Industrial Manslaughter and the Heavy Responsibility for Business: The Path Forward

Protecting employees at the workplace is a key concern for all businesses across Australia. Australia’s workplace health and safety laws mandate that organisations know what their obligations and responsibilities are to their employees whether on a worksite or office. At the very minimum, this means ensuring the health and safety of all workers and not putting the health and safety of  people at risk

In 2011, WorkSafe Australia released model WHS laws designed to harmonise WHS legislation in every state and territory. Despite the intention to harmonise these laws, Victoria has not adopted these laws, Western Australia is only now harmonising and other states have made slight changes to laws along the way.

New changes to Industrial Manslaughter legislation

This is also the case with the introduction of Industrial Manslaughter legislation.

The Review of the Model WHS laws: Final report by Safe Work Australia¹, released in December 2018, recommended a new offence of industrial manslaughter be included in the model WHS laws.

The report reasoned that it is critical that the community is confident that the model workplace health and safety laws enable justice to be administered fairly and appropriately.

Among many recommendations, independent lead of the Review, Marie Boland, suggested it was necessary to introduce a new industrial manslaughter offence: “I consider that this new offence is required to address increasing community concerns that there should be a separate industrial manslaughter offence where there is a gross deviation from a reasonable standard of care that leads to a workplace death².”

Industrial Manslaughter – key considerations for business

Industrial manslaughter is very much on the agenda in many industries with damage to reputation and brand, business interruption, competition, and customer needs.

This is in addition to the devastating effect an incident in the workplace may have on the employee concerned, their family, and their colleagues and families.

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Any breaches of WHS and Industrial Manslaughter legislation can have serious consequences for employers. The increased legislative activity in relation to industrial manslaughter has businesses and executives seeking to understand the extent to which they can mitigate against such risk, and the extent to which their insurance may provide some form of protection.  The key insurance solutions organisations should consider include:

• Directors & Officers (D&O) Insurance: This protects corporate directors and officers in the event they’re personally sued for actual or alleged wrongdoing when managing a company. This covers defence costs and damages (awards and settlements) arising out of wrongful action allegations and lawsuits.
• Statutory Liability Insurance: This covers the company, senior management and employees for allegations of wrongful breaches of key legislation in the course of the company carrying out its business.
• WHS Specific Statutory Liability Insurance: This is an extension to standard stat liability insurance designed to respond to specific WHS related events.

It should be noted that insurance is unable to indemnify against all business-related risks. Some types of risk are uninsurable as a matter of law or moral hazard. Further to this, the Boland Review also recommended a ban on such insurance, and further recommended that it be an offence to enter into, or take the benefit of, such insurance or indemnity arrangements. In connection with the introduction of industrial manslaughter offences, some jurisdictions have re-examined the insurability of WHS penalties, and at least three jurisdictions have imposed prohibitions, including New South Wales, Western Australia and Victoria.

These changes make it an offence for a person or organisation to enter into an insurance contract (or other arrangement) for indemnification of a monetary penalty. It is also an offence for a person or organisation to provide insurance (or other indemnity) for liability for a monetary penalty under WHS laws.

However, legal and investigation costs of defence are insurable, and there is no prohibition on insurance indemnity for legal costs incurred by an organisation or by a natural person in the defence of a manslaughter or industrial manslaughter prosecution.

Proactive, risk management approach needed

For businesses to effectively manage their risk exposure to WHS and Industrial Manslaughter legislation, the key is performing thorough due diligence. A due diligence review should be performed across the business, ensuring compliance with WHS obligations, understanding the risks and hazards associated with the business, and identifying the ‘officers’, that is a person conducting a  business or undertaking (PCBU), that have a WHS duty or obligation.

Businesses should also develop, implement and regularly monitor a due diligence action plan to ensure processes for complying with WHS duties are enforced and appropriate. Lastly, businesses should ensure they have the appropriate insurance in place with sufficient coverage.

These are significant and serious obligations for businesses to consider, however it is key that sufficient attention is devoted to addressing and updating compliance with WHS and Industrial Manslaughter legislation to ensure a safe workplace for all.

¹ Review of the Model WHS laws: Final report by Safe Work Australia

² ibid