intentionally or otherwise, continued.136 There were also a number of incidents involving unsafe ventilation practices, including incidents where air was diverted away from a working face without workers being given prior notice; where the ventilation had been shut down for over 40 minutes while maintenance work on machines underground continued and workers were overcome by fumes from machinery; and where inexperienced workers showed a lack of regard for basic ventilation and gas practices and the need for set procedures.137 There is little doubt that these in part represented deficiencies in training systems. They were also symptomatic of a workforce that had swelled its numbers with inexperienced personnel and was under severe pressure for production, such that the ability to train and impart knowledge to the inexperienced personnel was limited. The following was the evidence of one experienced miner:

“I have got to admit I’ve found it very hard here with the young men. They seem to have too much self-confidence, too quick. They’ve been underground maybe six months and they are a miner. But they can’t have in those six months appreciated the dangers down there …. Some of these young men have called me some serious names while I’ve been here … I said, ‘Look, I don’t care. I’ve been in this game all my life and I’m not going to die here just because you don’t understand where you are working.’ And that’s why I jacked it in.”138 The point is though that these workers did not understand why they were required to follow the safety procedures. They clearly did not understand that their lives depended on them not taking contraband into the mine. They did not understand that ventilation systems were there to protect them from the very accumulation of methane gas that caused the explosion. They did not understand that the methane monitor was there to provide forewarning for the very tragedy that took place on 19 November 2010. As for the mine manager, he clearly did not understand that methane accumulation was more than just a nuisance! The evidence was that all the workers were inducted. Despite the fact that the induction and mandatory training covered the issue of contraband, and despite preventative actions taken by management, contraband incidents occurred. Although workers were aware of the requirement, they did not follow it because they did not understand what it was all about. Critically, they did not ask.

The need for workers to ask more questions and make sure that they understand what is expected of them, is ever more pressing in the modern workplace environment. A Canadian study139 has shown that there are real concerns about knowledge transfer in the context of changing demographics and work transformations. The research

suggests that by undermining work teams and increasing the workload of experienced workers, these changes hinder the knowledge sharing process. In such a context, the work teams are continually being reconfigured, which can demotivate experienced workers who constantly have to initiate new recruits despite already having a work overload. Possible avenues for research are proposed with a view to helping organisations support experiential knowledge transfer for organisational performance and the preservation of worker health and safety.140 Now, more than ever, workers need to interrogate their trainers more so that they can understand the reasons safety procedures are in place — because there may not be anyone more experienced working with them at “the coal face”. Footnotes 125

The discussion of the Valero Refinery incident is based on the US Chemical Safety and Hazard Identification Board investigation and report, CSB 2006, Case Study: Valero Energy Corporation Refinery — Confined Space Entry — Worker and Would-be Rescuer Asphyxiated, No 2006-02-I-DE, 2 November 2006.

126

The following paragraphs are based on the findings of the Royal Commission into the Pike River disaster: G Panckhurst, S Bell and D Henry, Royal Commission on the Pike River Coal Mine Tragedy, Final Report (2012) vol 1–2, 30 October 2012, available at pikeriver.royalcommission.govt.nz/Final-Report.

127

Ibid vol 1, 14–15.

128

Ibid vol 1, 15.

129

Ibid vol 2, 53.

130

Ibid vol 1, 12.

131

Ibid vol 1, 18.

132

Ibid vol 2, 65.

133

Ibid vol 1, 33.

134

Ibid.

135

Ibid vol 1, 24.

136

Ibid vol 2, 65.

137

Ibid.

138

Ibid vol 2, 60.

139

E Cloutier, E Ledoux and P-S Fournier, “Knowledge Transmission in Light of Recent Transformations in the Workplace”, Relations Industrielles, (2012) 67(2), 304– 324.

140

The study was based on three industries — film technicians, food service helpers and homecare nurses — in Quebec, Canada.

CHAPTER 5 YOU NEED TO BUY-IN   Key messages • Workers must engage in the consultation process. • Workers will be required to implement the risk management process. • Workers are in the best position to understand and identify hazards, assess the risks and recommend controls. • Workers must report hazards and incidents.

Case example

You do not need a special invitation to fix a problem As discussed in Chapter ¶1, in March 2000, Heath Worts was working on a construction site in Byron Bay, New South Wales. His company, Ridge Consolidated, had won a job to carry out roadworks at the Ewingsdale Interchange, near the Pacific Highway. At 29 years old, he was employed as a labourer.141 Alan Sherwood and Patrick Hunt were operators at the same site. They were also employed by Ridge Consolidated. Their foreman was Russell Larkham. On 15 March, Mr Sherwood asked Mr Worts to drive the water tanker truck. The water tanker truck carried large volumes of water for spraying freshly graded sections of road. The truck weighed approximately 5.5 tonne unloaded and approximately 13.5 tonne when it was full of water. Mr Worts had never driven the truck before.

Mr Sherwood showed Mr Worts how to turn the water on and fill up the truck. He told Mr Worts there was “gear trouble” with the truck. At first Mr Worts was working at the top of the hill. Mr Sherwood was at the bottom of the hill in another water tanker. He was watering an area which was being rolled by Mr Hunt, a roller operator. Mr Sherwood then reversed back and his left rear wheel went into some soft material and he did not have the power to pull the water tanker back out. Mr Worts got a call from a grader driver and drove the truck to a particular part of the site and sprayed the gravel. He parked the truck slightly uphill from Mr Sherwood’s truck, stopped the truck, applied the handbrake and exited the truck to walk down to Mr Sherwood. As Mr Sherwood and Mr Worts were talking, Mr Hunt looked up and saw the truck starting to roll downhill towards the driver’s side of Mr Sherwood’s truck. Mr Hunt called out to both men to “look out”. The truck was running towards them and had the possibility of running onto the Pacific Highway at the site where there was moving traffic. Mr Worts ran to the truck, opened the door, reached in and grabbed the steering wheel with one hand and pulled the handbrake on. The handbrake came straight out. The truck collided with Mr Sherwood’s vehicle. Mr Worts was caught in the door. He then fell between the two vehicles on the ground. Mr Worts suffered a dislocated hip and lacerations to his scrotum and groin area. The company’s procedure was that, prior to operating a vehicle, all drivers on site were required to complete a daily pre-start checklist. This involved placing a tick or a cross on the checklist which listed such items to be inspected as brakes, fuel, park brake, horn, seatbelts, air-conditioning and tyres. The checklist was collected at the end of each week by Mr Larkham, the foreman, who signed the checklists and placed

them in the tray of the site engineer. The site engineer filed the checklists away. The drivers completing the checklists had recorded a defective handbrake on the truck on the checklist for a period of approximately two months prior to the accident. The truck was used almost every day. Mr Larkham was prosecuted for breaching his duty of care to Heath Worts. He was convicted and fined $520. The maximum penalty at the time was $3,300. The maximum penalty under the current legislation is $300,000 and/or five years imprisonment. The sentencing Judge, Boland J (as he then was) held at [14]: “The defendant’s failure to take any steps to effect repairs to the handbrake and his failure to prevent persons from operating the truck until the handbrake was repaired amounts to a relatively serious offence. That persons might be injured as a consequence of these failures was, as I have said, reasonably foreseeable. Moreover, simple, straightforward steps were available to remedy the defective handbrake and to prevent persons from operating the truck until the handbrake was repaired.” His Honour noted that the defendant worker, Russell Larkham, was aware of the defective handbrake on the water tanker truck but that he took no action to have it repaired because he presumed it “was someone else’s responsibility”. His Honour also noted that the defendant failed to prevent employees from operating the truck while the handbrake was defective or indeed inform the employee concerned of the defect. His Honour said at [12]–[13]: “That the health and safety of persons at the defendant’s place of work might be endangered by a defective handbrake was reasonably foreseeable on objective standards … [The tanker] was used nearly every day for the two months prior to the accident. The defendant was aware of the defective handbrake, having signed off on checklists indicating the

defect on a weekly basis. The fact that Ridge had no policy or system in place to repair defective vehicles did not, given all of the circumstances, relieve the defendant of his duty to take reasonable care that persons at his place of work would not be injured by a vehicle with a defective handbrake.”

Engage with work health and safety The duty of care of workers requires them to engage with the person conducting the business or undertaking in relation to work health and safety matters. Safety is not “someone else’s responsibility” — it is yours. Everyone has a duty of care for the health and safety of people at work and people who may be affected by work activities. Engagement of workers has long been recognised as necessary to achieve better safety outcomes in the workplace. When an independent review panel chaired by former US Secretary of State James Baker into the BP US Refineries, commissioned in the aftermath of the 2005 Texas Refinery explosion which killed 15 people and injured 180 others, reported its findings, one of its key observations was that a positive safety culture requires: … all constituencies of the refinery’s workforce — from the plant managers to superintendents to HSSE professionals to hourly employees and contractors — [to] regard process safety as a core value …142 Workers have an important role in every phase of the safety management system from policy inception (through consultation); to implementation (through hazard identification and risk assessments); to performance measurement (through incident reporting). Figure 10 — Components of engagement

Policy development There is no doubt that the effective development of policy requires worker input. People at the “coal face” have more intimate knowledge and insight into the hazards they face in their daily activities and the effective manner in which to control them, than the managers who are charged with formulating the procedures. Engagement of workers in the policy development process through worker consultation channels, such as health and safety committees, is critical. As discussed in Chapter ¶3, a health and safety committee is there to facilitate cooperation between the business and workers in instigating, developing and carrying out measures designed to ensure the workers’ health and safety at work. Its key function is to assist in developing standards, rules and procedures relating to health and safety that are to be followed or complied with at the workplace.143 As explained in Chapter ¶3, workers have a right under the legislation to be consulted in relation to matters affecting their health and safety. Therefore, workers should participate in: • the analysis of incidents and hazards related to their usual work including proposed corrective actions • the commissioning of new plant for their usual workplace, and • the development of safe working procedures for their work.

That engagement will typically occur through the health and safety committee or through health and safety representatives. That is, workers need to have input into the consultation process notwithstanding that they may not have direct involvement in it. Not every worker will be a health and safety representative. Similarly, not every worker will be elected to a health and safety committee. But workers need to maintain their involvement to ensure effective safety outcomes and facilitate their own compliance with their duty of care. Where a health and safety committee exists, workers should take an interest in its deliberations. Health and safety committees usually meet monthly. They are required to meet at least once every three months and at any reasonable time at the request of at least half of the members of the committee.144 Dates of meetings should be arranged well in advance.145 Workers should find out when meetings are scheduled and make sure that they get issues they want considered, on the agenda. Workers should also read the minutes of committee meetings in order to familiarise themselves with emerging issues affecting their working environment. You cannot outsource your engagement Workers cannot outsource their engagement to their union delegates. There is little doubt that unions have a constructive role to play in work health and safety consultation. But there are other agendas at play also where unions are involved. Some of those agendas are industry wide, some are political. Safety can be used by unions as a pretext to further an industrial agenda. The duty owed by workers is theirs to discharge. It cannot be delegated. Workers can take advice from unions and others, but at the end of the day they need to take reasonable care with respect to the health and safety of people who may be affected by their work. Unions can provide support to workers. Where union officials are experienced and well-trained in health and safety principles, they can add a great deal of value. A well-trained union official can offer an independent perspective and be able to share information acquired at an industry wide-level. In that respect, unions have an important role to play in supporting workers and businesses to achieve better health

and safety outcomes. For that reason, an authorised trade union officer or employee who is a WHS entry permit holder may enter workplaces to investigate suspected work health and safety offences or to consult and advise workers.146 Unions can enter a workplace to consult with workers on work health and safety matters.147 You are not required to consult with them but that is your right if you choose to exercise it. In addition to the right of entry for consultation, the unions can also assist in relation to a suspected contravention of the work health and safety legislation. The right of entry in this respect is limited to a situation where a WHS entry permit holder reasonably suspects before entering the workplace, that a contravention of the Act has occurred or is occurring. If so, they may enter a workplace for the purpose of inquiring into the suspected contravention but only if it relates to, or affects, a relevant worker.148 While at the workplace, the permit holder entering may: • inspect any work system, plant, substance, structure or other thing relevant to the suspected contravention • consult with the relevant workers in relation to the suspected contravention • consult with the relevant PCBU about the suspected contravention • require the relevant PCBU to allow them to inspect, and make copies of, any document that is directly relevant to the suspected contravention and that is kept at the workplace or is accessible from a computer that is kept at the workplace, and • warn any person whom the WHS entry permit holder reasonably believes to be exposed to a serious risk to their health or safety emanating from an immediate or imminent exposure to a hazard, of that risk.149

It is an offence to, without reasonable excuse, refuse or unduly delay entry into a workplace by a permit holder who is entitled to enter the workplace.150 It is also an offence to intentionally and unreasonably hinder or obstruct a permit holder in entering a workplace or in exercising any rights at a workplace.151 On the other hand, a permit holder exercising or seeking to exercise rights must not intentionally and unreasonably delay, hinder or obstruct any person or disrupt any work at a workplace, or otherwise act in an improper manner.152 A person must not take action with the intention of giving the impression, or reckless as to whether they give the impression, that the doing of a thing is authorised if it is not so authorised. But there is no contravention if the person has a reasonable belief that the doing of the thing is authorised.153 System implementation Risk management is key to workers taking reasonable care with respect to their own health and safety and the health and safety of others. It should also be a key feature of the work health and safety procedures in place at the workplace, and therefore a procedure that workers are required to follow as part of their obligation to comply with initiatives put in place by the PCBU with respect to health and safety. Risk management in the health and safety context is the process of systematically identifying hazards and assessing and treating the risks to health and safety arising from each hazard. The primary responsibility for managing risks is imposed on the PCBU. However, in practice, it will be workers who will be required to implement those requirements. The first step in risk management is identifying hazards. Identifying hazards involves finding all of the things and situations that could potentially cause harm to people. Hazards generally arise from the physical work environment; the equipment, materials and substances used, and the work tasks and how they are performed. Some hazards arise from the work process, such as mechanical hazards, noise or toxic properties of substances. Other hazards result from equipment failures, chemical spills and structural failures.

Hazard identification is done by inspection of the working environment. Workers have an important role to play in that. Workers are required to be consulted in relation to the risk assessment process, including the process of identifying hazards. They need to be engaged in that process, sharing their experiences openly and sharing their practical knowledge. Workers should also be forthcoming with incidents and near misses associated with a process. In relation to every hazard, all risks arising from that hazard must be identified and, as far as is reasonably practicable, eliminated. If the risk and control is well known, then it must be treated. If it is less understood, then it needs to be assessed and controls need to be identified for it. All controls need to be implemented. Assessing risks is about considering what could happen if someone is exposed to a hazard and the likelihood of it happening.154 Ask yourself: What could happen here? Do existing controls measure up? What should be done? How quickly does it have to be done? Some hazards have exposure standards; for example, noise or airborne contaminants. To do a risk assessment properly, you need to have scientific testing or measurement done to check that the relevant exposure standards are not being exceeded. Figure 11 — The risk management process

Source: How to Manage Work Health and Safety Risks Code of Practice

Tips for assessing severity of risk To estimate the severity of harm that could result from each hazard, the Code of Practice on risk management suggests that you should consider the following questions: • What type of harm could occur (eg muscular strain, fatigue,

burns, laceration)? How severe is the harm? Could the hazard cause death, serious injuries, illness or only minor injuries requiring first aid? • What factors could influence the severity of harm that occurs? For example, the distance someone might fall or the concentration of a particular substance will determine the level of harm that is possible. The harm may occur immediately something goes wrong (eg injury from a fall) or it may take time for it to become apparent (eg illness from long term exposure to a substance). • How many people are exposed to the hazard and how many could be harmed in and outside your workplace? For example, a mobile crane that collapses on a busy construction site has the potential to kill or injure a large number of people. • Could one failure lead to other failures? For example, could the failure of your electrical supply make any control measures that rely on electricity ineffective? • Could a small event escalate to a much larger event with more serious consequences? For example, a minor fire can get out of control quickly in the presence of large amounts of combustible materials.155

When working out the likelihood that someone will be harmed, consider: How often is the task done? Does this make the harm more or less likely? How often are people near the hazard? How close do people get to it? Has it ever happened before, either in your workplace or somewhere else? How often?156 A risk is the combination of likelihood and consequences or severity. The higher the severity, the higher the risk. Similarly, the higher the

likelihood, the higher the risk. The most important step in managing a risk is eliminating it. To the extent it is reasonably practicable, risks must be eliminated. But if the risk cannot be eliminated, it must be minimised as far as is reasonably practicable. Identifying the appropriate controls for a risk is another step where worker input is key. As a worker, you should be heavily involved in the deliberations about the appropriate controls because you have to live with them. If they are ineffective, you will be exposed to risk. If they are impracticable, they will frustrate you and they may lead to other workers seeking to circumvent them. There are many ways to control risks. Some control measures are more effective than others. It may be necessary to use several controls in combination. The ways of controlling risks are ranked from the highest level of protection and reliability to the lowest — this is known as the hierarchy of controls. You try to eliminate the hazard. If you cannot practicably do that, then substitute the hazard with something safer. If not, isolate people from the hazard. If that is not practicable, reduce the risks arising from the hazard through engineering controls. These measures are regarded as reliable or effective controls. If a risk remains despite these measures, or if it is not reasonably practicable to use these measures, then reduce the exposure to the hazard through administrative action, such as policies or training. Use appropriate personal protective equipment, such as hearing protection, eye protection, gloves, harnesses, high visibility vests etc, if there is residual risk. You are required, so far as you are reasonably able, to wear the personal protective equipment in accordance with any information, training or reasonable instruction given to you. Figure 12 — The hierarchy of risk control

Source: How to Manage Work Health and Safety Risks Code of Practice

System performance measurement The duty to take reasonable care implies engagement in relation to hazard and incident reporting. Workers are required to report hazards. This was previously an express obligation in some jurisdictions. It is now implied in the duty of care of workers. If a worker fails to report a

hazard that proves to be the cause of an injury to another worker, they would be in breach of their duty to take reasonable care for that worker. Indeed, this would also be the case in the absence of actual injury — a near miss or an exposure of another worker or person to risk to their health and safety from the known but unreported hazard, would be sufficient to constitute a breach of the duty. This is important because we know that many incidents go unreported. The failure to report incidents frustrates the effectiveness of the safety management system. It exposes other workers to risk to their health and safety. The failure of businesses to address this is a real issue in terms of the primary duty of care of the PCBU. But it is also an issue for the workers themselves under their duty to take reasonable care for the health and safety of other workers and other persons who may be affected by their work. If the PCBU also has a policy or procedure which requires the reporting of incidents, the failure to report would also constitute a breach of the duty to comply with the initiatives put in place by the PCBU with respect to health and safety. Footnotes 141

The following account of the incident is based on the judgment in the prosecution of Mr Larkham: Inspector Martin v Larkham [2003] NSWIRComm 31.

142

JA Baker, FL Bowman, G Erwin, S Gorton, D Hendershot, N Leveson, S Priest, I Rosenthal, PV Tebo, DA Wiegmann and LD Wilson, The Report of The BP US Refineries Independent Safety Review Panel (2007) Washington, 60.

143

Work Health and Safety Act 2011 s 77.

144

Ibid s 78.

145

Safe Work Australia, Worker Representation and

Participation Guide (2016) Ch 6 s 6.2. 146

Work Health and Safety Act 2011 s 117(1), 121(1).

147

Ibid s 121(1), 122.

148

Ibid s 117.

149

Ibid s 118(1).

150

Ibid s 144.

151

Ibid s 145.

152

Ibid s 146.

153

Ibid s 147.

154

Safe Work Australia, How to Manage Work Health and Safety Risks Code of Practice (2011) Ch 3.

155

Ibid Ch 3 s 3.2.

156

Ibid.

CHAPTER 6 DO NOT BE THE REASON YOUR MATE IS HURT   Key messages • People cannot know about a problem unless they are told. • Workers have a duty to report incidents and risks including incidents of risk of psychological harm, such as bullying. • There are protections afforded to workers to permit them to report — no excuses.

Case example

Where staying silent is a crime Brodie Panlock157 was a compassionate young woman. She was bought up in Heathmont where she lived with her parents and two older brothers. In early 2005, she began working as a waitress at the Café Vamp in Hawthorn, Victoria. At the time, her plan was to raise some money and then take an overseas trip with her brother and his girlfriend before returning to TAFE in 2007, where she was intending to study social work. According to family members, she was an organised, reliable and confident girl who showed compassion and cared for everyone she knew. In September 2006, Ms Panlock took her own life, unable to cope any longer with the torment she was subjected to at her workplace at the hands of three co-workers; 28-year-old waiter, Rhys Macalpine, 23-year-old chef, Gabriel Toomey, and the 26year-old café manager, Nick Smallwood, for whom she had feelings.

According to workmate Nicola Wood, Ms Panlock was being dealt with in an extremely aggressive and intimidating manner by coworkers and management at the café. On Ms Wood’s evidence, Mr Smallwood and Mr Macalpine were the main protagonists and were relentless in their efforts to demean Ms Panlock. At this time, Ms Panlock was in an intimate relationship with Mr Smallwood. Ms Panlock put up with his behaviour, as well as the behaviour of others, because she was in love with him and was looking for approval and acceptance from other co-workers. The torment of Ms Panlock took various forms. She was called names, told she was fat and ugly and even spat at. Ms Wood said: “It included putting fish oil in her bag, covering her with chocolate sauce, telling her that she was worthless and didn’t deserve to be here” and “they would just grab her and hold her down and put oil over her … (this occurring) on three or four occasions”. According to Ms Wood, Ms Panlock was initially reacting in a manner designed to give the impression that it didn’t bother her, so as not to give her tormentors the satisfaction that they were affecting her. However, it began to have an effect on her. Ms Wood told her to leave but she felt a sense of loyalty towards her employer. Ms Wood noticed that Ms Panlock had been selfharming and had a bandage over her left wrist covering small cuts. Ms Wood took the matter up with Mr Smallwood. She told the inquest: “I remember talking to him about the extent of how she was feeling and how he really had such a hold over her and she listened to all of the things he said and it was really getting her down. And I said you know, how would you feel if it did get to another point where she, you know, not just self harm but took it further and committed suicide and he did say that he would feel pretty bad and the next couple of days he … slowed down on the insults and stuff for a little while. He just said that he would take it down a couple of notches and not behave the way that he was behaving ….”

It lasted about two days. Within a month, Ms Panlock had attempted suicide. She consumed rat sack and alcohol in the basement of Mr Smallwood’s apartment block after he kicked her out of his flat. She was taken to Epworth hospital and had her stomach pumped. Ms Panlock survived that attempt only to be tormented by her co-workers about her failure to take her own life. On her return to work, she found rat poison in her pay envelope. Mr Smallwood said to her “if you are going to do it, do it properly”. Meghan Chester, who was another co-worker at Café Vamp, gave the following evidence at the inquest: “I can describe Brodie as a buoyant, chirpy, compassionate, patient, giving girl. She was like a little ray of sunshine. Unfortunately, she was young, naïve and working in an environment that encouraged and supported bullying behaviour. In my opinion, Nick and Rhys were successful in bullying Brodie because she felt she deserved it. She had no confidence in her beauty or self worth. Nick was the manager and Rhys was his side kick at Café Vamp. But no matter what she did, be it right or wrong, Brodie could never do anything right by Mark, the owner, Nick, Rhys or Gabe. She got such a hard time from all of them. I have worked in the hospitality industry for ten years but I have never seen anything like what these four males did to Brodie and … Unfortunately, Brodie for some unknown reason was infatuated with Nick … This infatuation became out of control and Nick took advantage of Brodie’s vulnerability and naiveté. He abused her verbally, emotionally and psychologically.” Ms Chester left her job at the café in part because she could not handle watching what was happening to Ms Panlock. She spoke to both Mr Smallwood and Mr Macalpine about their behaviour towards Ms Panlock, but Ms Panlock asked her not to “stir the pot with Nick”, and did not want her family to know about her workplace situation.

