The wave of industrial manslaughter offence reforms currently sweeping Australia presents both risks and opportunities for the insurance market.
For many years in Australia, the appetite for industrial manslaughter offences on the statute books has waxed and waned. But the 2016 events in Queensland that resulted in multiple fatalities at Eagle Farm and Dreamworld gave the push for such reforms additional impetus. The Queensland Government announced a Best Practice Review of Workplace Health and Safety Queensland that included recommendations for industrial manslaughter provisions in the wake of those incidents.
What does the legislation say?
Queensland’s Work Health and Safety and Other Legislation Amendment Act 2017 (WHS Amendment Act) introduced industrial manslaughter provisions into Part 2A of the Work Health and Safety Act 2011 (Qld) (WHS Act) for both senior officers and PCBUs. The WHS Amendment Act creates two criminal offences of industrial manslaughter under sections 34C and 34D. Under the provisions, an 'employer' and a 'senior officer' commit an offence where:
- a worker dies in the course of carrying out work (or is injured and later dies);
- the PCBU or senior officer's conduct causes the death of the worker;
- the PCBU or senior officer was negligent about causing the death of the worker by the conduct.
From the legislative drafting of the industrial manslaughter provisions, it appears that little regard was had to the broader legislative framework within which the new offences would sit. For the purposes of the industrial manslaughter offence, a 'senior officer' is defined as an executive officer of the corporation (if the person is a corporation) or, otherwise, the holder of an executive position in relation to the person who makes, or takes part in making, decisions affecting all, or a substantial part, of the person's functions. This is different from the section 9 Corporations Act 2001 (Cth) definition of an officer which applies for the purposes of the officer due diligence obligation in section 27 of the WHS Act and will capture a broader group of individuals than those captured by the due diligence obligation.
The criminal standard of negligence applies to the offences and in contrast to the other WHS Act offences, no time limitation period applies to the industrial manslaughter offences. The maximum penalty for the industrial manslaughter provisions is $10 million for an organisation and up to 20 years imprisonment for senior officers. This means there are more significant penalties for an offence involving negligence than the category one offences involving recklessness in section 31 of the WHS Act. The provisions have been incorporated into industry specific legislation for electrical safety and recreational water activity safety but have not been incorporated into mining industry specific legislation.
What is the current state of play on industrial manslaughter across Australia?
Up until the 2017 Queensland reforms, only the Australian Capital Territory had an industrial manslaughter offence on the books (within its general criminal laws). Now it seems other Australian States and Territories are looking to follow suit.
The Victorian Government has announced that it will create a new criminal offence of industrial manslaughter if re-elected in the November 2018 Victorian state election, with 20-years' imprisonment for individuals or a fine of up to approximately $16 million for corporations. This would represent a significant increase in maximum penalties under the Occupational Health and Safety Act 2004 (Vic) (OHS Act) that are currently set for the reckless endangerment offence under section 32 of the OHS Act (five years imprisonment or a fine of $3,171,400 million for corporations and $285,426 for individuals).
The Northern Territory is currently considering whether to introduce similar offences as part of its Best Practice Review of Workplace Health and Safety in the Northern Territory. Western Australia has announced it intends to follow Queensland in introducing industrial manslaughter offences with 20 years’ imprisonment when it introduces its version of the harmonised WHS Act (currently foreshadowed to occur in mid-2019). The New South Wales Labor opposition has announced an intention to introduce specific workplace death offences in the event they win the NSW state election in March 2019. Only the South Australian and Tasmanian Governments appear not to be making such commitments at this time, with the Liberal Party winning the most recent elections in those States.
At the Federal level in Australia, there is also renewed interest in the matter. In March 2018, the Senate referred an inquiry to the Education and Employment Reference Committee into the framework surrounding the prevention, investigation and prosecution of industrial deaths in Australia. That inquiry is due to report back in October 2018. Many of the submissions to the Inquiry have passionately advocated both for and against industrial manslaughter. If Labor wins the next Federal election in Australia (which must occur by May 2019), we can expect to see significant pressure from the union movement for similar provisions to be introduced at the Federal level. The unions have been calling for $20 million fines and 25 years imprisonment for industrial manslaughter.
These developments in the industrial manslaughter space are also posing a further threat to the harmonisation of health and safety laws across Australia which has proceeded with limited success since 2012. Notwithstanding commitments to harmonised WHS Laws, early signs point to marked jurisdictional differences as the industrial manslaughter offences are introduced around the country. It appears they may apply different legal tests (negligence vs recklessness), apply to different categories of individuals (‘senior officer’ vs ‘officer’) and different penalties ($10 million vs $16 million) depending on the state or territory in which the fatality takes place.
While we can debate the merits of industrial manslaughter offences, it seems that the tide is in their favour and organisations need to be ready for them. What we are seeing practically in the event of workplace fatalities, is that the police and safety regulators are both responding to and looking at potential charges under both general criminal laws and work health and safety laws. These require different legal strategies.
While in the past, the focus of safety regulators was on the systematic failures of an organisation in the context of such incidents, there is now a trend towards charging individuals at all levels as well as the organisations in the event of a fatality. In one recent case following a construction fatality, a crane driver, a crane dogman, a site safety officer, a senior site supervisor and a site manager have all been personally charged as well as officers of the principal contractor and the crane company and the companies themselves.
Given the increasingly significant legal ramifications for organisations and individuals arising in the context of Australian workplace fatalities, incident response and investigation policies and protocols need to be reviewed to determine whether they are sufficient for fatal incident response. There may be a conflict between the various interests of individuals and organisations given that the microscope is now on both the conduct of individuals and the conduct of organisations. It may be that a more sophisticated incident response is required with separate legal representation for the corporate entities and individuals involved at multiple levels. Organisations may need to consider establishing a panel of different law firms to be immediately available to represent various different interests in the event of a fatal workplace incident.
Of course, the level of legal fees claimed under relevant policies is likely to increase significantly in the context of multiple individuals requiring such representation. The more sophisticated insureds are examining their incident response protocols as well as the scope of coverage of their insurance policies in light of these developments. Now that there is the potential for workers lower down the chain of operations to suffer personal legal consequences in the context of fatal incidents, there may be questions on coverage for legal representation costs beyond the organisational and officer levels.
There are both risks and opportunities for the insurance market represented by the introduction of industrial manslaughter provisions in Australia as insureds look for policies which are responsive to these latest developments.
Alena Titterton, Partner, Occupational Health Safety and Security team, Australia – Alena responds to health and safety related incidents across Australia with our 24/7 incident response service and defends regulatory prosecutions in the space. She designed ClydeCovered, our health and safety incident notification app that is available for free download in iTunes and covers general health and safety incident notification laws all Australian jurisdictions, Singapore and New Zealand.