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TRANSCRIPT
Brendan Torazzi
This is an ohs.com.au production Welcome to Episode 32 of the Australian Health and Safety Business Podcast. I'm Brendan Torazzi, the host of a show and today I'm with Jeremy Kennedy, who is the Special Counsel for Roberts legal. Good morning, Jeremy.
Jeremy Kennedy
Good morning, Brendan.
Brendan Torazzi
Now, as we, as I said before, thank you so much for doing this. Again, we had a bit of a tech issue before. And so this hopefully this podcast is going to be even better this time, because we've, we've already had one run through. So tell me about a little bit about the proposed amendments to New South Wales legislation that's currently is it sitting in Parliament or it's about to sit in Parliament.
Jeremy Kennedy
So there was a bill called the Work Health and Safety amendment review, Bill 2019, which was put before the lower house of New South Wales Parliament on the 12th of November last year, up to its second reading, and is to go to the opera house in, in New South Wales Parliament as yet. But don't I don't think there'll be any problems with getting through the opera house at all. They've certainly got the numbers. So yes, the bill, mate. I guess it focuses on some recommendations that came out of a federal Senate inquiry that was conducted in late 2018. With the findings being handed down in early 2019. I think the Senate inquiry was called they, they never came home. The framework surrounding the prevention investigation, prosecution probe industrial desks, so it was a review of the the model legislation that we currently operate under in Australia and New South Wales parliament have picked up some of those key recommendations in this bill. And probably one of the first states to to pick up those recommendations say for the introduction of industrial manslaughter legislation, which this bill falls short of, but which some of the other states have have already picked up.
Brendan Torazzi
So that this is sort of about, as I understand at the moment, there's, you know, if you're a PCBU, or a director of a company, you can take out insurance to safeguard against, I guess, any negligence that happens. That's changing now there was an all or once a bill goes through.
Jeremy Kennedy
Yeah, I wouldn't say negligence, because that is a civil issue. Okay, this is this is insurance has been available for about the last 10 years. And it's been quite controversial, which will interact with the work health and safety incident and investigation by the regulator and subsequent prosecution. So there's a number of policies that are available in the marketplace. There's directors and officers policies, stat liability, or statutory liability policies and specialists work health and safety policies. And they purport to give coverage for legal costs associated with the investigation and prosecution, and also for the penalties that are ultimately handed down. So those those insurance policies have been operating, as I say, for about the last 10 years. And a significant component to this new bill is to ban insurance and indemnities for penalties under the Work Health and Safety Act, so to make insurance for those penalties and costs associated with the prosecution illegal. Okay,
Brendan Torazzi
so you can still get insured for the actual defending your position. But if this goes through, that will mean that you can't insure against the penalties, which are really hefty, aren't they?
Jeremy Kennedy
Well, they are. And that's one of the other significant factors of this. This bill, it actually increases the penalties for the maximum penalty for a category one offence. So the penalties go up to for a corporation as the maximum penalty available under the Act 3,463,000 in for an individual, increasing the jail time to five years and penalties of up to 346,500 for an individual. So, so significant penalties for Category One offences and they might seem like odd numbers, but what they've done is they've actually picked up all the increases since 2011, when the bill first came in to CPI so it reflects CPI increases over the last nine years. That's why we have that figure. But the bill also puts in provisions that mean that every 12 months, the penalties will now go up automatically in line with CPI increases.
Brendan Torazzi
So what do you think the strategy is he from the government is to encourage businesses to, I guess, you know, get their act together from from day one, and training, education, all of that sort of thing in the workplace policies and procedures?
Jeremy Kennedy
Absolutely, absolutely. I mean, to date, we've had a fairly they've had a fairly big stick in terms of, you know, prosecutions and penalties, but the sticks even bigger now, and you can't you can't insure against being whacked with the big stick. So and I guess the argument has been, it's been quite controversial about whether or not you can take out insurance, because remember, these are criminal offences. So the argument is, it's against public policy to be able to insure for a criminal offence, you can't take out insurance that would cover you for penalties from a criminal assault or theft.
Brendan Torazzi
Yeah, exactly. You'd be able to
Jeremy Kennedy
four for criminal offences under the Work Health and Safety Act.
Brendan Torazzi
Yeah. So in other words, you're saying if you if you're prosecuted, then, you know, you can't take insurance out to stop you going from jail if you've done the wrong thing? So it makes it makes complete sense. Really.
