V091013 db1 oh&s issues for the board-09-10-13


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V091013 db1 oh&s issues for the board-09-10-13

  1. 1. AICD Directors Briefing Welcome to the Australian Institute of Company Directors (AICD) Victoria Division Directors Briefing OH&S Issues For The Board Presenters: Kirsty Roser, Managing Principal, Workforce Strategies, Marsh Pty Ltd Barry Sherriff, Partner, Employee Relations, Freehills Greg Tweedly MAICD, Chief Executive Officer, Victorian WorkCover Authority
  2. 2. www.marsh.com.au OH&S: Issues for Directors and the Board Limiting exposure through effective risk management 13 October, 2009 Melbourne
  3. 3. 3Marsh Agenda  Background issues  How does an organisation demonstrate due diligence and what are the benefits?  What makes an effective safety management system?  How do you know when its working?  How do you protect your organisation?
  4. 4. 4Marsh Health & Safety Drivers Employee expectations Community expectations Personal liability Legislation & enforcement Insurance costs Public relations Accreditation Health and Safety Pressures Are Increasing Supply chain Investor expectations
  5. 5. 5Marsh  Duty of Care (in relation to health and safety) can be defined as: “Taking all reasonable care to avoid acts or omissions likely to harm any person or cause damage in the workplace.”  An employer has a ‘duty of care’ and fulfills this by showing due diligence. Duty of Care
  6. 6. 6Marsh What is Due Diligence?  Taking every reasonable precaution in the circumstances to protect the health, safety and welfare of all your employees.  Can be used as a defence for prosecutions under the legislation.  Requires everyone in the workplace to understand and comply with the duties set out in the legislation.  Reasonable pre-caution.
  7. 7. 7Marsh How to Demonstrate Due Diligence  System in place for complying with the law.  Review health and safety issues at Board meetings.  Act promptly when made aware of a problem.  Follow up to ensure instructions have been carried out.  Provide written instructions to subordinates.  Allocate time and resources to support the health and safety program.  Monitor and audit the health and safety program.
  8. 8. 8Marsh Benefits of Due Diligence  Safer workplaces  Reduced costs  Legislative compliance  Increased productivity  Increased business / competitive advantage  Improved morale
  9. 9. 9Marsh Safety Management Systems  Safety needs to be integrated in to your general business practices.  What makes a system effective? – Senior management involvement – Reflective of the organisation’s practices – Implemented – do what you say you are going to do
  10. 10. 10Marsh A Systematic Approach  Safety Management Systems – a model for establishment, implementation and maintenance (reproduced from ILO-OSH 2001 - Guidelines on occupational safety and health management systems)
  11. 11. 11Marsh Key Elements of an effective system  Risk management  Consultation  Incident reporting  Monitoring and review
  12. 12. 12Marsh Risk Management
  13. 13. 13Marsh Consultation  Consultation is a two way conversation between employers and employees that involves: – Sharing information (information must be made available in a timely way and in a form that can be understood by employees) – Giving employees a reasonable opportunity to express their views (employees should be encouraged to play a part in the problem solving process), and – Taking those views into account (employees should help to shape decisions, not hear about them after they are made).
  14. 14. 14Marsh Incident Reporting  Timely  Detailed  Investigated  Escalated  Followed through
  15. 15. 15Marsh Monitoring and review How do you know if its working?  Audit Results  Management Reporting – Significant legal non-compliances (including non conformances and corrective actions) – Notifiable incidents – Legislative changes – Performance Indicators  Costs
  16. 16. 16Marsh  Is this what you see? Monitoring and review How do you know if its working?
  17. 17. 17Marsh  This is what you should also see: – % of planned audits completed – % of corrective actions closed out within prescribed time frames – % of incidents reported within prescribed timeframes – % of incidents investigated within 48 hours – % of planned health and safety system committee meetings held – % of managers trained in risk assessment – % of employees inducted prior to commencing their job Monitoring and review How do you know if its working?
  18. 18. 18Marsh How do you protect your organisation?  Systems in place and implemented  Clear responsibilities and accountabilities  Robust review of performance and results  Cultural leadership from the top down – high visibility and participation of senior management is critical  Insurance cover??
  19. 19. www.marsh.com.au
  20. 20. Australian Institute of Company Directors OH&S: Issues for Directors and the Board Harmonisation: What will it mean for corporate governance? 13 October 2009 Barry Sherriff
  21. 21. What we will look at today • current OHS obligations and liabilities relevant to corporate governance • positive duty for officers • other relevant changes • what to do to comply – and should you be acting differently
  22. 22. Key to the model OHS ACT • Removes employment as the key to duties of care and obligations • Duties owed to a wider (clearer) class of persons • A positive duty of care for officers and extension to the Crown • Broader obligations for consultation and representation in the workplace • Much higher penalties, but numerous alternatives to fines
  23. 23. Current officers’ liability provisions • differ across the jurisdictions • who is an officer? – Vic: s9 Corporations Act • how can an officer be liable? – Vic: officer guilty if offence by corporation is attributable to failure of officer to exercise reasonable care – Reverse onus of proof in NSW, Qld, SA and Tas – ACT: Specific measures required • what will be the consequences? – Vic: Max fine now >$200k
  24. 24. Officers liability - now • no current positive duty of care • guilty only if company is guilty • ‘attributed’ liability • often reverse onus on the officer • officer liability provisions nowhere near the duties owed by others (e.g. Vic s144; Qld, s167; ACT s219) – easily missed • inconsistent application by courts • do current provisions – encourage action by officers? – let officers know how to comply or avoid liability?
