Legal Insights

Are you aware of important changes to the Occupational Health and Safety Act 2004 concerning labour hire arrangements and limitations on insurance coverage?

By Catherine Dunlop, Dale McQualter

• 16 May 2022 • 6 min read
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Amendments to the Occupational Health and Safety Act 2004 (Vic) (OHSA) concerning labour hire arrangements and limitations on insurance coverage in Victoria took effect from 22 March 2022. The significant amendments expand the definitions of employer and employee (Labour Hire Amendments) and make it unlawful for insurance policies to cover pecuniary penalties for contravening the OHSA (Insurance Amendments).

Where do labour hire workers fit in now?

The Labour Hire Amendments broaden the definitions of ‘employer’ and ‘employee’ to expressly operate when workers are provided under labour hire arrangements. New definitions have also been inserted into the OHSA for ‘labour hire services’, ‘provider’ and ‘worker’.

Importantly, the revised definitions broaden the term ‘employee’ to include workers:

  • supplied by a labour hire service to a host employer
  • recruited by a labour hire service for a host employer
  • placed by a labour hire service to perform work for a host employer.

‘Worker’ is broadly defined to include any individual supplied or recruited by a labour hire provider to perform work for a ‘host’, where the provider is obliged to directly or indirectly pay the individual for the performance of that work (and including under an independent contractor agreement).

Prior to the Labour Hire Amendments, a labour hire worker was typically the employee of the labour hire provider, and the labour hire provider was the employer of that worker. The host employer may not explicitly have had the same workplace safety duties to labour hire workers as to employees because labour hire ‘workers’ were not considered to be employees of the host employer. The Labour Hire Amendments have been included to address a concern that the previous arrangements were disadvantageous for labour hire workers.

Host employers now owe the same duties under the OHSA in respect of labour hire workers and their direct employees. WorkSafe Victoria have commented that the extended definitions aim to remove the disadvantage by defining a labour hire worker as an employee of their host employer and an employee of their labour hire provider.

Does this mean greater consultation?

The Labour Hire Amendments impose a new duty on labour hire providers and host employers under the OHSA to, so far as is reasonably practicable, consult, co-operate and co-ordinate with each other where they share occupational health and safety duties to labour hire workers supplied, recruited and placed.

We agree with the view expressed by WorkSafe Victoria to the extent that it appears that it ‘is not intended that labour hire providers and host employers duplicate efforts to fulfil [their] duties…' It is expected that labour hire providers and host employers work together to ensure that all duties to labour hire workers are met’. The paramount issue being the safety of workers, not necessarily who actions the duty owed under the OHSA, but rather one of consulting to ensure the safety of labour hire workers in the same manner as direct employees.

Labour hire providers and host employers must, so far as is reasonably practicable, consult-co-operate and co-ordinate activities involving labour hire workers by:

  • providing information to labour hire workers about health and safety
  • monitoring the health of labour hire workers and keeping information and records relating to health and safety of labour hire workers
  • providing information, instruction, training and supervision to labour hire workers
  • consultation arrangements with labour hire workers, including negotiations on the establishment of a designated work group within fourteen days after receiving a request from a labour hire worker
  • the nature of work to be carried out and any associated hazards or risks
  • risk control measures and who is responsible for each control measure, including the provision of personal protective equipment and other equipment where required
  • reviewing risk control measures, particularly if there are any changes to the nature of the roles or workplace
  • the roles of each duty holder in responding to an incident.

Failure to comply with the new consultation duty can attract a maximum penalty of 180 penalty units for individuals (currently $32,709) and 900 penalty units for body corporates (currently $163,548).

What do the Insurance Amendments mean?

The Insurance Amendments follow similar changes introduced in other Australian jurisdictions and mean that as of 22 March 2022 an Insurer cannot pay fines imposed under the OHSA. Any agreement entered into that purports to insure or indemnify a person for a pecuniary liability that may be imposed under the OHSA is void to the extent of that insurance or indemnity.

Further, as of 22 September 2022, other provisions will commence, making it an offence for a person to enter into or be a party to an agreement (or offer to enter into or be a party) that purports to insure or indemnify a person under the OHSA. Importantly, this provision applies broadly to the business, any party to the agreement, individuals to be covered and the insurer. The new provisions create criminal offences under the OHSA with significant maximum penalties of 1500 penalty units for body corporates (currently $272,610) and 300 penalty units for individuals (currently $54,522).

Importantly, the Insurance Amendments do not prevent parties from entering into insurance arrangements that allow the insurer to exercise the right of subrogation, appoint the insurer's lawyers, and cover some of the costs of defending action taken by the regulator under the OHSA, including some legal costs.

Employers should immediately consult with their insurers to make sure that their policies do not contravene the Insurance Amendments. They should also review their arrangements with other parties (such as contractors) so that the provisions do not require indemnification for penalties under the OHSA.

Identical provisions have also been inserted into the Dangerous Goods Act 1985 and the Amendment of Equipment (Public Safety) Act 1994.

Additional changes

The OHSA has also been amended to:

  • allow for notices issued under the OHSA to be provided electronically
  • provide additional powers to health and safety representatives and authorised representatives of employee organisations, such as unions, in relation to taking photos, measurements, making sketches or taking recordings when attending on site
  • allow for ownership of seized items during workplace inspections to be forfeited to WorkSafe Victoria and empower WorkSafe Victoria to dispose of these forfeited items.

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