Occupational Health and Safety College - Essay Example

TOPIC Why is it thought that making 'officers' personally liable will improve the health and safety of workplaces Critically assess the Model Bill's provisions dealing with the duty of officers. Do you agree with them Explain. Introduction This paper critically considers the duties and liabilities of 'officers' as provided for in the Australian Model Work Health and Safety Bill of 2009. The paper firstly establishes a context for this discussion by highlighting the main goals and objectives of the Model Bill. It then proceeds to examine how 'officers' are defined within (and in relationship to) the Model Bill. Thereafter, the paper critically discusses the duties and obligations of officers as set down in the bill. It then examines the perception that Occupational Health and Safety (henceforth, O H & S) standards improve when officers are held personally liable for any errors or acts of malfeasance in relation to the provisions of the bill. Finally, the paper highlights possible legal 'loopholes' which culpable 'officers' may exploit to evade personal prosecution, and it concludes by making some recommendations on what additional reforms may be introduced to augment the effectiveness of the bill. The goals and the objectives of the Model Work Health and Safety Bill of 2009 The Model Health and Safety Bill (2009) aims to "provide for a balanced and nationally consistent framework to secure the health and safety of workers and workplaces" (S. 3). More specifically, it seeks to ensure that "workers and other persons [are] given the highest level of protection against harm to their health, safety and welfare from hazards and risks arising from work (or from specified types of substances or plant).(S. 3). Among the key objectives of the bill are: Promoting teamwork and effective communication among various O H & S stakeholders including: employer organisations; workers' unions; suppliers of industrial tools/machinery/raw materials; representatives of local or central government, etc.; Promoting education and training to strengthen awareness of O H & S issues and facilitating the continuous improvement (or progressively higher standards) of O H & S. Establishing effective standards control systems to monitor O H & S implementation and securing compliance through appropriate enforcement measures targeting organisations or specific personnel exercising powers under this Act; Strengthening and harmonising laws pertaining to O H & S and establishing a consistent national framework for managing O H & S issues (S. 3). For purposes of this discussion, the five main objectives of the Model Bill (as summarised above) can be further condensed into only three key outcomes. Firstly, the bill seeks to establish a harmonised and nationwide framework for defining O H & S criteria in Australia, and to continually strengthen this framework through regular education and training. Secondly, the bill seeks to identify all stakeholders involved in the implementation of O H & S regulations, and to specify the duties and obligations of these stakeholders. Finally, the bill seeks to clarify the enforcement measures provided by the bill and to specify the penalties imposed on organisations or individuals who shirk their O H & S responsibilities. The definitions and responsibilities of 'officers', according to the Model Bill The Model Bill distinguishes between two broad categories of 'officers'. One category comprises of public officers working for regulatory bodies such as government departments or local authorities. As stated in the bill: "A person who makes, or participates in making, decisions that affect the whole, or a substantial part, of the business or undertaking of a Government department, public authority or local authority is taken to be an officer of the Crown" (S. 244). As further stated in the appendix of the bill, "A jurisdiction will need to include local provisions to ensure that appropriate arrangements are made for the appointment as an inspector or a person who is an inspector under a corresponding WHS law" (S. 155). Officers serving the crown as regulators, inspectors, compliance officers or investigators perform functions determined by their local jurisdictions, which may include: Inspecting workplaces, machinery, raw-materials and finished products to determine their health and safety standards, Approving, refusing, suspending or revoking O H & S permits for businesses and industries; Enforcing O H & S laws and regulations by imposing fines, penalties or restrictions and by referring serious offenders to prosecuting authorities; Investigating health and safety complaints and providing advice regarding safe and healthy practices; and Encouraging managers and employees to participate in O H & S programmes. The second category of officers identified in the Model Bill serves within private or public corporate bodies as provided for in section 9 of the Corporations Act of 2001. These officers govern corporate bodies on behalf of shareholders, and according to the Corporations Act of 2001, these officers can be Company Directors, Secretaries or any other individuals who "makeor helpto make decisions that affect the whole or a substantial part of the business or who may significantly affect the company's financial standing" (S. 180). The duties of corporate officers, as specified in the O H & S Model Bill involve taking reasonable steps: (a) "to acquire and keep up to date knowledge of work health and safety matters; and (b) to gain an understanding of the nature of the operations of the business or undertaking of the body and generally of the hazards and risks associated with those operations; and (c) to ensure that the body has available for use, and uses, appropriate resources and processes to enable hazards associated with the operations of the business or undertaking of the body to be identified and risks associated with those hazards to be eliminated or minimised; and (d) to ensure that the body has appropriate processes for receiving