Jeremy Kennedy
Yeah. And I mean, the other key argument against the availability of insurances in sentencing, and it's, you know, a criminal law function to give deterrence to the conduct. Now, the argument is, there's no deterrence for potential people being prosecuted if they can insure for the fine, where's the deterrence factor? There is none. So that's the argument against public policy. And there's no deterrence in sentencing if people can take out insurance companies can, and officers of companies can take out insurance for individual liability. So what I feel is fairly significant change to the landscape.
Brendan Torazzi
So when a matter comes before a court, are they actually aware if there's insurance policy in place at the moment? Would that be have to be disclosed? Or did they just assume that one is in place?
Jeremy Kennedy
No, they don't assume that at all. It's a matter for the evidence to come out. And there's been a couple there's been a number of cases where there's been some, some discussion about insurance. There's a significant one that was down in South Australia, and quite a few years ago now, where the judge became aware that the director and the company had insurance to cover the penalty. And even though it was an early guilty plea, which would automatically get you a deduction on the maximum penalty, the judge determined that because there was policies of insurance, that would pay the penalties, he went straight to the maximum penalty and issued the maximum penalty, whereas normally in sentencing, they would reduce that, because you have pleaded guilty. So is insurance known to the judge that depends upon what's put before him or her by the prosecutor. So it's certainly certainly open for the regulator, when they're investigating a matter, to issue notices, and so forth to require a defendant to produce information about whether or not they're insured. And that could be a fact that they submit on in terms of certainty. But it's not become a big issue about the legality of the policy, because there haven't been any cases where the insurance have denied indemnity. And there's been an argument about whether the policy is legal or illegal. It's not up to the judge hearing these matters to give a pronouncement on on that particular issue. It's just a factor that they could take into account in sentencing. And
Brendan Torazzi
yeah, I wonder what the insurance industry view on this is like, is it like a big sector of the market that companies are taking up this insurance against, you know, penalties,
Jeremy Kennedy
a lot of the policies are part of general business policy packages, and they sign up to extensions in the policy to give coverage for work health and safety. But that, but that that extension is worth a fair bit in terms of premium, additional premium. And look, I'd strongly advise any employers or PCB use and officers to do a review of their insurance programme to make sure that they're not going to be paying premiums for something that they don't get coverage on now because of changes to the law. And I should say that the law hasn't yet changed. So it's not allowed goes yet, but it will become illegal once the bill is signed off on and receives from the Governor,
Brendan Torazzi
it will be interesting to see how quickly the insurance companies and the policyholders jump on to all of these bill changes. Because, as you say, I mean, policyholders could potentially be paying additional premiums for stuff that they're not even covered for.
Jeremy Kennedy
Well, can I say just that I have good relationships with quite a number of insurance brokers, the bigger guys I on and then, you know, lots of smaller guys and, and I've been speaking with them, in fact, I spoke to one only the day before yesterday, and they don't seem to be aware of these issues. Yeah. So yeah, it might be a bit of a slap in the face for those guys when when the it finally does become law, and I can't see any issues with it becoming law because the coalition has a fairly strong position in Parliament, and they're making changes that I can't see the the Labour Party objecting to, because they're tightening up and making it harder and tougher for for employers. So I can't see our Labour Party friends wanting to to change the bill significantly. And there are a couple of other pretty important changes that need to be made. Or sorry, that are being made in the legislation as well, that we probably should talk about. So is that about the
Brendan Torazzi
spot fines and displacement of provisional improvement notices? What
Jeremy Kennedy
will that that is one thing that's not in this actual bill those come about as a result of changes to regulations? Okay, but but the other really significant thing I think we need to discuss for listeners is around the new category one offence that they have introduced that of gross negligence. So currently, the category one offence in the act is that of recklessness. So reckless conduct of a PCBU or an officer to a risk of serious injury or death. And in New South Wales, we have not had any successful prosecutions under the current category. One offence, there have been a few in other states under their legislation, which mirrors ours in terms of that that offence, but the introduction of a gross negligence offence as a category one offence will make it easier because there's a lesser standard than to recklessness easier for prosecution to take pay successful prosecution as a category one offence and expose those businesses and individuals to those maximum penalties that we talked about
Brendan Torazzi
why with all these changes, you just businesses just can't afford not to get it right, rarely, they can't
Jeremy Kennedy
afford not to be compliant made because you can, you know, have a very significant penalty against the business and
Brendan Torazzi
you know, shut your business down. Basically, if he has a business down
Jeremy Kennedy
and personal liabilities, it's, it's scary for business. And it means that they've got to become compliant, they have to ensure that there's proper training to their staff, and that they're getting the right information. But also importantly, that the senior managers and officers who are making the decisions around safety and have that additional obligation to exercise due diligence to ensure that their businesses comply with the legislation, that they're getting proper training and have proper implement implementation of systems around ensuring that they're exercising their responsibilities. What would you change your mind? It's a real game changer.
