--p~.p~~p AUSTRALIAN BANKERS' ASSOClATiON INC. . -~ . -----m--a -- David fie11 i ev-3. i - ChieiExeculive Oficer Sydney NSW 2000 Telephone: (02) 8298 0401 Facsimile: (02) 8298 0402 24 February 2006 Mr Michael Keating AC Ciiairman, Independent Pricing atid Regulatory Tribunal PO Box Q290 QVB Post Office NSW 1230 ioartOiDart.nsw.aov.au Dear Mr Keatlng, Re: NSW Regulation Review The Australian Bankers' Association (ABA) is pleased to provide comments to the NSW Government's review of the burden of existing regulation in NSW. The purpose of the revlew 1s to: 1. Identify areas of NSW Government regulation which are imposing a significant, unnecessary regulatory burden on business and the community; and indicate priority areas in which regulatory reforms could provide significant immediate gains to business and the community; and 2. Develop recommendations for Government action to significantly improve the efficiency of regulation and reduce unnecessary regulatory burden on business and the community, including consideration of non-regulatory or incentive-based options for achieving this outcome. The ABA considers that there are a number of laws and rules which "directly influence or control the way people and businesses behave" that present a sign~ficant and unnecessary regulatory burden on business and the community in NSW. ' The Issues Paper defines regulation to include any NSW laws or other NSW Government 'rules' which directly influence or control Lhe way people and businesses behave. IPART (2006). Investigation into the burden of regulation in NSW and improving regulatoiy efficiency. Independent Pricing and Regulatory Tribunal. January 2006. p4. ABA-#12200-vl-NSW~Regulali01~~~Re~ie~.DOC Auztraiian Bankers' Association Inc. ARGN 117 262 978 (incorporated in New South ihlnles). Liability oi rnernhcrs is llinl!cd.
Transcript
--p~.p~~p AUSTRALIAN BANKERS' ASSOClATiON INC.
.. ~ -~ . ~~ -----m--a ~ -- David fie11 iev-3.i- ChieiExeculive Oficer Sydney NSW 2000
Mr Michael Keating AC Ciiairman, Independent Pricing atid Regulatory Tribunal PO Box Q290 QVB Post Office NSW 1230 ioartOiDart.nsw.aov.au
Dear Mr Keatlng,
Re: NSW Regulation Review
The Australian Bankers' Association (ABA) is pleased to provide comments to the NSW Government's review of the burden of existing regulation in NSW.
The purpose of the revlew 1s to:
1. Identify areas of NSW Government regulation which are imposing a significant, unnecessary regulatory burden on business and the community; and indicate priority areas in which regulatory reforms could provide significant immediate gains t o business and the community; and
2. Develop recommendations for Government action to significantly improve the efficiency of regulation and reduce unnecessary regulatory burden on business and the community, including consideration of non-regulatory or incentive-based options for achieving this outcome.
The ABA considers that there are a number of laws and rules which "directly influence or control the way people and businesses behave" that present a sign~ficant and unnecessary regulatory burden on business and the community in NSW.
' The Issues Paper defines regulation to include any NSW laws or other NSW Government 'rules' which directly influence or control Lhe way people and businesses behave. IPART (2006). Investigation into the burden of regulation in NSW and improving regulatoiy efficiency. Independent Pricing and Regulatory Tribunal. January 2006. p4.
ABA-#12200-vl-NSW~Regulali01~~~Re~ie~.DOC
Auztraiian Bankers' Association Inc. ARGN 117 262 978 (incorporated in New South ihlnles). Liability o i rnernhcrs is llinl!cd.
AUSTRALIAN BANKERS' ASSOCIATION INC. 2
The ABA has also recently made submissions to the Federal Government's Regulation Taskforce ("Banks Taskforce") and the Financial Services Advisory Council (FSAC) on concerns with over-regulation, including overlaps and inconsistencies between jurisdictions. Our comments following are consistent with the views we expressed to the Federal Government.
3 . Occupational health and safety laws
The ABA is concerned with the lack of uniformity between the Occupational Health and Safety Act 2000 (NSW) and other equivalent statutes. There are significant differences between the minimum standards for 'employers across the Commonwealth, States and Territories, which increases regulator/ burden and uncertainty for companies conducting business in NSW.
The myriad of OH&S statutes across Australia creates inconsistency which leads t o additional costs and inefficiencies for national employers, such as banks. As the duties and responsibilities are inconsistent there is a r i sk to the health and safety of all employees and others i n a workplace.
I n particular, the OH&S Act (NSW) is different from the other States and Territories in a number o f areas. Firstly, the Industrial Relations Commission (IRC) in Court Session determines cases. This means that the Supreme court of NSW (except in relation to appeals against decisions for a death in a workplace pursuant t o section 32A. of the OH&S Act (NSW)) is not the arbitrator. It also means that thecour t of Criminal Appeal is not at the apex of the criminal system, as the IRC also determines appeals.
Secondly, NSW is the only jurisdiction in Australia which permits unions to bring prosecutions for alleged breaches of occupational health and safety legislation. Unions are not required to demonstrate that the prosecutions are in the interest.
Finally, the independence of prosecutors in NSW (whether WorkCover or union prosecutor) is bought into question by their ability to claim a moiety. No other jurisdiction permits the payment of fines to union or WorkCover prosecutors for OH&S prosecutions. There are no restrictions on the use of such payments.
The ABA recommends that to improve legislative effectiveness and regulatory efficiencies, there should be national harmonisation OF occupational health and safety legislation.
I n particular, in our submiss~on to the NSW Goverriment review of the OH&S Act (NSW), the ABA made a number of recommendations relating to procedural fairness as follows:
OtI&S matters should be returned to the jurisdiction of the courts, allowing the IRC t o concentrate on industrial relations matters.
OH&S matters should be taken by the Department of Public Prosecutions (DPP) to the Supreme Court of NSW. The Court of Criminal Appeal shobld be at the apex of the OH&S system.
No moiety should be payable to a VlorkCover prosecutor or union. These procedural issues potentially undermine the integrity of the OH&S system.
The AEA's initial ar?d supplementary submissions to the NSW Government review of the OH&S Act (NSW) are attached for your information.
2. Consumer credit and related legislation
The, AEA has had a longstanding and active interest in consumer credit regulation. The AEA played a major role in the development and implementation of the Uniform ~ o n i u m e r Credit Code (UCCC) in 1994 and before that State Credit Acts that.were legislated in the 1980s.
The NSW Minister for Fair ~ r a d i n g is a member of the Ministerial Council on Consumer Affairs (MCCA) that has responsibility for the UCCC and the national regulation of finance brokers.
There are several aspects i n these areas of regulation that the ABA beiieves are relevant to the NSW regulation review.
The UCCC template
The UCCC model has served consumers and industry reasonably well over its 10 or so years of operation. However, the AEA belleves that some recent approaches by MCCA place the cont~nuation of the co-operative template model at r~sk.
There is Increasing concern from the credit industry over the approach of the MCCA t o consultation with industry, policy formulation and timing of consumer credit related initiatives. Following are a number of examples.
E-commerce amendments to the UCCC
It has been some 6 years since a post-implen~entation review of the UCCC in 1999 recommended that the UCCC should be amended to permit electronic contract formation and disclosure and electronic communication of certain other UCCC regulated material - a major efficiency gain for consumers and industry. Draft legisiation was released in July 2004 that is only now expected to be brought forward in 2006.
A B A - # ~ ~ ~ O ~ - ~ ~ - N S ~ ~ ~ ~ R B ~ U I ~ I I O ~ ~ R ~ V I ~ W OOC
Nationally uniform regulation o f finance brokers
The credit industry, consumer advocates and finance broker associations themselves all agree that nationaily uniform reguiation of finance brokels is a priority.
The key policy settings for the !egislation were established in ]fine 2003. The ABA participated in a working party established by the NSW Office of Fair Trading that has carriage of this matter to provide its views on a series of technical issues. This process concluded in about March 2005. However, legislation is t o date unsighted by the ABA. I t is understood that the proposed legislation (o r the regulatory impact statement) is being considered by the Commonwealth Office of Reguiation Review before its introduction later this year. The ABA is concerned that a mostly non-controversial regulatory initiative of benefit to consumers and industry has suffered from delay..
Having said that, in supporting the national.regulation of finance brokers the ABA remains concerned over two aspects of the proposed regime that it believes are 'unnecessary and overly burdensome on business. Those two aspect; are:
1. A proposal to regulate business finance brokers (brokers that negotiate with credit providers on behalf of small to medium sized businesses for financing, including leasing, of business equipment and traditional business lending facilities, such as working capital overdrafts, term loans and letters o f credit). No research has been conducted to determine, whether there has been a market failure in the business finance broking sector to warrant legislative intervention. Business finance braking is a more specialised and immediate type of broking where compliance with regulatory requirements could add cost and delay for small to medium sized businesses in securing their financial needs.
2. A proposal that i f a consumer in default under their loan has a claim against their finance broker who set up their loan, thereshould be a mechanism for the consumer to obtain a stay of proceedings against the mortgagee exercising its power of .sale under the mortgage. This mechanism could be invoked even where there is no implication of the credit provider in the finance broker's conduct complained of. The proposed mechanism almost certainly would be exploited by consumers' legal advisers to forestail a mortgagee's legitimate enforcement proceedings. The filing of an unmeritorious claim against a finance broker could be used to stay a mortgagee's action until the final determination of the claim against the finance broker. This cannot be in the interests of the consurr~er where interest and default charges continue to accrue on their unpaid loan. There are prudential issues for banks and other authorised deposit taking institutions (ADIs) if legislative intervention is to be pursued. The proposal would extend to credit contracts in respect of investment property increasing the risk exposure for credit providers particularly in unfavourable economic conditions. Courts already have a general equitable jurisdiction to grant injunctive relief in appropriate
cases. The proposal should be abandoned for these reasons and because it is not directly reiated to the regulation of finance brokers.
