National Harmonisation of WHS Legislation

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1 National Harmonisation of WHS Legislation Considerations for Schools Update No. 2 Roles and Structure July, 2011 Michael Shorter, CAHRI, CPMSIA, RSP (Aust) Grad. Dip. Occ. Health Prac. This update contains seven pages of important information and three pages of appendices. However, if you are busy and don t have the time to read the entire update we recommend you read the conclusion on page 7, and the highlighted sections on pages 4 & 6. Please then pass it on to someone else. As we are now reaching the pointy end of the implementation process I thought it an appropriate time to issue an update on the progress of the National Harmonisation of Workplace Health and Safety legislation, and to provide additional details of what this means for schools when the changes come into force. Some of the matters covered in this update also appeared in the first paper. However, given that we are now warming up prior to kick-off I thought it wise to use this paper take an in-depth look at roles and structure, as these are a central and substantial part of the changes which will be brought about by the new legislation. In short, the new Act completely overhauls and replaces all of the structural frameworks that existing under previous State based legislation. If you received the first paper you would be aware the Safe Work Act was reviewed, amended and agreed to at a meeting of the Workplace Relations Ministers Council (WRMC) in December 2009, and is on schedule for implementation in 2011 (and commencement from 1 January, ). It is important to understand that the process does not transfer responsibility for OHS legislation from the States and Territories to the Federal Government. What is proposed, and has essentially been agreed to 2, is for the States and Territories to each transition to a common regulatory framework. Proportions of the Act The proposed Act and Regulations run to over 700 pages. Correspondingly, the proposed legislation has, in general terms, greater breadth, detail and prescription than existing State and Territory legislation. The regulatory requirements placed on the person conducting the business or undertaking are very detailed and prescriptive, and it will be important for the officers of a school to ensure compliance (this is covered later in the paper). 1 There may be some implementation differences between the jurisdictions but the general position is that the Act will be consistently adopted across all jurisdictions from this date. As an example, the timing of the removal of high risk work licences granted under the existing framework may vary from State to State. 2 In June NSW legislated the right for Union Secretaries to prosecute breaches of the legislation, which is the first departure from the harmonized approach. National Harmonisation of OHS Legislation (update 2) Michael Shorter and Associates July,

2 Change of Approach: Redefinition of the Relationship Between Parties. Rather than using the traditional employee/employer model for determining whether a duty of care exists between the parties involved in any work arrangement the proposed Act describes the following parties : 1. Worker 2. Officer 3. Person Conducting a Business or Undertaking Each category 3 is expanded upon later in this paper. In summary, however, the main purpose of this new approach is to avoid argument over whether a relationship exists between the parties to any work arrangement. To this end, the draft Act does not contain a definition of employee, employer, contractor, etc. Person Conducting a Business or Undertaking The meaning of a person conducting a business or undertaking (abbreviated to PCBU, which has also been colloquially termed a Peekaboo ) is set out in Section 5 of the proposed Act. The PCBU is the primary duty holder in any business or undertaking. The use of the term business or undertaking seeks to capture the work activities of a business in their entirety, including the various undertakings involved in carrying out that business. Undertakings may involve the use of workers other than employees. Expressed in very simple terms the business of a school would be to provide educational services to students, and the undertakings would be the work carried out to deliver those services. Meaning of Person in Person Conducting a Business or Undertaking For the purpose of the Act a person can be either a natural person or a legal entity, the determination of which is dependent on the arrangement under which the person is working. For instance, a self-employed electrician operating as a sole trader would be considered a person conducting a business or undertaking under the proposed Act. However, if that sole trader was in turn engaged by a school to carry out work at a workplace under the management or control of the school then the school as a legal entity would be considered a person conducting a business or undertaking in its dealings with the contractor. If, under such circumstances, the contractor was injured then it is likely that the school would be considered the primary duty holder, as the person conducting the business or undertaking and the contractor considered a worker. On the other hand, if the contractor was engaged by a residential householder to install an electrical switch in a domestic residence the contractor would be considered the person conducting a business or undertaking for the workplace, and would be responsible for ensuring, so far as is reasonably practicable, that the health and safety of other persons is not put at risk as a result of the work being carried out. 3 This paper is concerned with the internal structure and roles of the school. It should be noted that there are also external categories, such as supplier, which are not discussed in this paper. National Harmonisation of OHS Legislation (update 2) Michael Shorter and Associates July,

