New amendments to the Work Health and Safety Act 2011 (NSW) will not only significantly increase penalties under the law in that jurisdiction from 1 July 2024, but also increase the prospects of a company being successfully prosecuted for a category 1 – gross negligence offence, by allowing a court to consider the impact of its corporate culture. 

The Work Health and Safety Amendment Bill 2023 (NSW) was passed by the New South Wales Parliament on 12 October 2023 and is currently awaiting assent for it to commence operation.

Increased penalties

The Bill increases the maximum fines for work health and safety (WHS) category 1 offences (gross negligence or reckless conduct) as follows:

• bodies corporate: from $3,992,492 to $10,424,983;
• individual persons conducting a business or undertaking (PCBUs) and officers of a PCBU: from $798,383 to $2,168,029 or 10 years’ imprisonment, or both; and
• officers and individuals: from $399,479 to $1,041,992 or 10 years’ imprisonment, or both.

This means that the maximum jail time for these offences have doubled, and the penalty rates have more than doubled.

These amendments commence on 1 July 2024.

Imputing of conduct to body corporate

The current position under the WHS Act is that any conduct engaged in or on behalf of a body corporate by an employee, agent or officer, “within the scope of their employment or authority”, is conduct also engaged in by the body corporate. This approach, known as imputation, reflects the traditional legal position that a corporate entity can only act through its officers and employees.

However, to assist the Court to convict a company for a category 1 offence where gross negligence or reckless conduct must be proved, the Bill both expands the group of persons whose conduct will be imputed to being the conduct of the company as well as extending the type of prior attitude to safety, or ‘corporate culture’, as being evidence of the company’s reckless or negligent state of mind.

This new approach is aimed at countering a company’s defence that it cannot possibly be deemed to have acted recklessly due to the reckless conduct of an individual person, because that conduct must always be outside the “scope of [that person’s] employment or authority”. The NSW Minister tabling the Bill stated, “Providing for imputation in the Work Health and Safety Act will help to address expectations that exist in the wider community that companies should be held accountable for meeting their work health and safety duties, and prosecuted for failure to uphold their work health and safety duties in the same way that individuals are.”

Under the Bill, the group of persons whose conduct will now be able to be imputed to the company includes:

• the board of directors;
• an officer, employee or agent of the body corporate acting within the scope of their employment or authority (authorised persons); and
• a person acting under the direction, agreement, or consent of the board of directors or authorised persons.

Further, the Bill provides that, if it is necessary to establish a state of mind of a body corporate in relation to the commission of a WHS offence, it is now sufficient to show that:

• the board of directors or authorised persons intentionally, knowingly or recklessly engaged in the relevant conduct; or
• the board of directors or authorised persons expressly or impliedly authorised or permitted the carrying out of the conduct; or
• a corporate culture existed within the body corporate that directed, encouraged, tolerated or led to the carrying out of the conduct.

Factors relevant to determining whether such a corporate culture existed include whether authority or permission to carry out similar conduct had previously been given by a corporate officer, and whether the person who carried out the conduct believed on reasonable grounds that a corporate officer would have authorised or permitted the carrying out of the conduct.

The Bill defines ‘corporate culture’ as “one or more attitudes, policies, rules, courses of conduct or practices existing within the body corporate generally, or in the part of the body corporate in which the relevant activity takes place”.

These amendments commence on the day of assent of the Bill.

Other changes

1. Banning insurance for WHS penalties: Since 2020, the WHS Act has prohibited a person from entering into an insurance contract or other arrangement that covers liability for penalties under the WHS Act. The Bill makes this prohibition complete by proscribing that any such contracts are void. So, it’s not just an offence to have the insurance, you also cannot rely on it.
2. Prohibited asbestos orders and silica register: The Bill now authorises SafeWork NSW, as the regulator, to issue a prohibited asbestos notice if it reasonably believes prohibited asbestos is present in the workplace. This notice must contain directions as to the management and removal of asbestos. This authority will come into effect 6 months after the date of assent of the Bill. SafeWork NSW is also empowered to establish a silica register in accordance with the Regulations commencing on assent of the Bill.
3. Police power to enforce WHS Regulations regarding delivery drivers: The Bill amends the Regulations to provide police officers with the power to enforce compliance and issue penalty notices for breaches of the duties of food delivery drivers, which includes failing to wear high-vis personal protective equipment, or not making their training verification record available for inspection to a police officer. This amendment commences on the date of assent.