Mandatory Co~nparison Rate (MCR)
The MCR commenced in July 2003. The legislation was riot preceded with written policy papers or a regulatory impact statement.
On 17 December 2005, the ABA received a 106 page preliminary impact statement that had been prepared by independent consultants on behalf of the MCCA. The review of the operation of the MCR was commissioned under the authority of the MCCA and commenced in April 2005. The review was necessary because the legislation has a built-in sunsetting provision effective on 30 June 2006. Unless there is evidence of a net benefit to consumers over the cost of compliance to industry the MCR would "suilset" on 303une 2006. The preliminary impact statement was released for public comment to this end..It is relevant to note that the preliminary impact sfatement concluded that there was insufficient evidence to make a final determination about the continuation of the MCR and that further industry and consumer input would be necessary.. A 17 February 2006 response date was stipulated that in practice translated into a mere 4 weeks for industry to develop its response.
Prior to the 17 February submissions due date, the: MCCA had determined that the sunset period should be extended for one year to 30 June 2007 and a draft bill has been prepared accordingly. Industry was not consulted on or formally advised of this decision until 20 February 2006. The decision was not mentioned in the preliminary impact statement nor is a regulatory impact statement t o be prepared.
Almost three years of operation of the MCRhas seen substantial compliance costs imposed on credit providers that inevitably have found or will find their way back t o consumers with little t o show for consumer benefit. As already mentioned MCCA's consultant has determined in the preliminary impact statement that unless it can be shown there is a net consumer benefit over the costs of compliance to industry, then the comparison rate regime should sunset on 30 June 2006. To date the consultant has not been satisfied that there has been a net benefit t o consumers.
Additional pre-contractual disclosure under the UCCC
There is currently a consultation process authorised by the MCCA into a MCCA decision to amend the UCCC to add a further disclosure requirement on credit providers under the UCCC pre-contractual disclosure regime. The origin of this decision lies in the post-implementation review of the UCCC that was completed in 1999. The review recommended that the existing financial table that . is permitted to form part of all of the pre-contractual disclosures would be amended t o distinguish between "essential information" and other information. It was not apparent from the recommendation that this modification would entail production of an entirely new document to be provided separately to the consumer.
I n early April, 2004, the ABA received a communication from the NSW Office of Fair Trading inviting a response by 23 April 2004 to proposals for implementation of the 1999 review recommendation. This was the first consultation with t i le ABA on the matter since the consultations leading up to the recommendation 5 years before and in the subsequent National Competition Poiicy Review of the UCCC in 2000.
The NSW Office of Fair Trading kindly agreed to the AEA's request for an extension of time within which to respond, but only to 30 April 2004.
The AEA considered the proposal to be a substantial departure from the original 1999 recommendation and wrote to the then NSW ~ i n i s t e r for Fair Trading, No subsequent research of which the ABA is aware has been conducted on the likely effectiveness of the proposed change let alone its effectiveness in a significantly changed consumer credit market in 2006 compared with 1999. The decision by the MCCA to proceed with the amendment to the UCCC is likely to result in substantial additional pr.e-contractual disclosure obligations being imposed upon credit providers and costs assodated with changing computer systems, document design, changed pre-contractual disclosure procedures and additional staff training.
he "explanatory package" received by the ABA in January 2006 that h a d been prepared on the authority of the MCCA for the proposed additional disclosure included this statement:
'[Tlhere are no plans to test the new scheme by simulation or survey pnor to its implementation".
A 31 March 2006 response date is required.
Credit card regulation under the UCCC
There are proposals under consideration by the MCCA relating t o credit card marketing and consumer credit overcommitment. Possible regulation of the marketing practices of credit providers in offering credit card holders the choice of accepting or declining an increased credit l imit on their credit cards could follow from the MCCA. The NSW Minister for Fair Trading has referred the matter t o the M ~ A and she has provided a briefing paper t o the MCCA.
No input to the paper was invited from industry nor has a copy been provided to the ABA. It is understood that the MCCA has requested the NSW Minister for Fair Trading to develop a firm policy proposal for the consideration of the MCCA. The ABA understands that industry will not be consulted in the development of the proposed policy until after it has been presented to the MCCA and authorised for public release and public comment. It is only after then that consultation is expected to be undertaken with industry and other stakeholders. A review by the Commonwealth Office of Regulation Review of the regulatory impact statement would then follow.
~epresentations have been made to the NSW Office of Fair Trading without result, which is of concern t o the ABA and its mernbers as 1 March approaches.
These iristances and experiences of banks with proposed and existing MCC/\ initiated reguiatory intervention on consumer credit and finance broking coupled with the NSW maximum APR amending legislation are of concern to the ABA ancl its member banks. They do not reflect weii on the reguiatory approaches and pr-ocesses of the States and Territories. The ABA recognises that the reguiatory responsibility for consumer credit rests largely with the States and Territories and that complex and at times extended consultative arrangements between those jurisdictions are necessary.
However, some of these processes lack transparency and adequate timing, and coupled with a predilection for, regulatory intervention, they are factors that the ABA believes have led to much of industry's concerns with the development of regulatory policy and the resulting and at times unnecessary, inappropriate or excessive regulation.and red tape.
Recommendation
Tlle ABA believes that market failure does not necessarily justify regulation, and that the costs and benefits of a range of potential responses 2hould b e considered. Therefore, the ABA recommends that the NSW Government shouid use i ts position on the Ministeriai Council on Consumer Affairs (MCCA) to ensure that the development of pubiic poiicy by the MCCA takes place through formal consultative mechanisms that do not pre-empt consideration of alternatives to regulation. This wiil allow the financial services industry to better engage with governments on non-regulatory or incentive-based options for achieving pubiic policy outcomes: ..
Also, the ABA believes that the MCCA members should be urged to review their processes and arrangements at officials' level for communication with other jurisdictions and consultation with stakeholders with the view to improving the efficiency and timing of decisions without derogating from effective consultation with industry.
I f you have any queries regarding the issues raised in this letter, please contact me or the ABA's Director, Corporate & Consumer Policy, Diane Tate on (02) 8298 0410: [email protected] (occupational health and safety) or Ian Gilbert, Director, Retail Regulatory Policy on (02) 8298 0406: isilberthbankers.asn.au (consumer credit and finance broke~s).
Of serious concern to the ABA is a recent public statement by the NSW Minister for Fair TI-ading that appears to pre-empt any other approach to this matter than legislative intervention under the UCCC. The statement of 19 December 2005 in the Minister's media release includes:
"I a ~ n determined that NSW-sponsored amendments to the Consumer Credit Code will ensure consumers aren't given rncre credit than they can repay, that lending authorities give a clear disclosure of the long term effects of minimum repayments and that consumers' changing circumstances are taken into account.
"The proposed amendments to the 'Consumer Credit Code' - will be circulated for discussion to all states and stakeholders and would be subject to review by the Commonwealth 'Office of Regulation Review".
The AEA has been concerned for some time that, particularly in NSW, consumer credit policy is approached through the legislative intervention prism.
Maximum interest rate cap NSW
On 1 March 2006, an amendment to the NSW Consumer Credit Act made by the Consumer Credit (New South 'Wales) Amendment (Maximum Annual Percentage Rate) Act ZOOS will come into' force. '~he amendment is aimed a t high charging, fringe credit providers who charge fees instead of interest to circumvent the existing maximum permissible annual percentage rate regulation:
Under the new Act the annual percentage rate (APR) is to be calculated by including in the calculation all credit fees and charges to gauge whether the maximum APR has been exceeded. The basis of the calculation is akin to the MCR calculation.
No distinction is t o be drawn between fees and charges'that are not able to be avoided by the debtor and those that are purely contingent, that Is payable because a particular event has occurred. The calculation will also include NSW government fees and charges that could lead t o the maximum APR being exceeded.
The aim of the new Act is also to ensure that fringe credit providers who do not disclose an APR because they charge consumers only fees and charges without reference to an interest rate must now disclose these fees and charges as an APR. The regulatory intention is that banks and other mainstream lenders that do disclose an APR would not be affected. However it is far from clear that this is the case either from the legislation itself or the Minister's second reading speech.
The requirement is that the APR as disclosed must also include fees and charges in the nature of interest (whether expressed as such or not). This now appears to be a new disclosure obligation on banks and other mainstream credit providers that disclose an APR as well as provide for payment of fees and charges, an outcome that the NSW Office of Fair Trading considers was not intended. This is a serious matter for the ABA's members because any uncertainty over these disclosure obligations could lead to the imposition of a substantial civil penalty under the UCCC, should they misinterpret theil- obligations in this respect.
