Insights & News

June 24, 2021

On 22 June 2021, the Victorian Government introduced the Occupational Health and Safety and Other Legislation Amendment Bill 2021. If passed, the Bill will make a number of significant amendments to the Occupational Health and Safety Act 2004 (OHS Act), some of which align quite closely with aspects of the harmonised WHS legislation in place outside of Victoria.

Extending protections for labour hire workers

The Bill extends the definition of an “employer” and “employee” to ensure that hosts of labour hire workers owe the same duties to those workers as they owe to their own employees.

The Bill adopts the definitions of “worker”, “provider” and “labour hire services” contained in the Victorian Labour Hire Licensing Act 2018.

Employers who host labour hire workers will need to review their practices to ensure that, if they are not already doing so, they exercise the same degree of care for the safety of labour hire workers as they do for their employees.

These changes will come into effect six months after the Bill receives Royal Assent.

New obligation for duty holders to consult, cooperate and coordinate regarding labour hire worker safety

The extended protections for labour hire workers will mean that labour hire providers and host employers will owe duties under the OHS Act in respect of the same workers.

The Explanatory Memorandum notes that expanding the definition of employee to include labour hire workers is not intended to require a duplication of effort by host companies and labour hire providers.

However, to encourage labour hire providers and hosts to work together to ensure that all duties owed to labour hire workers are met, the Bill proposes a new obligation – namely every person who owes a duty under the OHS Act to the same worker must, so far as is reasonably practicable, “consult, cooperate and coordinate” (CCC) activities with each other person who has a duty in relation to the same worker.

If passed, the new CCC duty will come into effect six months after the Bill receives Royal Assent.

Failure to comply with the CCC duty will be a criminal offence punishable by fines of up to 180 penalty units (approximately $32,713) for individuals or 900 penalty units (approximately $163,557) for companies.

No insurance against safety fines

The Bill also proposes to prohibit and make void any terms in a contract or other agreement which seek to insure or indemnify a person against liability to pay a pecuniary penalty under the OHS Act. If passed, this prohibition will come into effect the day after the Bill receives Royal Assent.

On and from the first anniversary of the Bill receiving Royal Assent, it will also be an offence to be party to, or enter into, a contract or other agreement of the kind described above.

Importantly, these prohibitions and offences do not extend to insurance policies which provide cover and indemnity for legal defence costs.

If these provisions are enacted, employers will need to discuss them with their insurance brokers to ensure that policies obtained going forward, including liability insurance for directors and officers, do not result in employers or their officers inadvertently committing an offence.

Broadening of powers of Health & Safety Representatives (HSRs) and union right of entry permit holders

The Bill proposes to grant new powers to HSRs and union right of entry permit holders, namely to:

• take photographs
• take measurements
• make sketches
• make recordings

Currently, these powers are only available to WorkSafe inspectors.

The Bill will make it a criminal offence for a union permit holder to intentionally use, disclose or provide to another person photos, measurements, sketches or recordings obtained while exercising right of entry, for a purpose not reasonably connected with the exercise of powers under the right of entry provisions of the OHS Act.

This proposed offence should capture the online dissemination of photos or video footage taken by union permit holders at a workplace.

If the Bill is passed, employers will need to update their right of entry policies and protocols to ensure that they take into account the above.

Please contact us if you have any questions or need assistance.

June 4, 2021

What has happened?

Today, the Fair Work Commission issued a provisional view that it will insert an exemption rate into the Restaurant Industry Award for an initial period of 12 months.

If the clause is inserted into the Award, it will mean an employer can agree to pay an employee an hourly rate of pay that is 170% of the award rate of pay and the employee will be exempt from overtime, penalty rates and allowances.

Why is this significant?

Award compliance has proven to be very difficult in recent years. Exemption rates were common prior to award modernisation but were largely phased out in that process. They make complying with awards much simpler.

Exemption rates generally do not attract the onerous time keeping obligations that come with annualised salary provisions. Whether this will be achieved in the clause being proposed in the Restaurant Award is not clear.

One hopes the Commission acts on its provisional view and inserts exemption rates into the Restaurant Award as well as other industry awards. If it does, it will be a big step in improving award compliance.

Why has the Commission made this decision?

The change has been triggered by the unique set of circumstances pertaining to the COVID-19 pandemic. There can be no doubt that the circumstances warrant improved flexibility and less regulatory burden in the restaurant industry, which has been particularly hard hit.

In our view, the benefits associated with exemption rates would be well placed in other industries. We think this helps to solve a problem that existed prior to COVID-19, which was the excessive regulatory burden associated with award compliance.