On 20 September 2006, Ms Panlock attended a gallery opening in Richmond. Although he had originally intended to attend also, Mr Smallwood decided to go directly home after finishing work at around 6 pm. At about 9 pm, he received a call from Ms Panlock who offered him money to come to Swan Street, pick her up and drive her home. Mr Smallwood picked her up at around 9:30 pm and drove her home and then went up to her flat ostensibly so that he could get his money. Once in the flat, Ms Panlock, who was influenced by her earlier alcohol intake, and Mr Smallwood were intimate and thereafter he left with Ms Panlock following him to his car, attempting unsuccessfully to persuade him to stay overnight. Ms Panlock later called her friend, Ashlea Cooper. She was crying hysterically. She related the story of her encounter with Mr Smallwood and about his departure and “how she begged him to stay but that he just got up and left”. She said “(I) can’t face him at work.” She said “I’ve made a fool of myself. I was begging him to stay. How embarrassing. I want to die. Ash, it is over I have had enough. It’s over.” Sadly, Ms Panlock was successful on the second suicide attempt, succumbing to her head injuries after jumping off a multi-storey car park. The three workers were prosecuted for failing to take reasonable care with respect to the health and safety of another employee. Magistrate Lauritsen convicted all three workers. Nicholas Smallwood was fined $45,000, Rhys Macalpine was fined $30,000 and Gabriel Toomey was fined $10,000. The employer company and the director of the company were also fined. The company failed to provide a safe working environment for Ms Panlock and its director failed to take reasonable care to ensure compliance by his company. The evidence was that he knew the bullying was going on and turned a blind eye to it, saying to his workers on one occasion to “take it outside”. But he was not the only one that did not do enough. This tragedy could have been avoided if other workers who were

aware of the bullying behaviour had done more to stop it. Consider Ms Panlock’s mother’s evidence to the Parliamentary Inquiry into workplace bullying. Mrs Rae Panlock commented: “She was a very strong person. I think I have said it a few times, but she used to soldier on and get over whatever was going on. But the impact was just too much. It was not just one person; it was four men: the owner and three individuals. They just kept on pursuing her. This is the other thing. The people who worked there other than these men did try but did not try enough. A lot of them said in the court case they wished they had done more.”158

Reporting incidents At least some of Ms Panlock’s co-workers, Ms Chester and Ms Wood, confronted the perpetrators directly and provided support to Ms Panlock. Even that does not usually happen in most bullying cases. The lack of reporting is the reason that bullying has been described as a “hidden problem”.159 We just do not know how bad it is because victims try to “tough it out” until they cannot bear it any longer, and the workers around them at best do not want to meddle, or at worst, think that it is harmless or that the victim somehow deserved it. It is estimated that 6.8% of Australian workers are bullied with 3.5% experiencing bullying for longer than a six month period.160 The figure may be even higher than that, with some estimates putting it at one in three workers or 33%.161 While the primary responsibility for stamping out workplace bullying falls on the PCBU, workers have an important role to play. Relevantly, a worker cannot say that they took reasonable care with respect to the health and safety of their fellow workers if they fail to report instances of workplace bullying. The duty is not limited to workplace bullying or even psychological hazards; it obviously also applies to physical hazards. Workers are

often concerned that there would be repercussions from their reporting of incidents. Indeed, because some companies reward management based on negative performance indicators such as reductions in lost time injury rates, management can pressure workers not to report incidents, or at least there may be an apprehension among workers that they may do so. This is why there are protections built into the legislation in relation to workers exercising their rights. You are protected Workers are protected from being victimised for exercising their rights under work health and safety laws so there is no excuse for not reporting incidents. That protection is afforded them for internal reporting as well as external reporting — for example to the regulator. Brodie Panlock would have been alive today if one of the workers that witnessed her abuse had called the regulator. The protections operate by prohibiting certain conduct — discriminatory conduct — which is undertaken for a reason that includes a prohibited reason. As an additional measure to increase deterrence and facilitate enforcement of these protections, the onus of proving that the discriminatory conduct was for a reason that included a prohibited reason is shifted to the accused. That is, if you are victimised, once you raise the allegation that the discrimination that you suffered was for a prohibited reason, it is up to the person accused to disprove that. The prohibited reason does not have to be the sole motivator for the discriminatory conduct; it just has to be one of the reasons. That means that discrimination cannot be hidden behind seemingly legitimate restructures or redundancies. Figure 13 — Protections against victimisation

Discriminatory conduct The conduct which is considered discriminatory conduct is to: • dismiss a worker • terminate a contract for services with a worker • put a worker to his or her detriment in the engagement of the worker • alter the position of a worker to the worker’s detriment • refuse or fail to offer to engage a prospective worker • treat a prospective worker less favourably than another prospective worker would be treated in offering terms of engagement • terminate a commercial arrangement with another person, or • refuse or fail to enter into a commercial arrangement with another person.162 If the person organises to take any of the above actions or threatens to organise or take that action, they have also engaged in

discriminatory conduct.163 Engaging in discriminatory conduct includes requesting, instructing, inducing, encouraging, authorising or assisting another person to engage in such conduct.164 Figure 14 — Discriminatory conduct

Prohibited reason The conduct is engaged in for a prohibited reason if it is engaged in because the worker or prospective worker or relevant person: • is, has been or proposes to be a health and safety representative • exercises a power (or has or proposes to exercise) or performs a function (or has or proposes to) as a health and safety representative • is, has been or proposes to be a member of a health and safety committee

• exercises a power (or has or proposes to exercise) or performs a function (or has or proposes to) as a member of a health and safety committee • undertakes (or has undertaken or proposes to undertake) another role under the Act • exercises (or has or proposes to exercise) a power under the Act in a particular way • performs (or has or proposes to perform) a function under the Act in a particular way • refrains (or has or proposes to refrain) from exercising a power or performing a function under the Act in a particular way • assists (or has or proposes to assist), or gives (or has or proposes to give) any information to any person exercising a power or performing a function under the Act • raises (or has or proposes to raise) an issue or concern about work health and safety with the PCBU • raises (or has or proposes to raise) an issue or concern about work health and safety with an inspector • raises (or has or proposes to raise) an issue or concern about work health and safety with a work health and safety entry permit holder • raises (or has or proposes to raise) an issue or concern about work health and safety with a health and safety representative • raises (or has or proposes to raise) an issue or concern about work health and safety with a member of a health and safety committee • raises (or has or proposes to raise) an issue or concern about work health and safety with another worker

• raises (or has or proposes to raise) an issue or concern about work health and safety with any other person who has a duty under the Act in relation to the matter • raises (or has or proposes to raise) an issue or concern about work health and safety with any other person exercising a power or performing a function under the Act • is involved (or has been or proposes to be involved) in resolving a work health and safety issue under the Act, or • is taking action (or has or proposes to take action) to seek compliance by any person with any duty, etc, under the Act.165 The key protection for reporting incidents or risks is in relation to the prohibition against discriminating against someone who assists or has assisted or proposes to assist, or gives or has given or proposes to give any information to any person exercising a power or performing a function under the Act, and specifically the additional protections in relation to raising a concern with an inspector or a union official who is a permit holder.166 Furthermore, to provide an additional layer of protection, a person must not take action, or organise or threaten to organise to take any action, against another person with intent to coerce or induce the other person or a third person to exercise a power under the Act, or to perform a function under the Act or refrain from seeking or continuing to undertake a role under the Act.167 These provisions can be enforced through criminal or civil proceedings. An affected person may also seek an injunction and/or compensation for being victimised contrary to those protections. Figure 15 — Prohibited reason

Note: “HSR” is a health and safety representative. “HSC” is a health and safety committee.

Footnotes 157

The following account of the Brodie Panlock case is based on the Coronial Findings of Coroner Peter White on 16 May 2008, Case No: 3625/06 at www.coronerscourt.vic.gov.au/resources/8c4c36a690eb-41d1-b352-89078d795cee/panlock.pdf.

158

Parliament of the Commonwealth of Australia, House of Representatives Standing Committee on Education and Employment, Workplace Bullying: We just want it to stop (2012) [1.12].

159

Ibid [1.22].

160

Ibid [1.23].

161

Ibid [1.26].

162

Work Health and Safety Act 2011 s 105(1).

163

Ibid s 105(2).

164

Ibid s 107.

165

Ibid s 106.

166

Ibid s 106(g), (h).

167

Ibid s 108.

CHAPTER 7 THE RULES ARE THERE FOR YOUR BENEFIT   Key messages • Worker duty requires compliance with relevant policies. • A worker may be liable even if the company is at fault. • Just culture is not a free pass — it requires worker accountability. • Skylarking is a crime.

Case example

Taking responsibility for one’s actions At 14:32 on Wednesday, 26 July 2000, the 14:22 Glen Waverley express train (train number 2020) to Flinders Street collided with the 14:11 Glen Waverley train (train number 2018) to Flinders Street which was stationary at Holmesglen Railway Station.168 Twelve people were injured in the collision. Holmesglen Station is 16 km from Flinders Street Station on the Glen Waverley line which is used for suburban passenger electric train traffic only. The station is not staffed. It is equipped with video recording equipment for security purposes. The stationary train was carrying passengers, while the express train was not. Each train consisted of six cars. The 14:11 Glen Waverley to Flinders Street train, Train 2018, had been stationary at Holmesglen Station since 14:27:05. Its driver had discovered a problem with the passenger door and was

attempting to fix it. Consequently, he was out of his cab. Contrary to the requirements of the Book of Rules and Operating Procedures, he did not inform train control about the fault. The Book of Rules and Operating Procedures is “the bible” for the industry. It sets out the responsibilities and duties of workers, including drivers, to ensure the safe interaction of trains on the network. At 14:32:30, the express train collided with the stationary train from the rear. Had the driver of the stationary train told train control of the fault, train control would have been alerted that he was being delayed further at Holmesglen station. As it happened, he did not. The real issue, however, was with the express train driver. After exercising train brake tripping procedures at Automatic Signal DG484, the express train proceeded to Holmesglen at excessive speed. Under the Book of Rules, drivers are required to remain alert and pay immediate attention to and obey all signals. They are also required to regulate the running of the train to remain within the authorised speed. Crucially, the driver must bring the train to a stand for 30 seconds if an automatic signal displays the “Stop” signal. If the automatic signal is still at “Stop” after 30 seconds, the driver may proceed at a speed of “extreme caution”, being prepared to find the section occupied or obstructed. The extent of damage to the carriages and couplings of both trains and the distance that the stationary train was pushed forward, indicated an impact speed in excess of 44.5 km/h. That is not regarded as an “extreme caution” speed. There was no failure in the signalling system or any other safety, electrical or mechanical system fitted to either train or to the infrastructure in place at the time of the accident. This was simply a case of a worker failing to comply with the rules. The driver of the express train was prosecuted for breach of his duty to take reasonable care with respect to the health and safety

of others in relation to this incident. He was convicted and fined $3,000 in relation to a rail collision.169 He was lucky with that outcome. The consequences of this collision could have been far more severe. The potential penalties would also be far more severe if this incident was being dealt with under the current work health and safety laws.

It is your duty to comply It is important to note that the investigation into the Holmesglen collision identified a number of organisational factors — absent or failed defences that were at the root cause of this incident. But that did not excuse the driver’s conduct in failing to follow the rules. We have become all too ready to make excuses for workers. We have misunderstood the real message behind the just culture approach. The idea of having a just culture in an organisation is to recognise that, as humans, we all make mistakes. Saying that an accident was caused by human error does not tell us a great deal. We know humans make mistakes. The system should be robust enough to prevent accidents notwithstanding that. So, blaming workers for human error is inherently unfair and does not recognise the proper role of system failure in the causation chain of accidents. However, that has never meant that workers are never to blame. Just culture is not synonymous with no-blame culture. The “just” in the phrase just culture is designed to capture the balanced approach that needs to be taken to incident investigations.170 A well-trained, wellequipped worker who decides not to follow the procedures put in place for their protection and the protection of others, is absolutely to blame. A system that does not address that, is destined for perpetual failure. Worker accountability for compliance with systems is at the heart of the systemic approach to safety. It is a core foundation of the law. We may have forgotten it. It may be out of fashion. But it is necessary. You cannot have safe outcomes without worker accountability.

Case examples

Skylarking is not on The most offensive conduct when it comes to worker accountability and the need for workers to follow the rules is skylarking. Thankfully, courts and regulators also find that conduct to be offensive, and the case law is rife with examples of workers prosecuted and convicted for conduct that they thought was funny but that went terribly wrong. In one case, an employee drove a forklift onto a marked pedestrian walkway to throw a cup of water on a fellow worker. In the process, the tyres of the forklift pinned the worker against a steel pole, crushing his pelvis and fracturing several vertebrae. The driver of the forklift was convicted and fined $4,000 for breaching his duty to take reasonable care with respect to the health and safety of other employees.171 In another case, an employee hooked a fellow worker to a crane and hoisted him half a metre off the ground. This employee was also prosecuted and convicted for breaching his duty to take reasonable care for the health and safety of other employees. He was fined $2,500.172

Following advice For more senior workers, it is important that they seek and follow advice from competent persons in relation to health and safety matters. In one case, a manager who failed to do so and instructed workers to carry out a task, despite being advised that it was

unsafe, was prosecuted and convicted. The manager needed to install a power unit. The unit weighed 180 kg. The unit was to be installed in the ceiling of the company’s factory. The manager was advised to install the power unit using a crane. Instead, he instructed five employees to help him install the unit manually through a manhole in the ceiling of the factory. The ceiling collapsed during the installation, killing an employee and seriously injuring another. The manager was prosecuted and convicted for failing to take reasonable care for the health and safety of other employees and was fined $3,000.173

Footnotes 168

The following account of the rail collision is based on the Office of the Director of Public Transport, Safety and Technical Services Branch investigation report: Department of Infrastructure, Office of the Director of Public Transport, Safety and Technical Services Branch 2001, Final Report: Investigation into the Collision between Connex Passenger Trains at Holmesglen Station on Wednesday 26 July 2000, (May 2001) available at www.vicsig.net/suburban/holmesglen/report.pdf.

169

O’Grady v Fernandez (unreported, Dandenong Magistrates’ Court, 11 December 2002, Magistrate Macpherson).

170

Another book of this series, Due Diligence: Incident Notification, Management and Investigation, discusses the elements of a positive safety culture in greater detail.

171

VWA v Welsh (unreported, Sunshine Magistrates’ Court, 5 February 2002, Magistrate Wakelin).

172

VWA v D’Amato (unreported, Sunshine Magistrates’ Court, 10 August 2001, Magistrate Goldsbrough).

173

R v Tormey (unreported, VCC, 5 September 1995, Morrow J).

CHAPTER 8 THINK BEFORE YOU ACT   Key messages • Workers have to apply rules to context. • Expectations will be commensurate with the experience, qualifications and training of the worker. • Workers may be liable for breach of their duty to take reasonable care even if they were following the safety management system of the PCBU.

Case example

When bad advice becomes a crime A manager and an employee were removing the plastic coating from a metal box by burning a highly flammable substance to soften the plastic. The manager left before the process was completed. The employee attempted to light the substance with his cigarette lighter when an explosion occurred. The employee was seriously injured. The manager was prosecuted as an employee for failing to take reasonable care for the health and safety of a fellow employee. He was convicted and fined $3,500.174

Duty to verify There is an obligation on a worker to consider the context in which

they are required to act. The so called Nuremberg defence — that is “I was just following orders” or the “rules made me do it” — generally does not work and certainly won’t work in the context of worker duties. Regardless of what is required by the systems of work, the worker must consider the working environment and the circumstances in which they are required to apply the requirements of the system of work, and make a decision based on their experience, qualifications and training. That is what is expected by the requirement to take reasonable care. This is important because it is a key plank of safety culture. Deviations from the system are not necessarily unsafe and are not necessarily unlawful. While generally the safety management system of an organisation will prescribe the pathway to safe outcomes, the requirements of the system are usually based on certain assumptions. If those assumptions are not met in practice, then the requirements of the system do not necessarily guarantee a safe outcome. The more prescriptive the system, the more this is the case. This is why there is a significant emphasis on training and competence of workers in work health and safety legislation. The more qualified, trained and/or experienced the worker is, the greater the expectation is that they will properly discharge their duty to take reasonable care. In other words, these workers are held to a higher standard as a result of their higher levels of qualification, training and/or experience. Any worker who believes otherwise is simply sticking their head in the sand. Figure 16 — Duty to verify

If you are not sure, ask As discussed in Chapter ¶3, a worker is entitled to refuse to perform unsafe work.175 They are entitled to consult their health and safety representative about any work health and safety concerns they may have. If a health and safety representative believes the work is unsafe, they can direct that it cease.176 They are entitled to consult their union representative. Union representatives have powers of entry into the workplace for that reason. Most importantly, workers are entitled and expected to clarify a situation with their supervisor. In that context,

there is no reason for rushing blindly to do something if you are not sure that it is safe to do so. The consequences can be catastrophic. A client proudly shared with me a recent experience at their workplace. A young graduate engineer was allocated on site accommodation in a 24 hours operating site. Because of the position of the accommodation, noise levels were high and the graduate could not get any sleep. In the morning, it was his responsibility to supervise rock bolting in tunnelling work. Within an hour of the commencement of the shift, he directed that work cease and informed his supervisor that he was unable to perform the work because of fatigue. The work stopped. The shift did not proceed. It was expensive for the company. But it was the right thing to do. The reality is that many other workers in that situation would have persevered, tried to get through the shift even though they would suspect that they weren’t at their best and that the quality of their work may not be entirely reliable. But the margin for error in safety critical jobs is very low. Getting rock bolts wrong can kill scores of people. When a person’s job is to give professional advice about that, they must be confident that they are bringing all of their skills, training and experience to the task. The reason the client was proud of that example is because the young worker was not reprimanded nor criticised. Instead, he was congratulated and his actions celebrated. The quality of his amenities were investigated and found to be wanting. They were addressed. That’s what a good worker does. That’s how a good employer responds. The oil and gas industry is rife with tales of workers who have pulled the emergency stop on an offshore oil rig, believing there to be a crisis requiring production to stop. Even when they are proven wrong, their actions are celebrated. This is despite the horrendous cost of stopping production in an offshore platform. The reality is that the alternative — a missed signal foreshadowing of a disaster — is far worse. Workers need to act. Persons conducting the business or undertaking need to encourage such action. Footnotes

Footnotes 174

Ashbury v Dodson (unreported, Sunshine Magistrates’ Court, 13 August 2002, Magistrate Jones).

175

Work Health and Safety Act 2011 s 84.

176

Ibid s 85.

CHAPTER 9 ROLE OF UNIONS   Key messages • Workers have the right to consult with their representatives in relation to work health and safety matters. • Unions can play a very constructive role in improving health and safety at the workplace.

Right of entry Authorised trade union officers or employees may enter workplaces to investigate suspected work health and safety offences or to consult and advise workers.177 The latter category is designed to supplement the vertical consultation obligations by promoting union-led consultation. In workplaces where there is a constructive industrial culture, this can be beneficial. A well-trained union official can offer an independent perspective and be able to share information acquired at an industry wide level. This can improve safety outcomes. The legislation sets out detailed requirements that need to be satisfied for a person to become a WHS entry permit holder. WHS entry permit holders have the right to enter workplaces and exercise specific powers while at those workplaces.178 The permit holder must have their WHS entry permit and photographic identification available for inspection by any person, on request.179 Entry for consultation A WHS entry permit holder can enter a workplace to consult on work health and safety matters with, and provide advice on those matters to, one or more relevant workers who wish to participate in the discussion.180 To do so, however, they must give notice of the

proposed entry to the relevant PCBU during the usual working hours at that workplace at least 24 hours, but not more than 14 days, before the entry.181 Once they have entered the workplace, the WHS entry permit holder may warn any person of a risk if they reasonably believe the person to be exposed to a serious risk to their health or safety, emanating from an immediate or imminent exposure to a hazard.182 There are restrictions on this otherwise broad right, however. Firstly, the permit holder may exercise entry rights only during the usual working hours at the workplace.183 Secondly, they may only exercise a right in respect of the area of the workplace where the relevant workers work or any other work area that directly affects the health or safety of those workers.184 Importantly, the WHS entry permit holder must comply with any reasonable request by the relevant business or the person with management or control of the workplace, to comply with any work health and safety requirement that applies to the workplace and any other legislated requirement that applies to that type of workplace.185 Practically, this includes obligations in relation to induction, wearing of personal protective equipment and following other site rules such as requirements that visitors are escorted on site at all times. The permit holder is not required to disclose to the relevant business or the person with management or control of the workplace, the name of any worker at the workplace, unless the worker so consents.186 Investigation of contravention In addition to the right of entry for consultation, there is also a right of entry for investigating suspected contraventions. If entry is sought based on the investigation limb of the right of entry, it is useful to understand and seek details of the contravention alleged to have occurred. The right of entry in this respect is limited to a situation where a WHS entry permit holder reasonably suspects before entering the workplace, that a contravention of the Act has occurred or is

occurring. If so, they may enter a workplace for the purpose of inquiring into the suspected contravention, but only if it relates to, or affects, a relevant worker.187 If this suspicion is disputed by the PCBU, the onus is on the permit holder to prove that the suspicion was reasonable.188 Unless the WHS entry permit holder is entering the workplace to inspect or copy documents, they are not required to give advance notice of entry. However, they must, as soon as is reasonably practicable after entering a workplace, give notice of the entry and the suspected contravention to the relevant PCBU and to the person with management or control of the workplace, unless giving notice would defeat the purpose of the entry or unreasonably delay the permit holder in an urgent case.189 If the WHS entry permit holder is entering the workplace for the purpose of inspecting or making copies of employee records that are directly relevant to a suspected contravention, or other documents that are directly relevant to a suspected contravention and that are not held by the relevant PCBU, the permit holder must give at least 24 hours, and no more than 14 days, notice190 of the proposed entry. The notice must be given during usual working hours at that workplace.191 Powers upon entry for investigation While at the workplace, the permit holder entering may: • inspect any work system, plant, substance, structure or other thing relevant to the suspected contravention • consult with the relevant workers in relation to the suspected contravention • consult with the relevant PCBU about the suspected contravention • require the relevant PCBU to allow them to inspect, and make copies of, any document that is directly relevant to the suspected contravention and that is kept at the workplace or is accessible from a computer that is kept at the workplace, and

• warn any person whom the WHS entry permit holder reasonably believes to be exposed to a serious risk to their health or safety emanating from an immediate or imminent exposure to a hazard, of that risk.192 Obstruction of permit holders It is an offence to refuse or unduly delay entry into a workplace by a permit holder who is entitled to enter the workplace, without reasonable excuse. The burden of proving reasonable excuse is with the person claiming it.193 It is also an offence to intentionally and unreasonably hinder or obstruct a permit holder in entering a workplace or in exercising any rights at a workplace.194 Permit holder conduct A permit holder exercising or seeking to exercise rights must not intentionally and unreasonably delay, hinder or obstruct any person or disrupt any work at a workplace, or otherwise act in an improper manner.195 The permit holder must not take action with the intention of giving the impression, or reckless as to whether the impression is given, that the doing of a thing is authorised if it is not so authorised. But there is no contravention if the person has a reasonable belief that the doing of the thing is authorised.196 A person must not use or disclose information or a document obtained in an inquiry into a suspected contravention, for a purpose that is not related to the inquiry or rectifying the suspected contravention, unless: • the person reasonably believes that the use or disclosure is necessary to lessen or prevent a serious risk to a person’s health or safety or a serious threat to public health or safety • the person has reason to suspect that unlawful activity has been, is being or may be engaged in, and uses or discloses the information or document as a necessary part of an investigation of the matter or in reporting concerns to relevant persons or authorities

• the use or disclosure is required or authorised by or under law • the person reasonably believes that the use or disclosure is reasonably necessary for one or more specified actions by, or on behalf of, an enforcement body197 (within the meaning of the Privacy Act 1988), or • if the information is, or the document contains, personal information, the use or disclosure is made with the consent of the individual to whom the information relates.198 Footnotes 177

Ibid s 117(1), 121(1).

