The contractor ‘killing fields’ - life, death and liability for a contractor - Part 3

Under OHS legislation, employers have a statutory duty to secure the health, safety and welfare of employees and third persons working at or near their workplace. This general duty requires employers to actively prevent risks arising out of their business activities and extends to protecting both employees and independent contractors. OHS obligations are supported by a three-tiered legislative framework: a core piece of statute, industry-specific regulations and codes of practice. OHS obligations are investigated and enforced by statutory authorities that have an extensive range of powers and functions, including but not limited to conducting workplace investigations and initiating prosecutions for OHS offences under the Act.

All states and territories have similar legislative and administrative OHS frameworks in which broad, general duties are imposed on similar categories of ‘duty-holders’.

Employers’ general duty

‘Employer’ is defined under the OHS Act 2004 (Vic) as persons or companies who employ others under either an employment contract or training/apprenticeship contract. The principal duty imposed on employers is: “… to provide and maintain for employees, where reasonably practicable, a working environment that is safe and without risks to health.”

'Employee' is defined to include independent contractors engaged by employers (as well as employees of contractors). In discharging their central duty towards employees, employers must be able to demonstrate they have:

• maintained the workplace in a safe manner;
• provided systems of work that are safe and without health risks;
• ensured the safe use, handling, storage and transport of plant substances; and
• provided adequate facilities, information, instruction and training to enable employees to carry out tasks safely.

Duty towards independent contractors

Employers engaging independent contractors to perform work on site have a duty to minimise the health and safety risks to them too. This is because they are deemed to be employees for the purposes of the Act; and because employers have a duty to protect third parties at or near their workplace. A failure to maintain a safe workplace for contractors may constitute a contravention of the employer’s general duty under the Act.

Legal elements of OHS prosecutions

In most states, the WorkCover authority has the burden of proving (in OHS prosecutions) that the employer has breached its general duty of providing a safe and healthy workplace environment, requiring them to establish four main legal elements:

1. The defendant is an employer;
2. There was a real risk to health, safety and welfare that arose at the defendant’s place of work;
3. Employees, contractors or third parties were exposed to risks to their health, safety and welfare as a result of the defendant’s workplace activities; and
4. It was reasonably practicable to minimise or prevent the risks from arising. This requires the establishment of a connection between the employer’s failure and the risk to health, safety and welfare.

Actual injury, fatality or health damage is usually sufficient evidence that there was a lack of safety or risks to health.

Concurrent liability

Under the current OHS Act, where an employee of an independent contractor is injured, the contractor is responsible for the injury of its employee. This is because they were acting in their capacity as an employer and therefore subject to the most onerous standards under OHS legislation. However, where the injury occurs on premises controlled by the principal, the principal may also be liable, both due to the extended definition of employee under section 21(3) and due to OHS responsibilities of ‘occupiers’. An occupier is a person or company who has management or control of the workplace but is not the employer of workers engaged at the premises - ie, employees of independent contractors. As an occupier, a principal is subject to concurrent liability and may also be prosecuted for injuries suffered by an employee of its contractor.

Imputed liability

Generally, directors and company officers are not personally held liable for actions undertaken by their company, since the company is a separate legal entity. However, most OHS statutes contain provisions that enable managers and directors of corporations to be prosecuted for serious criminal offences under OHS legislation. This is referred to as ‘lifting the corporate veil’ so that directors may be imputed with liability for offences committed by the company.

Under OHS laws, offences committed by the company can be imputed to individual ‘officers’. The term officer has a specific statutory meaning, which departs from the common understanding of the word. Under OHS laws, an officer is a person who makes or participates in making decisions that affect the whole or a substantial part of the body-corporate’s business. They must also have the capacity to affect significantly the body-corporate’s financial standing. In effect, officers are directors and senior managers of a company.

In determining whether an officer is guilty of a particular offence (eg, workplace injury), generally the court must have regard to:

• what the officer knew about the matter concerned;
• the extent of the officer’s ability to make (or participate in the making of) decisions that affect the body-corporate in relation to the matter concerned;
• whether the contravention by the body-corporate is also attributable to an act or omission by any person; and
• any other relevant matters.

Harmonised OHS laws

From December 2011, OHS laws will adopt one national model to unify and standardise the safety requirements imposed on various categories of duty-holders that are currently mandated by disparate pieces of OHS legislation. This fundamental objective of adopting a harmonised national system is to improve safety outcomes, reduce compliance costs and eliminate duty-based inconsistencies across the different states. The national model opts for an ‘aspirational’ approach to workplace safety, as demonstrated by the objects of the draft Model Act: “The principle that workers … should be given the highest level of protection from hazards and risks as is reasonably practicable.”

The key change is the imposition of broad, non-delegable and concurrent duties on persons who conduct a business or undertaking. The duty is owed to any persons or workers whom the business or undertaking exercises control or influence over. As a result, principals owe a primary duty to contractors and contractors’ employees working on site. Further, directors and senior managers owe a positive duty to exercise due diligence to ensure the business complies with the OHS legislation. By December 2011, there will be no doubt that businesses will owe an identical duty to any worker on site as they do to their own employees.

*Andrew Douglas, Douglas Workplace and Litigation Lawyers.