AUSTRALIAN BANKERS' ASSOCIATION INC. 9
Yours sincerely
David Bell
Enclosures:
1. Review of the NSW Occupational Health and Safety Act 2000
2. OHS legislation - supplementary comments
AUSTRALIA^^ BANKERS' ASSOCIATION INC. ~--,-- -.----a-2-- ~- . -
Diane Tale i.4 3T5Gil l Stieer Director Sydliey NSW 2000
Mr Perer Dunphy ~ i rec tor , OHS Legislation ~ e v i k w VVorkCover, NSW Locked Bag 2906 LISAROW NSW 2252 P e t e r . D u r ~ o h v @ w o r k c o v e r . n s w . g ~
Dear Mr Dunphy,
Review of Occupational Health and Safety Act 2000
The Australian Bankers' Association (AEA) is aware that the review teani is seeking further information on discrete areas within the scope of the review of the Occtlpationai Health andsafety Act 2000 (NSW). The review team has released five Issues Papers. Of particuiar interest to our member banks are the Issues Papers on the role of codes of Practice and controllers of work premises.
The ABA provided comments on these matters in our initial submission. I n summary, we believe the following:
. Role of Codes o f Practice: The AEA believes that Codes of Practice may be one mechanism for developing a cooperative, consultative and consistent framework for OH&S across business sectors. However, we believe that maintaining an open dialogue amongst stakeholders, such as banking representatives and Workcover representatives, is also important in improving and maintaining OH&S standards. Codes of Practice should provide practical guidance on an industry and activity specific basis. Codes of Practice should only be developed through initial and ongoing consultationwith industry representatives.
Controllers o f work premises: The AEA' believes that further clarity of the concept of controllers of work premises would be useful. Lack of clarity may compromise OH&S standards as well as unnecessariiy and inappropriately apportion duties across multiple parties. The ABA suggests an amendment be made to ensure that multiple liabilities are not pursued for a single factual incident. The ABA also suggests further guidance be issued seeking to raise awareness and understanding of the concept of "controlier".
Austra l ian Bankers' Association Inc. ARBN 1'7 261 978 (Incoipoidted in New Soutn wales:. Liabilhry of members is l imi ted
AUSTRALIAN BANKERS' ASSOCIATION INC. 2
Following are our comments as contained in our initiai submission.
Standards and codes of pract ice
OH&S principles need to be flexible enough to address different circumstances, yet balanced so that companies and individuals know wnat their particular responsibilities are. It is important for banks to ensure their OH&S systems meet
their legal obligations as weil as staff, customer and other stakeholder expectztions.
I n additlon t o the OH&S Act and Regulations, there are a number of standards that form part of the OH&S laws, including: .
. AS/NZS 4804: 1997 - OHS Management Systems - General guidelines on principles, systems and supporting techniques.
Under Part 4 of the OH&S Act, as part of the OH&S framework, Codes of Practices have been prepared t o provide additional guidance. Codes of Practice have been introduced for some industries; for example, there is also a code of Practice for Cash in Transit, introduced in March 2003.
It has been suggested that a Code of Practice be developed to identify individual director and manager responsibilities. The Code could include discussion of obligations and requirements for an adequate safety management system; development of a reievant risk assessment plan; and methodology and strategies required and that should be followed for implementing, overseeing and enforcing compliance with relevant safety management systems.
Codes of Practice can be vulnerable to criticism as they are approved by Workcover NSW, and even though these documents may be used for demonstrating compliance, these documents fall short of normal law making processes. Furthermore, rather than providing further guidance, these documents tend to reiterate the main elements of the AS 4084.
The ABA believes that directors and managers have little guidance as t o their OH&S duties and how to discharge their responsibilities under the Act. Given the seriousness o f the offences that directors and managers [nay be liable for, further guidance on how directors and managers can meet their obligations under the Act would be of assistance to directors, managers and OH&S practitioners.
However, the ABA has concerns with the deveiopmerit of a general Code of Practice for directors and managers. It would be difficult for such a Code to apply across industries and provide meaningfui and practical guidance. On the one hand, providing broad interpretation may not be any more instructive than the general duties contained in the law and may create additional confusion; whereas on the other hand, providing prescriptive interpretation may be impractical for some sectors. Therefore, the ABA conside~rs that a Code would only be useful for
AUSTRALIAN BANKERS' ASSOCIATION INC. 3
directors and managers i f i t was to be industry and activity speciflc and developed through initial and ongoing consoltation with industry representatives.
Control lers o f work premises: mul t ip le l iabil it ies
The ABA acknowledges that typically duty holders share a range of duties that apply simultaneously to the same workplace. However, under the existing legislation the 'hierarchy of control' is opaque; as such there is scope for a hazard or risk t o give rise to multiple liabilities arising from a single factual incident; for example, an employer could breach:
Section 8(1) by faillng t o ensure the health, safety and welfare at work of employees; and
. . Section 8(2) if there is a risk to health and safety of third parties on the premises.'(e.g. an Innocent bystander in a bank branch).
If the premises is controlled by a person other than the employer (e.g. a related company or the building "owner"),that person could also be in -breach of section
'
10 by failing to ensure that the premises are safe and without risks to health.
I n addition, the directors and other persons concerned in the management of the corporation could also each be liable of offences under section 26.
The concept of "controllers of work premises" and the relationship between employers and controllers is ambiguous. The ABA recognises that multiple persons or companies may have certain responsibilities with respect to particular health, safety and welfare matters at a workplace. Therefore, it is important for each of the parties to discharge their duties in a coordinated manner; for example, the scenario of the call centre operator.
However, the potential for all of these different parties to be guilty of an offence under the OH&S Act is difficult to justify, in particular, where the persons will have varying degrees of ability to control the hazard or risk in the workplace. The ABA considers that in these circumstances the prosecutor should not be able to pursue each of the parties in relation to a single factual incident; for example, the agent employing the call centre operator, the bank engaging the contractor via an agent, and the other party controlling the premises.
, , , . . . an ime"dment b<&de t o ensure tha t r$ltiple liabilities a
fa=tu'al 'incidknt: The .ABA also -suggests further guid ise . . . ~ awareness . . , . and . .. understanding o f the concept of "control
,. . . .. ~ B . . . .
AUSTRALIAN BANKERS' ASSOCIATION INC. --p
4
I f the review team would iike any further information, I would be happy to discuss with you any of the issues raised in this letter.
Yours sincerely
Review of the Occupational Health and Safety Act 2000 (NSW)
2 September 2005
'Table of Contents
3 . Duties relating to health safety and welfare ..... 4
3 . i Scope of OH&S duties: employe m ..................................................................................... 4
3.2 Contract arrangements and outsourciny ........................................................................... 5
Offences defences and 0""s of ,,roof... . 8
Offences . causal nexus and foreseeability ....................................................................... 7
9.1 Right of appeal to the Criniinal Court of Appeal .......................................................... 79
Review of the Occupational Health and Safetvdct 2000 INSWI
1. Introduction
The Austraiian Bankers' Association (ABAj is pleased to provide comments'to the New South Wales Government's review of the Occupational Health and Safety Act 2000 (NSW) (OH&S Act), which came into force on 1 September 2001. The ABA has made previous representations to The Hon John Della Bosca MLC requesting that particular provisions of the OH&S Act be reviewed. Therefore, we we!come the Government's review of the OH&S Act.
Pursuant to section 142 of the 0t I&S Act, the Minister is to review the Act, as soon as possible after the period o f five years from the date of assent, to determine whether the:
Policy objectives of the Act remain valid; and
Terms o f the Aci remain appropriate for securing those objectives.
OH&S legislation piaces an absolute duty on employers and controllers of workpiaces (and directors and managers) to provide a safe and healthy workpiace for empioyees and visitors t o the workpiace. There is clear support across the business sector and the community for workpiace health andsafety; indeed, there is widespread regard that a culpable failure to provide a safe working environment is a matter of utmost seri,ousness.
Failure to address OH&S issues can lead to massive and unnecessary economic and social costs as well as allow significant benefits to go unrealised. While the ABA supports the general policy objectives of the OH&S Act, the current iegisiation, particularly as recently amended by the Occupational Health & Safety Amendment (Workplace Deaths) Act 2005, is a significant disincentive to employers- who are lnot "rogue" employers conducting business in NSW'. The negative.impact on business investment as a result of the broad and uncertain application of the law to employers and controllers of workplaces should not be underestimated.
The ABA is concerned that some of the provisions of the Act are too broad anduncertain. Essentially, the OH&S Act is wide-ranging and only provides companies and individuals with very limited defences. The penalties for breaches of the legislation are significant. I t is important for the legislation to provide clarity and certainty for duty holders. Therefore, the ABA considers that it is necessary for specific provisions of the legisiation to be amended so that the terms of the law are well-defined, practicai and well-understood by employers, employees and the wider community.
I t is vital that the OH&S regime:
1. Clearly articuiates the policy objectives of the system;
2 . Ensures that the system is structured in a manner that can deliver these objectives through an explicit set of duties; and
3 . Recognises the rights and responsibilities of all people - empioyees, self-employed, controllers, suppliers, employers, etc.
' The Wan John Oella Bosca MLC said that the Occupational Heatlh and Safely Wd!place Dealhs) Gill targets "rogue bosses" . a small mi,roiity of employers who denlonstrate little or no regard for the safety bf their workers
2. Policy objectives of the OH&S Act
The ABA acknowledges v~orkplace safety as a serious issue for the community and supports the gerleral poliry objectives to secure and promote tlie heaith, safety and welfare of people at work as contained in the Act. Since the revised legislation came into force on 1 September 2001, incidenies of workplace death and injury have declined i n NSW. According to WorkCover NSVI, overall incident data demonstrates a long-term positive trend in the reduction of workpiace death, Injury and illness.