and considering information regarding incidents, hazards and risks and responding in a timely way to that information; and (e) to ensure that the body has, and implements, processes for complying with any duty or obligation of the body under this Act" (S. 26). Examples of some of the obligations consistent with these duties include: reporting notifiable incidents consulting with workers ensuring compliance with notices issued under this Act ensuring the provision of training and instruction to workers about work health and safety ensuring that health and safety representatives receive their entitlements to training to verify the provision and use of the resources and processes referred to in paragraphs (c) to (e)" (S. 26). Critiquing the duties and responsibilities of officers Inspectors, safety managers and compliance officers serving the crown within specific jurisdictions partly work under 'localised' conditions, as clearly provided for by the Model Bill. This 'regionalisation' O H & S operations somewhat contradicts the 'spirit' of the Model Bill, which purports to 'standardise' O H & S criteria throughout Australia. Currently, different jurisdictions tend to place different kinds of emphases on proactive as opposed to reactive O H & S inspections. Furthermore, wide differences in maximum fines imposed by different jurisdictions have been noted (http://ohs.anu.edu.au/ohs/index.php#standard). However, "while there are important differences in enforcement policy and practice, there are some common approaches between some jurisdictions and, in recent years, all OHS inspectorates have participated in some nationally coordinated and implemented enforcement initiatives" (ibid.). Corporate officers face tensions between 'standardising' and 'localising' tendencies. On one hand, they are supposed to be conversant with the broad O H & S framework in force across all of Australia. But at the same time, there are supposed to comply with local by-laws and regulations. It is also interesting that corporate officers (who are held accountable for implementing O H & S standards) are 'loosely defined' in the Model Bill to include Company Directors, Secretaries, any individuals making decisions which affect a substantial part of the business and any persons who have the capacity to significantly affect the corporation's financial standing. This 'loose' definition potentially encompasses all levels of management ranging from the most senior executive right down to a site manager. One consequence of such 'inexact' definition (as we shall see) is that culpable individuals may be difficult to 'pin down', since many categories of officers are included within this definition. Finally, it also appears to be slightly contradictory that the Model Bill seeks to recruit all workers within corporate organisations to become actively involved in O H & S issues while at the same time insisting that accountability rests of a few designated officers. This contradiction appears to undercut the ethos of collective responsibility promoted by the bill. The O H & S implications of personally prosecuting corporate 'officers' It is noteworthy that the Model Bill exonerates crown-affiliated officers from personal prosecution for any acts of negligence or malfeasance pertaining to O H & S implementation in Australia. Instead, the bill makes provisions for serving 'crown agencies' with 'infringement notices': "1). If the Crown is to be served with an infringement notice, or proceedings are brought against the Crown, for an offence against this Act, the responsible agency in respect of the offence may be specified in the infringement notice or any document initiating, or relating to, the proceedings. 2). In this section, the responsible agency in respect of an offence is the agency of the Crown: (a) whose acts or omissions are alleged to constitute the offence; or (b) if that agency has ceased to exist, that is the successor of that agency; or (c) if that agency has ceased to exist and there is no clear successor, that the court declares to be the responsible agency. 3). The responsible agency in respect of an offence is entitled to act in proceedings against the Crown for the offence and, subject to any relevant rules of court, the procedural rights and obligations of the Crown as the accused in the proceedings are conferred or imposed on the responsible agency. 4). The person prosecuting the offence may change the responsible agency during the proceedings with the court's leave" (S.245). In other words, the agencies in within which crown-affiliated officers operate bear the brunt of prosecutions, but not the officers themselves. Corporate officers, on the other hand, enjoy no such 'immunity' from personal prosecution. As the Model Bill makes clear (with regard to reckless conduct): "A person commits a Category 1 offence if: (a) the person has a health and safety duty; and (b) the person engages in conduct that, without reasonable excuse, exposes an individual to whom that duty is owed to a risk of death or serious injury or illness; and (c) the person is reckless as to the risk of death or serious injury or illness to that individual" (S.30). The maximum penalty for category 1 offences is: "In the case of an offence committed by an individualas a person conducting a business or undertaking or as an officer of a body corporate-$600 000 or 5 years imprisonment or both. In the case of an offence committed by a body corporate - $3 000 000" (S.30). At first sight, the idea of making corporate officers personally liable for O H & S infringements appears to be a 'failsafe' way of improving workplace health and safety standards, since (presumably) no 'sane' officer would wish to be personally charged for any 'omissions'. However, this reasoning soon proves to be faulty, especially when it is applied in cases involving junior officers. In the first place, targeting an individual rather than the entire corporate entity sends out the message that O H & S 'solutions' lie in individual agency rather than in corporate structures. One