New work health and safety laws: key changes and impacts on small business

In brief – Broader primary duty of care, tougher penalties, increased consultation

On 1 January 2012, new work health and safety laws commenced operation in a number of jurisdictions, including NSW, as part of the push towards national harmonisation of OH&S legislation. Victoria, Tasmania, WA and SA have deferred implementation of the legislation until next year.

The Work Health and Safety Act 2011 (NSW) (WHS Act) creates a number of challenges for small businesses.

Broader primary duty on a "person conducting a business or undertaking" (PCBU)

The WHS Act places the primary duty of care to take all reasonably practical steps for health and safety on a "person conducting a business or undertaking" (PCBU) instead of an employer. A "person" can include a company or a partnership.

The WHS Act adopts a broader definition of "worker" instead of "employee". A worker is defined as a person who "carries out work in any capacity" for a PCBU. This expressly includes employees, contractors, subcontractors, employees of a contractor or subcontractor, volunteers, labour hire companies, outworkers, apprentices and work experience students.

Under the new Act, some people may be both a PCBU and a worker. For example, if Joe is a plumbing contractor with his own plumbing business, then by definition Joe is a PCBU. However, when Joe is hired by a construction company to do the plumbing for a residential development, he will also be a worker for that construction company.

Visitors to the workplace, like customers or family members of workers, will now be considered responsible to some extent for their own safety, since the new Act requires that they take reasonable care and comply with reasonable instruction.

Positive duties of due diligence on "all officers" of a workplace

If you are an "officer" of a company (i.e. a director or manager), the WHS Act obligates you to exercise "due diligence" at all times. If you are an officer, you have a legal obligation under the WHS Act to keep informed and up to date about health and safety matters, ensure the corporation uses appropriate resources to minimise or eliminate OH&S risks and act immediately or in a timely manner on any OH&S risks or incidents that are brought to your attention, by reporting notifiable incidents and consulting with workers.

As an officer of the corporation, you may be liable for failing to exercise the required due diligence, even if the corporation itself is complying with its obligations and there has been no incident or accident in the workplace.

Tougher penalties and jurisdictional changes

The maximum penalty for serious breaches involving recklessness and exposure to death, serious illness or injury extends to $3 million for a body corporate and $600,000 for an individual. By comparison, the old legislation carried a maximum fine of $1.65 million for a body corporate and $165,000 for an individual.

Prosecutions under the WHS Act can be brought in the Local Court, District Court or Supreme Court. The Act grants courts an expanded range of sentencing options, including enforceable undertakings, remedial orders, adverse publicity orders, injunctions, compensation orders and community service orders, in addition to penalties.

Increased consultation and expanded union powers

Under the WHS Act, small business owners (as PCBUs) have a legal duty to consult with workers on all work health and safety matters. To comply, you could:

• arrange for workers to elect a health and safety representative to represent them on health and safety issues, such as preparing emergency or evacuation plans
• form a health and safety committee to develop and review policies
• build on existing informal arrangements (eg talk about it over morning tea)

The new Act expands union powers to investigate workplace safety incidents and consult with employees about work health and safety matters. Penalties apply if a PCBU hinders union representatives from exercising their powers without reasonable excuse.

Rebate for small businesses

The NSW government is offering a rebate of up to $500 to small business owners who purchase and install safety equipment to address a safety problem in their workplace. It is available from 1 March 2012 to businesses or sole traders with up to 20 full time employees.

The rebate can be used to assist small businesses with the purchase and installation of safety equipment that addresses slips, trips and falls, manual handling, hazardous noise, injuries from moving objects, chemicals and dangerous goods.

The Small business rebate: Fact sheet and application form can be downloaded from the website of WorkCover Authority of NSW.