3 Elements of the Primary Duty of Care The specific elements of the primary duty of care are set out in Section 19 clause (3) of the draft Act. The PCBU;.must ensure, so far as is reasonably practicable; (a) the provision and maintenance of a work environment without risks to health and safety 4 ; and (b) the provision and maintenance of safe plant and structures; and (c) the provision and maintenance of safe systems of work; and (d) the safe use, handling and storage of plant, structures and substances; and (e) the 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; and (f) the provision of any information, training, instruction or supervision that is necessary to protect all persons from risk to their health and safety arising from the work carried out as part of the conduct of the business or undertaking; and (g) that the health of the workers and the conditions of the workplace are monitored for the purpose of preventing illness or injury of workers arising from the conduct of the business or undertaking. You will note that the obligations are preceded by the term must ensure, so far as is reasonably practicable;. The reasonable practicability test is a standard test applied by the courts to determine whether a duty holder has met their duty of care. The inclusion in the draft Act of a definition of reasonable practicability will clarify, to some degree, how far a duty holder must go in order to satisfy this test, should it ever be necessary for the test to be applied. The inclusion of this definition also signifies that a specific intention of the proposed Act is to establish the risk management process as the legal cornerstone for managing work health and safety. For the information of readers the definition and a short explanation of the process is included as Appendix 2, and it is recommended that all schools closely follow the principles/process to which it eludes. In broad terms these are the legal obligations placed upon the PCBU (read the school as a legal entity) by the proposed Act 5. The responsibility for ensuring the PCBU, which in a school s case is likely to be an inanimate legal entity, fulfills its primary duty falls squarely in the lap of the officers of the PCBU. 4 This includes both the physical work environment in which work is carried out and the way work is undertaken such as hours of work, work organization, etc 5 These will be fleshed out with more specific detail in the Regulations National Harmonisation of OHS Legislation (update 2) Michael Shorter and Associates July,

4 Important Step - Identifying the PCBU for the School One of the important steps a school must take in the lead up to the introduction of the new legislation is to identify the PCBU. If the school is a corporation then the legal entity will be the PCBU. I would suggest that it is unlikely a school would be structured in a manner that could lead to a natural person being the PCBU. Important Note Don t be confused by Sections 20 to 26 of the Act Sections 20 to 26 of the proposed Act set out the duties of a PCBU in more detail. If you read these sections don t be confused into thinking that they give rise to a natural person being the PCBU for the school. These duties relate to the primary duty holder and, as I have said above, if the school is a corporation then the legal entity will be the PCBU, not an individual person. Definition and Duties of an Officer For the dual purpose of simplicity and clarity the WRMC has agreed to adopt the definition of an officer from the Corporations Act 2001, which is included as Appendix 1 6. Section 27 clause (1) of the proposed Act sets out the duty of an officer, and reads: If a person conducting a business or undertaking has a duty or obligation under this Act, an officer of the person conducting the business or undertaking must exercise due diligence to ensure that the person conducting the business or undertaking complies with that duty or obligation. In brief, the officers of an organisation are those people who make, or participate in making, decisions affecting the whole or a substantial part of the business. Officers are those involved in making the strategic and senior operational decisions, which includes both senior employees and board members of a corporation (whether paid or unpaid). Put simply, those identified as officers are able to choose whether the school demonstrates, or doesn t demonstrate, a commitment to managing WHS. The result is that board members will be drawn much closer to the epicenter of a school s work health and safety management process. It is important to note that Section 27, by the inclusion of the term..must exercise.. places upon the officers a positive obligation to exercise due diligence in the management of work health and safety. If the officers of a school do not exercise their due diligence this is a breach of their duty, irrespective of whether an accident has occurred or not. It is, of course, possible to pursue an action for breach of due diligence against directors under the existing legislation of many jurisdictions, though the wording of the proposed Act removes the need for the inclusion of cumbersome deeming provisions. 6 Officer also means an officer of the Crown or an officer of a local authority, other than an elected member of a local authority acting in that capacity, though the matters discussed in this paper do not relate to either of those arrangements. National Harmonisation of OHS Legislation (update 2) Michael Shorter and Associates July,

