Industrial manslaughter: Do you have a culture of compliance?

Publication September 2019

This article was originally published by OHS Professional Magazine and is reproduced with permission.

The recent trend towards introducing industrial manslaughter laws in jurisdictions in Australia significantly increases and changes the nature of the legal risk, and the satisfaction of legal duties, arising from a fatal workplace incident.

It has recently been articulated that determining a breach of the industrial manslaughter laws will involve an assessment of whether there is a failure by an organisation or individual to create a “culture of compliance” in respect to safety. This negligence test is a new legal test that is different to the tests for “reasonably practicable” and “due diligence”, which are the tests that most organisations’ safety management system would currently address.

In this article we recap the status of implementation of industrial manslaughter laws in Australia and then examine the nature of the laws and how breaches will be assessed against the “culture of compliance”. We also explore what organisations can do to meet the new legal test and achieve a “culture of compliance”. 

Status of industrial manslaughter laws in Australia 

Currently, Queensland and the Australian Capital Territory (ACT) have implemented industrial manslaughter laws. In the ACT, the offence forms part of the ACT’s general criminal law legislation and applies to negligent conduct causing death. It carries a maximum penalty of 20 years’ imprisonment and/or $320,000 for senior officers and $1.6 million for employers. In Queensland, a new offence has been inserted into the Queensland WHS Act which provides for an offence of gross negligence causing death, and attracts maximum penalties of 20 years’ imprisonment for senior officers and $10 million for body corporates. 

The Victorian government has also promised to introduce an industrial manslaughter offence with employers potentially facing up to $16 million fines and individuals up to 20 years’ jail. Consultation in relation to the proposed offence is currently underway, with a new implementation taskforce created to consult on the laws. The Northern Territory has also recently announced plans to introduce industrial manslaughter laws within a year (with a life imprisonment maximum penalty for officers) after the offence was recommended by an independent review of work health and safety in the Northern Territory. 

At a national level there has also been two national reviews that have recommended the introduction of an industrial manslaughter offence across Australia, being the Senate Inquiry into Industrial Deaths (conducted in 2018) and the Marie Boland review of the model WHS laws (completed in early 2019). The offence recommended by the Marie Boland review will address gross negligence causing death and apply to officers and Persons Conducting a Business or Undertaking (PCBUs). Safe Work Australia is currently seeking feedback on the anticipated impacts of implementing this and other recommendations in the Marie Boland review and has recently released a regulation impact statement.

Nature of industrial manslaughter laws 

The industrial manslaughter offence usually applies where there has been negligent, or grossly negligent, conduct causing death. By drafting the offence as an outcome-based offence (i.e. it is triggered by a specific event, a workplace death), legislators seem to have moved away from the existing approach for safety law offences, which are mostly limited to providing for risk-based offences in relation to conduct that exposes a person to a risk of death or serious injury or illness, rather than for a specific outcome (a workplace death). 

In terms of understanding the nature of the offence, there has been somewhat limited guidance by legislators and regulators regarding interpretation of the concepts of “negligence” and “gross negligence”, in that legislators and regulators have not articulated what the relevant standard of care is for an organisation or officer to meet, or provided guidance on what conduct will amount to “negligence” or “gross negligence”. This is in contrast to the concepts of “reasonably practicable” and “due diligence”, which are the relevant legal concepts for determining a breach of the general safety law obligations by organisations and officers. The legislation contains specific and detailed guidance for what these concepts mean, and there is also guidance provided in relation to these concepts in secondary materials published by regulators. This makes it easier for organisations to know exactly what it is they have to do to comply with their general safety duties. 

We can anticipate that, in determining a breach of industrial manslaughter laws, safety culture will be a factor that is assessed as part of that process, given that evidence of an individual’s fault will not be necessary to make out the offence – rather, corporate criminal liability will arise “where an organisation’s culture, or unwritten rules, policies, work practices or conduct implicitly authorise non-compliance, or fail to create a culture of compliance, and a death results from this negligent conduct.”

This appears to be a new legal test that is different to the tests for “reasonably practicable” and “due diligence”, which are the tests that most organisations’ safety management system would currently address. 

How will safety regulators assess whether an organisation has implemented a “culture of compliance”? 

Under industrial manslaughter laws, we can expect to see regulatory investigations in relation to possible offences of industrial manslaughter targeting issues of culture and whether or not there has been a failure to achieve a “culture of compliance”.

Regulators have not yet given guidance on what will constitute a failure to create “a culture of compliance”, and although we may see more guidance on this topic in the future, it is also a concept that, from a legal point of view, is somewhat uncertain and difficult to define. 