178

A register of WHS entry permit holders is published on the authorising authority’s website (usually the Industrial Relations Commission) and includes the date on which the register was last updated.

179

Work Health and Safety Act 2011 s 125.

180

Ibid s 121(1).

181

Ibid s 122.

182

Ibid s 121(2).

183

Ibid s 126.

184

Work Health and Safety Act 2011 s 127. But the rights cannot be exercised in a part of a workplace used only for residential purposes.

185

Work Health and Safety Act 2011 s 128. Section 142 of the Act allows the authorising authority to deal with a

dispute about whether such a request was reasonable. 186

Work Health and Safety Act 2011 s 130.

187

Ibid s 117.

188

Explanatory Memorandum, Model Work Health and Safety Bill [439].

189

Work Health and Safety Act 2011 s 119.

190

Regulation 27 and 29 of the Work Health and Safety Regulations 2011 set out the requirements for such notices.

191

Work Health and Safety Act 2011 s 120.

192

Ibid s 118(1).

193

Ibid s 144.

194

Ibid s 145.

195

Ibid s 146.

196

Ibid s 147.

197

For details, see s 148(d) of the Work Health and Safety Act 2011.

198

Work Health and Safety Act 2011 s 148.

CHAPTER 10 EPILOGUE: WORKER DUTY IN CONTEXT   Key messages • Worker negligence can be a crime under the criminal law. • Worker duty is one of many duties under the legislation. • Worker duty is a crucial component of the safety legislative framework.

Case example

Taking the fast lane to gaol On 5 June 1998, Van Dieu Do was driving a Volco tipper truck east along Mona Vale Road towards Mona Vale Cemetery in Sydney.199 At the time, his truck was fully laden with a gross weight of 21 tonnes. Just before the cemetery there is a hill followed by a large bend in the road. At the beginning of the downward grade of the hill there is a sign that reads “Trucks must use low gear”. Van Dieu Do was travelling up the hill within the speed limit. But on reaching the downward grade of the roadway, he accelerated very quickly. He was going so fast that he lost control of the truck. He frantically tried to put the truck into gear to control it, flashing his lights and sounding his horn to warn off other drivers as he careered out of control. He went through a roundabout, narrowly missing an oncoming car. The truck mounted the concrete apron of the roundabout, crossed to the other side of the road straight into the side of another oncoming car, causing minor damage. He

swung back to the correct side of the road, mounted a bank, left the ground, and when the truck landed again, it veered across an intersection and collided with a car, killing its driver. Still in motion, the truck then continued through a barrier and a brick wall, crashing into the front of a brick veneer house at the intersection of Mona Vale Road and Emma Street, killing a 13year-old boy in the house. The driver was charged with two counts of manslaughter, convicted and sentenced to four years imprisonment.

Figure 17 — Relationship between WHS and other laws

What is the difference between a real crime and a workplace crime? In the case example given above, the truck driver was a worker. The road happened to be his workplace but this could have been any workplace. He disobeyed traffic warnings advising him to use low gear and warning of the bend in the road. He was speeding contrary to the road rules. Two people paid for his negligence with their lives. It is sometimes easy to forget that the work health and safety legislation is not the only law relevant to a work-related accident affecting a worker or a member of the public. The criminal law is also available to regulate instances of gross negligence, for example. Indeed, many of the prosecutions discussed in this book could have easily been the subject of a prosecution under the general criminal law. Shooting a nail gun at a fellow worker or tormenting a vulnerable teen to suicide, particularly in the context of a known attempt at selfharm, are examples of cases that could have been dealt with under the general criminal law if investigated by police and prosecuted by the Director of Public Prosecutions. Where the line between the workplace and the general criminal law is drawn is never clear, and indeed it is best to view it as a continuum of behaviours which are captured by the respective laws and in many instances, overlapping. That is, much of what offends the work health and safety legislation from a worker duty perspective would constitute a crime under the general criminal law. That means that the consequences of negligence in the workplace can be very severe to both victim and perpetrator. Manslaughter, for example, attracts a maximum term of imprisonment of 25 years. The elements of the worker duty to take reasonable care, discussed in this book, provide a blueprint for avoiding those consequences and preventing accidents. It should be clear to the reader by now that the duty of workers is one of many duties under the work health and safety legislation. It is by no means the most important. The duty of officers holds that honour, with the primary duty of the PCBU being a close second. But it is also not as insignificant as its limited consideration and analysis in public

commentary and case law suggests. Workers have a crucial role to play in delivering safety outcomes. It is about time we recognise and embrace that. Footnotes 199

This description of this incident is based on R v Do [2000] NSWCCA 459.

Part VI Dealing with Regulators

CHAPTER 1 THE REGULATORY CONTEXT   Key messages • Regulators have broad powers. • Dealing with regulators involves a balancing act of ensuring compliance with obligations towards regulators and protecting your legal rights. • The broad nature of duties under safety legislation multiplies the effect of the broad powers of regulators in this area.

Case example

When a heart attack is a breach of the duty of care Sadly, the death of a worker on a construction site is an all too common occurrence, but one particular death has come to symbolise the breadth of the health and safety duties. The death is remarkable, not because of the failures causing it, but rather, because the construction company was held liable despite not causing it. On 5 July 2005, Mr Bandrowski was found dead in one of two large sediment ponds located on the Chatswood-Epping rail link site. The rail project was being constructed as a joint venture between Thiess Pty Ltd (Thiess) and Hochtief AG (Hochtief), two construction contractors. There were two sediment ponds at the site. Water and other material (resulting from tunnelling operations) were stored in these two ponds pending filtering of the water at the site filtration plant to remove the sand and related rock product. Water was pumped into the sediment ponds on an ongoing basis.

One pond was allowed to settle, such that sediment could later be removed from it by a front end loader. The sediment ponds were approximately six metres in width, 28 m long to the overflow weir and three metres deep at one end. At the other end (where the “entrance” to the sediment ponds was), there was a ramp from the level concrete slab leading down into the sediment ponds. It constituted a restricted access area of 12 m. The ramp leading into the sediment ponds was at an angle of 14 degrees. At the top of the ramp was a chain, and attached to the chain was a sign which had the words “Strictly No Admittance” written on it. There was no evidence to suggest that the sign and warning on the chain were not properly visible to anyone at the relevant time on 4 July 2005. The ponds were, however, not fenced. Near the sediment ponds there was a site shed that was known as the “laundry shed”. Behind the laundry shed was the office area. Near the laundry shed was the first aid shed. On the side of the first aid shed were five “No Parking” signs. Mr Bandrowski parked his backhoe on a flat concrete pad. There was no evidence that there was mud or any other material which could contribute to anyone slipping or tripping. The distance of the waterline in the western sediment pond from the flat concrete slab was measured at 1.9 m. On the afternoon of 4 July 2005, Mr Bandrowski had a conversation with Mr Wheeler, a leading hand at the site. The conversation took place at the top of the drive of the tunnel where personnel exit and enter the tunnel near a tag out board 25–30 m away from where the backhoe was subsequently parked. Mr Bandrowski proceeded to park his vehicle near the pond(s). A short time after the conversation, the backhoe was observed by Mr Wheeler to be parked, but with its motor still running. It was also later seen by Mr Bradford, a project manager of the joint venture. On the morning of 5 July 2005, the backhoe was in the same position. Mr Bandrowski was nowhere to be seen. Inquiries about Mr Bandrowski’s whereabouts were undertaken. During the

course of the morning, Mr Bandrowski’s hard hat was found in the adjoining pond to that in which Mr Bandrowski was found. A post mortem report indicated that Mr Bandrowski had suffered a severe heart attack and had died as a result of it. Despite that finding, Thiess and Hochtief, were respectively fined $24,750 and $16,500 in relation to the incident. The court found that there was a risk to the health and safety of Mr Bandrowski and other persons. The risk arose because two sediment ponds at the worksite were not properly fenced and thereby provided a detriment to the safety of all persons (nonemployees) at that worksite (including Mr Bandrowski), all of whom were required to perform work at the site. The court held that there was nothing to prevent members of the large workforce from coming into the vicinity of the pond. The court accepted that the defendants failed to: • provide adequate instruction and training to workers in the dangers of working near a body of water, namely a sediment pond • adequately restrict access to the sediment pond area on the premises so as to ensure that workers were not exposed to the risk of falling into a body of water, namely a sediment pond • ensure that there were adequate control measures, including but not limited to physical barriers and adequate signage, in place at the premises so as to eliminate the risks of working in the vicinity of the sediment pond, and • provide adequate supervision to workers working at the premises in the vicinity of the sediment pond. Those failures existed notwithstanding that Mr Bandrowski’s death was not caused by them.

Hochtief1 demonstrates the breadth of the duty of care under health and safety laws. Even when a death is not caused by the business or undertaking, the subsequent investigation by the regulator may still uncover breaches of the legislation which result in a prosecution. Ultimate test of strategy Dealing with regulators is the ultimate test of strategy. A regulator has broad coercive powers, the resources of the state at their disposal, no commercial drivers holding them back and is often staffed by personnel drawn to those roles by their belief in the cause pursued by that regulator, be it the protection of the health and safety of workers, members of the public, the environment or consumers. Against those odds, most businesses retreat to their instincts — fight or flight. They either fold and “give away the farm”, being eager to please in a naïve attempt to “avoid trouble” (even falling for the — “if you co-operate we will go easy on you” — line). Or, they put up the shutters and steel themselves for the fight. Neither is an effective strategy. Approaches to dealing with regulators This book advocates a far more “nuanced approach” — an approach that balances the need to co-operate with regulators and foster a good working relationship with them, with the need to protect the legal rights of the relevant duty holders. Figure 1 — Legal risk continuum in dealing with regulators

“Eagerness to please” serves only to hasten the path to conviction and penalty — often to a greater extent than would otherwise have been warranted. Those who advocate this approach simply do not understand the mindset of a regulator. Faced with excessive

workload, a choice between a certain victory in court (because of the eager compliance of a business) and a difficult evidentiary fight, the inspectors and those who advise them would pragmatically choose the former in most situations. The extent of the charges depends on the public interest and not the extent of compliant behaviour in the aftermath of an incident. The regulator expects and demands compliance after the incident — it makes the job of the regulator easier. You get no extra credit for that. You simply confirm in the mind of the regulator your guilt and that you are deserving of what will be handed to you. Conversely, the “bunker down and fight” approach is equally ineffective. The rationale behind this approach appeals to tough business people and is an instinctive response to a perceived attack. Advocates of this approach tend to be singularly focused on the outcome of litigation, but in doing so they make the prospect of litigation a foregone conclusion. This approach is one-dimensional and fails to recognise the competing priorities of businesses. Such an approach can often play out very badly in the media, damaging an organisation’s reputation in the process. This approach may result in an organisation being tried in the “Court of Public Opinion” long before it steps into a court room to defend itself.2 This approach also brings out the worst in certain types of inspectors who are accustomed to getting their way and react badly to people challenging their authority. In one of the few examples of these issues being aired in court, Justice Staunton observed the following about the dealings between a WorkCover NSW inspector and a personal defendant: “There is no doubt, as the evidence unfolded before me, that there was significant animosity between Inspector Mansell, the authorised prosecutor in these proceedings, and Mr Smith. Mr Smith took great offence to Inspector Mansell seeking to interview him in relation to this matter and advising him, in seeking that interview, that he was making inquiries only in relation to the corporate defendant. In short, Inspector Mansell gave certain assurances to Mr Smith that in seeking to interview him, he was

doing so with a view to prosecuting the corporate defendant rather than Mr Smith himself. It is abundantly clear, given the difficulty that Inspector Mansell had in securing that interview and the whole tenor and tone of the interview as it progressed, that there erupted between Inspector Mansell and Mr Smith what can only be described as naked hostility. That much was abundantly evident in both the demeanour and the behaviour of both Inspector Mansell and Mr Smith in their evidence before me. The genesis of Mr Smith’s antagonism clearly lay in the fact that, notwithstanding the assurances given to him by Inspector Mansell as to the basis on which he participated in the record of interview, Inspector Mansell, on behalf of WorkCover, then ultimately proceeded to issue a summons against Mr Smith as well as the corporate defendant. Understandably, Mr Smith felt that Inspector Mansell had gone back on his word and he perceived this prosecution of him particularly as ‘malicious’. For his part, it must be said that I was not impressed by Inspector Mansell’s seeming indifference, in giving his evidence, that he went back on what was an assurance given by him, as an Inspector of WorkCover, and subsequently proceeded to prosecute Mr Smith without any subsequent advice or warning given to him. A prosecutor’s discretion in relation to the bringing of prosecutions is undoubtedly wide but that discretion should not be used without any consideration as to the rights of the individuals concerned. True it is, the record of interview conducted with Mr Smith, which was ultimately admitted before me, conveyed no information that was in any way damaging to Mr Smith or to the corporate defendant. But that is not the point. Let it be said now, in the strongest terms, that I do not condone, and nor should it be said that this Court should condone the behaviour of Inspector Mansell in this matter. It is simply unacceptable for inspectors of WorkCover to be given the authority to prosecute and then to use that authority in the way that Inspector Mansell did with no regard to Mr Smith’s right to be advised and properly warned. I would not wish to encounter a repeat of such an action by Inspector Mansell in the future.”3

That is, a personal defendant was prosecuted because an inspector developed a dislike of him. Antagonising a person who is vested with powers more extensive than law enforcement officers in the police services will usually not pay off. Nor will the court leap to an organisation’s aid. Once prosecuted, the substantive matters are the court’s primary considerations. The defendant in the above proceedings was convicted despite her Honour’s comments. To read more on this case, see the first book of this series Due Diligence: Duty of Officers. Dealing effectively with regulators requires much more finesse. It requires co-operating on issues that are not crucial to your defence and, at the same time, invoking your rights in relation to matters that are more critical to your case. It requires taking strategic points where it matters and being prepared to run them to ground. That is the approach advocated in this book. While this book is about dealing with work health and safety regulators, it is important to appreciate in devising any strategy, that work health and safety regulators are not the only relevant regulators. Often work health and safety issues overlap with issues concerning the environment, product safety, consumer protection, competition, corporations law, criminal law and even occasionally taxation compliance. Figure 2 — Overlap between different regulators

Footnotes 1

Hochtief was a NSWIRC decision: Thiess Pty Ltd and Anor v Inspector Jones (WorkCover Authority of New South Wales) [2009] NSWIRComm 77. There was also an application for judicial review of the decision in: Thiess Pty Limited v Industrial Court of New South Wales [2010] NSWCA 252. Application was dismissed.

2

For a discussion of communication strategies in the context of incidents, see the second book of this series, Due Diligence: Incident Notification, Management and Investigation (CCH, 2017) Ch 5.

3

WorkCover Authority of New South Wales (Inspector Mansell) v Daly Smith Corporation & Ors [2004] NSWIRComm 349 [123]–[124].

CHAPTER 2 KNOW THY ENEMY Key messages • There are multiple regulators regulating health and safety issues with sometimes overlapping jurisdictions. • Regulatory investigations after an incident are primarily concerned with determining whether there has been a breach of the relevant laws. • Regulators have a discretion whether to use prosecution as the relevant enforcement measure or whether to use a lesser enforcement option.

Case example

Construction incident demonstrates overlap between regulators The following incident and series of prosecutions illustrates the complexity of the regulatory environment in operations at most sites. Abigroup Contractors Pty Ltd (Abigroup) was engaged by Australian Rail Track Corporation Ltd (ARTC) to construct an extension and upgrade of the rail track at Allandale and Farley in New South Wales.4 Abigroup engaged Boom Logistics to provide mobile crane hire and services, including the supply of a 200 tonne all terrain mobile crane to provide lifting services at the site. On 24 March 2009, work was being undertaken at the site, which involved the replacement of a section of railway line and supporting concrete sleepers, when an incident took place, killing one worker and seriously injuring two others. The incident occurred when installation workers removed the Pandrol clips on the railway panels being positioned into place which, unbeknown to them, were under load (ie their weight was partly carried by the

crane). By removing some of the clips, the integrity of the remaining clips weakened, leading to extra tension being placed on the remaining clips. This caused a number of rail lines to suddenly spring free from the rail panel and strike the three workers. The incident was investigated by Comcare, the Independent Transport Safety Regulator (ITSR) as well as WorkCover NSW. Comcare investigated the incident because it was a construction project on behalf of ARTC, a federal agency. The ITSR investigated the incident because an accredited rail operator was involved (ie ARTC). WorkCover NSW investigated the incident because several state-based contractors were involved.

Who are the regulators? As the Farley incident demonstrates, health and safety risks are regulated by a myriad of often overlapping regulators. Similarly, in the maritime environment, complexity occurs in ports at the point of interface between the Australian Maritime Safety Authority (AMSA) and state-based work health and safety WHS regulators. Work health and safety In the context of work, health and safety (WHS) laws, the legislation is regulated by a combination of state and federal agencies. For the federal public sector, the regulator is Comcare.5 Most other businesses are regulated by the following state and territory WHS regulators: • WorkSafe ACT • SafeWork NSW • NT WorkSafe • Workplace Health and Safety Queensland

• SafeWork SA • WorkSafe Tasmania • WorkSafe Victoria, and • WorkSafe WA. Other regulators Mining operations are regulated by separate mining inspectorates in New South Wales, Queensland and Western Australia: • NSW Department of Investment — Resources Regulator • Queensland Department of Natural Resources and Mines, and • WA Department of Mines and Petroleum. Rail operations are regulated by rail safety regulators, which (for most jurisdictions) is the National Rail Safety Regulator (ie in New South Wales, Victoria, the Northern Territory, South Australia, Western Australia and Tasmania). Road safety and the transportation of goods by road are regulated by roads and traffic agencies, such as Roads and Maritime Services in New South Wales. Food safety is regulated by both local councils and the various state health departments. The Australian Maritime Safety Authority (AMSA) has responsibility for the enforcement of maritime safety on non-government ships. In addition, consumer product safety is regulated by the Australian Competition and Consumer Commission (ACCC). The ACCC regulates compliance with the Competition and Consumer Act 2010 (Cth). There is also an overlap between WHS and environmental regulators, particularly in the areas of hazardous chemicals, major hazard facilities and noise management. As such, any regulator management

strategy needs to factor in that overlap. State and federal police services also have a role as regulators. For example, certain conduct arising from work may well breach broader criminal laws (eg conduct may amount to manslaughter). Certain failings by a business or undertaking may constitute a breach of laws dealing with the prevention of terrorist activities.6 To formulate an appropriate strategy, one needs to understand the role and functions of a regulator. Functions of a WHS regulator As their name suggests, regulators exist to “regulate”. That is, they assist in establishing the regulatory policy settings and enforce the laws passed by Parliament. Consistent with that, under the Work Health and Safety Act 2011 (Cth) (WHS Act), the regulator has the following functions to: • advise and make recommendations to the minister and report on the operation and effectiveness of the WHS legislation • monitor and enforce compliance with the WHS legislation • provide advice and information on WHS to duty holders under this Act and to the community • collect, analyse and publish statistics relating to WHS • foster a co-operative, consultative relationship between duty holders and the persons to whom they owe duties and their representatives in relation to WHS matters • promote and support education and training on matters relating to WHS • engage in, promote and co-ordinate the sharing of information to achieve the object of this Act, including the sharing of information with a corresponding regulator, and • conduct and defend proceedings under the Act before a court or

tribunal.7 The monitoring and enforcement of compliance with the WHS legislation is the function of inspectors. Functions of inspectors As their name suggests, the role of inspectors is to conduct inspections to monitor compliance with the legislation. It is not to write policies and procedures for workplaces. Visits to a workplace are primarily concerned with making an assessment of the extent of compliance with the laws and, based on that assessment, making a recommendation on the required regulatory response. That response may be providing information and advice. But in most cases, the response will involve considering whether there is sufficient evidence to commence proceedings. Consistent with this, an inspector has the following functions and powers under the WHS Act to: • provide information and advice about compliance with the Act • assist in the resolution of: – work health and safety issues at workplaces – issues related to access to a workplace by an assistant to a health and safety representative, and – issues related to the exercise or purported exercise of a right of entry • review disputed provisional improvement notices • require compliance with the Act through the issuing of notices • investigate contraventions of the Act and assist in the prosecution of offences, and • attend coronial inquests in relation to work-related deaths and

examine witnesses.8 In practice, an investigation by an inspector in the aftermath of a serious incident is primarily concerned with collecting information for a brief of evidence to consider whether legal proceedings should be commenced. That is not to say that every investigation will lead to a prosecution. It is possible that after an extensive investigation has taken place, the inspector recommends that no proceedings should be commenced. Most serious incident investigations, however, will result in a prosecution. It is also important to appreciate that the inspector merely makes the recommendation. There is an internal regulatory process, which considers that recommendation and makes the decision. This is important for organisations to understand because often the business or undertaking invests a great deal of effort appeasing the inspector, believing them to be the relevant decision-maker. While their recommendation is important, it is by no means conclusive. There are many prosecution briefs in commenced proceedings which disclose a recommendation of an inspector not to proceed with a prosecution, which has been clearly overruled. To understand the scale of the challenge, one needs to appreciate the breadth of the duties being regulated. Quite often companies get distracted by the circumstances surrounding the regulatory investigation — the accident being investigated or the complaint by a worker which initiated the regulatory inquiry. Whatever the cause of the initiation of a regulatory investigation, once commenced, the investigation is only concerned with assessing the extent of compliance with the relevant legal obligations. That is, it is not unusual for a company not to have directly caused a fatality but to nevertheless be in breach of a relevant duty. This was the case in Hochtief,9 discussed in Chapter ¶1. Compliance and enforcement policy The Commonwealth, state and territory governments have agreed to a National Compliance and Enforcement Policy (the Policy). The Policy aims to foster a consistent approach to enforcement by the regulators.