It is essential for the law to encourage and facilitate compliance as well as enforce non- compliance. However, the AEA believes that part of the decline in incidences of death and injury in NSW is due to the commitment made in 2002, by WorkCover NSW in conjunction with representatives from the NSW Government, employer groups, unions and health and safety experts to reduce workplace injuries by 40% and fatalities by 20% over the next 3.0 years through focusing on education rather than prosecution.
The AEA believes this constructive and supportive dialogue through the provision o f preventive information and advice, yet rigorous,enforcement o f sanctions where necessary; is a balanced approach that is working; as demonstrated by the continuing improvement i n health, safety and welhre of employees and increasing awareness ,of the duty of care to provide a safe workplace by'employers.
The OH&S Act and the Occupational Health and Safety Regulation 2001 provides the, framework containing the generalOH&S principles. The focus of the Act and Regulations is on asafe and healthy workpiace. .
Under section 3 of the OH&S Act, persons with an OH&S duty are obligated to:
Secure and promote the health, safety and welfare o f people a t work;
Protect people at a place of work against risks to health or safety arising out o f the. activities of persons at work;
Promote a safe and healthy work environment for people a twork that protects them from i n j u ~ y and illness and that is adapted to their physiological and psychoiogical needs;
. Provide for consultation and co-operation between employers and employees;
Ensure that risks to health and safety a t a place of work are identified, assess& and eliminated or controlled;
. Develop and promote community awareness of occupational health and safety issues;
. Provide a legislative framework that allows for progressively higher standards of occupational health and safety to take account of changes in technology and work practices; and
Protect people (whether or not at a piace of work) against risks to health and safety arising from the use of plant that affects public safety.
I n addition . t o t l ie OH&S Act, the Workplace In jury Management and Worker's Compensation Act 1998 provides a system of compensation for injured staff and assists them in returning to work. The focus of the Act is on a safe and timely return to work after a staff member has been injured at work.
Workplaces arechanging with economic reform, advances in technologies and new workforce participation dynamics. Along with these changes to our workforce are changes in community perceptions and expectations. The changing nature of the workplace a n d relationships within the workplace make it a challenge for legislation to strike .the right
balance between providing distinct, yet extensive duties to cover all workpiaces and all hazards and risks.
The ABA understands that the iegisiation should have adequate coverage so that it may apply to all risks to safety and health orising froln workpiace activities, and thereby should impose on those who are in a position to identify and assess and eliminate or control those risks, an obligation to do so. The banking industry is strongiy committed to ensuring the health, safety and welfare of empioyees, contractors and customers. Oli&S management is integrated with organisational activities and not oniy maintains individual banks' legislative obligations but also evolves to reflect changes in business and community expectations.
Some initiatives that the banking industry currently adopts as part of their OH&S practices include:
Continuous improvement in health, safety and weifare performance through systematic management of hazards and risks and regular i-?view of overall progress with health, safety and welfare performance;
Accountability'assigned throughout the bank to achieve' health, safety and welfare targets and meet workpiace objectives; - Adequate resources and supervision allocated to ensure employees are provided.with training to develop knowledge and skills to promote responsible health, safety and welfare in the workplace;
Consultation with employees about health, safety and welfare issues;
Safe and healthy premises, plant and equipment in the workplace;
No tolerance for harassment and bullying in the workplace;
OH&S information disseminated to empioye.es via training materials, handbooks, staff forums and intranet; and
' Rehabilitation and workers compensation systems that encourage recovery and return to work for employees who suffer from a work-related injury or illness.
The AEA considers that as a central statement of the principles of the legislation, the policy objectives reflect the intent of public policy regarding health and safety in the workplace. OH&S legislation should appropriately promote improved health, safety and welfare in the workplace as well as balance the regulatory burden and compliance costs imposed on businesses.
Generally, the policy objectives of the Act are consistent with the objectives of equivalent legislation i n other Australian jurisdictions. However, in practice, differences between the general duties and procedural matters means there is a considerable lack of uniformity across Australian OH&S legislation.
Banks generally operate throughout Austraiia. As a result of the dilferent jurisdictions, the development of OH&S management systems is impeded and business is exposed to sjgnificant business costs in terms of compliance and administration. Employees are also prejudiced as a result of the lack of national consistency. The ABA beiieves that NSW should be seeking to move towards national unifol-mity in occupational health and safety legislation.
;mentation ~F:oH&s ,legislation that is nai/onally consistent. i reduce the unnecessary administrative and compliance
3. Duties relating to health, safety and welfare
The 'Robens style" framework places the general OH&S duties on various categories of duty holder. The advantage of this approach is that it can capture ail workplaces and ail hazards and risks. However, it is important that the general nature of tile duties is not so broad that employers have difficulty in determining how and when to discharge a duty.
The Robens model was adopted at a time when 'standard employment' dominated workpiaces. This is no ionger the case, and complex employment relationships now permeate workpiaces in Australia. Developments in labour flexibility over the last two decades have seen new organisational structures, growth i n labour hire arrangements and expansion of outsourcing of business functions.
T ~ ~ ' O H & S legislation should explicitly set out the duties and responsibilities of each duty holder anri apply the duties in an equitable manner. The general nature of the OH&S duties in t i ie current legislation provides little guidance as to what is needed to comply with a duty of care. Therefore, the ABA believes. that the general OH&S dut ies should meaningfully allocate responsibilities to duty holders by maintaining the broad legislative objective to improve the conditions in which people work, but also as far as practicable clarify the responsibilities of various businesses in providing a workpiace that is safe and healthy.
WorkCover NSW assists industry to comply with i ts statutory obligations primarily through focusing on information exchange, prevention advice, assistance se~ices, standard setting and other advisory mechanisms. The ABA commends the efforts of WorkCover NSW. in promoting the commitment to OH&S across the business sector and the importance. of OH&Sacross the community.
3.1 Scope ofOH&S duties: employers
Under section 8(1) of the Act, employers have general duties to ensure the health, safety and welfare of employees and others in the workplace. The general duties include:
Ensurlng that any premlses controlled by the employer where the employees work (and the means of access to or exlt from the premtses) are safe and without r~sks to heaith;
. Ensuring that any plant or substance provtded for use by the employees a t work is safe and without risks to health when properly used;
. Ensuring that systems of work and t l ie work~ng environment of the employees are safe and without risks to health;
Prov~dtng such information, instruction, training and supervision as may be necessary to ensure the employees' heaith and safety a t work; and
Prov~ding adequate facilities for the welfare of the employees at work.
I n addition, under section 8(2) of the Act, employers must also ensure that people (other than the employees of the employer) are not exposed to risks to their health or safety arising from the conduct of the empioyer's undertaking while they are at the employer's place of work.
, - i8e Hrfl#>'i 'r;8!!,r?ccrl. for Ohs regufal~orl was inlro3dcca D) 'nr Rrncrls IKepol' ,n .S72 77s R-oerz rncnil 8s tnrec I erecl a:proh:o ir.1" oroil<$ ovrriirui ng ge#i:!zl d..l:es i'arli;..nca n .P(~:s n.3~' 1.17rt 0t .d $ 2 g?oi.vors CCII I~ ned n I:>< re.., a1 o!,s ano ncustri scec Tic .i..cance rol ln r w l l r l cL,<Icr "'oract c z ..c:>-slnrlr H ?$c371
~ ~ - . ~ - p - . . . . . . \....,. Occupalional ~ e a l i h a n d ~ i f i t y ~ a w a " ~ ~ b l i c y , L& ~ook Company. Sydney.
Controllers of work premises, plant or substances and designers, manufacturers and suppliers of : :ant an6 substances for use at work also have duties to ensure premises, plant or subsiances are safe and without risks to health.
, . , .
3.2 Contract arrangements and outsourcing
OH&S iegisiation has been based on traditional perspectives of the workplace; that is, there is one employer with employees a t one workpiace. However, the shift i n workforce participation, such as the increased use of contract arrangements and outsourcing means there are more complex employment relationships.
For example, an 'agent' may be employed to place contractors into a workplace, such as a cail centre operator, cheque processor or security officer for a bank. I n this circumstance, the ernployee will be supervised and controlled by another employer a t a workpiace, which may'or may not be a premises controiled by the bank. The employee will be employed under a contract with the agent, and the agent will have a contract with the bank.
I t is important that the A& adequately ensures that all employees are protected by the scope of the OH&S duties. However, there is considerabie overlap between the general . duties owed by the various parties, and fuchermor'e these'duties do not only apply in respect of employees. Typically, duty holders share a range of duties that appiy simultaneously to the sarne workplace. I t is important that to promote safe and healthy workplaces that each duty holder clearly understands their responsibilities.
The general OH&S duties inean that a risk management framework must be applied that identifies risks associated with the cail centre and assesses and controls those risks. Where a risk is identified that cannot be eliminated, the risk may be mitigated, possibly through the development of safe working procedures and training. The risk assessment should take into account the physical environment, people who work there, tasks performed, equipment used and the interaction between these variables.
For example, the bank should ensure via its contract with the agent that these OH&S duties are discharged by the agent or as otherwise stated in the contract arrangements or outsourcing agreement. The various OH&S duties in relation to the contractor or sub- contractoi- should be the responsibility of the agent; that is, the agent should ensure that a risk assessment of the cali centre has been conducted and necessary action taken. However, depending on the party that has controi of the workplace where the cali centre operator works other parties may also have Oli&S duties; such as, the cali centre may be located in a branch of the bank thereby controlled by the bank, a t a premises controiled by the agent or a t a premises controlled by another party.