5 However, it is important to also note that the regulators have recognised the important difference between paid and voluntary board members. Board members who are paid ( paid does not include reimbursement of out of pocket expenses) can be prosecuted for breach of duty whereas voluntary board members cannot. However, this does not mean that voluntary board members can wash their hands of involvement in the WHS management process. Voluntary board members need to exercise the same level of due diligence as their paid counterparts otherwise action can be taken against the PCBU or, worse still, may expose the paid officers of the school (read senior management) to an increased risk of prosecution and exposure to personal liability. Specific Duties of Officers to Meet Due Diligence Obligations Section 27 clause (5) of the proposed Act sets out the specific duties and officer should take reasonable steps to undertake in order to meet their due diligence obligations, and reads: In this section, due diligence includes taking reasonable steps; (a) (b) (c) (d) (e) to acquire and keep up-to-date knowledge of work health and safety matters; and to gain an understanding of the nature of the operations of the business or undertaking of the person conducting the business or undertaking and generally of the hazards and risks associated with those operations; and to ensure that the person conducting the business or undertaking 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; and to ensure that the person conducting the business or undertaking has appropriate processes in place for receiving and considering information about incidents, hazards and risks, and responds in a timely way to that information; to ensure that the person conducting the business or undertaking has, and implements, processes for complying with any duty or obligation of the person conducting the business or undertaking under this Act; and (f) to verify the provision and use of the resources referred to in paragraphs (c) to (e). As you can see, the role of officer in a school is central to both the; 1. satisfaction of the due diligence requirements of the Act; and 2. capability of the PCBU to function and meet the compliance obligations imposed on the PCBU by the Act and Regulations. The suggestions on the following page are made to assist schools, as well as officers, in preparation for the changes. National Harmonisation of OHS Legislation (update 2) Michael Shorter and Associates July,

6 Important Step - Determine the Officers for the School Basically, there are two levels of responsibility within a corporation officer and worker (there are other roles such as other persons at the workplace (S29), but I will leave these aside for the time being so things aren t overcomplicated). In order to prepare for the commencement of the new legislation one of the first questions that needs to be answered is Who is an officer?. As a general guide in an Independent School the Board (and certain sub-committee members), Principal, Deputy Principal, Business Manager, Senior Management Team and, in a multi campus school, any Heads of Campus will be officers. As this is only a guide it remains important for each school to complete an assessment as structural differences may mean that others will be officers by virtue of their role. After completing your review it should be retained as a record of the process. Important Step Advise the Officers Once the identity of the officers has been determined the school should write to each of the officers to advise them of their appointment, and the legal expectations they must meet. It is important to note that the officer tag comes with their position within the school and, therefore, it is not role that can be avoided or declined (other than by resigning their position). Important Step Train the Officers Officers must acquire and maintain an up-to-date knowledge of work health and safety, in particular work health and safety in an educational context. In addition, the officers will be responsible for ensuring the primary duty holder, the PCBU, does everything that is reasonably practicable to meet its obligations under Section 19 clause (3) of the Act. It is, therefore, recommended that they are trained to understand the compliance requirements of the proposed Act and Regulations in order that they have the skills necessary to properly implement a PCBU monitoring and reporting framework. Definition and Duties of a Worker A broad definition of worker has been utilised to ensure that as many work relationships as possible are captured by the legislation. This includes an employee, a contractor or sub-contractor (or their employees), an employee of a labour hire company assigned work in a person s business or undertaking, an outworker, an apprentice or trainee, a student gaining work experience, a volunteer, as well as the person conducting a business or undertaking if the person works in that business or undertaking. Section 28 of the proposed Act spells out the duties of workers. The legal standard of care expected of workers will be one of reasonable care (broadly speaking this means to take reasonable care of themselves, to take reasonable care not to adversely affect the health and safety of anyone else by their acts or omissions, and to follow any reasonable instructions, policies or procedures of the PCBU). National Harmonisation of OHS Legislation (update 2) Michael Shorter and Associates July,