It provides the blueprint for enforcement activities by WHS regulators. The Policy recognises that WHS laws provide regulators with a range of functions. These include: • providing advice and information to duty holders and the community • monitoring and enforcing compliance with WHS laws • fostering co-operative, consultative relationships between duty holders and persons to whom they owe duties and their representatives • sharing information with other regulators, and • conducting and defending proceedings under WHS laws.10 The Policy provides that the regulators will “seek to use an effective mix of positive motivators, compliance monitoring and deterrents to encourage and secure the highest possible levels of compliance with work health and safety laws”.11 In doing so, there is a need to balance a number of considerations. These include: • the community’s expectation that businesses and undertakings will “be monitored and held accountable” if they do not comply with WHS laws12 • the need to support and to build capability to achieve compliance with WHS,13 and • the need to work with industry and other stakeholders to “promote innovation and continuous improvements in health and safety standards”.14 Compliance monitoring of regulators includes inspections, audits and other verification activities. The aim of compliance monitoring is to enhance WHS management practices and achieve sustainable

compliance with WHS laws.15 The Policy provides a range of options for deterring breaches of the laws. These include: • detecting and dealing with alleged breaches of the WHS laws • undertaking inspections, audits and investigations of alleged breaches of WHS laws • taking appropriate enforcement action in response to breaches • seeking appropriate sentencing outcomes in prosecutions, and • publishing information regarding the nature and outcome of compliance and enforcement activities.16 When will investigations be undertaken? According to the Policy, investigations are undertaken for a range of reasons. These include: • determining the causes of an incident • assessing compliance with WHS laws • determining what action may be needed to prevent a further occurrence, and • determining what action may be appropriate to enforce compliance with WHS laws.17 Crucially, it highlights that “resources available for investigation of incidents are devoted to the most serious cases”.18 Typically, these are “Notifiable Incidents”.19 As the policy indicates: “The regulators will generally carry out a full investigation of a work-related death, unless there are compelling reasons for not doing so”.20 The Policy provides the following criteria for the triage of the balance of incidents and complaints:

• “the severity and scale of potential or actual harm • the seriousness of any potential breach of the law • the duty holder’s compliance history, including such matters as prior convictions and notices issued • whether the duty holder was licensed or authorised to undertake certain types [of] work • strategic enforcement priorities • the practicality of achieving results, and • the wider relevance of the event, including matters of significant community concern.”21 In practice, the resources of regulators are such that if the regulator takes the trouble to undertake an extensive investigation of an incident, it would be rare for that incident not to progress to a prosecution or at least an enforceable undertaking. The Policy sets out the following priority areas for investigations: • “work-related fatalities and serious injuries or where there is a risk of such outcomes • non-compliance with inspectors’ notices or directions • offences against inspectors • offences against health and safety representatives and matters relating to entry permit holders • discrimination against workers on the basis of their work health and safety activities, and • failure to notify incidents.”22 As discussed in subsequent Chapters, the regulator has a range of

enforcement options available to them. These options include providing advice, issuing notices and initiating prosecution proceedings (to name a few). Enforcement activity levels Figure 3 (below) presents the Enforcement Pyramid, which is a key diagram in the Policy. The pyramid is divided into levels of enforcement activity. Proportionally, most regulator activity takes place at the bottom of the triangle, during the Encouraging and Assisting Compliance (or “advisory”) phase. Activities in this phase include the dissemination of information, launch of various campaigns aimed at raising awareness on a particular work hazard, or increasing compliance in a particular context. However, that is not to say that an interaction with a regulator in relation to a fatality or other serious incident would be escalated, based on the pyramid below. The pyramid merely recognises that regulatory activity encompasses much more than these sorts of incidents. Those sorts of incidents are generally a small proportion of the overall incidents that occur. In saying that, few serious incidents would escape the Sanctions portion of the Enforcement Pyramid (see the top of the pyramid). In that respect, the Enforcement Pyramid can often look more like a split pyramid in practice, where the serious incidents are simply dealt with through sanctions, regardless of the compliance record of the regulated entity or person. Figure 3 — Enforcement Pyramid23

Criteria for choice of enforcement activity In deciding on the most appropriate action to take, the Policy recommends that regulators should be guided by the following considerations: • the adverse effect (ie the extent of the risk, the seriousness of the breach and the actual or potential consequences) • the culpability of the duty holder (ie how far below acceptable standards the conduct falls and the extent to which the duty holder contributed to the risk)

• the compliance history and attitude of the duty holder • if it is a repeat offence, or it is likely that the offence will be repeated • whether the duty holder was authorised to undertake certain types of work • the impact of enforcement on encouragement or deterrence • any mitigating or aggravating circumstances (these include efforts undertaken by the duty holder to control risks) • whether the risk to health and safety is imminent or immediate, and • whether the safety issue can be rectified in the presence of an inspector, or the inspector is satisfied with a plan to remedy the breach.24 Footnotes 4

The following account is based on publically available information set out in the decision Inspector Christensen v Boom Logistics Ltd [2012] NSWIRComm 95 and Inspector Christensen v Hebron Holdings Pty Limited (formerly known as Taylor Railtrack Pty Limited) [2012] NSWIRComm 31. Boom Logistics was convicted and fined $100,000. Taylor Railtrack was convicted and fined $83,000. The author acted for Abigroup in relation to the defence of charges brought against it regarding this incident. Abigroup was convicted of breach of s 8(2) and fined $200,000: Inspector Christensen v Lend Lease Engineering Pty Ptd [2014] NSWIRComm 45. MVM Rail Pty Ltd was convicted and fined a total of $160,000 in relation to the same incident: Inspector Christensen v MVM Rail [2013] NSWIRComm 89.

5

Comcare is currently also the regulator for Comcare self-

insured private sector companies, such as the Commonwealth Bank of Australia, John Holland and Optus. 6

See M Tooma, Safety Security Health and Environment Law, (Federation Press, 2nd ed, 2012) for a discussion of the intersection between health, safety and security issues.

7

Work Health and Safety Act 2011 s 152.

8

Ibid s 160.

9

Hochtief was a NSWIRC decision: Thiess Pty Ltd and Anor v Inspector Jones (WorkCover Authority of New South Wales) [2009] NSWIRComm 77. There was also an application for judicial review of the decision in: Thiess Pty Limited v Industrial Court of New South Wales [2010] NSWCA 252. The application was dismissed.

10

Safe Work Australia, National Compliance and Enforcement Policy (2011) 1. See www.safeworkaustralia.gov.au.

11

Ibid 2.

12

Ibid, Emphasis added.

13

Ibid.

14

Ibid.

15

Ibid.

16

Ibid 3.

17

Ibid 4.

18

Ibid.

19

“Notifiable Incidents” must be notified to the regulator. There are three categories of notifiable incidents: (1) the death of a person; (2) a serious injury or illness of a person; or (3) a dangerous incident. More information on notifiable incidents is available in another book of this series — Due Diligence: Incident Notification, Management and Investigation. See also the Work Health and Safety Act 2011 s 35.

20

Safe Work Australia, National Compliance and Enforcement Policy, (2011) 4. See www.safeworkaustralia.gov.au.

21

Ibid 4–5.

22

Ibid 5.

23

Ibid 6.

24

Ibid 7.

CHAPTER 3 THE REGULATED COMMUNITY Key messages • Work health and safety (WHS) laws are broad. • There are multiple overlapping duty holders. • An investigation that may begin with one issue, may uncover other issues. • Just because you did not cause an accident does not mean you are not liable.

Who is liable for what? The extent of the duty under WHS laws is best demonstrated by an iconic construction industry safety disaster — the Kogarah Gas Disaster.25 Case example

Kogarah Gas Disaster On 4 December 1995, an explosion occurred in Kogarah, New South Wales, which killed two people and injured a number of other persons, including members of the NSW Police Force. A second explosion occurred approximately one-and-a-half hours later, injuring several fire officers. The incident occurred during the upgrade of the Kogarah railway station. A demolition contractor on site, Joseph & Sons Contracting Pty Ltd, excavated an area where gas services had not been isolated, and came into contact with a charged gas line. The construction work was being undertaken by Abigroup Contractors Pty Ltd (Abigroup). Joseph & Sons Contracting Pty Ltd (Joseph & Sons) was a subcontractor to Abigroup and performing demolition work on the project.

An employee of AGL Gas Networks Limited (AGL) had previously attended the site and cut and capped the gas supply line to Shop 7 Railway Parade, Kogarah. The gas supply line was cut and capped within one metre of the alignment of the building. This left approximately two metres of the charged gas supply line within the Kogarah Station Upgrade site where construction was designed to occur. The gas supply line remained charged. While Abigroup was engaged directly by the State Rail Authority (SRA), SRA engaged Capital Works Management (CWM) as project manager for the railway interchange upgrade program. This included Kogarah Station. Capital Works Management was an unincorporated Joint Venture (JV) consisting of Group One Interiors Pty Ltd (a construction management company), Edwards Madigan Torzillo Briggs Pty Ltd (EMTB — an architectural company), TMG International Pty Ltd (TMG — a transport systems company) and Ove Arup (a consulting engineering group).26 By having a JV, this meant that the resources of a group of companies could be pooled (each having distinct areas of expertise) and a consortium could be created that would jointly tender for the project management services contract for the railway upgrade project.27 In the pooling of resources, it was intended that TMG would provide project management, rail systems and engineering expertise, Ove Arup would provide project management and engineering expertise, EMTB would provide architectural design management expertise and Group One would provide construction management expertise, including the superintendence of construction contracts.28 All employees of the JV were to be seconded from the staff of the participants.29 Unless otherwise determined by the Management Committee, any staff specifically engaged by the JV for the program were to be engaged by a participant who had expertise in the particular area (ie the area in which that employee was to operate), and thereafter, that employee would be seconded to the JV.30 The on-costs of employing an employee (including workers

compensation, payroll tax, annual leave and long service leave) were borne by the participant that seconded the employee to the JV.31 Each of the four participants of the JV held an equal share of 25% in the JV.32 The participants owned the assets of the JV as tenants in common in accordance with their respective interests.33 Each participant committed itself and all reasonably necessary resources to the JV and agreed to do all things necessary to enable the project to be carried out.34 Each month there was accounting to each participant, of its interest in the receipts in respect of the previous month.35 The Management Committee was created with a representative from each of the four companies. Each participant was to retain intellectual property supplied for the purposes of the JV by that participant but, where intellectual property was developed by the JV, it was to be owned by the participants in accordance with their respective interests, being an equal share of 25% each.36 Pursuant to the terms of their engagement, CWM appointed a superintendent charged with the duty of ensuring the work was conducted in accordance with contracts in a safe manner without risks to health. The Management Committee had power to require a participant to remove an employee from the JV where that staff member’s performance was unsatisfactory or where the client required that person’s removal.37 Once removed, the participant providing that employee was to replace the seconded employee with another employee of equivalent expertise and fill the vacant position.38 The cost of the secondment of employees to the JV was borne by the JV.39 The Management Committee had “full and complete power and authority” to give all approvals and to make all decisions and determinations required or permitted to be given or made by the participants under the agreement, including the power to “supervise the activities” of the JV.40 All approvals, decisions and determinations given or made by the Management Committee

under the Agreement were “binding on each and all of the participants”.41 The Management Committee was to ensure that the JV carried out its duties and obligations in accordance with the contract, established good management methods and practices, annual programs, and all applicable laws, regulations, orders and rules.42 Under the JV agreement, the powers of the Management Committee were broad.43 The Management Committee was also to provide monthly progress reports to the participants.44 There was a division of responsibilities between the participants in the JV. Within that division of responsibility, construction management lay with Group One and the super-intendent it nominated. Apart from its position on the Management Committee, Ove Arup had no legal right to give a direction to any other participant. A number of prosecutions resulted from the incident. The demolition contractor, Joseph & Son, was prosecuted and fined a total of $1.36m in relation to six charges arising from the incident.45 Mr Robert Josef, the Managing Director of Josef & Son, was also personally prosecuted and fined a total of $70,000 in relation to four charges arising from the incident.46 The principal contractor, Abigroup, was prosecuted in relation to the same incident and fined a total of $1.1m in relation to five offences.47 AGL was prosecuted and convicted in relation to the same incident. It was fined a total of $325,000 in relation to two charges arising from the incident. Ove Arup was prosecuted, convicted and fined a total of $300,000 in relation to the two charges arising from the incident.48 The other three joint venture “partners” in the CWM, Group One Interiors Pty Ltd, EMTB and TMG, were not prosecuted. The SRA was prosecuted, but the prosecution was out of time and therefore dismissed. This case demonstrates just how far the net may be cast. It also illustrates the prosecutorial discretion. It is difficult to understand

why Ove Arup would be any more culpable than its three other joint venture partners. Certainly, there is nothing in the judgment that would suggest that Group One Interiors Pty Ltd, TMG and EMTB would not be equally liable in relation to this incident. But that was little comfort for Ove Arup. The decision to prosecute is made by the regulator. The court’s role is to determine liability, and if liability is found, sentence the offender.

Who is the regulated community? The legislation imposes duties on any person(s) conducting a business or undertaking (PCBU), their officers and their workers. The duty of officers was discussed in the first book of this series — Due Diligence: Duty of Officers. The duty of workers was discussed in the fourth book of this series — Due Diligence: Duty of Workers. The duty of PCBU is discussed in greater detail in another book of this series — Due Diligence: Duty of Persons Conducting a Business or Undertaking. Who is a person conducting a business or undertaking? The definition of PCBU is deliberately broad, as is the primary duty of care imposed on such persons.49 The breadth of the duty is intended to capture every business or “business-like” activity. A person may conduct a business or undertaking alone or with someone else. They may do so for profit or gain or not-for-profit or gain. They can do so as partners in a partnership or unincorporated association, in which case each partner will be a PCBU. But a person is not conducting a business or undertaking merely because they are a worker or an officer of an entity which is conducting a business or undertaking. Such persons, workers and officers, have duties of their own. The duty of officers is touched on later in this chapter. It is, however, also covered in more depth in the first book of this series — Due Diligence: Duty of Officers. The duty of workers is covered in the

fourth book of this series — Due Diligence: Worker Rights and Duties. There is a limited exemption for volunteer associations. These associations consist of a group of volunteers working together for one or more community purpose(s) where none of the volunteers employs any person to carry out work for the volunteer association. Liability under modern corporate structures A company is regarded as a PCBU under the WHS legislation. Even a holding company within a group of companies is conducting a business or undertaking. Each corporate entity within a corporate group will be regarded as a separate duty holder conducting a business or undertaking. In a typical modern structure, a company in a group of companies which employs staff will be conducting a business or undertaking of labour supply. Therefore, it will be held responsible for risks arising from that activity and all related or incidental activities. This is the equivalent to the traditional duty of employers. The PCBU in that context has a duty to ensure, so far as is reasonably practicable, the health and safety of workers. The duty extends to workers directly engaged by them, caused to be engaged by them and workers whose activities they can influence or direct. But this is not where the reach of the primary duty of care of PCBU ends. The duty extends much further and covers all business activities or undertakings of companies affecting the health and safety of persons. A company in a corporate group which takes out the lease or owns the work premises will be relevantly conducting the business or undertaking of control or management of premises used as a place of work. It will, therefore, have obligations and be liable in relation to risks arising from the premises, and any related or incidental activities associated with that undertaking. The legislation puts that issue beyond doubt by listing a PCBU involving management or control of a workplace as a specific example of a PCBU and providing further duties on such persons to ensure the safety of those workplaces.50 A company in the group which owns or leases the plant and fixtures used (including mobile plant), will be relevantly conducting the

business or undertaking of supply of plant and fixtures for use at work. Therefore, it will have obligations and liabilities in relation to any risks arising from that business or undertaking, including any related or incidental activities. Again, the legislation puts that issue beyond doubt by listing a PCBU involving management or control of fixtures, fittings or plant at a workplace as an example of a PCBU and providing further duties on such persons to ensure the safety of those fixtures, fitting or plant.51 A company in the group which conducts the customer-facing transaction, processes the invoices or processes the payroll, will also be relevantly conducting a business or undertaking. Similarly, it will be liable for risks arising from its activities, including any related or incidental activities. In that regard, the legislation requires the PCBU to ensure, so far as is reasonably practicable, that other persons are not put at risk from work carried out as part of the business or undertaking of the PCBU.52 Clearly, those activities in the structure outlined above overlap. While some corporate groups use multiple entities within the group for specific business activities or aspects of the undertaking, some use simpler structures. The legislation requires each entity to discharge its obligation to the full extent of its control over an issue and to consult, co-ordinate and co-operate with the other entities in relation to the discharge of their respective duties. What is the duty of the company? PCBUs have a duty to ensure, so far as reasonably practicable, the health and safety of workers while the workers are at work in the business or undertaking engaged. That includes workers who are not directly engaged by the PCBU, but are caused to be engaged by them, or whose activities in carrying out work are influenced or directed by the person. A PCBU must also ensure, so far as reasonably practicable, that the health and safety of other persons is not put at risk from work carried out as part of the conduct of the business or undertaking. Figure 4 — Primary duty of care of company

That means that in addition to the duty to workers, the company has to ensure that it does not create a risk to health and safety to anyone in the conduct of its business activities.53 As indicated previously, a company also has a duty to its workers and other workers it causes to be engaged, including contractors, subcontractors and employees of contractors and subcontractors. It also has a duty to other workers whose activities are influenced or directed by it. That includes labour hire workers that its subcontractors may use, for example, or subcontractors of its subcontractors, such as transport companies, used to deliver plant or components for the services of its contractors. A company must ensure, so far as is reasonably practicable, the health and safety of workers engaged directly or indirectly by them, and workers whose activities are influenced or directed by them. The duty is very broad and is not limited to what happens at the company’s workplace. “Workers” means anyone performing work, including contractors, subcontractors, employees of contractors or subcontractors, labour hire workers, apprentices and trainees, outworkers, students on work experience and volunteers, not just employees.

Figure 5 — Definition of worker

A company also has a duty to consult workers in relation to matters affecting their health and safety. It is required to consult, co-operate and co-ordinate with other duty holders in relation to discharging the respective duties in areas of overlap. It has obligations in relation to reporting of incidents. There are also extensive regimes aimed at protecting workers and prospective workers against victimisation on safety grounds. The legislation creates powers for inspectors (ie extensive investigation powers) and union officials (ie entry to workplaces). The obligation is, therefore, imposed on a company to ensure that it does not obstruct or hinder the exercise of those powers.

The regulations impose specific obligations on a company in relation to the management of risks (generally) and the risks associated with certain common hazards, such as the management of chemicals, plant and fixtures, electrical work, construction work, and work involving hazardous manual handling or the risk of, for example, a fall. A company must have a comprehensive system to manage the risks associated with its operations in order to discharge the above obligations. Breaches of the duties of a company are criminal in nature and attract a maximum penalty of up to $3m for serious offences. Reasonable practicability As broad as it is, the duty of a company is still limited by reasonable practicability. Reasonable practicability is a balancing exercise (see Figure 6). It means doing what is reasonably able to be done in relation to ensuring health and safety, taking into account and weighing up all relevant matters including on the one hand, the likelihood of the hazard or the risk concerned occurring, the degree of harm that might result from the hazard or the risk, what the person concerned knows, or ought reasonably to know, about the hazard or the risk and ways of eliminating or minimising the risk; and, on the other, the availability and suitability of ways to eliminate or minimise the risk and the cost associated with available ways of eliminating or minimising the risk. The concept is not new in the law. It has been around for over a century and there is a large body of law interpreting that weighing-up exercise. It is a point-in-time assessment. That is, the weighing-up exercise is considered from the perspective of what was known about the risk (both in terms of likelihood and consequences) and the relevant controls and costs, at the point in time when the relevant decision was made giving rise to the alleged breach. The assessment, therefore, is not retrospective. Figure 6 — Reasonable practicability

Duty of officers Officers of PCBUs have a duty to exercise due diligence to ensure compliance by the PCBU with the legal duties and obligations under WHS legislation. As discussed in the first book of this series — Due Diligence: Duty of Officers, the due diligence duty is a duty imposed on officers personally. It is separate from the duty imposed on their company. The duty is proactive. In essence, it is a duty to put in place a corporate governance regime. That is, it can be breached merely for failing to do so, even though there may not have been a WHS incident at the officer’s company. This is important in the context of regulatory enforcement. Figure 7 — Relationship between different duties

Due diligence is defined under the model WHS legislation to consist of six elements: 1. Knowledge of WHS matters. 2. Understanding of the nature of the operations of the business and the hazards and risks associated with those operations. 3. Resources and processes. 4. Information regarding incidents, hazards and risks and responding in a timely way to that information. 5. Legal compliance. 6. Verify the provision and use of these resources and processes. These are presented in Figure 8 following. Figure 8 — Elements of due diligence

Footnotes 25

This case study is based on information presented in M Tooma, Safety Security Health and Environment Law (Federation Press, 2nd ed, 2012).

26

WorkCover Authority of New South Wales (Inspector Mansell) v Ove Arup Pty Ltd [2006] NSWIRComm 240 [13].

27

Ibid [15].

28

Ibid.

29

Ibid [190].

30

Ibid.

31

Ibid.

32

Ibid [191].

33

Ibid.

34

Ibid.

35

Ibid.

36

Ibid.

37

Ibid [192].

38

Ibid.

39

Ibid.

40

Ibid [193].

41

Ibid.

42

Ibid [194].

43

Ibid [195].

44

Ibid.

45

WorkCover Authority of NSW (Inspector Maltby) v Josef & Sons Contracting Pty Limited (In Liquidation) [2005] NSWIRComm 425 (Schmidt J).

46

WorkCover Authority of New South Wales (Inspector Mansell) v Josef [2004] NSWIRComm 323 (Wright P, Walton VP and Staunton J).

47

Abigroup Contractors Pty Limited v WorkCover Authority of New South Wales (Inspector Maltby) [2004] NSWIRComm 270 (Wright P, Walton VP and Staunton J).

48

The first charge covered the disconnection of the gas and the inadequacies of severing the line at a point which left it considerably within the demolition site, for which the defendant was fined $125,000. The period of the second offence covers the substantial development of the site, steps taken to identify the location of the pipe by fairly rudimentary means, and the removal of that identification in contemplation of the bringing onto the site, heavy machinery to complete the task of demolition for which the defendant was fined $175,000.

49

Section 5 of the Work Health and Safety Act 2011 (Cth); Work Health and Safety Act 2011 (NSW); Work Health and Safety Act 2011 (Qld); Work Health and Safety Act 2011 (ACT); Work Health and Safety Act 2011 (NT); Work Health and Safety Act 2012 (SA); and Work Health and Safety Act 2012 (Tas). Further references to the work health and safety legislation will refer to Work Health and Safety Act 2011.

50

Work Health and Safety Act 2011 s 20.

51

Ibid s 21.

52

Ibid s 19(2).

53

WorkSafe v Rawson Homes [2016] NSWDC 237.

CHAPTER 4 REGULATORY OPTIONS   Key messages • Work health and safety (WHS) regulators have an escalating hierarchy of regulatory enforcement options available to them. • Options range from advice and guidance to prosecutions.

Advice or guidance While statistically, advice and guidance is the most extensive role for WHS regulators, the bulk of that activity is generic and aimed at a broad audience. Some duty holders, however, may come to the regulator’s attention on minor breaches. In such cases, the use of advice and guidance is appropriate as a regulatory intervention. Advice and guidance aims to raise awareness of WHS rights and obligations.54 Those activities help duty holders know how to comply with WHS laws and build their capability to address WHS issues and achieve compliance.55 If satisfied that a person has taken “timely and satisfactory steps to remedy a breach at the time of detection or through agreed action” in response to an advice given, the regulator may decide to take no further action.56 Figure 9 — Typical regulatory sequence

Regulatory notices An inspector may issue a non-disturbance notice to the person with management or control of a workplace if the inspector reasonably believes that it is necessary to do so to facilitate the exercise of his or her compliance powers.57 An inspector may also issue an improvement notice and/or prohibition notice. The aim of issuing improvement and prohibition notices is to ensure that non-compliance with WHS laws and serious risks, are remedied.58 Improvement notices An inspector may issue an improvement notice if the inspector reasonably believes that a person is contravening or has contravened a provision of the Work Health and Safety Act 2011 (WHS Act) in circumstances that make it likely that the contravention will continue. The notice may direct the person to: • remedy the contravention • prevent a likely contravention from occurring, or • remedy the things or operations causing the contravention or likely contravention.59 The National Compliance and Enforcement Policy (the Policy) provides that inspectors may issue an improvement notice in any circumstance where they form a reasonable belief regarding a contravention “unless some other appropriate action is considered by the inspector to achieve the desired outcome”.60An improvement notice is strategically significant because it discloses the regulator’s perspective in relation to the relevant failure on the part of the duty holder. The inspector has to firstly form the view that there is a breach of the law and identify this in the notice. Then, they identify what they require the duty holder to do to remedy the contravention. This is what the regulator perceives should have been done in the first place and, should the matter proceed to a prosecution, will be the basis on which the case will be brought (ie the particulars of the offence). In that

context, accepting a notice is accepting for the purpose of the investigation, that the direction required by the notice should have been taken, and was reasonably practicable for one to take. If that is not the case, it is crucial that the notice is appealed. Case example

Steps taken in response to improvement notice, considered The issue of the admissibility of steps taken in response to an improvement notice was considered in SafeWork NSW v Tamex.61 The case related to an injury to a truck driver, employed by a contractor of the defendant, while his truck was being unloaded by an employee of the defendant, at the defendant’s premises. In the aftermath of the incident, a WorkSafe NSW inspector attended the site and issued two improvement notices. The first notice directed the defendant to “ensure so far as is reasonably practicable the health and safety of workers/other persons by implementing a safe work procedure to manage the risks associated with persons being struck by moving plant and/or loads being moved at the workplace”.62 The second notice directed the defendant to “eliminate the risks associated with metal gates falling from cages, where this is not reasonably practicable you must minimise the risks so far is as reasonably practicable by developing and implementing a system for ensuring the gates are secured in position during transport”.63 The defendant took certain steps in compliance with those notices, which were set out in a revised Safe Work Method Statement for the unloading process. Those steps were later abandoned as being impracticable. The defendant was prosecuted in relation to the incident. The particulars of the charge reflected the very steps that were identified by the defendant in its revised post-incident Safe Work Method Statement. No evidence was led by the prosecutor in relation to the reasonable practicality of the particulars of the charge, other than the post-incident compliance by the defendant with its

improvement notices. The defendant argued that the court can have no regard to steps taken by the defendant post-incident under compulsion of a statutory notice. Scotting J reasoned as follows: “The defendant contended that the Court could not consider any of the steps taken by the defendant after the incident because it was legally compelled to take those steps by the issue of the Improvement Notices. The defendant did not cite any authority for that proposition. The argument can be simply disposed of on the basis that the Improvement Notices did not require the defendant to take the particular steps taken by it after the incident. The Improvement Notices required it to take steps that were reasonably practicable as required by the Act. The defendant chose to take the particular steps that it did. I can see no reason why the taking of the particular steps by the defendant cannot be some evidence of the fact that they were reasonably practicable. When the Court comes to apply section 18 of the Act, that evidence may not be determinative of the issue. At that point, I must be satisfied beyond reasonable doubt that the steps were reasonably practicable to achieve the provision of a safe working environment at the time leading up to the incident and not with the benefit of hindsight.”64

Appeals against improvement notices An improvement notice can be appealed by the person to whom the notice was issued. This person may be: • a PCBU whose interests are affected by the decision • a worker whose interests are affected by the decision, or • a health and safety representative who represents a worker whose interests are affected by the decision.

