Legal Insights

Changes to NSW WHS laws create new offences and harsher penalties for duty holders

By Brigid Clark & Rema Hamdan, Christine Maibom

• 02 July 2020 • 7 min read

Changes to the Work Health and Safety Act 2011 (NSW) (WHS Act) have introduced new offences, harsher penalties and expanded existing offences in response to concerns about workplace fatalities in NSW.

Amendments to the WHS Act

The Work Health and Safety Amendment (Review) Act 2020 No. 10 came into effect on 10 June 2020 in NSW. It implements most of the recommendations made by Marie Boland’s national review of the model WHS laws (Boland Review).

The amendments respond to increasing concerns about the high number of workplace fatalities in NSW. In 2019, there were 59 work-related fatalities. The amendments also seek to provide stronger support for families of workplace victims, streamline investigations and give businesses and workers more clarity on the WHS Act.

The key amendments include the expansion of Category 1 offences, higher penalties, new offences for insurance or indemnity arrangements and more powers for investigators.

Category 1 offences

The WHS Act expands Category 1 offences to include a fault element of ‘gross negligence’. This means that a duty holder commits an offence if they are grossly negligent in exposing workers or other persons to a risk of death or serious injury or illness.

As opposed to the standard of ‘recklessness’, which, at times is difficult to prove, gross negligence does not require prosecutors to prove any intent to disregard a risk of death or serious injury or illness. This is expected to make it easier for regulators to prosecute Category 1 offences in NSW, as noted in the Parliament of NSW’s second reading speech (second reading speech).

New offence for insurance arrangements

The amendments create a new offence where a person enters into, provides, or benefits from insurance or indemnity arrangements for liability for a monetary penalty for a WHS offence (refer to Section 272A of the WHS Act). This clarifies the position that indemnities do not apply to criminal wrongdoing.

This means that companies cannot enter into arrangements to protect or indemnify themselves or individual officers against monetary penalties under the model WHS laws. The maximum penalty for entering into an insurance or indemnity arrangement is $25,000 for individuals or $125,000 for a corporation. There is no such prohibition in respect of indemnity for legal costs associated with a potential WHS breach or enforceable undertaking.

Penalties

The amendments also increase the maximum penalties for all offences in the WHS Act, which have not increased since the WHS Act came into operation in 2012 (refer to Section 242B of the WHS Act). The increase in penalties seeks to ensure that the penalties continue to act as effective deterrents, as noted in the second reading speech.

Maximum Penalties – Previous and updated penalties

For corporations

For individual PCBUs or officers

For individual workers or others

Offence

Previous

Current

Previous

Current

Previous

Current

Category 1

$3,000,000

$3,463,000

$600,000 and/or 5 years imprisonment

$692,550

and/or 5 years imprisonment

$300,000

and/or 5 years imprisonment

$346,500

and/or 5 years imprisonment

Category 2

$1,500,000

$1,731,500

$300,000

$346,5000

$150,000

$173,000

Category 3

$500,000

$577,000

$100,000

$115,500

$50,000

$57,500

Investigations

Finally, the time for which a person can make a request to a regulator to bring a prosecution regarding a workplace incident has expanded from 12 to 18 months (refer to Section 231 of the WHS Act). This provides more flexibility to prosecutors for complex workplace investigations which may take longer than 12 months to commence prosecution.

Industrial manslaughter laws

The Boland Review recommended the introduction of industrial manslaughter laws in Australia, however this has not been adopted in NSW. It is unlikely NSW will adopt industrial manslaughter laws in light of the amendment for Category 1 offences to introduce the concept of ‘gross negligence’. Work-related fatalities can be prosecuted in NSW as involuntary manslaughter under the Crimes Act 1900 (Cth) by the Director of Public Prosecutions on behalf of the State, however historically this avenue has not been adopted. The Parliament of NSW confirmed, when introducing the new amendments to the WHS Act, that it believes this is an appropriate means of dealing with such offences as opposed to introducing an industrial manslaughter offence, once again noted in the second reading speech.

This position differs from other state jurisdictions such as Queensland, who introduced the laws in 2017 following the Dreamworld accident and Victoria who will introduce the laws from 1 July 2020.

The first prosecution of industrial manslaughter in Queensland was handed down on 11 June 2020, in the case of R v Brisbane Auto Recycling Pty Ltd [2020] QDC 113, was handed down on 11 June 2020. The Defendant, Brisbane Auto Recycling Pty Ltd, was convicted of industrial manslaughter and fined $3 million dollars after a worker was struck and killed by an unlicensed, inexperienced forklift driver.

The two directors of the company pleaded guilty to Category 1 offences for engaging in reckless conduct, and were each sentenced to a 10 month suspended prison sentence.

The court found that the workplace had no safety systems in place, and that steps to prevent the incident would have involved minor inconvenience and cost to the company.

What does the case mean for New South Wales?

While the company was convicted of industrial manslaughter, the same outcome in terms of the financial penalty could be made in NSW for a Category 1 offence. It is therefore uncertain whether industrial manslaughter laws are indeed necessary, or lead to better deterrence from corporate offenders. The NSW Parliament has, for now, confirmed its view that the current laws in NSW can appropriately deal with offending of this kind.

What should employers be doing in light of the amendments to the WHS Act?

Businesses must act now to review any D&O insurance policies to ensure they are compliant with the recent changes to the WHS Act. Employers and company officers should also review any applicable safety management systems to ensure they are up to date with the amended laws.

Require further information?

Contact a member of the Employment & Workplace team for more information on the amendments to the WHS Act and what employers should be doing in light of the amendments.

By Brigid Clark & Rema Hamdan, Christine Maibom

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