Brendan Torazzi
Absolutely. Like what would happen though, if you like, say, you're a business and you've got you've put hand on heart and go on making every best effort and endeavour to, you know, give my staff training. We've got policies and procedures in place. We're complying with the legislation, but an accident still happens. What happens now?
Jeremy Kennedy
Well, that comes down to the argument about whether or not they did everything reasonably practicable. Yeah, to ensure the safety which was the standard or the burden, that that has to be made. So if they can establish and they have their systems, and they're able to prove that they exercise due diligence, and there's still an accident, as long as they're judged by that reasonably practicable stick or yardstick, if you like. Then they can mount an argument to say that they did do everything reasonably practicable. But to be able to do that, they've got to be able to show that that their staffs properly trained that they've got proper processes and procedures for hazardous tasks, that they conduct risk assessments in relation to various tasks that and the data is being provided that information is being provided they're giving training supervision, to, to their employees, or to the to not just employees workers, which is God, how
Brendan Torazzi
do you think it's harder for like, smaller businesses or bigger businesses? Like, I guess for bigger businesses, there's more people, there's more things happening. And you know, that's a lot to manage. But then for smaller businesses, perhaps they don't have the resources and a capability in place to put all these systems in place. What have you seen out in the marketplace? Or is it a mixture of different size companies having different issues?
Jeremy Kennedy
Well, so the reasonableness test, one of the factors that the courts need to consider about whether you did everything reasonably practicable, does come down to an analysis of cost, availability of resources, size of business, etc. So a multinational top 100 ASX listed company that operates in the mining sector will be judged a lot harsher and a lot stricter in terms of what they should put in place, then a mum and dad plumbing or building trade business, for instance.
Brendan Torazzi
Yeah, that makes that makes sense. And so that's all covered in the legislation. It sounds like, well,
Jeremy Kennedy
it's not covered specifically. But it when you look at what is reasonably practicable, and the matters that the court takes into account, and considering that it is one of the factors, they do take into account the size of business availability of resources and costs, etc. So they're not going to small businesses are going to be judged to the same standard of implementing or acquiring safety devices and equipment, as say, you know, a large company that, that that makes a lot of money and has a lot of employees is going to be so I mean that that's not a failsafe though that argument. I mean, they're still small employers small to medium enterprises must still be compliant with the legislation and do what would be reasonable for a business of their size. So still ensuring that their their staff are properly trained, and that they're undertaking the tasks safely and have systems to ensure that they still need to have safe work procedures for specific hazardous tasks and ensure that they're complying. I mean, a classic example would be a small, let's say, a small building, domestic building or construction company, just because they're small, and they might only employ one or two blokes and a couple of apprentices doesn't mean that they don't have to comply with standards, in terms of working from heights and making sure that there's full protection, and that their staff are trained in that that system and the system to identify hazards like powerlines, and things that they might be working around. They're all basic things that they still have to comply with. Just because they're small doesn't mean that they don't have to do anything.
Brendan Torazzi
And so you were saying earlier in the call that some other excuse me, one sec. Some other states have done industrial manslaughter legislation, Victoria and Swa gone through as well.
Jeremy Kennedy
So Queensland in the ICT have already implemented industrial manslaughter. And Victoria recently passed some legislation for industrial manslaughter with Big fines, and imprisonment. So individual citing Victoria, the bill was $16.5 million as a maximum penalty for a company and 20 years jail for an individual. And WA, they had a bill that was put before Parliament in mid November, again, in implementing industrial manslaughter $10 million fine for companies and 20 years jail for individuals.
Brendan Torazzi
And so does that still that reasonably practical, practicable clause still apply in those states? So again, you know, you got to be able to demonstrate that you've done all the right things, training, you know, processes, procedures, all that sort of thing. Is that what the same, correct? Yeah, yeah. Wow. Okay. Well, it sounds like really big changes for businesses out there that it's um, how would you start? How would you say that they start like if you're a company that has nothing in place, and not obviously it depends on there's key industries that are more at risk than others.