Figure 10 — Persons with standing to appeal an improvement notice

The first step in the appeal process is to apply to the regulator for an internal review of the notice.65 The application must be made in the manner and form required by the regulator.66 An appeal against a notice must be lodged within the period specified in the notice for compliance with the notice or 14 days, whichever is the lesser.67 An application for an internal review of an improvement notice stays the operation of the notice.68 The person who made the original decision does not review that decision.69 Typically, the process is entrusted to a dedicated team of reviewers, but some regulators use the supervisor of the division for that purpose. Reviewers aim to be consistent in their approach.70 All decisions must provide procedural fairness to all the parties, and deal with any real or perceived conflict of interest.71 Reviewers must act independently and exercise their own judgment while having regard to the WHS Act, relevant regulatory policies and (where relevant) accepted technical standards or guidance material.72 They must provide written reasons for their decisions.73 The review considers all the material that was available to the original decision-maker at the time the decision was made, and any new relevant information that has become available since that decision,

including information provided by the applicant.74 The reviewer may contact the applicant to seek clarification or additional information.75 If the internal reviewer seeks further information from the applicant, the 14-day period ceases to run until the applicant provides the information to the internal reviewer.76 In these circumstances, the reviewer will indicate the timeframe to provide the information and the review process stops until the applicant provides the information.77 The applicant must provide the further information within the time (being not less than seven days) specified by the internal reviewer in the request for information.78 If the applicant does not provide the further information within the required time, any decision will be taken to have been confirmed by the internal reviewer at the end of that time.79 A reviewer can also speak to the original decision-maker, as well as other relevant people, including experts if it is a technical issue.80 They may also refer to written documents, such as codes of practice or industry standards.81 Sometimes a reviewer might arrange a meeting with the applicant or a visit to the workplace if they think it is necessary to help them make their decision and if it can be done within the timeframe.82 The reviewer then decides, in light of all the material, what decision is the most appropriate — by confirming the original decision, or varying the original decision, or setting aside the original decision and substituting another decision.83 The applicant is advised in writing of the reviewer’s decision and the reasons for the decision.84 The internal reviewer must review the reviewable decision and make a decision as soon as is reasonably practicable and within 14 days after the application for internal review is received.85 If the reviewable decision is not varied or set aside within the 14-day period, the decision is taken to have been confirmed by the internal reviewer.86 An applicant can appeal the internal review decision by making an external review application. The forum for those applications differs

from jurisdiction to jurisdiction. In New South Wales, it involves an application to the Industrial Relations Commission (IRC). The application must be made within 14 days. There is no automatic stay of the notice. As such, the applicant must, at the time of making the application, apply for a stay. Case example

Essential Energy The first case under these provisions involved the New South Wales state-owned energy utility, Essential Energy. Essential Energy is one of three Distribution Network Service Providers in New South Wales. To drive competition in an otherwise stateowned industry, and in relation to certain categories of work, such as network connections of customers, these service providers are required to give their customers a choice. Customers may either use their services or use other private electrical service providers (approved by the Department of Fair Trading) to perform that work. Those private providers are called Accredited Service Providers (ASP). On 11 April 2012, an ASP called Ronin Pty Limited was undertaking a network connection on behalf of one of its customers, Hibbard Pty Ltd, when one of its apprentices received an electric shock. The incident was investigated by a WorkCover NSW inspector who issued an improvement notice on Essential Energy. Essential Energy appealed the notice to WorkCover NSW via the internal review process but the notice was confirmed. Essential Energy then appealed the decision to confirm the notice to the IRC. The first step in that process was to seek a stay of the notice. What you have to show is that there is a serious issue to be decided and the balance of convenience favours giving the stay. Backman J stayed the notice on that basis. WorkCover subsequently withdrew the notice.

Essential Energy’s only involvement was to issue an access permit in relation to the work, providing access to a part of its network consisting of electrical conductors which it had deenergised. The electrical conductors which the worker came into contact with were not subject to the access permit — that is, they were not an area for which access to the network had been authorised.87

Figure 11 — Improvement notice review process

Prohibition notices In the most serious of incidents, the inspector will also issue a prohibition notice. The Policy describes a prohibition notice as: “a direction to prohibit an activity until the inspector is satisfied that the risk has been remedied”. It also requires an inspector to issue prohibition notices “where there is a serious risk which emanates from an immediate or imminent exposure to a hazard”.88 The WHS Act itself provides that an inspector may issue a prohibition

notice if they reasonably believe that an activity is occurring (or may occur) at a workplace that involves (or will involve) a serious risk to the health or safety of a person — emanating from an immediate or imminent exposure to a hazard. The inspector may give a person who has control over the activity, a direction prohibiting the carrying on of the activity, or the carrying on of the activity in a specified way, until such time as the inspector is satisfied that the matter(s) that give (or will give) rise to the risk have been remedied.89 The direction may be given orally, but must be confirmed in a written notice.90 If a person to whom a prohibition notice is issued fails to take reasonable steps to comply with the notice, the regulator may take any remedial action it believes reasonable to make the workplace or situation safe. Prior to any action occurring, the regulator will give written notice to the person (to whom the prohibition notice was initially issued) of its intention to take that action. The written notice will contain the owner’s or person’s liability for the costs of that action.91 The regulator may then recover the costs associated with remedial action set out in the written notice, from the person who failed to comply with the prohibition notice.92 If the regulator reasonably believes that circumstances in which a prohibition notice can be issued exist, and a prohibition notice cannot be issued at a workplace because, after taking reasonable steps, the person with management or control of the workplace cannot be found, the regulator may take any remedial action necessary to make the workplace safe.93 The regulator may recover the cost of taking that remedial action from the person on whom the notice would have been issued.94 Appeals against prohibition notices Inspectors will issue prohibition notices in the most serious of cases. As such, the remedial action required in a prohibition notice usually indicates a serious breach by the duty holder. If the duty holder disagrees with the prohibition notice, they should appeal it. An application for internal review of a prohibition notice can be made by the person to whom the notice was issued; the person with

management or control of the workplace, plant or substance which is the subject of the notice; a PCBU whose interests are affected by the decision; a worker whose interests are affected by the decision; a health and safety representative who represents a worker whose interests are affected by the decision and a health and safety representative who gave a direction to cease work,95 that is relevant to the prohibition notice.96 Figure 12 — Standing to appeal a prohibition notice

Much like the appeal against the improvement notice, the first step in the appeal process is to apply to the regulator for an internal review of the notice.97 The application must be made in the manner and form required by the regulator, and must be lodged within 14 days.98 Unlike the internal review of an improvement notice, an application for an internal review of a prohibition notice does not automatically stay the operation of the notice.99 The reviewer may stay the operation of the notice.100 They can do so at their own initiative or on the application of the applicant for review.101 The reviewer must make a decision on an application for a stay within one working day after receiving the application.102 If the reviewer has not made a decision to stay a decision within one working day, he/she

is taken to have made a decision to grant a stay.103 A stay of the operation of a decision continues until the end of the prescribed period for applying for an external review of the decision.104 The process for internal review of a prohibition notice is the same as that for an improvement notice. The person who made the original decision does not review that decision but may be consulted by the reviewer. The applicant is entitled to procedural fairness. That means only relevant information is considered. Matters to be taken into account must be put to the applicant, and the applicant must be given an opportunity to respond to them. If the internal reviewer seeks further information from the applicant, the 14-day period ceases to run until the applicant provides the information to the internal reviewer.105 The applicant must provide the further information within the time (ie not less than seven days) as specified by the internal reviewer in the request for information.106 If the applicant does not provide the further information within the required time, the decision will be taken to have been confirmed by the internal reviewer at the end of that time.107 The internal reviewer must review the reviewable decision and make a decision as soon as is reasonably practicable and within 14 days after the application for internal review is received.108 The decision may be to confirm or vary the reviewable decision, or to set aside the reviewable decision and substitute another decision that the internal reviewer considers appropriate.109 If the reviewable decision is not varied or set aside within the 14-day period, the decision will be taken to have been confirmed by the internal reviewer.110 An applicant can appeal the internal review of the decision by making an external review application. The forum for those applications differs from jurisdiction to jurisdiction. In New South Wales, it involves an application to the IRC. The application must be made within 14 days. As with the internal review application for a prohibition notice, it is necessary to apply for a stay of the notice. Compliance with notices It is an offence to fail to comply without reasonable excuse with a nondisturbance notice, improvement notice or prohibition notice. Failure to

comply may attract further enforcement action, such as a prosecution. In addition, the regulator may also apply to a court for an injunction compelling a person on whom a non-disturbance, improvement or prohibition notice has been issued to comply with the notice.111 Where there is a failure to comply with an inspector’s notice, the regulator may prosecute, or, if there is a serious risk to health and safety, the regulator may seek an injunction against the person to whom the notice was directed.112 It is a common misconception that improvement and prohibition notices are punitive enforcement measures. Improvement and prohibition notices are remedial measures,113 not punitive measures.114 This is why in most cases, where improvement notices and prohibition notices are issued, some other form of enforcement measure is used. For minor offences, this is a penalty notice. For more serious offences, a prosecution is initiated.115 That is, rarely will the issuing of improvement notices be the end of a regulatory investigation. Quite the opposite — it is usually the beginning of a journey which ends in a prosecution. Injunctions Injunctions may be sought by regulators to compel a person to comply with an inspector’s improvement, prohibition or non-disturbance notice.116 The Policy provides that “injunctions are likely to be sought when there are exceptional, pressing or urgent circumstances (eg where the breach involves a significant risk to public safety)”.117 Infringement notices Regulators have the option of issuing on-the-spot fines, called infringement notices. The purpose of issuing infringement notices is to send “a clear and timely message that there are consequences for non-compliance”.118 These are usually used against workers and other individuals and are issued only for minor offences where the nature of the breach is not serious enough to warrant prosecution.119 The Policy provides that infringement notices are only available for certain types of offences where:

• “the offence involves a contravention of a more minor nature • a prosecution of the offence would not give rise to a right to trial by jury, and • there is prima facie evidence that an offence has been committed”.120 The following factors listed in the Policy are considered relevant to the exercise of discretion to issue an infringement notice: • “the seriousness of the risk • the extent of any injury • the frequency of similar conduct by the duty holder • the prevalence of the offence in the jurisdiction and industry impact • the duty holder’s safety and compliance history • the duty holder’s co-operation and willingness to address the issue • whether the subject matter of the offence is part of a priority intervention or campaign • the attempts by the person to control the risk associated with the alleged contravention • prior notice of the risk (eg direct to the duty holder or through educational material, safety alerts, guidance sheets, etc) • whether the circumstances warrant the application of a sanction at a lesser scale than an enforceable undertaking or prosecution (possibly in addition to remedial action in the form of an improvement or prohibition notice), and • any mitigating or aggravating circumstances”.121

In relation to issuing infringement notices to workers, the Policy provides that “when exercising discretion to issue an infringement notice to a worker, the regulator or inspector will always consider whether the person conducting the business or undertaking’s obligations to the worker and others have been met”.122 Prosecutions A prosecution may be brought by the regulator in relation to an offence under the WHS Act. The timing for the regulator to bring charges against a person is as follows: • within two years after the offence first comes to the regulator’s attention — this may be more than two years after the actual incident itself (eg in relation to a failure to report an incident; In the case of a design or supply breach, this may be several years after the plant or structure was designed or the plant supplied.) • within one year after a coronial report was made or a coronial inquiry or inquest ended, if it appeared from the report or the proceedings at the inquiry or inquest, that an offence had been committed against the Act • within six months of a contravention of an enforceable undertaking, or • if an offence relates to reckless conduct that creates a risk of death or serious injury/illness, at any time thereafter if fresh evidence is discovered.123 The regulator has a discretion whether or not to prosecute a duty holder for breach of the legislation. In determining whether or not to prosecute, the following criteria must be met: • “the existence of a prima facie case, that is, whether the evidence is sufficient to justify the institution of proceedings • a reasonable prospect of conviction, that is, an evaluation of the likely strength of the case when it is presented in court (taking into account such matters as the availability, competence and

credibility of witnesses and their likely impression on the court or tribunal that will determine the matter, the admissibility of any confession or other evidence, and any lines of defence available to the defendant) • a public interest test which may include the following considerations: a) the seriousness or, conversely, the triviality of the alleged offence or whether it is only of a technical nature b) any mitigating or aggravating circumstances c) the characteristics of the duty holder — any special infirmities, prior compliance history and background d) the age of the alleged offence e) the degree of culpability of the alleged offender f) whether the prosecution would be perceived as counterproductive, that is, by bringing the law into disrepute g) the efficacy of any alternatives to prosecution h) the prevalence of the alleged offence and the need for deterrence, both specific and general, and i) whether the alleged offence is of considerable public concern”.124 Penalties A breach of the duty under the WHS Act is a criminal offence. Companies face a maximum penalty of $3m. Officers face a maximum penalty of $600,000 and/or five years imprisonment. Workers similarly face a maximum penalty of $300,000 and five years imprisonment.125 Table 1 — Penalties for breach of work health and safety laws

Category

Description

Penalty

1

The most serious cases. The breach involves recklessness and serious harm to a person or risk of such harm.

Corporation = $3 million Individual = $600,000 and/or imprisonment of up to five years Workers and other persons = $300,000 and/or imprisonment of up to five years

2

A breach where there is Corporation - $1.5 million serious harm or the risk of Individual officers = it. $300,000 Workers and other persons = $150,000

3

Breach of the duty.

Corporation = $500,000 Individual officer = $100,000 Workers and other persons = $50,000

Are these liabilities insurable? In recent years, there has been an increase in the availability and take up of statutory liability insurance policies — policies that purport to insure against criminal liability arising from a breach of a statutory duty. That trend has been fuelled by escalating penalties for corporate crimes across the board. One area that has attracted particular interest is the WHS legislation. However, the enforceability of such policies, if tested, is dubious at best. Contracts that purport to indemnify against criminal liability are void against public policy. There is good reason for this. In the same way that one cannot get insurance for committing armed robbery, you cannot get insurance for committing a crime under WHS laws. Both are void against public policy since they seek to indemnify in relation to liability for a criminal offence. Indeed, many statutes, including the WHS legislation, expressly void such contracting out of liability.

It is not even clear whether such policies can be lawfully offered. It is arguable that the offering of an indemnity for liability for a crime may amount to aiding, abetting, counselling or procuring the commission of such a crime — an offence in its own right in many jurisdictions. Undeterred, however, some insurance companies openly promote such policies. Companies and company directors, alarmed by the increasing level of corporate penalties under social statutes such as WHS laws, have an increasing appetite for such policies. And, even though the policies would be unenforceable if tested, companies happily pay the significant premiums associated with them. That is because neither has an interest in exposing the sham. The insured is happy to have the cover for what can be very significant liability given that a workplace incident may give rise to multiple charges — each attracting a maximum penalty of $3m. And the insurer is happy to honour the policy because to do otherwise would destroy their business. What the companies that take out such insurances may not be appreciating is that the use of such policies may well have a detrimental impact on their liability and lead to escalating personal liability. Penalties are imposed by legislation to deter corporate wrongdoing. In areas such as WHS and environmental law, the penalties are set at levels that command the attention of boards. These penalties are supported by a myriad of additional orders, such as publicity orders and personal liability provisions for officers of companies, as the ultimate deterrent. The rise of statutory liability insurance upsets those settings. It signals a blunting of the deterrent effect of corporate and individual penalties, leaving courts and regulators with the more extreme remedy (ie a custodial sentence) as their only option if they are to achieve the effect of the legislation. It will not take regulators long to work out that corporate defendants are insured. A few simple inquiries at the investigation stage or during proceedings will secure evidence of that fact. Faced with such evidence, one can see the submission from the bar table about the need for publicity orders against the corporate defendant because any penalty will not be paid by them. Worse still, where a director or other officer of the company is also prosecuted, it is likely that the

regulator’s attention will become fixated on them because any order against the company will simply be paid out by the insurer. A court, having had the deterrent effect of any penalty it imposes thwarted by the insurance cover, may well be more amenable to harsher penalties. It is not inconceivable that this, over time, could fuel a rise in custodial sentences against individual directors in a last ditched effort to rebalance the general deterrence impact of sentencing for corporate offences. In addition, the availability of statutory liability policies has an impact on prosecution strategies. Knowing that a corporate defendant is “insured” — a regulator will be more inclined to pursue individual directors and other officers personally. The difficulty with this trend (if it takes hold) is that one of the effects of having a liability insured, is the loss of control of the conduct of the matter. The extent of such loss of control will depend on the insurer, but some loss of control is inevitable when someone else is paying the bills. That means individuals may face greater exposure with a decreased ability to control the strategy deployed in their defence. Of course, it is not just directors and companies who will feel the impact of the spread of statutory liability policies. Knowing that they are “insured” for the criminal and civil liability of industrial accidents, some firms will find it harder to economically justify the large investment in systems designed to prevent such accidents from taking place. Economists call this moral hazard. Leaving aside ethical considerations, if a company will not face the consequences of deficiencies in its systems, it is less likely to maintain such systems. The vigilance around safety may be lost to the detriment of workers. That point will not be lost on unions. Over time, unions are likely to become more interested in whether the employer has procured policies designed to avoid criminal liability for corporate wrongdoing and interpret such a decision as being industrially provocative. There can be no clearer signal of intention than the seeking out of indemnity for a prosecution for failing to protect the health and safety of your workers. The analysis is similar for directors and officers. While directors and

senior managers will often have “directors and officers liability insurance”, these insurances do not cover liability in relation to WHS offences. The best that these policies can do is cover the legal costs associated with a defended prosecution. There are also limits under the Corporations Law 2001 restricting the extent to which a company can offer indemnity to its officers in relation to criminal liability, such as WHS liability. Case example

Impact of insurance coverage in sentencing The issue of the impact of insurance coverage in sentencing of a director under the predecessor legislation, was considered in Hillman v Ferro Con (SA) Pty Ltd (in liquidation) and Anor.126 The case related to a fatality during the construction of The Adelaide Desalination Water Plant. The deceased was a 35-year-old rigger employed by Ferro Con (SA) Pty Ltd. Ferro Con was using a large crane to install a 1.8 tonne, 14-metre long steel monorail beam to the rafters of a partially built building. While the lifting was taking place, the fabric sling supporting the beam snapped, resulting in the end of the beam dropping directly onto the deceased’s head, killing him. The lifting of the beam had been poorly planned. No risk assessment or job safety analysis had been undertaken for this type of lift, and no safe working procedure had been devised to take account of the particular hazards of the task. Ferro Con was prosecuted for breach of the predecessor South Australian safety legislation, as was its director, Mr Maione. Both pleaded guilty. But by the time the matter came to court, Ferro Con was in liquidation and it became known to the court that Mr Maione was insured for not only the legal costs of the charges, but also the penalty. His Honour, Industrial Magistrate Lieschke, observed as follows: “In my opinion Mr Maione and Ferro Con have taken positive

steps to avoid having to accept most of the legal consequences of their criminal conduct as determined by the course of justice. This has occurred through Mr Maione successfully calling on an insurer to pay his fine. Ferro Con had in place a general insurance policy which apparently included indemnification of its Director for fines imposed for his criminal conduct. Curiously the insurance covers a criminal fine but not a consequential compensation order. The insurance cover carries a $10,000 excess or deductable payment. As Ferro Con is in liquidation and has no assets with which to pay the excess, Mr Maione has paid it personally. He may not even bear the full cost of this if claimed as a tax deduction. By his payment he has ensured the insurance company grants both Ferro Con, and more importantly him, the indemnity he sought. In this way Mr Maione has made arrangements to avoid the vast bulk of the anticipated monetary penalty. In my opinion Mr Maione’s actions have also undermined the Court’s sentencing powers by negating the principles of both specific and general deterrence. The message his actions send to employers and Responsible Officers is that with insurance cover for criminal penalties for OHS offences there is little need to fear the consequences of very serious offending, even if an offence has fatal consequences. As for specific deterrence Mr Maione has not said he no longer has such insurance for his current businesses. In my opinion Mr Maione’s actions are so contrary to a genuine acceptance of the legal consequences of his criminal offending that they dramatically outweigh the benefits to the justice system of the early guilty plea and statement of remorse. Accordingly it would be entirely inappropriate to grant any reduction of penalty to Mr Maione or Ferro Con in these circumstances. I add that the Court was faced with the reality that an insurance company has granted indemnity to Mr Maione and

Ferro Con, and that the Court has no ability to challenge that fact. Whilst the terms of the policy were not produced to the Court, and there remains a possibility that indemnity was granted for commercial reasons given the ongoing nature of the Group’s business, this Court has no legal ability to consider if the indemnity is invalid as being contrary to public policy.127 … The Court however must accept that the indemnity is not an aggravating factor in the sentencing process, as the insurer is not a defendant. It is strictly only relevant to the issue of reduction in penalty.”128 Imprisonment was not available to his Honour in the context of these charges, as they were first offences under the predecessor legislation. It is interesting to speculate what would have occurred had these been category 1 charges under the WHS Act, where the maximum penalty for officers is six years imprisonment. There is certainly a real risk that by relying on indemnities under insurance policies in relation to charges under the WHS Act, that officers are risking prison sentences, since monetary penalties would not act as a deterrent for such officers.

Publicity orders The court may make an adverse publicity order on its own initiative or on the application of the prosecutor. An adverse publicity order may require an offender: • to publicise, in the way specified in the order, the offence, its consequences, the penalty imposed and any other related matter, and/or • to notify a specified person or specified class of persons, in the way specified in the order, of the offence, its consequences, the penalty imposed and any other related matter.