The ABA considers that Lhe existing legislation does not provide adequate direction as to what is expected of the various duty holders insofar as they have control over the work of others. The capacity to have controi over the activities that take place in a workplace will vary between different duty holders, determined in part by their. capacity to control the relevant activities. This is confusing for einployers and could lead to a failure to assume responsibilities for their empioyees.
While i t has been generally accepted that the employer's obiigations to its empioyees extend only as far as employees of contractors directly engaged by the employer under contract, recent decisioris by the Industrial Relations Commission (IRC) in NSW and the Court of Appeal in Victor~a indicates that an employer's obiigations may extend to sub- contractors. Uniess there is an allocation of realistic responsibilities and ciarity given to the
AUSTRALIAN BANKERS' ASSOCIATION -- 6
responsibilities of several parties, the management of contractor heaiih and safety may be compromised.
She ABA suggrsts that responsibilities with respect Lo contractors should be clarified by specifying particular obligations, for example, regarding risk assessment, and who is responsible for the obiigation - the contractor, the controller of the premises or the owner of the business undertaking. One option is to limit OH&S obligations to the enipioyer at law provided that the "host employer" and the controllet- of premises provide adequate access to the workplace to enable the employer to comply with i ts obligations.
The AEA cons~ders that there 8s ~nadequatc gdlddnce on how duty holders s h o ~ l d aooortlon, and make dec~s~ons about. OrIsS risks and hazards in terms of contractnrs
r ' : ~ h $ ~ $ ~ ' ? ~ u c j i e s t s r. holder'under~the A : ~ < ~ p i ~ y e $ , ' c o n t r o ~ .~:arrtygements and
, , . ,. :,,: . ~ , . . . . .
4. Offences, defences and onus of proof
Pursuant to section 8 of the OHES Act, an employer must ;@cure and promote the health, safety and welfare a t work of ail of its empioyees and others a t the workplace. Pursuant to section 10 of the OH&S Act, a controller, and section.11, a supplier, have a general duty to ensure that premises, plant or substance are safe and without .risks to health. This is an absolute obiigation, which carries strict liability.
I n a prosecution, the prosecutor must prove that the statutory 'elements! of tile offence are established to the criminal standard; that is, '!beyond reasonable doubt". The elements that the prosecution rnust establish are as follows:
1. the defendant was an employer;
2. there was a real risk to health, safety and welfare;
3. the risk arose a t the defendant's place of work;
4. the persons exposed to risK to thetr health, safety and welfare were employees of the defendant; and
5. there was a causal connection between the defendant's failure and the risk to health, safety and welfare; that is, the failure is the "substantial or significant" contributing factorto any injuries.
The first four of these elements are gerierally readily established where an ir~cident occurs in the workplace. However, the firth element is significantiy important, yet in the current legislation and case law has not been given significant attention.
Under section 28 of ihe OH&S Act, a duty holder must prove that i t was not "reasonably practicable" to comply, or that they had "no control" over the cause of the offence. The defendant must prove t h ~ s defence.
A penalty for a" offence against the OH&S Act is significant. I n relation to Division 1 general duties, in the case of a corporation being a previous offender-$825,000; or a corporation not being a previous offender-$550,000; or in the case of ail individual being a previousoffender-$82,500 or irnprisonrnent for 2 years, or both; or in the case of an individual not being a previous offender-$55,000. I n relation to Part 2A workplace deaths, i n the case of a corporation-$1,650,000; or in the case uf an itldividual-$165,000 or imprisonment for 5 years, or both. Offences in relation to Part 2A make no distinction between previous and first time breaches.
4.1 Offences - causal nexus and foresee2bi l i ty
The OH&S Act imposes an absoiute duty on empioyer; to ensure the health, safety and welfare of employees a t work. Tile ABA considers that cndw the exisling legislation and through the determination5 of the iRC, the absoiute nature uf the duty is unrealistic and unachievable. For example, wiiere an immediate and substantiai cause of the risk was the conduct of a third party (and the conduct of the third party was aberrant and unlawful in the extreme), an empioyer can be found guilty of a breach of the ~ c t ' . Determinations have been made that risk of harm was "known, foreseeable and the relevant risk to safety foreseen", even with acts by a third party.
Could an act be reasonably foreseen?
The IRC has tended to adopt a broad view of what constitutes a sufficient causai nexus between the acts and omissions of the empioyer and the risk to health, safety and welfare , as well as whether a risk or hazard couid have been reasonably foreseen. Under the current legislation, it, is clear that a defendant can be convicted of an offence in circumstances where the risk was directly or substantially caused by the intervening and uniawfui action o f a third party. he ABA believes that this is unacceptable.
A bank manager may be subject to criminal prosecution for the injury or death of a person, where injury or death has been caused by a third pacty within the workpiace. For example, a bank robber in the course of an armed robbery of a bank kills an innocent bystander i n the branch. The bank robber is subsequently arrested by the police and is prosecuted within the criminal system. The bank branch manager, who has done nothing more than their job to the best of their ability, could also be subject to criminal prosecution.
On 15 June 2005, the Occupational Health and Safety Amendment (Workplace Deaths) Act ZOOS came into force. Where there is a workpiace fatality of an employee or other person, the defendant will bear the onus of proving their innocence. The possibility for individuals to b e deemed liable is not restricted to directors or senior management of corporations. I n particular, under s32A of the OH&S Act, there is a possibility of the bank manager being convicted and going to gaol for a first offence. The ABA maintains that the Part 2A provisionsare unnecessary as there is existing scope within the law to apply penalties for "rogue" employers and individuals. Furthermore, the ABA considers that i t is inappropriate for a first offender to be sentenced to go to gaol.
The ABA is concerned with the determination of whether there is a causai relationship between the conduct of the ernpioyer and the consequent risk to the safety of an employee or other person (where conduct may be an act or an omission), particulariy in the case of an act by a third party. Given the limited nature of the avaiiable defences, and the onus of proof being borne. by the defendant, i t is appropriate that amendments be made to section B(1) of the OH&S Act i n order to ensure that risks that ace not directly caused by the defendant do not constitute a breach of the Act. I n the absence of a mental element, duty holders under Division 1 are subject to a strict liability offence. Given the absoiute nature o f the employer's obligations, it is important for adequate protections to be available for employers that impiement measures to address foreseeable hazards and risks.
The AEA suggests an amendment DC made to include a provis~on tnaL niakes :l clear that it is not a breach of section 8(11 wncre the lmrnco a:e r ~ s k was s~bs tan t ai v . , , :
a third ParW ait ing uniawfuiiy andfor ina.m&her that, . . ave reasonably foreseen i n the
~ . , . .
' For example. Geoff Denich v Ausfrafiarl 8 New Zeaiand Banking Group Lfd jZ003] NSWlRComm 406
4.2 Defences - "reasonably practicable"
There are t w i deferices contained in the OI:&S Act, both whereby !RC defendant bears :he onus o f establishing the deferice. The first defence is that it was riot 'reasonably practicable" for tile employer to comply with the requirement to prevent the risk. Tlie second defence is where the offence was due tc causes over which the employer had no control and against the happening of which it was impracticable for the person to make provisiorr. To establish a d.,fence, the ernployer must among other things demonstrate there is a "gross disproportion" between the benefit o f the duty and the cost of the measures to secure the duty.
I n determining compliance with the Act, the IKC will consider the severity and likelihood o f the hazard or risk occurring, as against the cost of eliminating or providing control measures for the hazard or risk (i.e. time, money, production and effort). However, i n practice, these defences have proven difficult to establish as the IRC has tended to interpret the concept of "reasonable practicability" as requiring "all pussible steps".
The element of 'control' is a major factor in considering liability; for example, the degree to which the company or individual holds the capacity to foresee and control the hazard o r risk. Where a person had 'no'control" over an incident occurring, inherently the concept o f knowledge of the hazard or risk should be considered by the Court. I n part, control is about whether the duty holder had the knowledge of the risk or hazard, the means of
I eliminating or controlling the, hazard or risk and whether the risk or hazard was foreseen.
I n the AEA's view, the scope of the general duties and defences has resulted ii, practice in an allocation o f responsibilities that is inappropriate. Particularly given the absolute nature o f the duty of care, the defences available are inadequate. The legislation should seek to ensure that reasonably practicable steps are taken a t the prevention stage, rather than simply a t the stage of defending a prosecution. ,
, , . ~ . , . , .~. .
Proposed new defence
The Regulation prescribes specifically in respect of various matters including: . risk assessment and the elimination or control of risks at employer's places of work;
instruction, training and supervision of employees;
. the obligation of an employer to obtain information;
employee consultation;
. duties of controllers o f premises;
. particular risk control measures; and
plant and equipment.
The ABA is concerned that compliance with the detailed provisions of the Regulation does not provide an employer with any protection against an allegation of breach of the Act. The ABA considers that where an employer has taken reasonable steps to conlpiy with the Regulation then this should constitute a defence under the Act.
uggests that where an empioyer has taken reasonable steps to ~ o ~ p l y with ions under the Regulation in respect of a 'particular issue, then such
that issue under
4.3 Onus of proof
I n any proceedings for an offence against a provision of the Act, the onus of proving that a person or company had a reasonable excuse lies with the defendant. The prosecutor bears the onus of proving "beyond reasonable doubt" the elements of the offence in section 8 of the Act.