  25. 25. Recommended officers’ duty of care WRMC decisions on recommendations of National Review into Model OHS Laws • Modified s9 definition of an officer • include Crown but not Ministers • volunteers and councillors have duties of officers but not to be prosecuted • Officers will have a positive duty of care to exercise due diligence to ensure compliance by the corporation – can be guilty of an offence without an incident – onus of proof on the prosecution • ‘due diligence’ will not be defined, decisions by the courts will provide the meaning of the term • The recommended definition - based on case law – may be used as a guide
  26. 26. Due diligence: What should officers do? (Proposed definition) Up-to-date knowledge of OHS laws and compliance requirements An understanding of the nature of the operations of the entity and generally the hazards and risks associated with those operations Ensuring appropriate resources and processes to enable the identification and elimination or control of specific OHS hazards and risks Verification that risks and hazards are being appropriately controlled A process for receiving, considering and ensuring a timely response to information regarding incidents, identified hazards and risks.
  27. 27. Officers protection – the current position Officers can protect themselves by: • exercising and showing due/reasonable diligence in fulfilling their roles (demonstrate obligations identified and responsibilities allocated) • having a proper basis for believing that OHS is being properly attended to by appropriate people – governance, accountability, reporting, auditing, follow up etc • having the understanding of OHS and information to be able to do this • not ignoring obvious hazards Same standard under model Act – but a positive duty
  28. 28. How does this fit with what officers ordinarily do? Isn’t this just proper and effective governance? Will OHS now be any different to other legal obligations of officers?
  29. 29. Executive and Senior Management • Provides the direction and policy • Authorises resources – human and financial • Ensures framework and support systems are in place • Monitors performance and review through reports (lead indicators, not just lag) • Demonstrates leadership • Lead by example
  30. 30. Management • Identify and monitor legal obligations and compliance • Arrange acquisition/allocation of resources • Analysis and recommendations • Policy and procedure development and implementation • Involvement in strategy and action planning • Engage in consultation • Deal with authorities • Ensure information, training and supervision • Audit/incident follow up • Demonstrate leadership
  31. 31. Practical impact in current economic climate OHS compromised • reduction in resources – unable to do it properly – stress and psychological injuries • distraction from OHS to other issues • suspension of expenditure on OHS and other initiatives (e.g. training) • cultural ‘deterioration’ and friction between workers and management • corner cutting by suppliers of labour and inputs
  32. 32. Corporate governance Leadership and governanceLeadership and governance Policies and procedure and actionPolicies and procedure and action • Culture • Accountability • Resource allocation • Due diligence
  33. 33. Governance and leadership • To govern is to drive accountability and compliance • To lead is to make people want to join you to do it • Either way you need personal involvement at the top supported by useful information • Leadership can have the greatest impact, while governance provides the support (and demonstrates compliance)
  34. 34. Particular issues to consider Preparing for any future changes may also allow you to assess your current level of compliance – Understand impact of the new primary duty of care – Consider requirements of officers’ positive duty and review current corporate governance arrangements – Understand how consultation, issue resolution, HSR provisions may impact your business to ensure ongoing corporate compliance, for which you must exercise due diligence – Require a review or develop or development of policies and contract provisions for effective and efficient compliance – Review or develop procedures for incident response, including ensuring privileges are available and exercised
  35. 35. Starting now is prudent • Model OHS laws are no longer just a possibility • While the detail is to be refined the key principles and key changes have been clearly stated and agreed • Development and effective implementation (‘take up’) takes 18 months to 2 years for significant change • Detailed requirements in regulations will also happen at the same time – get the strategic, structural and consultation issues resolved ahead of this 35
  36. 36. Leading from the top • The executive being first aware can lead and support the changes – train them first in what is needed to be done • The executive will be directly involved in strategic and structural issues – critical to due diligence and their duty of care as officers • Then the middle management and subject matter experts can be trained in the detailed requirements and what they will mean • Development, consultation and implementation, training and review can then take place
  37. 37. For further information Contact: barry.sherriff@freehills.com 0418.577.736
  38. 38. www.freehills.com
  39. 39. OHS Management in Boards 13 October 2009
  40. 40. Context • OHS is now an issue of community concern • Direct and indirect costs of injuries are difficult to quantify • There is an increasing link between market performance and safety records • Good OHS can provide competitive advantage
  41. 41. Boards have a legal obligation to take a leadership role in health and safety
  42. 42. Duties of Officers in Victoria • Officers can be responsible when a contravention by a corporation is attributable to the officer failing to take reasonable care • In determining whether an officer has committed an offence, regard must be had to — (a) what the officer knew about the matter (b) the extent of the officer's ability to make, or participate in the making of, decisions that affect the body corporate in relation to the matter (c) whether it is also attributable to any other person; and (d) any other relevant matter.
  43. 43. Good occupational health and safety is good business
  44. 44. Roles and responsibilities • Leadership • Knowledge • Responsibility • Decision-making • Consultation • Oversee efficacy of OHS systems and programs
  45. 45. Organisational culture is driven from the top. Visible levels of involvement in leading OHS strategy by the board makes a difference to the level of importance it is given throughout the organisation.
  46. 46. Thank you
  47. 47. AICD Directors Briefing Question & Answer Session
  48. 48. AICD Directors Briefing Thank you for your attendance. Please complete the evaluation sheets found on your seat to help us evaluate this event. We look forward to seeing you at the next AICD event. Upcoming Events: 15 October: Directors Briefing – Contribution of the Not For Profit Sector 22 October: Leaders Edge Luncheon, Professor Ian Plimer, Human Induced Climate Change This event was Sponsored by: