Let me put a stake in the ground before I set about dissecting the corpse of executive liability for safety and health. I do not believe prosecutions are an effective method of improving health and safety outcomes. I have written about this before (see for example: The Prosecution Problem; Due Diligence prosecutions under WHS Legislation (and other fairy stories)) and will not expand further here.
However, my views are very obviously not in the majority as society and the health and safety community clambers around with ever more strident calls for increased penalties, positive due diligence obligations and now, Industrial Manslaughter.
The reality is social expectations for corporate executive responsibility in health and safety, and the promises of positive due diligence obligations under WHS legislation are naïve and there is nothing in our immediate future to suppose we will ever meet these expectations.
What were your expectations when positive due diligence obligations were introduced under WHS legislation? Did you think executive officers from big companies would suddenly realise they had important personal obligations for health and safety and be accountable for them? Did you expect a concerted investigation into the behaviour of board rooms in our capital cities, and the impact of decision-making, leadership and culture on workers in the field?
If history is any guide this nothing more than wishful thinking.
Please understand, I am not making any moral judgement about corporate leadership and their concerns for health and safety. I accept they may be very concerned, and deeply troubled by any accident in their workplace. But their personal legal liability is illusory.
The history of prosecution of executive management in Australia has always been at the small business level, focused on business owners with day-to-day management of the work, and very often personally involved in the work at the time of the incident (see for example Neil Foster, Personal Liability of Company Offices for Corporate Occupational Health and Safety Breaches: Section 26 of the Occupational Health and Safety Act 2000 (NSW)). This trend has continued unbroken through WHS legislation - we prosecute small businesses owners and managers - as illustrated by the Kenoss decision discussed later in this article.
There is simply no history of health and safety regulators pursuing cases against executive management in large organisations who are removed from day to day operations. There has been no case mounted against executive management in Australia to test due diligence at that level; to examine whether they understand the hazards in their business, how they are controlled and how effectively they are managed.
According to information published by Safe Work Australia between 2013 and 18 October 2018, there have been 1046 workplace fatalities in Australia. To the best of my knowledge, in none of those cases has there been a prosecution of a chief executive officer, senior executive or board member – within the textbook definition of Company Officer – who was removed from the day-to-day operational work of the business. Are we really to believe that in every one of those cases the Company Officers were able to demonstrate to the satisfaction of the regulator they had met all their obligations with respect to due diligence? History would suggest this is extremely unlikely. What is far more likely is, I suspect the question was never asked. The issue was never investigated.
There is nothing in the history of regulator intervention in Australia that should cause executive managers of large companies who are not involved in the day-to-day operational decision-making and day-to-day work of the business to lose a second of sleep over concerns about personal due diligence for health and safety.
And now the Senate wants to reduce those concerns further.
In the Education and Employment References Committee, They never came home – the framework surrounding the prevention, investigation and prosecution of industrial deaths in Australia (Report), the following recommendation is made:
amend the model WHS laws to revise the definition of 'officer' to better reflect the capacity of the person to significantly affect health and safety outcomes (paragraph 5.82)
The essence of the recommendation is to cast the net more widely and focus on the capacity of a person to significantly affect health and safety outcomes (paragraph 5.80). The Report relies on submissions from the ACTU (paragraph 5.77 – 5.81) drawing from the decision, Brett McKie v Munir Al-Hasani & Kenoss Contractors Pty Ltd (in liquidation) [2015] ACTIC 1 (Kenoss).
This recommendation, and the basis for it, are ill conceived and will simply give regulators greater scope to avoid difficult investigations into senior executive officers and make true accountability at an executive level even less likely.
In the Kenoss decision, Mr Al-Hasani was prosecuted as a Company Officer, but the charge was dismissed because the prosecution could not prove he met the definition of Company Officer. The court said Mr Al-Hasani was a project manager, and:
Mr Al-Hasani had responsibility as an employee but he is not charged in that capacity. I am not satisfied beyond reasonable doubt that his role rises to the level of an officer within the corporation and for that reason the charge in respect of Mr Al-Hasani is dismissed. [51]
Clearly, Mr Al-Hasani could have been prosecuted in his capacity as a project manager, and it would make perfect sense if that had of happened. However, there were people in the company more senior than Mr Al-Hazani. There was a director, Mrs Beverly Brendas and her husband was the General Manager. Their son was employed as a safety officer, even though he had no experience or qualification in safety systems [10]. However, it seems, no thought was given to investigate their roles or what they understood about the hazards in the business and how they were controlled – certainly this was not evidence in the proceedings. For example, the Court said:
There is no evidence from within the corporation as to where Mr Al-Hasani sat within it or his level of influence, other than from those who sat below him in the chain of command. Despite there being a director and a general manager, the role of those, beyond what can be assumed within the statutory role of a director, are unknown. Mr Al-Hasani’s evidence was that he answered to these two positions and that Mr Brendas as was “El supremo”. That evidence is unchallenged. [49]
What is established is that Mr Al-Hasani’s participation in the business process was operational; whether it went beyond that to being organisational is speculative. It is not clear that he made decisions, or participated in making decisions, that affected either the whole or a substantial part of Kenoss’ business. [50]
(my emphasis added)
The real issue in the Kenoss case, it seems, is not the scope of Company Officer liability, rather the quality of the case made by the prosecutor. It is also worth noting that Mr Al-Hasani was a self-represented litigant – he did not have a lawyer – which perhaps tells us something else about the quality of the prosecution.
The prosecution argued the wrong case. This does not warrant watering down company officer liability.
More importantly however, changing or expanding the definition of company officer will not help to direct attention to the quality of health and safety due diligence at the senior levels of our large organisations. There is nothing in the history of regulator behaviour in Australia to suggest, whatever changes we make to the definition of company officer, they will do anything other than go after small and medium-sized businesses when it comes to prosecuting managers.
If we widen the definition of company officers, it will not increase the legal exposure of senior executive leadership in organisations. It will decrease it. It will push executive liability down organisational hierarchy to people who, if prosecuted at all, ought to be prosecuted in their capacity as employees, recognising their proximity to the performance of work.
Perhaps the Senate might have been better served spending more time trying to understand why senior executives are not prosecuted in the first place, rather than water down their legal exposure.
You can read more articles in the Safety Case(s) series HERE.
This article represents a general discussion about legal principles. It is not specific advice, and you should seek your own legal advice in relation to your specific circumstances.