Are you entitled to trust your independent contractors to comply with occupational health and safety obligations? If you do, and there's a workplace accident, can you be prosecuted under WH&S laws? What does the prosecution have to show?
The High Court has provided some valuable guidance on how the "reasonably practicable" obligation in the new harmonised Work Health and Safety Bill laws will operate, and the elements the prosecution must show, in Baiada Poultry Pty Ltd v The Queen HCA  14.
First, catch your chicken: Baiada's outsourcing arrangements with independent contractors
Baiada processed broiler chickens, which it bought from growers. Independent contractors acted as chicken catchers to round up the chickens, load them into crates, stack the crates into a series of steel modules, and then use a forklift truck to load the modules of filled crates onto a trailer. The trailers were driven by a different set of independent contractors.
A chicken catcher (whose job was literally to catch the chickens and who was not licensed to drive a forklift) was, without supervision, using a forklift to shift a module on the trailer when another module fell on and killed a transporter.
The WH&S prosecution: what did Baiada control?
Baiada was charged under section 21(1) of the Occupational Health and Safety Act 2004 (Vic), for failing as an employer "so far as is reasonably practicable, [to] provide and maintain for employees... a working environment that is safe and without risks to health".
The prosecution said that that Baiada should have provided an adequate system of work to be followed at grower farms or broiler sheds, and in particular should have:
- ensured that the forklift was operated by a properly trained employee; and
- identified and eliminated or controlled the risks associated with the system of unloading and loading live birds for transport at night.
Baiada argued that it did not have the right to control how the forklift was used, as it was within the control of the independent contractor. It also argued it was entitled to rely on its experienced independent contractor.
Baiada was convicted; it appealed its conviction, saying the trial judge did not direct the jury properly. The Court of Appeal agreed, but upheld the conviction anyway because no substantial miscarriage of justice actually occurred.
Why did the High Court overturn Baiada's WH&S conviction?
The starting point for the High Court was this: What does an employer have to do under section 21?
The OH&S Act is clear: the employer has to provide and maintain a safe working environment "so far as is reasonably practicable". The employer does not have to take every possible step that could be taken. It's not enough for the prosecution to show that a step could have been taken and that, if taken, it might have had some effect on the safety of a working environment
Baiada's reliance on expert subcontractors could be relevant only to the question of what was reasonably practicable for an employer in the circumstances. The prosecution had said that in theory Baiada could have controlled the independent contractors' activities. However, it also had to prove beyond reasonable doubt that it was reasonably practicable to do so.
The jury should have been told that the prosecution had to establish beyond reasonable doubt that Baiada's engagement of its independent contractors was not sufficient to discharge Baiada's obligation to provide and maintain a safe working environment at the farm so far as was reasonably practicable.
The High Court found that the Court of Appeal could not be satisfied that no substantial miscarriage of justice had actually occurred. On that basis, the appeal was allowed, the conviction quashed, and a new trial ordered.
What does this mean for persons conducting a business or undertaking?
The new harmonised Work Health and Safety laws, which are now in operation in a number of States, use similar language in relation to the obligation on persons conducting a business or undertaking to put the onus on the prosecution, so this case is a valuable guide to how these laws will operate.
First, the prosecution will have a significant burden. It cannot simply point to an act the person conducting a business or undertaking might have taken. The person only has to take such steps as are "reasonably practicable".
Secondly, while the employer won't be able to simply say it is "entitled" to rely on its independent contractors, it also shouldn't be convicted simply for failing to exercise a theoretical right of direction. More – and possibly quite detailed – evidence will be required from the prosecution to show that that the person conducting a business or undertaking had failed to provide and maintain a safe working environment so far as was reasonably practicable. If the act or omission alleged to have caused the breach is one that is not necessary to discharge the obligation so far as is reasonably practicable, then the act or omission will not necessarily evidence a breach of the legislation.
Finally, persons conducting a business or undertaking can't simply outsource the problem. There is nothing in this decision that says Baiada can't ultimately be convicted of this WH&S offence upon retrial; indeed, the High Court said that the jury at the original trial might still have convicted Baiada, even with proper directions from the judge. That means persons conducting a business or undertaking should take a serious look at their outsourcing arrangements. This includes those that have been in place for some time – what might not have been reasonably practicable a few years ago might be now. You should review the terms of the contractual arrangements in place with contractors you engage, to help ensure you are best placed to meet your obligations and defend any prosecutions.
When managing contractors, and depending on the contract, and nature of the work and risks, some things to consider are:
- exercising due diligence in assessing and appointing the contractor, including ensuring that they have sufficient skills, expertise and resources to carry out the contract safely;
- identifying where you are relying on the contractor's specialised skills and expertise and particularly where the principal does not have the skills and expertise itself;
- providing the contractor with information known in relation to the hazards associated with the contract and asking the contractor to address how it will manage those hazards;
- ensuring the contractor has in place a safe system of work and effective health and safety management systems;
- having the contractor provide regular reporting on compliance (including in relation to training, competencies, hazard identification and analysis, incident reporting etc);
- provide for a system of internal and independent audits and reporting on compliance with audit recommendations;
- appoint a qualified independent verifier to verify compliance;
- acting immediately and proactively on identified breaches, incidents or identified unsafe practices;
- creating contractual obligations on compliance with legislation; discharging obligations and providing a safe and healthy working environment;
- establishing safety key performance indicators; and
- providing for a system on consultation, co-operation and co-ordination in relation to safety matters.
Ultimately, a person conducting a business or undertaking will need to balance its obligations under the legislation with ensuring that it does not improperly interfere with the contractor relationship and otherwise take on responsibilities that it has properly delegated to the contractor. This is a difficult balancing act, and one that is clearly even more important to get right under the new legislation.
You might also be interested in ...
- Changes in new harmonised OH&S laws by 1 January 2012
- National OH&S laws bring tough new duties for "officers" from 1 January 2012
- Setting the course for OH&S policy and enforcement: the Australian Work Health and Safety Strategy
Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this bulletin. Persons listed may not be admitted in all states and territories.
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