Corporate state of mind and safety culture

14 November 2024

The NSW Work, Health and Safety Act (WHS Act) now includes provisions to assess the corporate safety culture of the Person Conducting the Business or Undertaking (PCBU), to prosecute breaches of the WHS Act.

If a corporate culture existed within the PCBU that directed, encouraged, tolerated or lead to the carrying out of unsafe conduct, then such conduct will be used against the PCBU, Directors and Officers, to demonstrate an offence of Gross Negligence or Reckless Conduct under section 31 or Industrial Manslaughter under section 34C of the WHS Act.

Corporate culture is defined as:

One or more attitudes, policies, rules, courses of conduct or practices, existing within the body corporate generally or in part of the body corporate in which the relevant activity takes place.

The factors to be considered in assessing the particular conduct will consider:

Whether the person who carried out the conduct, believed on reasonable grounds, or had a reasonable expectation, that a corporate officer would have authorized or permitted the carrying out of the conduct.

Where a workplace developed an unsafe work practice which was tolerated by supervisors and management, whilst being inconsistent with the risk management policies, then the unsafe work practice conduct, will be used to demonstrate the corporate culture of the PCBU and its Directors and Officers.

The PCBU must take reasonable precautions to evidence that the unsafe conduct was not attributable to:

  • Inadequate management, control or supervision of the conduct of one or more of the employees, agents or Officers, or
  • Failure to provide adequate systems for conveying relevant information to relevant persons on the body corporate.

We recommend that each Board and PCBU consider the following questions:

Does the Board receive sufficient leading and lagging information to assess the safety culture of the organization?

Has the Board posed the question to the PCBU, are there any safety “short cuts” being taken that have become accepted practice?

Has the PCBU implemented safety control measures to eliminate Sexual Harassment and guide Appropriate Workplace Behaviours, that create a risk to a person’s health and safety?

Does the Board receive information as to psychosocial hazards and investigation reports?

Is the PCBU implementing the NSW Code of Practice, dated June 2024, of Sexual and Gender Based Harassment, to manage the forthcoming seasonal parties and events?

Has the Board implemented its WHS Due Diligence System to take reasonable steps to ensure the PCBU is meeting its safety compliance obligations?

Conclusion

If any of the above questions lead to a negative response, it is recommended that a safety health check of the Board and PCBU, be undertaken.

This article was written by Greg McCann, Partner.

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