The offender is required to give the regulator, evidence that the action or actions were taken by the offender in accordance with the order. This should be provided within seven days after the end of the period specified in the order. If the offender fails to give evidence to the regulator, the regulator (or a person authorised in writing by the regulator) may take the action or actions specified in the order. If the offender gives evidence to the regulator but (despite that evidence) the regulator is not satisfied that the offender has taken the action or actions specified in the order in accordance with the order, the regulator may apply to the court for an order authorising the regulator (or a person authorised in writing by the regulator) to take the action or actions. If the regulator or the person authorised in writing by the regulator takes an action or actions, the regulator is entitled to recover from the offender, by action in a court of competent jurisdiction, an amount in relation to the reasonable expenses of taking the action or actions as a debt due to the regulator.129 Case examples

Off-site training In Inspector Covi v New South Wales Police Service,130 the Chief Industrial Magistrate ordered the NSW Police Service to publicise the offence, its consequences and the penalty imposed to all its police officers and employees through its intranet system (and where the intranet was unavailable, to an officer or employee, by other means). The case related to an incident which occurred at Gladesville Hospital after a training session which was conducted in a room at the hospital. At the end of the session, three sergeants of the defendant cleaned the room. One of the employees, Sergeant Marsh, swept the floor. The floor of the premises was made of wood and was in poor condition. The floor had holes in it. Particle board covered some of the holes, but the boards were not securely fixed in place and were not adequate to prevent a

person from falling into the holes. While sweeping the floor, Sergeant Marsh accidentally brushed the cover off of a hole in the floor with his foot and fell down the hole, suffering an injury to his leg. As a result of the fall, he suffered soft tissue and cartilage damage to his left knee and underwent an operation to remove damaged cartilage from his leg. The defendant was convicted and, in addition to the publicity order, was fined $20,000. Fall prevention In Inspector Franke v Eurobodalla Shire Council,131 the Chief Industrial Magistrate ordered the Eurobodalla Shire Council to publicise the offence, its consequences and the penalty imposed, to all its employees. The case related to an incident where an employee, who was sent to remove a corroded aluminium ladder from a septic tank, fell when the ladder collapsed while he was standing on it. He was not wearing any fall arrest device. A harness was, however, available to him in his truck. In addition to the publicity order, the council was convicted and fined $5,000. Trash pump In Inspector Constable v National Parks & Wildlife Service NSW,132 the Chief Industrial Magistrate ordered the defendant to publicise the offence, its consequences, the penalty imposed and the action taken by the defendant to rectify the breach, to all of its employees within three months. The Chief Industrial Magistrate provided that electronic mail may be used to comply with the order. The case related to an accident where a National Parks & Wildlife Service employee was burnt by hot water while disconnecting a hose from a cavitating pump at the Sawpit Creek garbage tip in Kosciuszko National Park. In addition to the publicity order, the defendant was convicted and fined $26,000.

Unguarded guillotine in class In Inspector Ankucic v Department of Education and Training (NSW),133 the Chief Industrial Magistrate ordered the Department of Education to publicise the offence, its consequences and the penalty imposed to principals of schools and to industrial arts teachers within three months from the date of the decision. The Chief Industrial Magistrate provided that compliance with the order could be achieved by electronic mail. This case related to an accident that occurred at South Granville High School in New South Wales, in which a 15-year-old Year 10 student was injured. The student was attending a design and technology class taught and supervised by the head teacher of industrial arts at the school. The student was making a small cabinet with a lid. He had been instructed by his teacher to cut the lid by hand, as he had made an error on his job. The end of the class then neared and the teacher instructed the students to pack up, put away their tools, pack away their jobs, wash their hands and wait for the bell to go. The teacher observed that the tools were put away and noted that the students were washing their hands. The teacher noticed thinners on the bench and took them to the adjacent store room and placed them on the shelf. The student, in the teacher’s absence, attempted to cut the cabinet lid using a guillotine by operating it from the front. Two folds rendered the lid too large to fit in the front entry point of the guillotine. The student then placed the lid in the guillotine from the rear of the machine and made a cut by holding the lid in place while a fellow student pressed the foot pedal of the machine. The student attempted to make a second cut and asked another student to press the foot pedal while the student held the lid in place from the rear of the machine. The other student pressed the foot pedal of the machine before the student had removed his fingers from the reach of the cutting blade. Two fingers on the student’s left hand were severed by the cutting blade of the machine, amputating the tips. In addition to the publicity order, the defendant was convicted and

fined $30,000. Unguarded timber saw In Inspector Przibilla v Department of Education and Training (NSW),134 the Chief Industrial Magistrate ordered the Department of Education to publicise the offence, its consequences, the penalty imposed to principals of high schools and industrial art teachers, within three months. The case related to an accident at Billabong High School, Culcairn where a woodwork teacher’s left thumb was amputated while using an unguarded timber saw during an adult education class. The teacher had removed the guard on the saw eight weeks earlier. The teacher had been instructed by the principal of the school to replace the guard, but did not do so. The Department of Education and Training had a system for checking equipment on an approximately bi-annual basis. In addition to the publicity order, the defendant was convicted and fined $21,000.

Restoration orders Where someone has committed an offence, the court may order the offender to take steps specified in the order, within the period also specified in the order, to remedy any matter that appears to the court to be within the offender’s power to remedy. The period in which an order must be complied with may be extended, or further extended, by order of the court, but only if an application for the extension is made before the end of that period.135 Training orders The court may make an order requiring a person to undertake or arrange for one or more workers to undertake a specified course of training.136 Work health and safety project The court may make an order requiring the offender to undertake a

specified project for the general improvement of WHS within the period specified in the order.137 The order may specify conditions that must be complied with in undertaking the specified project.138 Court ordered undertaking The court may (with or without recording a conviction) adjourn the proceeding for a period of up to two years and make an order for the release of the offender based on the offender giving an undertaking with specified conditions.139 A court-ordered WHS undertaking must specify the following conditions, that the offender: • appears before the court if called on to do so during the period of the adjournment and, if the court so specifies, at the time to which the further hearing is adjourned • does not commit, during the period of the adjournment, any offence against the WHS Act, and • observes any special conditions imposed by the court.140 An offender who has given a court-ordered WHS undertaking may be called on to appear before the court by order of the court.141 An order must be served on the offender no less than four days before the time they are expected to appear.142 If the court is satisfied at the time to which a further hearing of a proceeding is adjourned, that the offender has observed the conditions of the court-ordered WHS undertaking, it must discharge the offender without any further hearing of the proceeding.143 Injunctions If a court finds a person guilty of an offence against the WHS Act, the court may issue an injunction requiring the person to cease contravening the Act.144 Footnotes 54

Safe Work Australia, National Compliance and

Enforcement Policy (2011) 7. See www.safeworkaustralia.gov.au. 55

Ibid.

56

Ibid.

57

Work Health and Safety Act 2011 s 198. Section 199 prescribes the minimum content of that notice. Section 209 deals with service of notices. Note Part 12 in relation to review of notices. Note also that subsequent notices may be issued pursuant to s 201.

58

Safe Work Australia, National Compliance and Enforcement Policy (2011) 7. See www.safeworkaustralia.gov.au.

59

Work Health and Safety Act 2011 s 192 prescribes the minimum content of improvement notices. Section 194 provides a mechanism for seeking of extension of time to comply with the notice. Section 209 deals with service of notices. Note Part 12 in relation to review of notices.

60

Safe Work Australia, National Compliance and Enforcement Policy (2011) 8. See www.safeworkaustralia.gov.au.

61

[2016] NSWDC 295. The author acted for Tamex in relation to this matter. The commentary is based only on material in the judgment itself.

62

SafeWork (NSW) v Tamex Transport Services P/L t/as Tamex [2016] NSWDC 295 [48].

63

Ibid [49].

64

Ibid [76].

65

Work Health and Safety Act 2011 s 224(1).

66

Work Health and Safety Act 2011 s 224(2). See, for example “Application for internal review” available at www.safework.sa.gov.au/uploaded_files/app_internal_review.pdf and WorkSafe NT has also published a Guide to Applications for Internal Review Decisions — May 2015.

67

Work Health and Safety Act 2011 s 224(3).

68

Ibid s 228(1).

69

WorkSafe NT, Guide for Applications for Internal Review Decisions (May 2015) 2.

70

Ibid.

71

Ibid.

72

Ibid.

73

Ibid.

74

Ibid.

75

Ibid.

76

Work Health and Safety Act 2011 s 226(3).

77

WorkSafe NT above n 69.

78

Work Health and Safety Act 2011 s 226(4).

79

Ibid s 226(5).

80

WorkSafe NT above n 69.

81

Ibid.

82

Ibid.

83

Ibid.

84

Ibid.

85

Work Health and Safety Act 2011 s 226(1).

86

Ibid s 226(6).

87

Essential Energy (ACN 37 428 185 226) and WorkCover Authority of New South Wales [2012] NSWIRComm 83 [14].

88

Safe Work Australia, National Compliance and Enforcement Policy (2011) 8. See www.safeworkaustralia.gov.au.

89

Work Health and Safety Act 2011 s 195. Section 196 prescribes the minimum content of prohibition notices. Section 208 deals with service of notices. Note Part 12 in relation to review of notices.

90

Safe Work Australia, above n 88.

91

Work Health and Safety Act 2011 s 211.

92

Ibid s 213.

93

Ibid s 212.

94

Ibid s 213.

95

Ibid s 85.

96

Ibid s 223.

97

Ibid s 224(1).

98

Ibid s 224(3).

99

Ibid s 228(1).

100

Ibid s 228(2).

101

Ibid s 228(3).

102

Ibid s 228(4).

103

Ibid s 228(5).

104

Ibid s 228(6).

105

Ibid s 226(3).

106

Ibid s 226(4).

107

Ibid s 226(5).

108

Ibid s 226(1).

109

Ibid s 226(2).

110

Ibid s 226(6).

111

Ibid s 214–215.

112

Safe Work Australia, above n 88.

113

Ibid.

114

Ibid.

115

Ibid.

116

Ibid. See also the Work Health and Safety Act 2011 s 215.

117

Safe Work Australia, above n 88.

118

Ibid.

119

Ibid.

120

Ibid.

121

Safe Work Australia, National Compliance and Enforcement Policy (2011), 8–9. See www.safeworkaustralia.gov.au.

122

Ibid 9.

123

Work Health and Safety Act 2011 s 232.

124

Safe Work Australia, National Compliance and Enforcement Policy (2011) 10–11. See www.safeworkaustralia.gov.au.

125

Work Health and Safety Act 2011 s 31–33.

126

[2013] SAIRC 22.

127

Ibid [82].

128

Ibid [78]–[84].

129

Work Health and Safety Act 2011 s 236.

130

[2003] NSWCIMC 15.

131

[2003] NSWCIMC 33.

132

[2003] NSWCIMC 64.

133

[2003] NSWCIMC 79.

134

[2004] NSWCIMC 4.

135

Work Health and Safety Act 2011 s 237.

136

Ibid s 241.

137

Ibid s 238(1).

138

Ibid s 238(2).

139

Ibid s 239(1).

140

Ibid s 239(2).

141

Ibid s 239(3).

142

Ibid s 239(4).

143

Ibid s 239(5).

144

Ibid s 240.

CHAPTER 5 NON-REGULATORY DRIVERS TO COMPLIANCE   Key messages • The law is not the only driver to compliance. • There are many good ethical and commercial reasons for compliance with work health and safety (WHS) standards. • The corporate social responsibility movement is creating a self-regulatory framework, which is driving greater accountability on WHS issues.

More to compliance than just fines BP was sued for tens of millions of dollars in the United States by institutional investors who alleged that the oil major, misled them over its safety policies and the scale of the spill in the Gulf of Mexico.145 BP settled the claims for US$175m.146 The institutional investors, who included the South Yorkshire Pensions Authority, Skandia Global Funds and GAM Fund Management, alleged that they lost substantial sums as a result of BP’s misleading statements. As such, they sued (under Texas law) for common law fraud, negligent misrepresentation and statutory fraud.147 The law suits relates to the 2010 blowout and explosion on the Deepwater Horizon mobile oil platform in the Gulf of Mexico that killed 11 people and caused significant environmental damage. The commercial ramifications for BP have been astronomical. Nearly US$70b has been wiped off the value of BP due to its 38% plunge in share price.148 The incident has cost BP over US$2.65b149 in spill response, containment, relief well drilling, grants to Gulf states, claims paid and federal costs alone. BP agreed to pay US$20.8b in compensation to the US Government and several States (Louisiana, Mississippi, Alabama, Texas and Florida) affected by the spill.150

There were over 64,000 legal claims made by people whose livelihoods have been affected by the spill. These figures are significant — even when viewed against the company’s sales and other operating revenue figures for 2009 of US$239b. More fines and penalties are also likely to come from the United States Justice Department’s investigation. Savings achieved from cutting safety expenditure cannot be rationally justified against this backdrop. Interestingly, the US Chemical Safety and Hazard Board’s investigation into a 2005 BP explosion at a refinery in Texas found that “cost cutting, failure to invest and production pressures from BP senior executives did not provide adequate resources to prevent major accidents and that budget cuts impaired process safety performance at the Texas City refinery”.151 It is this link with which the resourcing element is concerned. In a book152 analysing the incident, Professor Andrew Hopkins makes the following observations about BP senior management’s approach to resourcing: Senior executives demanded cost cuts and left it to others further down the hierarchy to ensure that these cuts were not at the expense of safety. Lower-level managers responded as best they could to these conflicting requirements but, inevitably, safety was compromised. The only way out of this predicament is for those who order the cost cuts to take responsibility themselves for ensuring that safety is not compromised.153 However, those savings fade into insignificance compared to the cost of the disaster. Direct financial costs alone have been estimated at US$1.5b. An estimated additional US$87m will be needed to pay Occupational Safety and Health Administration (OSHA) infringement penalties. Finally, several million dollars relating to undisclosed commercial settlements of legal proceedings brought by families of the victims of the disaster will need to be paid. Non-regulatory drivers to compliance There are many reasons why a company implements safety standards, not least of which is the moral and ethical desire to ensure

that people are not put at risk from the activities of the company. The law is not the only driver in this respect. Commercial drivers for safety Positive safety performance has been shown to be a good indicator of operational performance.154 Safety conscious and environmentally sustainable companies outperform their peers on the share market, delivering net additional share value of as much as 4%.155 A study of stock market performance of companies that achieve high-scoring assessments in health or safety in the American College of Occupational and Environmental Medicine’s awards, the Corporate Health Achievement Award (CHAA), found that those companies outperformed the Standard & Poor’s 500 (S&P) average.156 Indeed, the greater the health and safety score in the CHAA, the greater the margin of outperformance of their peers on the S&P.157 Another study found that companies that build a culture of health and safety by focusing on the well-being and safety of their workforce, yield greater value for their investors.158 Some studies have identified a return on safety investment. A study by the US health and safety regulator, OSHA, has found that an investment in safety can achieve a return on investment of between 4:1 and 6:1.159 That is, for every $1 spent on safety, a return, by way of cost savings to workers compensation premiums and associated costs of between $4 and $6, is achieved. While those studies may oversimplify the issue, they illustrate some empirical basis for the assertion that safety has more in common with capital investment than costs. Even looking at the issue purely from a savings perspective (ie putting aside productivity gains associated with better safety performance), the return on investment is significant. A US report by the Centre of Chemical Process Safety (CCPS) found that major industrial accidents cost an average of $80 million each. Other costs also accrue. For example, business disruption costs are estimated by the CCPS to be up to four times the average cost of the property damage, or an average of $320m for each major industrial

accident.160 Other studies have placed the indirect costs of an incident at up to 10 times the direct costs, once a number of factors have been considered (eg training and compensating replacement workers, accident investigation and implementation of corrective actions, scheduling delays and lost productivity, administrative expenses, low employee morale, increased absenteeism, and poor customer/community relations).161 High penalties and the threat of prosecution by a regulator are not the only drivers for compliance. It is important that companies put this in context when implementing their safety management systems and formulating their regulatory response. This is particularly the case in the context of incident investigations, a topic discussed in another book of this series — Due Diligence: Incident Notification, Management and Investigation. Corporate social responsibility In addition, there is a growing expectation by shareholders of listed companies that their companies will behave in an ethical manner. The Australian Securities Exchange (ASX) Corporate Governance Council’s Corporate Governance Principles and Recommendations162provides that: “To make ethical and responsible decisions, companies should not only comply with their legal obligations, but should also consider the reasonable expectations of their stakeholders including: shareholders, employees, customers, suppliers, creditors, consumers and the broader community in which they operate … It is important for companies to demonstrate their commitment to appropriate corporate practices and decision making.”163 There has also been a recognition of the leadership role that lending institutions should take in ensuring the environmental and social sustainability of projects which they finance. To that end, the International Finance Corporation (IFC) Performance Standards on Environmental and Social Sustainability have been developed as a

guide to environmental and social risk management in the financial services industry. Performance standard four of the standards aims to mitigate the risks and impacts presented by project activities, equipment and infrastructure, to communities.164 That is, companies wanting to have their projects funded by financial institutions which have signed up to the IFC Performance Standards must ensure that their projects comply with the requirements of the standards, including those relating to health, safety and security. Footnotes 145

E Gosden, “BP sued ‘for hiding truth over safety’ in Gulf oil disaster”, The Telegraph, 4 September 2012.

146

Reuters, “BP will pay $175m to settle shareholder lawsuit over Gulf Mexico oil spill”, 3 June 2016, Fortune.

147

Gosden, above n 145.

148

C Kahn, “BP chief to face investors, questions about job”, McAlester News-Capital, 4 June 2010, see http://mcalesternews.com/local/x1910026150/BP-chiefto-face-investors-questions-about-job; BP website, share chart for 20 April–28 June 2010, www.bp.com.

149

“BP Spill Costs Rise to 2.7B”, 28 June 2010, CBC News.

150

D Rushe, “BP set to pay largest environmental fine in the US history for Gulf oil spill”, The Guardian, 3 July 2015.

151

US Chemical Safety and Hazard Investigation Board, Investigation Report, Refinery Explosion and Fire, BP Texas City, Texas, 23 March 2005 (CSB, USA) 210.

152

A Hopkins, Failure to Learn: The BP Texas City refinery disaster (CCH Australia Limited, 2008)

153

Ibid 81.

154

A Veltri, M Pagell, M Behm and A Das, “A data based evaluation of the relationship between occupational safety and operating performance”, The Journal of SH&E Research (vol 4(1), 2009). The study collected data from 19 manufacturing firms regarding quality, productivity and economic performance. The study found that, as safety deteriorates, product quality and plant performance suffers.

155

A 2002 study by Holliday, Schmidheiny and Watts found that the Dow Jones Sustainability Group Index consistently outperformed the Dow Jones Global Index. See CO Holliday, S Schmidheiny, P Watts, Walking the Talk: The Business Case for Sustainable Development (Berrett–Koehler Publishers, 2002) 19–31. Similar studies within Australia have demonstrated that the OHS index significantly outperforms the All Ordinaries Index.

156

R Fabius, R Loeppke, T Hohn, D Fabius, B Eisenberg, D Konicki and P Larson, “Tracking the Market Performance of Companies that Integrate a Culture of Health and Safety: An Assessment of Corporate Health Achievement Award Applicants”, Journal of Occupational and Environmental Medicine (vol 58(1), 2016) 3–8.

157

Ibid 5.

158

R Fabius, R Thayer, D Konicki, C Yarborough, K Peterson, F Isaac, R Loeppke, B Eisenberg and M Dreger, “The Link Between Workforce Health and Safety and the Health of the Bottom Line: Tracking Market Performance of Companies that Nurture a ‘Culture of Health’”, Journal of Occupational and Environmental Medicine (vol 55(9), 2013) 993–1000.

159

American Society of Safety Engineers, “White paper addressing the return on investment for safety, health and environmental management programs”, (2010).

160

Centre for Chemical Process Safety, The Business Case for Process Safety (American Institute of Chemical Engineers, New York, 2nd ed, 2006) 8.

161

CCH, “The safety cost of containment”, Australian Compensation News (Issue 6, 9 August 2004).

162

ASX Corporate Governance Council, Corporate Governance Principles and Recommendations with 2010 Amendments (2007).

163

ASX Corporate Governance Council, Corporate Governance Principles and Recommendations, Principle 3.

164

M Tooma and S Christou, “Performance Standard Four: Community Health, Safety and Security”, in M Torrance (ed), IFC Performance Standards on Environmental & Social Sustainability: A Guidebook (Lexis Nexis, 2012).

CHAPTER 6 POWERS OF REGULATORS   Key messages • Inspectors have broad powers of entry. • There are serious consequences to obstructing inspectors in their exercise of their powers. • Businesses and undertakings should seek advice regarding regulatory investigations.