would expect companies to 'pre-empt' cases of individual 'ineptitude' by putting in place recruitment structures which place the most effective individuals in the most 'strategic' positions. Targeting the individual 'underperformer' - as the Model Bill does - is akin to prosecuting the 'elderly' airline pilot who crashes his jet because of failing eyesight instead of targeting the corporate body which allowed such a pilot to fly in the first place. In fact, targeting the Airline rather than the pilot sends out the message that safety lies in effective (or efficient) corporate structures - a message which ultimately promises to improve future safety standards. While criticising the thinking which makes junior officers liable for personal prosecution under the provisions of the Model Bill, we should, however, readily endorse the Bill's principle of holding Company Directors personally liable. The Companies Act of 2001 clearly states that Corporate Directors have no excuse whatsoever for not taking full charge of the operations of their companies, and for ensuring that these operations proceed efficiently. The heavy responsibility laid on company directorship has been eloquently described in the American case of Francis v United Jersey Bank 432 A 2d 814 (NJ 1981) at 821-823: "As a general rule, a director should acquire[an] understanding of the business of the corporation. Accordingly, a director should become familiar with the fundamentals of the business in which the corporation is engaged. Because directors are bound to exercise ordinary care, they cannot set up as a defense lack of the knowledge needed to exercise the requisite degree of care. If one "feels" that he has not had sufficient business experience to qualify him to perform the duties of a director, he should either acquire the knowledge by inquiry, or refuse to act." In line with this thinking, making Company Directors personally liable only underscores their obligation to fully commit themselves to the corporate structures over which they preside. While suggesting that the Model Bill should discriminate between junior officers and Company Directors by only allowing for the prosecution of the latter, we also need to be cautious of certain complexities which make proof of a Director's liability difficult. As Deacons (2008) has suggested, prosecutors have the burden of proving that a culpable officer personally knew about the O H & S matter; that he or she could have done something personally to avert the problem, and that the contravention in question cannot be reasonably attributed to someone else (p.1). The New South Wales case of Inspector Wayne James v Sunny Ngai and Ors6, easily comes to mind. In the case, an employee got severely injured while trying to clean an embossing machine. The employee's company was charged with a breach of section 8 of the NSW OHS Act, and four directors were also charged in their personal capacities under section 26 of the same Act. The Managing Director, pleaded guilty, and was convicted and charged. However, two other directors pleaded not guilty on the grounds that they were not in a position to influence the operations of the company. One pointed out that his principal role was purchasing, and the other one argued that he was mainly involved in sales and marketing. The two directors were found not guilty, since they were deemed to be not directly complicit in the O H & S contravention. Conclusion: closing off legal loopholes Since O H & S should be a top priority for all nations seeking to underpin social and economic activities with consistent O H & S standards, it becomes necessary for legal scholars to continually review the O H & S legislation currently in force, and to make it more efficacious by 'closing off' any inconsistencies or legal loopholes. The following suggestions, offered in place of a 'conventional' conclusion, are made in this spirit: There should be more coordination between regional O H & S regulators to bring about more standardisation and 'harmonisation' in the implementation of O H & S standards in Australia. Senior Regulators or officers working for the crown should be liable for prosecution if they commit any acts of negligence or malfeasance, just like their counterparts in the 'Corporate World'. Junior Corporate officers should be exonerated from personal liability since they are functionaries within systems which need to be the targets of prosecution and which are in any case managed by more senior personnel. A clear message should be delivered to the Corporate World that inefficient operational structures can be costly particularly if they result in breaches of O H & S regulations. Finally, the liability of Company Directors should be further clarified so that certain Directors cannot plead ignorance and therefore claim immunity from prosecution. In other words, thee should be stronger reference back to the obligations of Directors (as stipulated in the Companies Act of 2001) to close off any existing loopholes in the legislation. Works Cited: Adams, M. (2005). Officers' duties under the microscope. In Keeping good companies, 57. Australian Institute of Company Directors. (2007). General duties and responsibilities of officers and directors. Available: http://www.companydirectors.com.au/NR/rdonlyres/8AC93078-7ABA-42BD-AA27-C55986DAB7EA/0/DUTY01_GeneralDutiesResponsibilities.pdf . Accessed 8 April 2010. Baxt, R. (2005). Duties and responsibilities of directors and officers. Sydney: AICD. Commonwealth Consolidated Acts. Corporations Act 2001. Available: http://www.austlii.edu.au/au/legis/cth/consol_act/ca2001172/index.html . Accessed 7 April 2010. Deacons, M. N. (2008). Australia: Directors And Officers OHS Liability. Available: http://www.safetyinaustralia.com.au/latest/safety-news/121208-australia-directorsa-and-officersa-ohs-liability-200812111574.html. Accessed 6 April 2010. Love, M. (2006). Advising Directors Exposed to Derivative Liability. Available: http://www.wln.com.au/docfiles/DerivativeLiability(short).pdf . Accessed: 6 April 2010. Read More