Given the absolute nature of the employer's obligation to ensure health, safety and welfare of Its employees, this is not a difficult task to achieve i n the absence of a technical defect in the charge. Experience suggests that, where an employer is able to secure an acquittal, it is on the basis of the defences. However, these defences have been cast narrowly and i t is the employer who bears the onus of proving that "on a balance of probabilities" they have taken such steps as are required to establish the defence. I n practice, the IRC has tended to interpret the defences to require that an employer must take "all possible steps" to prevent the hazard or risk in order to discharge the onus of proof. The AEA considers that this Interpretation by the IRC is unfair and fi~ndamentally flawed.
. An employer may be subject to criminal piosecution for the injury 01- death of a person, where. the injury or death has been caused by a third party within the workplace. For example, anarmed robber unlawfitlly gains access to a bank whenthe branch is closed. . When the employees cometo open the branch, they are confronted by the armed robber who has .been able to gain access to a secure area of the branch. I n this instanre, it is likely tha t the IRC would regard this as a hazard and a breach of the employers' general duty. The employer will now bear the onus of proving its innocence in order to secure an acquittal. I f i t does not, it will be convicted and fined and the prosecutor will receive a portion of the fine. However, i f the bank robber is- later apprehended by the police and prosecuted, the armed robber will be presumed innocent until proven guilty. Neither the police nor the prosecutor will receive any financial benefit if a conviction is secured. There is no sound basis for the onus of proof being different when it comes to the employer being prosecuted under the Od&S Act.
The AEA acknowledges that a determination of the facts relevant in the circumstances should be made by the Court. However, to ensure procedural fairness, rather than a defence available to the employer, "reasonably practicable" should be an element of the offence, thereby meaning that the prosecutor bears the onus of establishing that the employer did not take "reasonably practicable" steps in discharging their OH&S duties. I t is noted in this regard that this is the position in most other Australian jurisdictions. I t is appropriate that for criminal offences that the onus of proof lies with the prosecutor, not the defendant. Currently i t is difficult for employers to be confident in a system of justice that essentially presumes them to be guilty of offences that can give rise to significant penalties.
' , , . S an amendment b e habe so'
reasonable doubt-hat the. teps to secure a safe and healthy W
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AUSTRALIAN BANKERS' ASSOCIATION -. 10
5. Duties, responsibilities and liabilities
5.1 Controllers of work premises: mul t ip le l iabii i t ies
The ABA acknowledges that typically du?f holders share a range of duties that apply simultaneously to the same workplace. However, under the existing iegisiation the 'hierarchy of control' is opaque; as such there is scope for a hazard or risk to give rise to multiple liabilities arising from a single factual incident; for example, an employer could breach:
Section 8(1) by failing to ensure the health, safety and welfare at work of employees; and
Section 8(2) if there is a risk to health and safety of third partieson the premises (e.g. an innocent bystander in a bank branch).
I f th; premises is controlled by a person other than the empioyer (e.g. a related company or the building 'owner"), that person could also be in breach of section 10 by fail ingto ensure that the premises are safe and without risks to health.
I n addition, the directors and other persons concerned in the management o f the corporation'could also each be liable of offences under section 26.
The concept of "controllers of work premises" and the relationship between employers and contiollers is ambiguous. The ABA recognises that multiple persons or companies may have certain responsibilities withrespect to particular health, safety and welfare matters at a workplace. The.refore, it is important for each of the parties to discharge their duties in a coordinated manner; for example, the, scenario of the call centre operator.
~ a w e v e i , the potential for ail of these different parties to be guilty of an offence under the OH&S Act is difficult to justify, in particular, whei-e the persons will have varying degrees of ability to control the hazard or risk ill the workplace. The ABA considers that in these circumstances the prosecutor should not be able to pursue each of the parties in relation to a single factual incident; for example, the agent employing the call centre operator, the bank engaging the contractor via an agent, and the other party controlling the premises.
. . . . . . . . . a n amendment be rnade to 'e"s"i>'thdt h, . . . . . .
:'~~i~ued.for'a>ingle:factual incident. The ABA also suggests fu&her guidance be.!:
. . ;: i. . . . . .:-:- \ '':iI$e ABA suclclests
. . . . ,:,.. ... . t ... " . ' . . ~ l t io ie . liabilities are not
- - isuea seeking to raise awareness and ~nderstandlng of tne concept of "controller". . . .
5.2 Duty to consult
The OH&S Act contains a duty for employers to consult with employees so that employees are able to contribute to decision making regarding the health and safety of the workplace.
Consultation is required when:
risks to health and safety arising froni work are assessed or when the assessment of those risks is reviewed;
decisions are made about the measures to be taken to eliminate or control those risks;
introducing or altering the procedures for monitoring those risks;
decisions are made about the adequacy o l facilities for the welfare of employees;
changes are proposed to the premises, systems, methods of work, plant or substance that may affect health, safety or weifare; and
AUSTRALIAN BANKERS' ASSDCIAT~ON . -. 11
decisio~is are made about the consultation procedures.
The Act tends to concentrate on OH&S con;mittees and OHSlS representatives in respect of consi~ltative mechanisms. This approach d3es not illlc~w Cmployers sufficient Flexibility to deveioprnent consultative mechanisms Lhat best s ~ l i t the workpiace. I n the AEA's view, committees and representatives may be mechanisms that achieve legislative coiripliance, but do not necessariiy engage ernployees in an effective .manner. Employers need flexibility to suit the changing nature of workforce dynamics and employinent arrangements. I t would be useful for there to be clarification of 'other agreed arrangements' for consultation.
5.3 Directors and managers: liability of individuals
Under section 26 of the OH&S Act, where a corioration contravenes, whether by act or omission, its OH&S duties, each director of the company and each person concerned i n t h e management of the company, is also taken to have contravened the law, unless the director or other person satisfies the Court that they. were not in "a position to influence" the conduct of the colnpany in relation to its contravention of the law or they, being in such a position, used "all due diligence" to prevent the contravention of thelaw. Therefore, directors and officers in positioiis to influence the safety of workplaces can be attributed with personal liability for OH&S failures.
Currently an individual can be presumed to be guilty of an offence in circumstances where they are not in any real or practical sense culpable. Case law demonstrates that a person who is concerned in the management of a company is not limited to the highest of management, and as such there is the possibility that an individual rnay not necessarily be a senior employee. This is particularly significant since the introduclion of a new workplace deaths offence, where an ir~dividual may be deemed jiabie for a workpiace death, convicted and sent to gaol for a first time offence.
The uncertainty associated with these provisions for deemed individual liability acis as a serious disincentive for persons to take on positions of responsibility in comcanies in NSW, where not just conduct, but advice or decision making may be determined as a contravention. Recent case law demonstrates that individuals caught by the deemed liability legislation can include technical specialists who are not directors or in any real practical sense a part of the senior management of the corporation4.
The ABA believes that there should be further clariiication of who a 'person concerned in the management' is and the meaning of the terms 'in a position to influence' and 'all due diligence'. Ranks currently are subject to various corporate governance requirements contained in the Banking Act and Corporations Act. It is important that liability for individuals is appropriately contained.
There is a real threat to securing talented senior employees, to the detriment of the economic and competitive prosperity of NSW. Individuals should be accountable for individual responsibilities where individual fault exists. Therefore, liability for individuals must be limited to circumstances where the individuai directly caused or contributed to the hazard or risk. Individual liability should allow for excuse where relevant events occur without an individual's actual or constructive knowledge of material facts and where relevant events are beyond an individual's control. Furthermore, the prosecutor should
' Tor example. Slephen Finlay McMarlin v Newcastle Wallsend Coal Company fi Limited & Ors 120041 NSWlRComm 202.
AUSTRALIAN BANKERS' ASSOCIATION 12
bear the. onus of proving that the conduct of the individuai was a direct and substantial contributing factor to the existence of the hazard or risk.
be made tb ensure t h i t individuals are only liable for where the. individual
BA also suggests that in
5.4 Employee dut ies and o the r person duties
Under section 20 of the Act, related duties confer obligations on employees. While at work, an employee must take reasonable care for the health and safety of people who are a t the employee's place OF work and who may be affected by their acts or o~nissions a t work. I n addition, while at work, an employee must co-operate with their ernpioyer or other person so far as is necessary to enable compliance with any requirement under the Act that is imbosed in the interests of health, safety and welfare on the employer or any other person.
It is che AEA's view that employees should have a more active duty beyond cooperation. Given that employers can be found liable for a breach in circumstances where an employee acts in contravention of safe work procedures, employees should have a duty to act in accordance with safe work procedures as contained in the OH= policies of the employer.
Such a duty would supplement the duty not to intentionally or recklessly interfere with, or misuse, anything provided in the interests of health and safety pursuant to section 2 1 of the Act.
. , . , . . , . , , .:: I ~ , , , ., ... . . , . . . :The AEA suggests that amendment bemade t o section 2 0 t o clarify thegeneral duty of an employee to act in accordance w ~ t h an employers' O H S proLeoures. Tne AEA also be teves that there should be car f.catlon of OH&5 dut~es for ernolovees lhrouah further
5.5 F i n a n c e lesso rs
Under the existing legislation there is uncertainly in terms of funding provided for premises, plant and equipment, resulting in a finance lessor possibly being held liable for a breach of the Act. The AEA considers that with legislation such as the OH&S Act, i t is appropriate for the law to draw distinctions between the substance and the form of particular financing arrangements; that is, financing transactions where the substance of the transaction is to provide financial accommodation rather than equipment should not give rise to OH&S obligations on behalf of the provider of financf.