Case example

Intimidating an inspector The following decision demonstrates how a duty holder can make a bad situation worse for themselves by obstructing or intimidating an inspector in the exercise of their duty. On 3 April 2010 (Easter Saturday), a WorkCover NSW inspector, Inspector Bell, was shopping in Coffs Harbour with members of his family.165 He had parked near the corner of Park Avenue and Little Street, Coffs Harbour and on leaving his vehicle, he saw a person performing painting work on a bull-nose awning approximately 3.5 m above the ground but working without a fall restraint device.166 The person was Mr Jason Drews. Inspector Bell was also able to identify another person moving a mobile aluminium scaffold in front of Mr Drews, but the scaffolding was not close enough to provide adequate fall protection from the bull-nose awning, nor was it properly secured or tied.167 The worker on this scaffold later became known to Inspector Bell as Mr Daniel Clifford.168

Although the Inspector was not on duty at the time, he could not ignore the risks to safety evident from the work being performed by Mr Drews and Mr Clifford.169 The Inspector approached these two workers, told them that he was a WorkCover Inspector and then gave them advice on moving the scaffolding to a position where it would provide fall protection for the worker on the awning, as he felt there was a risk of falling from that awning.170 The worker on the scaffolding, Mr Clifford, said that he would obtain a harness for Mr Drews to use while he was working on the awning.171 The Inspector told the two men that Mr Drews could not be left on the bull-nose awning without fall protection.172 As the Inspector left the area, he saw a person (later identified to him as Mr Andrew Caines) walking towards Mr Clifford and Mr Drews.173 The Inspector saw Mr Caines staring at him, but he did not know him.174 The Inspector said, “G’day” to Mr Caines as he walked by, but there was no reply.175 Inspector Bell returned to this worksite approximately 30 minutes later and noticed that Mr Drews was still working on the bull-nose awning without using a harness and that the scaffolding was still out of place and not providing fall protection for Mr Drews.176 The Inspector went to his car and got his WorkCover Inspector’s badge and WorkCover identification card and entry conditions and a camera, and then returned to the worksite where he took a photograph of Mr Drews working on the bull-nose awning.177 The Inspector attempted to take a photograph of the work vehicle parked in front of the bull-nose awning in order to later identify the owner and the person who might be responsible for the scaffolding.178 The vehicle was a work utility with words painted on the side, together with what appeared to be contact telephone numbers.179 The Inspector had proposed speaking to the person who owned that vehicle after he had established the identity of the owner.180 In the course of taking the photograph, he heard scuffling behind him and turned around and saw Mr Caines with his index finger raised in the air.181 The Inspector was able to

take a photograph of Mr Caines in that pose. He then heard Mr Caines say words to the effect: “What the fuck do you think you’re doing? Come over here soft cock and I’ll sort you out”.182 It was Inspector Bell’s normal practice to take photographs of an unsafe work situation and then speak to the work supervisor and provide advice about safety precautions to address risks he had observed.183 On this occasion, he looked at Mr Caines “standing there” and noticed that there were two people standing behind him.184 He felt intimidated.185 He thought the situation could escalate and, as he regarded his own safety as a first priority, he decided to remove himself from the situation. He also began to think of other ways to deal with Mr Caines.186 There were no other WorkCover Inspectors in town at the time and he thought that the police, who were only a few minutes away, could come to the site, but they may not be in the station or able to come until after the work was finished.187 On the following Easter Monday holiday, Inspector Bell telephoned Mr Caines and asked about the job being undertaken in Little Street, Coffs Harbour. Mr Caines said that he was performing that work and said that “some crazy person” had been there the previous Saturday, but stated that he had done nothing wrong.188 The Inspector identified himself as the so-called crazy person who had been at the site on the previous Easter Saturday.189 Mr Caines offered to try to resolve the matter by asking the Inspector to come to his place to sort it all out. Nothing was achieved in that telephone call and he told the Inspector to “fuck off”.190 When Inspector Bell first attended the worksite, none of the workers had asked for his Inspector's badge or Inspector’s identification. If they had, he would have produced that identification.191 On the first occasion he approached the workers, the Inspector said he was doing no more than providing advice to the workers. But on the second occasion, because no action had been taken to address the risk, he was prepared to

take “more official action”.192 On this second occasion he heard Mr Drews say words to the effect: “He’s back” while he was looking at him.193 Mr Caines’ conduct earned him a criminal conviction and a $2,200 fine for intimidating an inspector. He was also separately prosecuted for a breach of his duty of care to his workers and fined $5,500.194

Offences against inspectors A person must not directly or indirectly assault, threaten or intimidate, or attempt to assault, threaten or intimidate, an inspector or a person assisting an inspector.195 The maximum penalty for doing so is $50,000 and/or two years imprisonment for individuals and $250,000 for corporations. A person must also not intentionally hinder or obstruct an inspector in exercising his or her compliance powers, or induce or attempt to induce any other person to do so.196 The maximum penalty for doing so is $10,000 for individuals and $50,000 for corporations. Finally, a person who is not an inspector must not, in any way, hold himself or herself out to be an inspector.197 The maximum penalty for doing so is $10,000. Inspectors all have identification cards. If asked to produce them when exercising a compliance power, they are required to do so.198 But failing to do so when no one asks, does not invalidate their ability to exercise their powers. Justice Haylen considered the issue in the Caines case discussed previously. His Honour held [35]: “It might be mentioned at this point that Mr Caines’ submissions presume that Inspector Bell was required to wear a uniform that identified him as a WorkCover Inspector and that the Inspector was required to produce proof of his status before he was able to exercise any of his powers … the provisions of the Act do not

work in that manner … The evidence establishes that at no stage did either of the two men working on or around the bull-nose awning, nor later in the day, ever ask the Inspector to produce his identification card. The unchallenged evidence was that the Inspector had his badge and entry identification with him. Nothing in the Act requires him to wear a uniform and identify himself as a WorkCover Inspector before he performs any function.”199 Powers of entry An inspector’s power of entry is limited to workplaces. An inspector may at any time, enter a place that is, or that they reasonably suspect is, a workplace.200 But the definition of a workplace is very broad. A workplace is defined as a place where work is carried out for a business or undertaking and includes any place where a worker goes, or is likely to be, while at work.201 A place can include a vehicle, vessel, aircraft or other mobile structure, and any waters and any installation on land, on the bed of any waters or floating on any waters.202 The place does not have to actually be a workplace, the inspector has to merely reasonably suspect that it is a workplace. If an inspector enters a place that is not a workplace, the inspector must leave the place immediately.203 The inspector does not require the consent of the person with management or control of the workplace.204 They are also not required to give prior notice before entry.205 However, once they enter the workplace, they must, as soon as practicable after entry, take all reasonable steps to notify the relevant PCBU at the workplace, the person with management or control of the workplace, and any health and safety representative for workers carrying out work for that business or undertaking at the workplace.206 However, an inspector is not required to notify any person if to do so would defeat the purpose for which the place was entered (such as, for example, a surprise inspection) or cause unreasonable delay.207 Residential premises If an inspector requires entry to any other place (such as residential premises) without the consent of the owner, they may only do so with

a search warrant.208 The powers of an inspector in relation to entering a place are not exercisable where any part of a place is used only for residential purposes. The only exceptions are where the inspector: • obtains the consent of the person with management or control of the place209 • is operating under the authority conferred by a search warrant, or210 • for the purpose of gaining access to a suspected workplace, reasonably believes that no reasonable alternative access is available other than by accessing the residential premises, and they are doing so at a reasonable time, having regard to the times at which the inspector believes work is being carried out at the place to which access is sought.211 Powers upon entry When an inspector enters a workplace, they may do all or any of the following: • inspect, examine and make inquiries at the workplace • inspect and examine anything (including a document) at the workplace • bring to the workplace and use any equipment or materials that may be required • take measurements, conduct tests and make sketches or recordings (including photographs, films, audio, video, digital or other recordings) • take and remove for analysis, a sample of any substance or thing without paying for it • require a person at the workplace to give the inspector reasonable help to exercise the inspector’s powers, and

• exercise any compliance power or other power that is reasonably necessary to be exercised by the inspector for the purposes of the Work Health and Safety Act 2011 (WHS Act).212 A person required to give reasonable help must not, without reasonable excuse, refuse or fail to comply with the requirement.213 If a person is accused of not providing the reasonable help that has been requested, the onus is on that person to offer a reasonable excuse.214 An inspector who enters a workplace may: • require a person to tell the inspector who has custody of, or access to, a document • require a person who has custody of, or access to, a document to produce that document to the inspector while the inspector is at that workplace or within a specified period, or • require a person at the workplace to answer any questions put to them by the inspector.215 The requirement to produce a document to the inspector while the inspector is at that workplace or within a specified period must be made in writing unless the circumstances require the inspector to have immediate access to the document.216 Case example

Inspector and regulator powers considered The relationship between the powers available to inspectors on entry and the power of the regulator to request information, was considered in Hunter Quarries Pty v State of New South Wales (Department of Trade & Investment).217 The matter arose out of an investigation into the death of Mr Ryan Messenger, one of Hunter Quarries’ employees, on 9 September

2014, while he was working at the quarry which it operates at Karuah. That investigation was the result of a notification which it had given that day to the Department, pursuant to the incident notification requirements of the Work Health and Safety Act 2011. A Departmental Inspector, Inspector Flowers, attended the mine in response to the notification. A dispute then arose as to his intention to exercise powers granted to inspectors upon entry to a workplace under s 171 of the Work Health and Safety Act 2011, particularly by seeking to interview witnesses. Hunter Quarries disputed his reliance on that power, inviting him instead to exercise the power given to the regulator to request information under s 155 of the Act. The inspector refused and insisted on his reliance on the powers upon entry — s 171. Hunter Quarries brought an application to the Supreme Court of NSW seeking declaratory relief in relation to powers of the inspector and seeking to restrain the inspector from obtaining information in relation to the incident pursuant to s 171. Schmidt J dismissed the summons. Her Honour held: “On the proper construction of this Act, once an inspector has so exercised the statutory power of entry at a workplace, he or she is empowered by s 171 to require a person to tell him or her who has custody of or access to a document; to require that person to produce that document, while the inspector is still at the workplace, or later; and to require a person at the workplace to answer the questions which the inspector puts. That power is not displaced, limited or circumscribed by the powers granted to regulators by s 155 of the Act.”218

An interview conducted by an inspector must be conducted in private if the inspector considers it appropriate or the person being interviewed makes that request.219 That doesn’t mean that a health and safety representative of a worker being interviewed cannot attend that interview.220 As discussed in another book of this series — Due

Diligence: Horizontal and Vertical Consultation — health and safety representatives may attend interviews between inspectors and workers they represent, with the consent of the worker. Powers to copy and retain documents An inspector may make copies of, or take extracts from, a document given to them221 and keep that document for the period that they consider necessary.222 But, while the inspector retains custody of the document, they must permit the person who produced the document, the owner of the document and their representatives to inspect or make copies of the document at all reasonable times.223 Assistance An inspector can get assistance from other persons, such as an interpreter or a technical expert. An assistant may accompany the inspector entering a workplace.224 The assistant may do the things at the place and in the manner that the inspector reasonably requires to assist the inspector to exercise their compliance powers, but must not do anything that the inspector does not have power to do (except as permitted under a search warrant).225 Anything done lawfully by the assistant is taken for all purposes to have been done by the inspector.226 Power to require name and address An inspector may require a person to provide their name and residential address if the inspector finds the person committing an offence, or the inspector finds the person in circumstances that lead, or has information that leads the inspector to reasonably suspect the person has committed an offence.227 It is an offence to refuse or fail to comply with the inspector’s request, without reasonable excuse.228 The burden of proof is on the accused to show the reasonable excuse.229 When asking a person to provide their name and residential address, the inspector must tell the person the reason for this requirement and warn them that it is an offence to fail to state that information, unless the person has a reasonable excuse.230 If the inspector reasonably

believes that the name or residential address is false, the inspector may ask the person to give evidence of its correctness. It is not an offence for a person to fail to give that evidence.231 Power to seize evidence An inspector who enters a workplace may seize anything (including a document) at the place if the inspector reasonably believes the thing is evidence of an offence.232 They may also take and remove for analysis, testing or examination of a sample of any substance or thing without paying for it.233 Obviously, an inspector who enters a place with a search warrant may seize the evidence for which the warrant was issued.234 An inspector may also seize anything else at the place if the inspector reasonably believes the thing is evidence of an offence and the seizure is necessary to prevent the thing being hidden, lost or destroyed or used to continue or repeat the offence.235 If an inspector who enters a workplace reasonably believes that the workplace is defective or hazardous to a degree likely to cause serious injury or illness or a dangerous incident to occur, the inspector may seize the workplace. The power also extends to parts of workplaces and plant, substances or structures at the workplace. That is, if upon entering the workplace, an inspector reasonably believes that a plant is defective or hazardous to a degree likely to cause serious injury or illness, they can seize it.236 Having seized a thing, an inspector may move it or leave it in place but take reasonable action to restrict access to it.237 They may also dismantle or cause to be dismantled, a plant or structure that is seized.238 If an inspector restricts access to a seized thing, a person must not tamper, or attempt to tamper with the thing, or something restricting access to the thing, without an inspector’s approval.239 To enable a thing to be seized, an inspector may require the person in control of it to take it to a reasonable place by a reasonable time and, if necessary, to remain in control of it at the place for a reasonable time.240 That requirement must be made by written notice or, if for any

reason it is not practicable to give the notice, may be made orally and confirmed by written notice as soon as practicable.241 A further requirement may be made in relation to the same thing if it is necessary and reasonable to make the further requirement.242 A person cannot refuse or fail to comply with a requirement of an inspector in relation to the seizure, without reasonable excuse. The onus of proving the reasonable excuse is on the person seeking to rely on it.243 As soon as practicable after an inspector seizes a thing, the inspector must give a receipt for it to the person from whom it was seized.244 However, if for any reason it is not practicable to do so, the inspector must leave the receipt in a conspicuous position and in a reasonably secure way at the place of seizure.245 The receipt must describe generally each thing that has been seized and its condition.246 A seized thing is forfeited to the state if the regulator cannot find the person entitled to the thing, or cannot return it to the person entitled to it, after making reasonable efforts or if it reasonably believes it is necessary to forfeit the thing to prevent it being used to commit an offence.247 The regulator is not required to make inquiries if it would be unreasonable to make inquiries to find the person entitled to the thing.248 The regulator is not required to make efforts to return the thing if it would be unreasonable to make efforts to return the thing to the person entitled to it.249 If the regulator decides to forfeit the thing seized, the regulator must tell the person entitled to the thing of the decision by written notice.250 The regulator is not required to provide the notice to the person if it cannot find the person entitled to the thing, after making reasonable inquiries, or it is impracticable or would be unreasonable to give the notice.251 In deciding what inquiries and efforts are reasonable, or whether it would be unreasonable to give notice about a thing, regard must be had to the thing’s nature, condition and value.252 Any costs reasonably incurred in storing or disposing of a thing forfeited, may be recovered

in a court of competent jurisdiction as a debt due to the State from that person.253 If a seized thing has not been forfeited, the person entitled to the thing may apply to the regulator for the return of the thing once six months has passed since it was seized.254 The regulator must return the thing to the applicant unless the regulator has reasonable grounds to retain the thing.255 The regulator may impose any conditions on the return of the thing that the regulator considers appropriate to eliminate or minimise any risk to work health or safety related to the thing.256 Until a seized thing is forfeited or returned, the regulator must permit the person from whom the thing was seized (ie the owner of the thing, or their representatives) to inspect it and, if it is a document, to make copies of it at all reasonable times.257 This does not apply if it is impracticable or would be unreasonable to allow inspection or copying.258 Damage and compensation In the exercise, or purported exercise, of a compliance power, an inspector must take all reasonable steps to ensure that the inspector, and any assistant to the inspector, causes as little inconvenience, detriment and damage as is practicable.259 If an inspector or an assistant to an inspector damages a thing when exercising or purporting to exercise a compliance power,260 the inspector must, as soon as practicable, give written notice of the damage to the person who the inspector believes on reasonable grounds, is the person in control of the thing.261 If the inspector believes the damage was caused by a latent defect in the thing or circumstances beyond the inspector’s or assistant’s control, the inspector may state it in the notice.262 If, for any reason, it is impracticable to comply with that requirement to give the notice, the inspector must leave the notice in a conspicuous position and in a reasonably secure way, where the damage happened.263 But this does not apply to damage the inspector reasonably believes is trivial.264

A person may claim compensation if the person incurs loss or expense because of the exercise or purported exercise of a power of entry.265 Compensation may be claimed and ordered in a proceeding brought in a court of competent jurisdiction, or for an offence against the WHS Act brought against the person claiming compensation.266 The court may order compensation to be paid only if it is satisfied it is just to make the order in the circumstances of the particular case.267

Practical tips for inspector visits Consistent with the National Compliance and Enforcement Policy,268 an inspector will usually attend the site of a reported serious incident or a workplace complaint disclosing a serious risk to health and safety or repeated and systemic breaches. As discussed in another book of this series — Due Diligence: Incident Notification Management and Investigation — an inspector will usually use their initial site visit in the aftermath of an incident to gather forensic evidence of the scene and identify key witnesses. For example, inspectors will often take photographs of the scene, take measurements of distances and relevant plant, identify plant and structures involved in the incident including make, model and registration details, and seize certain equipment directly involved (eg harnesses). While an inspector will usually take a brief statement from eye witnesses, this will be recorded in the inspector’s notebook and is often restricted to identifying key events to better prepare the inspector for further interviews and inquiries. An inspector can have a person assist them in exercising their powers, including an interpreter.269 Similarly, in relation to visits of an inspector that have been initiated by a complaint, the inspector is mainly concerned with understanding the nature of the issue, and gathering preliminary evidence for it. If the inspector forms the view that the complaint relates to a minor breach, they will likely provide advice and

compliance information on the spot. If the complaint warrants remedial action, they may issue an improvement notice. They may also issue a penalty notice if there was a breach of the legislation of a minor nature, particularly by an individual duty holder. The key role of the company representative in that process is not only to co-ordinate and facilitate the inspection, but to anticipate the issues and present them truthfully, but in context (ie the manner in which one presents themselves in the most favourable light within the confines of the facts). Lies and half-truths will make a bad situation worse. Equally, an incomplete picture at this juncture is rarely undone. Inspectors are inherently suspicious. If one does not have the document when they ask for it, they assume it does not exist. Explaining the correct corporate structure or engagement of a worker can be critical to questions of liability. They are difficult questions to answer on the run but sadly often are. These answers shape the direction of the investigation. It is also important for the company representative to keep an accurate record of what was observed, seized or taken, including documents, which witnesses were spoken to and which were not.

Footnotes 165

Inspector Dall v Caines [2011] NSWIRComm 166 [5].

166

Ibid.

167

Ibid.

168

Ibid.

169

Ibid [6].

170

Ibid.

171

Ibid.

172

Ibid.

173

Ibid.

174

Ibid.

175

Ibid.

176

Ibid [7] (Cairnes).

177

Ibid.

178

Ibid.

179

Ibid.

180

Ibid.

181

Ibid.

182

Ibid.

183

Ibid [8].

184

Ibid.

185

Ibid.

186

Ibid.

187

Ibid.

188

Ibid [9].

189

Ibid.

190

Ibid [15].

191

Ibid [10].

192

Ibid.

193

Ibid.

194

Inspector Dall v Caines (No 2) [2012] NSWIRComm 21.

195

Work Health and Safety Act 2011 s 190.

196

Ibid s 188.

197

Ibid s 189.

198

Ibid s 157(2).

199

Inspector Dall v Caines [2011] NSWIRComm 166 [35].

200

Work Health and Safety Act 2011 s 163(1).

201

Ibid s 8(1).

202

Ibid s 8(2).

203

Ibid s 163(3).

204

Ibid s 163(2).

205

Ibid s 164(1).

206

Ibid s 164(2).

207

Ibid s 164(3).

208

Ibid s 163(4).

209

Ibid s 170.

210

Ibid.

211

Ibid.

212

Ibid s 165.

213

Ibid.

214

Ibid.

215

Ibid s 171(1).

216

Ibid s 171(2).

217

[2014] NSWSC 1580.

218

Ibid [89].

219

Ibid s 171(3).

220

Ibid s 171(4).

221

Ibid s 174(1)(a).

222

Ibid s 174(1)(b).

223

Ibid s 174(2).

224

Ibid s 166.

225

Ibid s 166.

226

Ibid.

227

Ibid s 185(1).

228

Ibid s 185(4).

229

Ibid s 185(5).

230

Ibid s 185(2).

231

Ibid s 185(3).

232

Ibid s 175(1).

233

Ibid s 175(1)(b).

234

Ibid s 175(2).

235

Ibid s 175(3).

236

Ibid s 176.

237

Ibid s 177(1).

238

Ibid s 177(1)(c).

239

Ibid s 177(2).

240

Ibid s 177(3).

241

Ibid s 177(4).

242

Ibid s 177(5).

243

Ibid s 177.

244

Ibid s 178(1).

245

Ibid s 178(2).

246

Work Health and Safety Act 2011, s 178(3). The requirement does not apply if it is impracticable or would be unreasonable to give the receipt, given the nature, condition or value of the thing being seized.

247

Work Health and Safety Act 2011 s 179(1).

248

Ibid s 179(2).

249

Ibid s 179(3).

250

Ibid s 179(4).

251

Ibid s 179(5).

252

Ibid s 179(7).

253

Ibid s 179(8).

254

Ibid s 180(1).

255

Ibid s 180(2).

256

Ibid s 180(3).

257

Ibid s 181(1).

258

Ibid s 181(2).

259

Ibid s 182.

260

Ibid s 183(1).

261

Ibid s 183(2).

262

Ibid s 183(3).

263

Ibid s 183(4).

264

Ibid s 183(5).

265

Ibid s 184(1).

266

Ibid s 184(2).

267

Ibid s 184(3).

268

Safe Work Australia, National Compliance and Enforcement Policy (2011). See www.safeworkaustralia.gov.au.

269

Work Health and Safety Act 2011 s 166.

CHAPTER 7 DOCUMENT PRODUCTION NOTICES   Key messages • Formal notices are part of the evidence collection process for a possible future prosecution — they must be treated seriously. • Legal professional privilege is available, despite the breadth of regulatory notices. • Privilege against self-incrimination is available for individuals and should be exercised in relation to provision of information and documents.

How far does a regulatory notice go? As discussed in Chapter ¶1, the Australian Competition and Consumer Commission (ACCC) is the regulator entrusted with enforcement of the federal consumer protection and competition laws. Case example

Did legal professional privilege apply to the notice? The ACCC was investigating a company called Daniels Corporation International Pty Ltd (Daniels Corporation), a medical waste management company specialising in the safe disposal of biological waste, for alleged breaches of competition laws. The relevant legislation at the time was the Trade Practices Act 1974 (Cth) (TPA). That law has since been replaced by the Competition and Consumer Act 2010 (Cth) (CCA). Under the TPA, the ACCC had broad powers — similar to those afforded to work health and safety (WHS) regulators. The ACCC had the right to enter premises of businesses, and to seek the

provision of information and production of documents. The notice for seeking the production of documents was (and still is under the CCA) called a “Section 155 Notice” after the section that affords the ACCC that power. The ACCC issued such a notice requiring the production of documents and the notice was served on Daniels Corporations’ solicitors. The solicitors produced some of the documents specified under the notice, but claimed legal professional privilege on behalf of their client with respect to the remainder of the documents. The ACCC brought an application to the Federal Court seeking orders requiring the applicant to comply with the notice. The question whether legal professional privilege applies to the notice was referred to the Full Court of the Federal Court for determination. At first instance, the full court held that it did not. The High Court unanimously overturned the full court’s decision holding that, in the absence of provisions to the contrary, legal professional privilege may be availed of to resist the provision of information or the production of documents in accordance with investigatory procedures of the kind which the section 155 notice asks for.270

Powers of WHS regulator to obtain information If the regulator has reasonable grounds to believe that a person is capable of giving information, providing documents or giving evidence in relation to a possible contravention of the WHS Act, or that will assist the regulator to monitor or enforce compliance with the Act,271 the regulator may, by written notice served on the person, require the person to give the regulator, in writing signed by the person (or in the case of a body corporate, by a competent officer of the body corporate) and within the time and in the manner specified in the notice, that information of which the person has knowledge.272 As Schmidt J observed in Hunter Quarries v State of NSW (Department

of Trade & Investment):273 “Section 155 is not concerned with the powers which inspectors may exercise on entry at a workplace. Rather, it makes express provision for the circumstances in which a regulator may serve written notices requiring persons to produce certain information and documents, or to appear to give evidence. That is, in circumstances where the regulator: … has reasonable grounds to believe that a person is capable of giving information, providing documents or giving evidence in relation to a possible contravention of this Act or that will assist the regulator to monitor or enforce compliance with this Act.” “Section 155 presupposes that the regulator already has information on which the required opinion could be formed. The obvious source of such information is an inspector who has exercised s 171 powers.”274 As Hall J observed in Perilya v Nash,275 the Regulator’s power under section 155 is “enlivened where ‘… the regulator has reasonable grounds to believe’ the following matters: (1) That the ‘person is capable’ of, inter alia, providing information including documents etc; (2) The ‘information’, ‘documents’ and/or ‘evidence’ concerns or relates to ‘a possible contravention of this Act’; and/or (3) The giving of information, provision of documents or giving of evidence will assist the regulator to monitor and enforce compliance with the Act. The use of the word ‘assist’ carries the meaning of helping or supporting or promoting the performance of the regulator’s function to monitor or enforce compliance etc.”276 The fact that a particular document, otherwise caught by section 155, may contain information relevant to matters other than work health and safety, does not invalidate the notice issued under section 155.277