Jeremy Kennedy
Certainly, I think the most basic thing that a small to medium business who is looking to make sure that they complied, they need to do a bit of a review of what they have available. I mean, bare minimums they need to have work health and safety policies and and procedures dealing with the key risks that they have in their business. I mean, if you had a medium sized business, you'd be saying, well, you should be doing a broad brush risk review, or risk assessment just to determine what are the key risk factors to our business? Is it working at heights is a traffic management is it? You know, if you're working with industrial machinery, risk of amputations or degloving injuries and things like that, yeah, and then, okay, so we know what our key risks are. So what are we doing to reduce or eliminate or eliminate those risks, and then part of that might be a procedure, part of it might be looking at some sort of some sort of way of engineering out that risk, putting putting in devices that automatically switch off machines, you know, the electronic Corden's and things like that. And then, you know, costing that out and having a programme to make sure that's implemented. But I think the key thing that they need to do is identify those hazards and risks. And even if they just got some swims some safe works. Yep, yep. And making sure that their staff are trained in those and that their staff are using them. It's no good having these procedures, and they sit in a folder on a shelf gathering dust. Yeah, they've got to be real documents that are being utilised to identify the risks and hazards and ensure that they're safe systems of work. So that's the first thing that you know that businesses need to do. Training is essential. I think training is essential and information provision of information. After that, it's supervision, making sure that people are doing the right thing. And if they're not, then taking some form of disciplinary action against them giving them warnings. And if you know, if it's significant breaches of your policies and procedures, terminating those stuff,
Brendan Torazzi
it sounds like, you know, depending on the size of the company, maybe you consider a, you know, annual review of your hazards and risks and make sure you know that you're tracking in the right direction and some perhaps some outside help if, if you couldn't if you didn't have someone internally doing that kind of review and audit? Well,
Jeremy Kennedy
yes, that's right. There's plenty of assistance available. I mean, our firm we've we've developed a basic desktop audit, and review, which is about 25 questions, with some multiple choice and some information and gives you back a report saying, here's here's a bit of a gap analysis for you, these are the key things you need to look at.
Brendan Torazzi
Oh, is that, is that an online thing? Or?
Jeremy Kennedy
It is? Yes, we've we've only just launched it in the in the last couple of months, but it's a simple tool, okay? Well, it's not a, it's not going to punch out
Brendan Torazzi
a whole heap of kind of solve all your problems if you've got them. So
Jeremy Kennedy
it's just helping you identify what some of those gaps in your systems may be. And then you can try it often. And try and fill the gaps. And I guess I should say that we do it for we do it under legal professional privilege. So that means that if you were to have an incident and you had the regulator, issuing you notices to produce documents, they often ask for any audits or reviews that you may have done on your systems. And and if we were to send you a legal document that said, you know, you've got some gaps in your systems that could be used against the business in any investigation. So we do it under legal professional privilege. So that means that it's confidential doesn't have to be provided to the to the regulator under their significant coercive powers to require you to provide information even though it might incriminate you.
Brendan Torazzi
Oh, that sounds great. We might. We might, if we can put your details on there, Jeremy. So listeners could potentially get in in contact with you to have a look at that if they're interested.
Jeremy Kennedy
Absolutely. That's that'd be that'd be great. Thank you.
Brendan Torazzi
So if people want to reach out to you, Jeremy has the best way to contact you.
Jeremy Kennedy
Well, email is always I guess, easy if it's not urgent. So my email address is Jeremy at Roberts legal. So that's Jr M EY at Roberts, our OB er T s le H gao.com.au. Or if it is urgent I I do offer 24/7 availability to clients significant incidences and so forth. People often, you know, in heavy industry, these things don't, don't happen nine to five they happen, you know, on the night shift or the dog watch, unfortunately, so listeners can contact me on my mobile phone, which is 0434499523.
Brendan Torazzi
And also, if you want to have a look at what your firm does, it's Roberts legal.com today Yeah, it sure is. Alright. Jeremy, thank you very much for the time today. And, you know, that's, it's, you know, I think part of it is just getting the information out there. As you say, a lot of people don't simply just don't know about it.
Jeremy Kennedy
Yeah, thanks for the opportunity, Brendan, most welcome and thanks for the chat. Great