Tell me the detail

For those of you that appreciate the detail, you can read the Commission’s statement here. The clause being proposed is as follows:

R.3 Exemption Rate

R.3.1 An employer and a full time employee (paid at the Level 5 or Level 6 rate of pay) may enter into an agreement to pay the employee no less than 170% of their relevant Level rate of pay each week as set out in clause 18 Minimum Rates of this award (the Exemption Rate).

R.3.2 Where an agreement to pay the Exemption Rate has been made, the following clauses of this award shall not apply:

1. 1. clauses 16.5 and 16.6 (meal break);
   2. clause 21 (allowances);
   3. clause 23 (overtime rates) but not clause 23.2; and
   4. clause 24 (penalty rates).

R.3.3 Where an agreement has been made to pay an employee the Exemption Rate the employee must be paid the Exemption Rate for each hour worked up to and including 57 hours in a week and for hours worked in excess of 57 in a week the employee must be paid:

1. 1. 150% of the Exemption Rate for the first two hours in excess of 57 in the week; and then
   2. 200% of the Exemption Rate thereafter in the week.

R.3.4 The Exemption Rate shall be the rate for the purposes of calculating:

1. 1. personal leave; and
   2. annual leave.

R.3.5 Clause R3 does not apply to employees classified under the administrative and general stream (Schedule A.4).

May 31, 2021

For the last seven years the superannuation contribution rate has remained unchanged at 9.5%. However, from 1 July 2021 the rate will increase by 0.5% to 10%, and it won’t stop there. The rate is legislated to continue to increase by 0.5% annually until it reaches 12% in 2025.

What does this mean for your business?

Depending on the remuneration arrangements in place with your employees, the change may result in an increase to your labour costs overnight.

Importantly, it should not be assumed that the income component of an employee’s salary can be reduced by 0.5% and redistributed to their superannuation fund. The ability to do so will depend entirely on the specific contractual arrangements in place.

How are compulsory superannuation obligations determined?

The first step in determining how, and by whom, the increase will be funded is to consider the employment contract.

If an employee’s remuneration is expressed to exclude superannuation contributions then, absent any other contractual provision (or a policy, procedure or custom and practice giving rise to an implied contractual position) the employer is likely to wear the costs of the increase to the employee’s compulsory retirement savings.

Conversely, where the salary or hourly rate is expressed to be inclusive of superannuation contributions and otherwise absorbs all employment entitlements owing to the employee (often referred to as an “absorption clause”) the employer may be able to redistribute the salary accordingly, instead of increasing its cost base. This means the take home pay may be reduced by the increase in superannuation.

What should you do?

Prior to the changes on 1 July 2021, closely consider the employment terms and conditions in place.

• If you have an “all inclusive salary” or “absorption” clause check it works.
• If you don’t, consider whether there is another contractual basis for achieving this.
• If not, develop a plan to manage the introduction of the increase for your business through contractual or administrative changes such as building the increase into planned pay rises.
• Consider any terms in an applicable industrial instrument that may affect your obligations regarding superannuation contributions.

If superannuation changes are causing your business concern, we are here to help.

May 27, 2021

On 20 May 2021, the Commonwealth, State and Territory Minsters responsible for work health and safety met to discuss a range of important issues impacting the work health and safety of Australians.

The discussion centred around review of the content and operation of the model WHS laws which was completed by Ms Marie Boland in late 2018 (Boland review).

The following key developments were identified by the Ministers in a communique released at the conclusion of the meeting.

Industrial manslaughter will not be incorporated into the model WHS laws

One of the key recommendations of the Boland review of the model WHS laws was the introduction of industrial manslaughter offences.

That recommendation fell one vote short of receiving the endorsement of Australian Ministers (with the jurisdictions that have enacted industrial manslaughter offences – being Victoria, the ACT, Queensland, Western Australia and the Northern Territory – voting in favour of the recommendation).

Category 1 offences to be expanded to cover gross negligence

The meeting of Ministers placed emphasis on a need to improve prosecution rates for Category 1 offences under the model WHS laws.

Category 1 offences are the most serious offences against the model WHS laws because they involve conduct that exposes a person to whom a duty is owed to a risk of death or serious injury or illness. Category 1 offences attract the most severe maximum penalties.

At present, to successfully prosecute a Category 1 offence (other than in NSW), a prosecutor must prove that the accused was reckless as to the risk of death or serious injury or illness.  Proving recklessness requires the prosecutor to show that a known or obvious risk was consciously disregarded by a defendant.