7 It is important to note that a volunteer is a worker if they are considered to be carrying out work for the PCBU ( work is not defined by the Act, and it should therefore be afforded its usual meaning). As a result, a person working as a parent aide in the classroom or as a shop assistant in the canteen may be considered a worker for the purpose of the Act. It is important to note that volunteers considered to be workers are not, unlike voluntary officers, granted an exemption from personal liability in the event of prosecution for any breach of duty under the Act. Definition and Duties of Other Persons at the Workplace Section 29 of the proposed Act spells out the duties of other persons at the workplace. This is a catch all classification designed to catch everyone who is not considered an officer or worker at a workplace. It will include students, visitors to the school shop, parents at social functions or sporting events under the control of the PCBU, trespassers, passers-by, etc. Like workers, the PCBU owes a duty of care to this class of people. People who fall into this category also owe a duty to others, and the legal standard of care expected will, as is the case with workers, be one of reasonable care. Conclusions In order to prepare for the commencement of the new legislation a school must take immediate steps to: 1. Formally identify the PCBU. 2. Identify the officers and record and retain the records of assessment. 3. Write to the officers setting out the legal expectations of the role. 4. Train the officers so that they are able to satisfy both; a) the due diligence requirements of the Act; and b) the need to ensure the PCBU is capable of functioning and meeting the compliance obligations imposed on the PCBU by the proposed Act and Regulations. Officers should also be trained to properly implement a PCBU monitoring and reporting framework. Our recommendation is that you should commence an assessment of your roles and structures as quickly as possible, so that your school is in a position to meet the compliance requirements of the legislation from the start of next year. If you are concerned about the prospect of this task our organization is in a position to assist you with this task. As specialists in providing work health and safety consulting services to the education sector we understand the roles and structures that exist in schools and can assist you in preparing for the new legislative regime. It is also our intention to provide further periodic updates during the next six months. Our next update is planned for August and will cover the need for a PCBU to consult, communicate and co-operate with other PCBUs who share a duty, as well as any workers at a workplace under the management or control of the PCBU. National Harmonisation of OHS Legislation (update 2) Michael Shorter and Associates July,

8 Appendix 1 "officer" of a corporation means: (a) (b) (c) (d) (e) (f) (g) a director or secretary of the corporation; or a person: (i.) who makes, or participates in making, decisions that affect the whole, or a substantial part, of the business of the corporation; or (ii.) who has the capacity to affect significantly the corporation's financial standing; or (iii.) 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); or a receiver, or receiver and manager, of the property of the corporation; or an administrator of the corporation; or an administrator of a deed of company arrangement executed by the corporation; or a liquidator of the corporation; or a trustee or other person administering a compromise or arrangement made between the corporation and someone else. Note: Section 201B contains rules about who is a director of a corporation. "officer" of an entity that is neither an individual nor a corporation means: (a) (b) (c) a partner in the partnership if the entity is a partnership; or an office holder of the unincorporated association if the entity is an unincorporated association; or a person: (i.) who makes, or participates in making, decisions that affect the whole, or a substantial part, of the business of the entity; or (ii.) who has the capacity to affect significantly the entity's financial standing. National Harmonisation of OHS Legislation (update 2)- Michael Shorter and Associates July, 2011 Appendix 1

9 Appendix In determining what is reasonably practicable in ensuring work health and safety In determining what is (or was at a particular time) reasonably practicable in ensuring work health and safety, regard must be had and appropriate weight given to all relevant matters including: (a) the likelihood of the hazard or risk occurring; (b) the degree of harm that might result from the hazard or the risk; (c) what the person concerned knows, or ought reasonably to know, about: (i.) the hazard and the risk; (ii.) ways of eliminating or minimising the hazard or the risk; (d) the availability and suitability of ways to eliminate or minimise the hazard or the risk; (e) the cost of eliminating or minimising the hazard or the risk. Author s Note: The application of the reasonable practicability test is a balancing act. The first step is to weigh up elements (a), (b) and (c) to determine the level of risk and the availability of options. Basically, this is your risk assessment process. Once this has been completed you need to assess the other side of the ledger by weighing up elements (d) and (e). These elements cover availability, suitability and cost. In essence, the process involves weighing elements (a), (b) and (c) against (d) and (e), and choosing the most appropriate management option on balance, all things considered. National Harmonisation of OHS Legislation (update 2)- Michael Shorter and Associates July, 2011 Appendix 2

10 Appendix 3 This paper was prepared by Michael Shorter of Michael Shorter & Associates. Michael Shorter & Associates prepare and deliver a range of workplace health and safety products & services. Contact Details Michael Shorter Michael Shorter & Associates, 25 Murray Street, Evandale, TAS 7212 Phone (03) Fax (03) Website: michael@asaferschool.com.au Disclaimer: The author of this paper will not take responsibility for loss, damage, or injury to person incurred or suffered by any organisation or natural person acting or omitting to act on the basis of the information contained in the paper. The paper refers to statutes, regulations and standards but should not be used or relied upon as a substitute for professional legal advice. National Harmonisation of OHS Legislation (update 2) - Michael Shorter and Associates July, 2011 Appendix 3

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