In relation to the breadth of the section 155 power, Hall J observed in Perilya v Nash that the provisions of s 155(1) of the WHS Act are wide in scope: “Section 155(1) contains the expression ‘in relation to’ a possible contravention of the Act. As noted above, s 155(1) refers to documents etc ‘… that will assist the regulator to monitor or enforce compliance with this Act …’ The power under s 155(1) … is sufficiently broad to enable a regulator to obtain and examine documents called for in a notice where he/she holds the requisite belief on reasonable grounds for the purpose of determining whether in some relevant way, they do or may assist in determining whether a contravention of the WHS Act has occurred and/or for monitoring or enforcing compliance with the WHS Act.”278 That is, it is not up to the recipient of the notice to determine relevance. As Hall J observed, such a “right” if it existed, “could plainly undermine the integrity of an investigation authorised by the WHS Act even to the point of negativing the express statutory powers conferred under it”.279 The only relevant limitation in that context is the “reasonable grounds belief” of the Regulator. A section 155 notice is usually a series of written questions which the witness is required to answer in their own capacity or on behalf of a business or undertaking. It is important that those questions are answered carefully and that legal advice is sought in relation to responding to such notices. If the regulator has taken all reasonable steps to obtain the information through a notice in writing,280 they may by notice, require the person to appear in person to answer questions orally.281 That is, if the question has been asked in writing and the answer is unclear or contradicts other evidence the regulator has acquired through their investigation, they may wish to interview the person for the purpose of clarifying or confirming their answers. The architecture of the provisions however, makes it clear that it is not a fresh inquiry. If the

regulator wishes to pursue a fresh line of inquiry on a topic, they should firstly attempt to do so by providing written questions to be answered in writing. The notice may also seek the production of certain identified documents or categories of documents.282 The production of all documents falling under a particular category sought, and strict compliance with the production of any specific identified item, is crucial. This is so, not just from a compliance perspective, but also for the purpose of any future proceedings. A person must not, without reasonable excuse, refuse or fail to comply with a requirement of such a notice.283 The maximum penalty for failing to comply with a notice is $10,000 for individuals and $50,000 for corporations. A person is not excused from answering a question or providing information or a document on the ground that the answer to the question, or the information or document, may tend to incriminate the person or expose the person to a penalty.284 However, the answer to a question or information or a document provided by an individual is not admissible as evidence against that individual in civil or criminal proceedings (other than proceedings arising out of the false or misleading nature of the answer, information or document).285 It is an offence to give information in complying or purportedly complying with the WHS Act that the person knows to be false or misleading in a material particular, or omits any matter or thing without which the information is misleading.286 Furthermore, a person must not produce a document in complying or purportedly complying with the WHS Act, that the person knows to be false or misleading in a material particular, without indicating the respect in which it is false or misleading and, if practicable, providing correct information, or accompanying the document with a written statement signed by the person or, in the case of a body corporate, by a competent officer of the body corporate stating that the document is, to the knowledge of the person, false or misleading in a material particular, and setting out, or referring to, the material particular in which the document is, to the knowledge of the person, false or misleading.287 The onus is on any

person accused with a breach of this obligation, to show that the accused had indicated the extent to which the document was false or misleading or that the accompanying document sufficiently explained the extent to which the document was false or misleading.288 The maximum penalty for this offence is $10,000 for individuals and $50,000 for corporations. Once section 155 notices are being handed out, a prosecution is a certainty. Quite often the approach taken to compliance with notices of this kind, limits the available strategies once the prosecution has commenced. For example, if no audit results are produced in response to a notice seeking them, it becomes harder to argue that there was an adequate system of audits in place. If “Job Safety Analysis” records are not produced in answer to a request for risk assessment, it becomes harder to argue that they demonstrate compliance with risk management requirements. Furthermore, the production of a document in isolation may provide a misleading picture of the extent of compliance or the responsibility for a particular activity. You have to have a developed defence strategy in mind when complying with notices. It is far too late down the track to undo the damage done by an ill-conceived response to a notice. Notwithstanding the breadth of the notices, several protections are afforded in relation to such notices. Firstly, the notices do not require the production of a document which is a privileged document (ie subject to legal professional privilege). Secondly, individuals are still afforded the protection against self-incrimination in the production of documents and provision of information (the privilege does not apply to companies). Legal professional privilege and notices It is a reasonable excuse to withhold the production of a document requested under a section 155 notice for the reason that it is subject to legal professional privilege. In Daniels Corporation International Pty Ltd v Australian Competition & Consumer Commission289 (discussed above) Gleeson CJ, Gaudron, Gummow and Hayne JJ noted [11] that:

“It is now well settled that statutory provisions are not to be construed as abrogating important common law rights, privileges and immunities in the absence of clear words or a necessary implication to that effect.”290 The courts have made it clear that a person is entitled to resist the giving of information or the production of documents which would reveal communications between a client and their lawyer made for the dominant purpose of giving or obtaining legal advice or the provision of legal services including representation in legal proceedings.291 The WHS Act itself expressly provides that it does not override that privilege.292 The privilege is not merely a rule of evidence; it is a rule of substantive law and an important common law immunity.293 As such, the privilege is not restricted to processes of discovery and giving evidence in legal proceedings.294 Rather, the privilege is available with respect to any process which would otherwise compel a person to produce privileged documents or information, including statutory notices such as s 155 of the WHS Act.295 Despite its prevalence, legal professional privilege is not well understood in the context of safety. It is seen as some trick — either a magic wand that you wave over documents — or some black magic that one should not engage in if they are “serious about safety”. Neither is true. Writing “privileged” over a document which is otherwise not privileged, does not render it so. Conversely, failing to write it does not make it not privileged. The area of greatest contention in a regulatory investigation is the request for incident investigation reports that are privileged and confidential, through document production notices. Legal professional privilege is a protection afforded by the law to the confidential communication between a client and their lawyer. It applies to documents which have been created for the dominant purpose of obtaining legal advice or in contemplation of legal proceedings. Given the regulatory context of WHS incidents, a proper

investigation of the causes of the incidents is necessary for the purpose of advising in relation to liability under the WHS legislation. Furthermore, most serious incidents result in legal proceedings, such as coronial inquests, WHS prosecutions and civil litigation. As such, an investigation report may also meet the second, alternative limb of the test for privilege. However, an investigation report prepared in compliance with a requirement of a corporate policy can never meet the dominant purpose test since its dominant purpose will be compliance with the corporate policy rather than the provision of legal advice. Waiver Privilege attaches only to confidential information. As such, privileged documents must remain confidential and must not be disclosed to third parties. That includes unions. Disclosing the substance of an advice can also waive privilege over the advice. So does the common managerial practice of relying on the legal advice as the basis for justifying a decision. All these behaviours are inconsistent with the maintenance of the confidence of the information and, therefore, the protection afforded by the law for such documents. The regulator cannot compel disclosure of privileged documents, such as confidential investigation reports commissioned for the dominant purpose of obtaining legal advice or statements taken by lawyers. The right is so fundamental to our legal system that even subpoenas (ie court orders for production of documents) cannot compel disclosure of truly privileged information, let alone regulatory notices such as s 155 notices. Strategy with legal professional privilege Legal professional privilege is just that — a privilege. It is the client’s privilege and it is their right whether to maintain it or waive it by disclosing the document. It is the client’s choice. Once the privilege is waived, however, a client can’t get it back. Just because privilege has been invoked over something, it does not mean that the privilege must be maintained forever. Clients can waive it at any time if they so choose, and they do — often.

Reports are commissioned by lawyers in the course of litigation. They prove favourable to the case. They are disclosed or even served on the opponents and relied upon. So a privileged investigation report is privileged for so long as a client wishes it to be. The client can disclose the document to the regulator, union or the public at any point in time if they so choose. They just can’t undo that decision once made. Warning in relation to privilege against self-incrimination and legal professional privilege Before requiring a person to answer a question or provide information or a document, an inspector must: • identify himself or herself to the person as an inspector by producing his/her identity card (or in some other way)296 • warn the person that failure to comply with the requirement or to answer the question, without reasonable excuse, will constitute an offence297 • warn the person about their right against self-incrimination,298 and • advise the person about the right not to provide any information or produce any documents which are privileged documents.299 Unless that warning is given, the individual may refuse to answer the questions or provide the information sought.300 But an inspector may obtain and use evidence given to them voluntarily by any person.301 For that reason, an individual should always expressly claim the privilege against self-incrimination before providing information and documents. A person is not excused from answering a question or providing information or a document on the ground that the answer to the question, or the information or document, may tend to incriminate the person or expose the person to a penalty.302 However, the answer to a question or information or a document provided by an individual is not admissible as evidence against that individual in civil or criminal

proceedings (other than proceedings arising out of the false or misleading nature of the answer, information or document).303 The evidence or information can be used against other individuals and against the company, public authority or agency that is conducting the business or undertaking. Practical advice in relation to notices for production of documents It is important that notices are complied with strictly and accurately. That is, all reasonable searches must be undertaken for categories of documents sought. A considered view must be taken in relation to each item of requested documents. It may be appropriate to obtain legal or other expert advice in relation to the item, to ensure strict compliance. Careful consideration needs to be given to whether any document sought is subject to legal professional privilege, and if so, whether privilege will be claimed. If it is, a proper claim of privilege should be put forward, asserting sufficient information to allow the regulator to assess the basis of the claim — that is, why it is alleged that the dominant purpose of the creation of the document was to obtain legal advice or, in anticipation of legal proceedings and information, to support the assertion that it is indeed a confidential document for which the privilege has not been waived. Inevitably, one will engage in several correspondences on any claim of privilege. In relation to provision of information, the scheme introduced by the WHS Act is designed to facilitate the provision of information in response to an investigation in writing, in response to written questions.304 This is an opportunity to reflect on the questions, make appropriate inquiries and provide accurate, considered answers in writing. The regulator expects that the interviewee will seek legal advice on those questions. The regulator will usually also have taken legal advice in relation to their questions. The questions asked may well extend beyond what are appropriate questions to be asked — for example, in their style in making inbuilt assumptions, or being leading in some way, or in asking the interviewee to provide information which it is not appropriate for them to provide (eg asking an individual to provide a document which does not belong to them, but belongs to their employer), or asking them to specify who are officers in their

organisation (a question that requires legal advice and access to extensive information about the structure of the relevant organisation). While such questions are inappropriate, one cannot blame the regulator for asking them — the blame lies with the interviewee who answers them without seeking advice. Finally, it is very important that the privilege against self-incrimination is asserted in answer to questions and in the provision of documents. While the operation of the WHS Act affords individuals that protection, in effect, it allows the individual to refuse to answer the question but permits a regulator to use voluntarily-provided information. If the information is provided voluntarily, it is not subject to the same protections that would apply to information secured by the use of coercive powers. It is best to put the issue beyond doubt by expressly claiming the privilege. Footnotes 270

Daniels Corporation International Pty Ltd v Australian Competition & Consumer Commission (2002) 77 ALJR 40; [2002] HCA 49( Gleeson CJ, and Gaudron, Gummow and Hayne JJ [10]); McHugh J [39]; Kirby J [111] and Callinan J [132].

271

Work Health and Safety Act 2011 s 155(1).

272

Ibid s 155(2)(a).

273

[2014] NSWSC 1580.

274

Ibid 58–59.

275

[2015] NSWSC 706.

276

Perilya v Nash [2015] NSWSC 706 (Hall J [96]).

277

Ibid [97].

278

Ibid [114]–[115].

279

Ibid [117].

280

Work Health and Safety Act 2011 s 155(4).

281

Ibid s 155(2)(c).

282

Ibid s 155(2)(b).

283

Ibid s 155(5).

284

Ibid s 172(1).

285

Ibid s 172(2).

286

Ibid s 268(1).

287

Ibid s 268(2).

288

Ibid s 268(3).

289

(2002) 77 ALJR 40; [2002] HCA 49.

290

Ibid [11].

291

M Tooma, Tooma’s Annotated Work Health and Safety Act 2011 (Thomson Reuters, 2012 [269.20]; Esso Australia Resources Ltd v Federal Commissioner of Taxation (1999) 201 CLR 49.

292

Work Health and Safety Act 2011 s 269.

293

Attorney-General (NT) v Maurice (1986) 161 CLR 475; Daniels Corporation International Pty Ltd v Australian Competition & Consumer Commission (2002) 77 ALJR 40; [2002] HCA 49.

294

O’Reilly v State Bank of Victoria Commissioners (1983) 153 CLR 1.

295

M Tooma, Tooma’s Annotated Work Health and Safety Act 2011 (Thomson Reuters, 2012) [269.20].

296

Work Health and Safety Act 2011 s 173(1)(a).

297

Ibid s 173(1)(b).

298

Ibid s 173(1)(c).

299

Ibid s 173(1)(d).

300

Ibid s 173.

301

Ibid.

302

Ibid s 172(1).

303

Ibid s 172(2).

304

Although in practice, s 171 is still widely used to undertake interviews in person upon the exercise of the power of entry to a workplace by an inspector.

CHAPTER 8 ENFORCEABLE UNDERTAKING   Key messages • Enforceable undertakings have many advantages. • Duty holders should consider enforceable undertakings at an early stage in investigations. • Enforceable undertakings should be innovative and align with the duty holder’s overall commercial and legal strategy.

When is a decision to refuse, reviewable? In what circumstances is a decision to refuse an enforceable undertaking, reviewable? Case example

Decision not the same as a decision to prosecute On 22 May 2009, Francis Ryan, an employee of QUBE Ports Pty Ltd (QUBE), fell while unloading a cargo of steel reinforcing bars at Pinkenba Wharf in Brisbane, sustaining two broken arms and a head injury.305 Workplace Health and Safety Queensland (WHS Queensland) filed proceedings for breach of the duty of care of the now repealed Workplace Health and Safety Act 1995 (Qld) against QUBE in relation to the incident. QUBE applied for an enforceable undertaking, offering to: • deliver a national training program on job safety analysis for all management personnel • develop an educational 15 minute DVD focusing on working at heights

• conduct regular third party auditing of its health and safety management system • sponsor and organise a community safety day to promote safety in the port, and • make a donation to Kidsafe Qld Inc. The enforceable undertaking was reviewed by WHS Queensland’s Enforceable Undertaking Panel. Mr Leahy (Associate Director-General, Department of Justice and AttorneyGeneral) refused to accept the undertaking on the basis that QUBE had been involved in two subsequent workplace fatalities in February and July 2010 and, therefore, an enforceable undertaking was inappropriate — having regard to the compliance history of QUBE, and Mr Ryan (the injured worker) having a “strong desire” to have the appellant prosecuted for the incident. Neither ground was raised with QUBE prior to the decision. Furthermore, while one of the subsequent fatalities was in Queensland, the other was in Victoria. QUBE made an application for an order of review of the decision to refuse the undertaking under s 20 of the Judicial Review Act 1991 (Qld). At first instance, the court used its discretion 306 to dismiss the application for review on the basis that it would be inappropriate for proceedings to be continued. The court considered that decisions relating to who is to be prosecuted and what they are to be prosecuted for, cannot be subject to review by a court, as these are decisions made by the Executive (and, therefore, non-justiciable). The court also considered that the “rules of natural justice” were inapplicable to the decision made by the regulator. Natural justice is a legal concept that is also known as procedural fairness. The rules of natural justice are generally understood as follows: • The hearing rule — the principle that a decision-maker must afford a person, whose interests will be adversely affected by his or her decision, an opportunity to present his or her

case307 • The bias rule — the principle that a decision-maker must not have an interest in the matter to be decided308 • No evidence rule – the principle that an administrator’s decision must be based on logically probative evidence309 QUBE appealed that decision on the following grounds, that is, the judge: • incorrectly characterised the decision to grant or refuse an enforceable undertaking as a decision by a prosecutor to prosecute (and therefore, not able to be reviewed by a court) • erred in stating that the two fatal incidents in February and July 2010 were not relevant to the decision • incorrectly classified the decision to grant or refuse an enforceable undertaking as a decision to which the rules of natural justice did not apply • erred in finding that QUBE was denied natural justice by the failure of Mr Leahy to notify that he planned to consider the two fatal incidents when making his decision, and his failure to provide it with an opportunity to make submissions in that regard. The Queensland Court of Appeal upheld the appeal, quashed the Department’s decision and remitted the enforceable undertaking application to the Director General. The Director General accepted the enforceable undertaking. In making its decisions, the court found that a decision to accept or refuse an enforceable undertaking is not the same as a decision to prosecute (and therefore, can be subject to judicial review) as it may lead to a range of other consequences and it found that the trial judge had erred in not quashing. It also found that the acceptance of an undertaking will lead to the imposition

of clear legal obligations on a party, therefore affecting its rights and interests. Where legislation seeks to prejudice a person’s rights or interests, the rules of natural justice will apply. As the rules of natural justice did apply to the decision, Mr Leahy was required to provide QUBE with notice of his intention to consider the previous fatalities and to afford QUBE an opportunity to make submissions in this regard.

What is an enforceable undertaking? Enforceable undertakings are an Australian invention.310 An enforceable undertaking is a legally binding agreement entered into as an alternative to having the matter decided through legal proceedings for a contravention of the WHS Act.311 By their very nature, enforceable undertakings are designed to secure remedies for contraventions of regulatory provisions without the need for court proceedings and to provide non-adversarial and constructive solutions to regulatory compliance issues.312 The WHS regulator may accept written undertakings given by a duty holder as an alternative to proceeding with a prosecution.313 The undertaking can be offered “in connection with a matter relating to a contravention or alleged contravention by the person” of the WHS Act that did not involve reckless conduct and a risk of death or serious injury or illness.314 Enforceable undertakings have been a feature of the regulatory landscape in Australia for some time and are widely used by a number of Australian regulators,315 including some WHS regulators. Since their introduction by the ACCC in 1993 and the Australian Securities and Investments Commission (ASIC) in 1998, enforceable undertakings have been adopted by other federal and state agencies outside the WHS context, including, at the Commonwealth level: • the Civil Aviation Safety Authority (CASA)

• the Australian Communications and Media Authority (ACMA) • the Australian Transaction Reports and Analysis Centre (AUSTRAC) • the Therapeutic Goods Administration (TGA) • the Australian Prudential Regulation Authority (APRA), and • the Fair Work Ombudsman.316 At the state level, it has been adopted by: • the office of Fair Trading (in both New South Wales and Queensland) • Consumer Affairs Victoria (CAV) • the Environmental Protection Authority (Victoria and New South Wales), and • the Electrical Safety Office, Queensland.317 In the WHS context, enforceable undertakings have been a feature of the legislation in the Australian Capital Territory, Northern Territory, Queensland, Tasmania and Victoria, and at the Commonwealth level. A review of enforceable undertakings conducted by Johnstone and Parker in 2010 provided the following breakdown of undertakings accepted by the relevant regulators: • between 2003 and 2009, WHS Queensland had accepted 62 undertakings • between 2004 and 2009, WorkSafe Victoria had accepted eight undertakings • between 2004 and 2009, Comcare had accepted seven undertakings, and • between 2004 and 2009, WorkCover ACT had accepted 11

undertakings.318 Figure 13 — Enforcement options

Typically, the activities associated with an undertaking are substantial and must aim to deliver tangible benefits to the workplace, industry or the broader community.319 The idea is that the offender saves on legal costs associated with proceedings and the penalty they would face. Instead, they divert that money to good use. As such, there is an expectation that at least a three time multiple of the likely penalty is applied to the overall cost of a project offered through an undertaking. Figure 14 — Example of an enforceable undertaking published summary (SafeWork NSW 2016)

The regulator must publish guidelines for the acceptance of WHS undertakings.320 An undertaking may be made by an officer who is in contravention of their duties. The availability of an enforceable undertaking in connection with a contravention will involve consideration of a number of factors,

including the: • nature and extent of the contravention • quality of the remedial action proposed and the extent to which it achieves measurable improvements in workplace safety, and • likelihood that the enforceable undertaking will deliver real benefits to the workplace, industry or community, beyond that which would normally be expected of a duty holder.321 An enforceable undertaking will not be accepted where the offence relates to reckless conduct or where an infringement notice has been issued for the contravention.322 The giving of a WHS undertaking does not constitute an admission of guilt by the person giving it in respect of the contravention or alleged contravention to which the undertaking relates.323 The regulator must give the person offering a WHS undertaking, written notice of the regulator’s decision to accept or reject the undertaking and of the reasons for the decision,324 and must publish on the regulator’s website, notice of a decision to accept a WHS undertaking and the reasons for that decision.325 To ensure full accountability, the regulator should also publish the terms of the undertaking on its website. A WHS undertaking takes effect and becomes enforceable when the regulator’s decision to accept the undertaking is given to the offeror or at any later date specified by the regulator.326 A person making a WHS undertaking may at any time, with the written agreement of the regulator, withdraw or vary the undertaking.327 No proceedings for an alleged contravention of the WHS Act may be brought against a person if a WHS undertaking is in effect in relation to that contravention, or if the undertaking has been completely discharged.328 Figure 15 — Benefits of an enforceable undertaking

If the regulator accepts a WHS undertaking before prosecution proceedings are finalised, the regulator must take all reasonable steps to have the proceedings discontinued as soon as possible.329 Figure 16 — Process for enforcement of an enforceable undertaking

It is an offence to contravene a WHS undertaking that is in effect, with a maximum penalty of $50,000 for individuals and $250,000 for corporations.330 The regulator may apply to the appropriate court for an order if a person contravenes the WHS undertaking.331 The court can impose a penalty and may make: • an order directing the person to comply with the undertaking, and/or • an order discharging the undertaking, and/or • any other order that the court considers appropriate in the circumstances, including orders directing the person to pay to the state, the costs of the proceedings, and the reasonable costs of the regulator, in monitoring compliance with the undertaking in the future.332 The regulator can also initiate proceedings for the alleged contravention of the WHS Act that prompted the offer of the WHS undertaking.333 Footnotes 305

The following summary is based on QUBE Ports Pty Ltd v Chief Executive Department of Justice and Attorney-

General & Anor [2012] QCA 285. 306

Judicial Review Act 1991 (Qld) s 48(1)(a)(i).

307

Kioa v West (1985) 159 CLR 550; 62 ALR 321; [1985] HCA 81.

308

R v Sussex Justices; Ex parte McCarthy [1924] 1 KB 256.

309

Salemi v MacKellar (No 2) (1977) 137 CLR 396.

310

R Johnstone and C Parker, “Enforceable Undertakings in Action - Report of a Roundtable Discussion with Australian Regulators”, National Research Centre for Occupational Health and Safety Regulation Working Paper No 71 (Regulatory Institutions Network, Australian National University, Canberra, February 2010) 7.

311

Safe Work Australia, National Compliance and Enforcement Policy (2011) 9. See www.safeworkaustralia.gov.au.

312

Ibid 5.

313

Work Health and Safety Act 2011 s 216.

314

That is, a Category 1 offence.

315

R Johnstone and C Parker, above n 310.

316

Ibid 9.

317

Ibid.

318

Ibid 10–12.

319

Safe Work Australia, above n 311.

320

Work Health and Safety Act 2011 s 230(3).

321

Safe Work Australia, above n 311.

322

Ibid.

323

Work Health and Safety Act 2011 s 216(2).

324

Ibid s 217(1).

325

Ibid s 217(2).

326

Ibid s 218.

327

Ibid s 221.

328

Ibid s 222(2).

329

Ibid s 222(4).

330

Ibid s 219.

331

Ibid s 220(1).

332

Ibid s 220(2) and (3).

333

Ibid s 220(4).

CHAPTER 9 FINAL THOUGHTS

Effectively dealing with regulators does not come by accident. A business needs to develop an approach, a set of policies reflecting that approach, train their employees and officers in that approach and promote a culture consistent with that approach. This book has advocated a balanced strategy for dealing with regulators. That involves co-operating with regulators, but within the constraints of knowing your rights and insisting on them where it matters to you. There is no doubt that in the WHS context, the duties are broad and the regulatory powers even broader. But as broad as they are, they still have their limits. Unlike the interpretation of the general duties — where the aim is to give such provisions the broadest interpretation the language permits to give effect to the objects of the legislation — coercive powers will be interpreted strictly by courts. That is, the regulator does not get the benefit of the doubt. If they have not asked for a document, you do not have to give it to them. If they asked the wrong question, you do not have to correct them. If they cast the net too broadly, the courts will likely bring them back to the relevant issues. But, if despite having protections available to you under the law, you allow them to walk all over you, do not complain when they do. An improvement notice that requires an inappropriate remedial action allowed to stand, will frame the likely prosecution case in future. A sloppily answered section 155 notice will undermine a defence in a future prosecution. Providing a damaging privileged document cannot possibly be of assistance to you. If the regulator is pleased with you for doing so, there is very good reason for that, and you should gain no satisfaction from this. This book has attempted to provide a roadmap for balancing cooperation and protecting your rights when dealing with regulators.

However, the most effective legal risk management strategy of all is to ensure legal compliance — that is, to avoid the incidents in the first place.