By contrast, proving criminal negligence does not usually require the prosecutor to establish risks were consciously disregarded. Instead, it requires proof of “such a great falling short of the standard of care which a reasonable [person] would have exercised and which involved such a high risk that death or grievous bodily harm would follow that the doing of the act merited criminal punishment”.

The Ministers unanimously agreed to introduce gross negligence as a fault element for Category 1 offences under the model WHS Act.

In NSW, gross negligence is sufficient to give rise to a Category 1 offence. However, that is not the case in the Northern Territory, Queensland, South Australia, the Australian Capital Territory, Tasmania or Western Australia. Accordingly, assuming that the agreement reached by the Ministers is implemented by Parliament in each of those jurisdictions, the threshold for being found guilty of the most serious category of WHS offences will be lowered significantly.

Psychological injury and amendments to model WHS regulations

A majority of Ministers agreed to amend the model WHS Regulations to deal with psychological injury.

Under the current model WHS Act, persons conducting a business or undertaking have a duty to protect workers from psychological hazards as well as physical hazards. This is due to ‘psychological health’ being including in the definition of ‘health’.

This announcement closely follows the Victorian Government announcing that it is developing regulations to provide “clearer guidance” to employers on their obligations relating to psychological risks and hazards.

All employers will need to monitor developments in this space closely to ensure that their safety management systems factor in, and promote compliance with, any new requirements introduced into WHS regulations.

Gig economy

Participants in the food delivery industry are already the subject of focus by safety regulators in certain Australian jurisdictions.

The Ministers’ communique notes that Safe Work Australia is developing national work health and safety guidance for the food delivery industry. Further, the Ministers agreed to refer work on:

• promoting and strengthening education to Safe Work Australia; and
• compliance and enforcement initiatives in relation to food delivery platforms and riders to the heads of workplace safety authorities for consideration.

Sexual harassment in the workplace

The Ministers have noted the Commonwealth Government’s response to the Respect@Work: National Inquiry into Sexual Harassment in Australian Workplaces conducted by the Australian Human Rights Commission.

State and Territory Ministers provided an update on their current or planned work and initiatives directed at addressing sexual harassment in their respective jurisdictions, and are required to formally respond to the Commonwealth by the end of June 2021.

Next steps

The Ministers agreed to reconvene before the end of the year to receive progress reports from each jurisdiction and Safe Work Australia on the implementation of the agreed recommendations.

May 25, 2021

What has happened?

A small business owner has been sentenced to eight months imprisonment (plus an additional 18 months suspended), a $2,250 fine and his company fined $605,000 in the first custodial sentence for a safety prosecution in WA history. This is also the highest fine ever issued in WA for a workplace safety breach.

The Director and the company pleaded guilty to gross negligence causing the death of one worker and serious injury to another.

The Director owned and operated a small shed building company. In March 2020, the two workers were installing roofing when strong winds caused a roof sheet to lift and both workers to fall approximately 9 metres. Neither worker held a high risk work licence or wore a safety harness.

Notably, these types of incidents were known in the industry (particularly in the Esperance region) and the Director was aware of the risks. Despite the Director’s early guilty plea and acceptance of responsibility, the Court considered the failures were of the most serious type.

This decision is the first time an individual has been jailed in WA under the existing safety legislation and is significant as it:

1. clarifies the misconception that industrial manslaughter is a new concept for WA when the possibility of a jail sentence for a serious breach of safety legislation has always been the reality;
2. is a clear indication that the safety regulators in WA will be willing to use new industrial manslaughter provisions to their full extent when the new WHS laws commence (in respect of officers and persons conducting businesses and undertakings); and
3. demonstrates Courts will issue penalties for safety breaches that are in line with the new, significantly higher, penalty regimes.

Considerations for employers

While safety is often considered a purely operational matter, this decision and outcome demonstrates that responsibility for safety exists at every level of an enterprise.

Employers and officers should be taking note of this decision and the attitude of the regulator in bringing a prosecution of this type against an individual, particularly in light of the impending Work Health and Safety Act 2020 (WHS Act) which places express obligations on officers in respect of safety and strengthens the framework for individual officer prosecutions.

Under the WHS Act, industrial manslaughter can result in individuals being liable for a maximum fine of $5,000,000 and/or up to 20 years imprisonment and corporations for a maximum fine of $10,000,000.

Due diligence provisions for officers require that they be familiar with the operational risks of the business, the systems to manage those risks and that they take steps to verify that the systems are in place and effective. A failure to take these steps may see officers liable for safety breaches, including where there has been a significant incident.

We recommend employers and individual officers actively review the safety arrangements currently in place and begin taking steps to ensure that they are ready for the introduction of the WHS Act.