06 October 2003
Minimising OH&S Penalties - some recent cases show compliance with safety obligations is your best strategy
A breach of an employer’s health and safety obligations could have disastrous consequences, such as the loss of life or limb to an employee or other person. But a breach could also result in a substantial penalty being imposed on the employer under the NSW Occupational Health & Safety Act 2000 Act.
Take for example a construction company that fails to take adequate steps to ensure a gas service is disconnected before excavators commence work on site. Or a company that fails to properly mark the location of the gas service. In a recent matter before the NSW Industrial Relations Commission, Abigroup was fined a total of $1.5 million after the excavator disturbed a gas line causing two explosions (WorkCover Authority v Abigroup Contractors Pty Limited & Anor  NSWIRComm 201). Two people died as a result of the explosions.
Penalties in the Act
Some breaches of the Act can result in a maximum penalty for corporations of $550,000 for a first offence or $825,000 for any subsequent offence, for example:
The failure of an employer to ensure the health and safety of its employees and non- employees at the employer’s place of work;
The failure of a person who controls premises used by persons as a place of work to ensure the premises are safe and without risks.
There are lesser penalties in the Act for breaches of other obligations. For example, an employer who fails to consult with its staff faces a maximum penalty of $82,500 for a second offence. There are also penalties in the Occupational Health & Safety Regulations 2001 for an employer who fails to have in place risk management practices, of up to $27,500.
"In the financial year ending 2002 the NSW WorkCover Authority obtained $9.5 million in fines from prosecutions brought by it under OHS legislation".
In the financial year ending 2002 the NSW WorkCover Authority obtained $9.5 million in fines from prosecutions brought by it under OHS legislation.
Compliance is the best strategy
The best strategy to minimise the risk of penalties is to comply with the obligations in the Act. Compliance requires an employer, to take OHS seriously, invest time with staff in developing a superior safety culture, develop effective risk management practices and educate staff in those practices.
Taking safety seriously can always work in an employers favour if an employer happens to breach the Act. An employer’s commitment to safety will weigh in the Commission’s mind when imposing a penalty.
In Inspector Blume v TMP Worldwide eResourcing  NSWIRComm 37 an employee was fatally injured after a washing machine fell on the employee’s head while being carried by a forklift. The Commission took notice that the employer took safety seriously and therefore did not increase the penalty of $152,750 by providing for a deterrent factor.
Whereas an employer which overlooks safety or fails to implement simple safety measures, risks a penalty which reflects that failure. In Abigroup the Commission was critical of the employer’s practice to merely identify the hazard of a gas line with stakes and bunting and without identifying the presence of a charged gas line.
Considerations for the Commission when determining penalty
The main consideration of the Commission when determining the penalty to impose for a breach of the Act is the objective seriousness of the breach.
A failure of an employer to take steps to guard against a risk likely to result in serious injury will be assessed differently from the failure to guard against a risk that is unlikely.
When imposing a penalty the Commission will also consider a range of factors in mitigation, often resulting in a discount in the penalty to be imposed.
In TMP Worldwide eResourcing the employer entered an early plea of guilty and received a 25% discount in penalty because of that. The employer received a further 10% discount for its commitment to safety and the steps it took after the accident to avoid a repeat incident. The initial penalty assessed by the Commission of $235,000 was discounted to $152,570.
The Commission in determining the appropriate penalty also considers whether an employer has assisted WorkCover in its investigation.
An early plea of guilty also receives a discount in penalty as it is seen as indicating remorse on the part of an employer; an acknowledgment of its responsibility. An early plea also saves the community the cost of a trial.
An employer’s contrition is another factor considered by the Commission when imposing a penalty. In Inspector Newman v Mainland Civil Pty Ltd  NSWIRComm 288, an employee was fatally injured when struck by a grader.
After the incident the employer offered counselling and financial assistance to the employee’s family. The employer also conducted its own investigation into the incident and implemented safety improvements. These steps saw the penalty discounted from $120,000 to $78,000.
When imposing a penalty the Commission will generally factor in a component in the penalty for deterrence; that is to deter an employer for breaching its obligations in the future.
In Abigroup, the Commission was critical of the fact that it took Abigroup seven years from the incident to comprehensively review its safety practices. For that reason, deterrence was a material factor in the significant penalty imposed.
Reacting swiftly to an incident in implementing measures to avoid a repeat incident will weigh favourably in the Commission’s mind.
The Act requires employers to be proactive in achieving compliance with their safety obligations. Being proactive will also assist in minimising the risk of a breach and the imposition of a penalty.
Where a breach occurs, reacting positively to the incident will mitigate any penalty being imposed. Employers should consider:
Promptly investigating any breach;
Implementing immediate measures to avoid a repeat;
Offer assistance and support to those affected by the incident.
Further, upon obtaining legal advice, an employer should give consideration to an early plea of guilty and, where appropriate, assist WorkCover in its investigation.