Where a bank provides mortgage finance to a company, it is recognised that the 'owner' of the building is the company (and not the bank) and therefore any reievant considerations in relation to control of the premises are based on the building owner or those contractual arrangements maintained with a possible tenant. However, where a bank maintains a finance lease for plant or equipment, even though the bank is a passive financier, the bank may be deemed to be the suppiier (or'owner') of the plant and equipment pursuant to the current terms of the Act.
Section 11(2)(d) of the Act extends the general duty o f suppliers of plant and substances for use at work to those that supply plant or substance "by way of sale, transfer, lease or hire and whether as principal or agent". The law is not clear in how it iniposes different compliance obligations and costs upon businesses. For example, an employee of a cherry
AUSTRALIAN B~NKERS' ASSOCIATION $3
farm is injured while operajing a cherry picker. The owner of the farm; their employer, may be liabie for a breach under the OH&S Act. However, where the cherry picker is no: owned by the farmer but is heid under a finance lease, tiien the supplier of the equipment may be liable for a broach of the Act. The sirpplier could be either an ordinar/ supplier o: the bank providing the finance.
Section 11(2)(f) of the Act indicates that the duties of suppliers do not extend to a person merely because the person supplies the plant or substance in the course of a business of financing the acquisition of the plant 01- substance by a customer from another person. Clearly this means that a bank is not liable for an asset that is acquired through finance. However, i t is not clear whether a bank is liabie for financing arrangenlents that are carried out via a finance lease. Legislation in other states is also. ambiguous as to the application of duties for financiers.
Banks and other financiers play an important role in the provision of working capital and other forms of financiai accommodation for a wide range of Australian businesses, including many small businesses. Commercial leasing and hire purchase facilities are important in assisting, business'es acquire necessary plant and. equipment in order to conduct their business activities. These types of facilities have certain financial benefits over pure lending facilities; accordingly, there are a number.of operational and taxation reasons why a company may decide to maintain a finance lease for supply of their plant and equipment, such as office equipment, motor vehicles, machinery (e.g. tractors, cherry pickers, and earthmoving equipment), etc.
.. I n the instance of a long term finance lease or hire purchase contract, the equipment is 'generally investigated, selected and acquired by the customer. The acquisition is financed by the financial institution in a form that suits the particular businesses' financial requirements, and provided the lessee or hirer performs its obligations under the financing
arrangement, it is rare for the equipment to be returned to the financier a t the end.of the financing arrangement. The bank or financiei' is not in the business or supplying plant and equipment.
Under,some short term leases and hirings the equipment is usually supplied by an organisation whose business' it is to supply plant and equipment. Commonly, the equipment is acquired by the business direct from the supplier and at the end of the lease or hiring theequipment is returned to the possession of the supplier. The same equipment could be hired or leased many times over to different businesses.
The ABA considers that the company or individual that has responsibility for the actual selection and day to day control and management (including maintaining safety)' of the plant or equipment should be deemed to have obligatioils under the OH&S Act. Under normal lease and hire purchase financing arrangements this approach would ' lea~~e the bank or financier free of those obligations.
I n some circumstances a financier will have responsibility for the safety aspects of plant or equlpment; however, this is not common. For example, in a situation where a bank or financier recovers possession of the plant or equipment either according to the terms of the contract or by entering into possession of the plant (e.g. as a mortgagee in possession) i t would be expected that the bank or financier should take steps to ensure that the applicable requirements under the law are met while they have day to day control and nianag'ement of the plant or equipment.
Without an amendment, liability of the equipment financier may lead to a distortion of the market for financial services, as the additional risk assumed by the financier could lead to a shift to other forms of financial accommodation for business equipment acquisitions.
. . : > .: , . .me ABA iuggests an amendmknt. to section 11 to ensure, that the company or individual that has responsibility.for the actual seiection and day to day control and
management (including maintai"ing"safetl/) of the p l a n t or equipment should' be deemed to have obligations uridei theOH&S Act. The Act should be'amended to make
.it clear that where a bank o r financier provides "financial accommodstion" th . not a circumstance whereby ar, OH&S duty would be conferred.
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6. Standards and codes of practice
OH&S principles need to be flexible enough to address different circumstances, yet balanced so that companies and individuals know what their particular responsibilities are. It is important for banks to ensure their OH&S systems meet their legal obiigatibns as well as staff, customer and other ~Lskeholder expectations.
I n additton to the OH&S Act and Regulat~ons, there are a number o f standards that form part of the OH&S laws, including:
AS/NZS 4804: 1997 - OHS Management Systems - General guidelines on principles, . .
systems and supporting techniques.
Under Part.4 o f the OH&S Act, as part of the OH&S framework, Codes of Practices have : been prepared to provide additional guidance. Codes of Practice have been introduced for some industries; for example, there is' also a Code of Practice for Cash in Transit, introduced in March 200.3.
I t has been suggested that a code of Practice be developed to identify individual director and manager responsibilities. The Code couid include discussion of obligations and requirements'for an adequate safety management system; development of a relevant risk assessment plan; and methodology and strategies required and that should be followed for implementing, overseeing and enforcing compliance with relevant safety management systems.
Codes of Practice can be vulnerable to criticism as they are approved by WorkCover NSW, and even though these documents may be used for demonstrating compliance, these documents fall short o f normal law making processes. Furthermore, rather than providing further guidance, these documents tend to reiterate the main elements of the AS 4084.
The ABA believes that directors and managers have little guidance as to their OH&S duties and how to discharge their responsibilities under the Act. Given the seriousness of the offences that directors and managers may be liable for, further guidance on how directors and managers can meet their obligations under the Act would be of assistance to directors, managers and OH&S practltioners.
However, the ABA has concerns with the development of a general Code of Practice for directors and managers. I t would be difficult for such a Code to apply across industries and provide meaningful and practical guidance. On the one hand, providing broad interpretation may not be any more instructive than the general duties contained in the law and may create additional confusion; whereas on the other hand, providing prescriptive interpretation may be impractical for some sectors. Therefore, the ABA considers that a Code w.ould only be useful for directors and managers if it was to be industry and activity specific and developed through initial and ongoing consultation with industry representatives.
. . . ABA believes a - Code of practice for directors and managers shouid provide
cticai guidance 0.n director and maria n an industry and activity ific basis. 'Such a Code should on ed through initial ultation with industry iepr'esentative
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7. Investigations, incident notification and inspector's notices
7.1 l~ispectors and authorised representatives
The OH&S Act sets out arrangements for, and powers of, inspectors and representatives to enforce the provisions of the Act. It has been suggested that consideration be given to recognising the heaith and safety inspectors appointed under corresponding legislation in other jurisdictions. The ABA is concerned that mutual recognition of inspectors would be inconsistent with other aspects of criminal law; for example. DPP and police officers are not awarded such recognition across borders.
While the ABA acknowledges that properly accredited union officials can i n their capaciv as representatives constructively contribute to discussions abo.ut occupational heaith and safety and assist in raising awareness of OH&S issues, it is important that unions do not use their powers of right of entry to access premises for reasons unrelated to occupational health and safety.
Immediate access withoutnotice shouid only be permissible with a permit from the Industrial Registrar or similar. Such access should only be granted in circumstances where it is reasonably beiieved that i f notice had been given, the duty hoider would take steps to conceal a risk or hazard: I n other circumstances, the AEA considers that OH&S inspectors and union representatives should be required to provide the duty hoider with at least 24 . '
hours notice of their intention to enter the premises.
OH&S inspectors and union representatives should also be required to advise the duty hoider of the nature of the suspected breach. Where there is an actual breach, the time difference between the union becoming aware of the breach and then investigating the breach couid expose employees and others to unnecessary risk, I f the duty hoider was advised immediately, steps could be taken to remedy the risk.
7.2 Notification of incidents
Under section 86 of the Act, the occupier of any place of work must give WorkCover NSW notice of any serious incident a t the place of work and any incident occurring at or in relation to the place of work. It has been suggested that consideration be given to amending the OH&S Act to require WorkCover NSW to notify the relevant insurer when it becomes aware of any serious injury or fatality. While the AEA supports streamlining of relevant notifications, we consider that this matter is best addressed by amendment to the Workpiace In jury Management and Worker's Compensation Act 1998.
7.3 Notices
OH&S inspectors hcve the power to issue investigation, improvement, prohibition and penalty notices unoer thz Act. Ail notices have a!? eiement of enforcement 01- sanction because compliance with a notice is mandatory. i t has been suggested that WorkCover NSW be able to provide advice of a non-mandatory [nature.
The AEA believes that further guidance in reiation to specific risk controls would be useful and would assist in promoting workplace health and safety. I-lowever, such advice should be given by a dedicated team of OH&S advice professionals, separate from the OH&S inspectors. These two functions are clearly distinct. Where a non-mandatory notice was introduced, it would need to be made clear within the law the differences between such a notice and an improvement notice.
Furthermore, the AEA believes that WorlcCover NSW should be able to issue enforceable undertakings, whereby duty holders could enter an agreement with 01i&S inspectors on a plan of 'action and implementation timeframe to improve workplace heaith and ,safety. I f the enforceable undertaking is not adhered to, or complied with, penalties and, in some cases prosecutions, could resuit. This approach would move the compliance focus of the IRC to an outcomes focus, given that undertakings could cover a.broader range of measures than the remedies that can be ordered by the IRC. Importmtiy, this approach would focus attention on what needs to be done to improve workplace heaith and safety.