Because of this, the key way we expect that regulators will assess this issue is by directly questioning witnesses about the safety culture of their workplace.

Approaches to culture outside of safety law 

Safety law is not the only area where culture has been garnering attention recently. 

The recent Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry (Banking Royal Commission) also examined the role of culture and, in particular, the links between organisational culture and misconduct in financial services entities. Kenneth Hayne’s Final Report, released in February 2019 (Final Report), has an entire section dedicated to culture and includes recommendations in respect to culture for financial services entities, and the supervision of culture within those entities by the financial services regulator, APRA. 

In the discussion of culture in the Final Report, there is reference to the fact that the term “culture” can provoke “a torrent of clichés” and “serious debate about definition”. The Final Report also acknowledges that, because culture is about behaviours, culture cannot be prescribed or legislated but rather needs to arise from, and be embedded within, an organisation. Importantly, the Final Report states that it is “evident that culture can drive or discourage misconduct”.

The Final Report went on to say that, while culture cannot be prescribed or legislated, it can be assessed, and must be assessed by financial services entities. The Final Report recommended that all financial services entities should, as often as reasonably possible, take proper steps to assess their culture, identify any problems with that culture, deal with those problems and determine whether the changes it has made have been effective. 

From the perspective of regulation and supervision of culture, the Final Report recommended that APRA should build a supervisory program focused on building culture that will mitigate the risk of misconduct. 

While the findings and recommendations of the Final Report apply in respect to the overall culture of entities in the financial sector, the findings and recommendations are also largely applicable in the context of safety culture. In particular, the recommendation for organisations to regularly assess their safety culture behaviours is a useful recommendation in light of the new focus on culture by regulators in the context of industrial manslaughter laws. 

What do organisations need to do to demonstrate a “culture of compliance”?

It is prudent for an organisation to directly address (in written form) how it will demonstrate that it has a “culture of compliance” in relation to its safety-related legal duties. The plan should address the types of behaviours/actions that demonstrate a culture of compliance that the organisation will implement. This is an extension of the approach of directly addressing the requirements of due diligence and reasonable practicability through written frameworks for compliance.

Organisations should also ensure that evidence is retained of the behaviours and actions that have been identified in the plan/framework and which can be used to demonstrate a “culture of compliance”. 

Organisations should also regularly assess their culture (similar to what is recommended by the Banking Royal Commission, only in respect to safety) by performing an assessment against the behaviours and actions documented in the plan, and the evidence that the organisation has collected in respect to those actions and behaviours. 

The following table sets out some examples of the kinds of behaviours and actions that demonstrate a culture of compliance in respect to safety issues for various topics, and which could be incorporated into the organisation’s safety culture compliance plan. 

           

Topic

           
           

Examples of behaviours/actions that demonstrate a culture of compliance

           
           

Oversight by the board

           
           

The board receives adequate information regarding safety risks, including early indicators of emerging safety risks.

           
           

Senior leadership oversight

           
           

The company establishes an effective safety risk committee at the senior executive level.

           
           

Risk management and compliance

           
           

Business units within the organisation have senior safety risk officers who are independent and can effectively challenge the business’ approach to safety.

           
           

Issue identification and escalation

           
           

There are appropriate processes for monitoring safety issues raised by internal audit and other sources.

           
           

Accountability

           
           

The company has safety accountability principles to achieve best practice in relation to accountability for safety issues.

           
           

Safety objectives and prioritisation 

           
           

The company takes a proactive approach to decisions regarding allocation of resources to safety risk management, compliance and resilience, rather than in response to safety issues or incidents. 

           
           

Remuneration 

           
           

Safety incidents and adverse outcomes in safety risk management are considered as part of assessing remuneration outcomes for executives. 

           
           

Culture and leadership 

           
           

Senior leaders reinforce key safety behaviours and are capable of cascading the desired tone at the top in a personal and authentic manner. 

           

What can OHS leaders do to demonstrate a “culture of compliance”? 

In addition to organisations, OHS leaders (i.e. heads of safety and other officers) are also subject to the industrial manslaughter provisions and will need to be able to demonstrate the ways in which they personally assist the organisation to achieve a “culture of compliance”.  

The steps that will be taken by leaders to ensure a “culture of compliance” should be documented in the company’s overall plan (as discussed above) and the OHS leaders’ existing plan for satisfaction of their due diligence duties. A key element of this plan is demonstrating a thorough and complete understanding of the way in which the hazard identification and risk management processes (including communication and reporting) work within the organisation and being satisfied that these adequately capture and address the real safety risks.


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