8. Proceedings
8.1 Prosecutorial independence
It is fundamental to a fair and open system of criminal justice that a prosector be independent. This rationale for the existence of a prosecutor who is independent o f those who make and investigate breaches of the law and those who benefit from its enforcement should not be discarded by the OH&S Act.
Under the current legislation, WorkCover NSW and the unions are able to make decisions relating to the investigation, evidence gathering and prosecution of occupational health and safety matters. They receive a moiety of the fine and are entitled to recover their reasonable legal costs in the same way as a normal civil litigant. I n particular, in the case o f a union, there is no requirement for the prosectorto demonstrate that a prosecution is directed towards the objects of the legislation or even the public interest. The decision to prosecute cannot be reviewed as there is no public accountability for it. There is no restriction on how the moiety of the fine is used. The ABA is concerned with the lack of transparency and accountability with proceedings.
The prosecutor can investigate a breach, prosecute it and receive a financial benefit for doing so. For example, there is opportunity for a union to pursue OH&S issues, at a time of its choosing, in order to secure outcomes that have a benefit for the union that goes beyond the health, safety and welfare of its members. While the ABA is not suggesting that any prosecution has been pursued by improper motives; however, there is an absence o f Separation in tlne process that may mean that prosecutions are vuinerable to the perception that they could be motivated by factors other than ensuring the intent of the legislation.
The AEA believes that there should be an estabiishment of a new independent prosecutor, possibly as part of the Depaliment of Public Prosecutions (DPP). This would have a number of advantages, including:
Removing the ability for unions to be involved in OH&S prosecutions and hence decreasing the likelihood of industrial relations matters becoming unnecessarily linked to OH&S matters;
Ensuring prosecutorial independence as a necessary safeguafd ag?inst the potential for corruption and political interference in the criminal justice System;
* Ensuring that there will be a separation of the Investigative and prosecutoriai functions in the criminal justice system as the decision to prosecute will be made independently of those who are responsible for the investigation;
Applying existing expertise (and supplementing' specialist knowledge) within the DPP in respect of the prosecution of criminal matters; and
Freeing up WorkCover .NSW to regulate compliance, but importantly, provide specialist guidance and assistance to businesses in coniplianee matters, particularly to small employers who do not have the resources to obtain specialist consulting and
. . risk management advice.
The AEA suggests an amendment to provtde for proseciltlon of Ori&S offences to be conducted by a new ~ndependent branch of the Department of Publ~c Prosecut~ons
.8.2 ' Moiety
The OH&S Act makes no directions as to the payment of any penalty. Such direction is provided, pursuant to section 122 of the Fines Act 1996 which provides for the person prosecuting to seek such portion of the fine as the relevant court sees f i t but not exceeding a moiety.
The usual practice of the IRC in respect of OH&S claims is to allow a moiety equivalent to one half o f any fine to the prosecutor, whether it is WorkCover NSW or a union. The basis o f such an award seems to be to encourage the assistance in obtaining the objects of the Act and i n recognition of the fact that the informant is not publicly funded. However, the Act does not ensure that this purpose is achieved.
The existing legislation places no limit on the w a y i n which the moiety is to be expended; for example, there Is no requirement on a union prosecutor to spend the money on issues relating to the health, safety and welfare of its members. The fines are not insignificant; fines o f u p to $1,650,000 can be imposed. Accordingly, there is a significant capacity for a union to supplement its income derived from members with a moiety on a fine, particularly in circumstances where there is no limitation on how the funds are to be applied and where it will receive an order for the payment o f its reasonable legal costs. As such, the moiety on the fine could be used for broader industrial purposes, or even for Lhe making of political donations.
The ABA considers that no person or body should be entitled to a moiety in relation to OH&S claims on the basis that the:
Objectives o f the legislation would be sufficiently advanced if such matters are prosecuted by a completely independent prosecutor (i.e. a branch of the DPP);
Cost to the DPP, which is publicly funded, in bri~iging the claims are not as great as they would be for non-publicly funded bodies, due to economics and efliciencies arising from the DPP's experience; and
AUSTRALIAN BANKERS' ASSOCIATION .-
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The DPP is publicly funded and does not rely on income from wccessful prosecutions.
Prosecutions would he, and would be seen to be, more open and transparent i f the prosecutor were independent and unabie to derlve any financiai benefit from the conduct o f a prosecution. This would promote impartial decision making and procedural fairness.
Notwithstanding, the ABA considers that to better promote good practice and continuous improvement i n workplace health and safety, a Fund could be estabiished that receives a portion of penalties and specifically provides further educatioii, ir>formational services and guidance to assist NSW businesses to meet their OH&S obligations.
9. Court jurisdiction . .
Wher) the previous OH&S Act was first enacted in 1983, jurisdiction to hear serious offences was conferred upon the Supreme Court. An appeal from the Supreme Court to the Court of Criminal Appeal by virtue' of the Criminal Appeal Act 1912 (NSW).was also available. Furthermore;under the Judiciary Act 1903 (Cth), a convicted defendant could seek leave to appeal to the High Court of Australia from a decision of the Court of Criminal Appeal.
T h e jurisdiction to hear serious offences was transferred in 1.987 to what is now tlie IRCin. Court Session and along with the transfer of jurisdiction, the r ~ g h t of appeal was lbst: I t . appears that the rationale for the transfer of jurisdiction from the Supreme Court to the IRC i n Court Session was based upon the expertise of judges of the IRC in dealing with workplace issues, This is clearly. an important consideration in relation to the question o f dealing with industrial relations matters and the rights of employers and employees.
Iiowever, the ABA notes a number of points as to whether the expertise of the IRC necessarily fits with the modern legal system:
OHS legislation is criminal legislation, involving a rigorous assessment of the rules of evidence and proof o f fact beyond reasonable doubt.
Practitioners in the OH&S area are becoming increasingly specialised and do not necessarily span the general employment and industrial relations areas.
I t is unlikely that members of the IRC have practised in areas of criminal law outside of the OH&S area.
The IRC currently has a significant case load and i t is not unusual for matters to take a number of years to be concluded (including short matters relating to individual employee claims).
The Supreme Court of NSW is coinprised of judges, a number of whom practised in the broader criminal law area and continue to deal with [major criminal matters as members of the bench. Giventhe serious nature of the penalties that can be imposed under the Oli&S Act, part~cularly since the inclusion of Part ZA, tlie ABA believes that i t is more appropriate for OH&S jurisdiction to be conferred on the Supreme Court of NSW. This approach would appropriately separate OH&S matters from industrial relation matters.
9.1 Right of appeal to the Criminal Court of Appeal
Due to the opel-ation of section 179 of tile 1ndus:riai ,?clat!uns Act 1996 (NSIN), the Court of Criminal Appeal is not at the apex of the OH&S system, with the exception for persons facing gaoi under the new vvorkplace deaths offence. The AEA is not aware o fany other Australian jurisdiction where defendants who have bsen convicted of serious cr im~nal offences, and who potentially face loss of their liberty, are unable to appeal to a higher court.
Given the severity of the penalties that can be imposed under the Otl&S Act, there must be a broader scope for appeal. It is unacceptable for the IRC to be the final arbiter of its own jurisdiction, particuiariy where there are judicial resources with considerable expertise in criminal law already in the Court of Criminal Appeal.
Defendants in proceedings for serious offences underthe OH&S Act should have an avenue of appeal, beyond limited form, to the criml~lal courts of NSW. The AEA is of the view that there must be a ,right of appeal to the C o u h o f Criminal Appeal, a t least in relation to questions of jurisdiction and law. I n other cases, an appeal by special leave only may be more appropriate.
Even i f the IRC is to retain its jurisdiction, there must be an avenue for right of appeal to the Court of Criminal Appeal.
. . . The ABA provoscs that tnc 1urisd:ction in OH&S matters be r e t ~ r n e d to the S ~ p r e m e Coun of NSVJ. The ABA also proposes that a right of appeal ,(to the Court of C rmna l Appeal) snould be avdllabie in all cases, at least in respect of questions of lalv and ]urtsa:ction.
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10. Conciusion
The ABA supports a robust OH&S system that secures safety, health and welfare in workplaces and promotes a safety culture. Compiiance with such a legislative framework is a desirable and necessary element of doing business. However, in a number of respects, the OH&S Act is unique and inconsistent with other jurisdictions in Austraiia. The existing legislation is a significant disincentive to employment, investment and business in NSW. Therefore, the ABA acknowledges the Commonwealth Government's announcement of the establishment of the Australian Safety and Compensation Council.
The ABA believes that OH&S legislation should rlOt simply apply a 'stick' approach, but also apply a 'carrot' approach. The prevention framework of the legislation should include incentives for improving standards of health and safety in workplaces, such as recognising employers that maintain continuous improvement in OH&.
Compliance can not, and should not, only be achieved via the threat of enforcement or punishment. The ABA considers that depending on the nature of the issue that has arisen, i t may be appropriate for a balanced approach to be pursued, such as information, advice or assistance, rather than issuance of notices, pursuit of prosecutions or other sanctions.
Compliance with OH&S principles promotes a safer and healthier workplace, generally meaning there are less workplace accidents and illnesses - providing benefits for employees, employers and the wider community.
