Increase in penalties for OSH breaches in WA makes employers re-evaluate the cost of effective risk management

Introduction Western Australia is currently experiencing a multitude of changes in its occupational safety and health sphere. Recently, penalty levels have dramatically increased, with Premier Mark McGowan stating that ‘The substantial increases reflect the seriousness of ensuring the safety of Western Australian workers’. This Limelight compares the new Western Australia penalties with those of the work health and safety laws developed by Safe Work Australia, known as the Model Act. We will also touch on the status of Western Australia’s modernised Work Health and Safety Bill, and briefly consider the implications for employers. Increase in penalties On 7 September 2018 the Occupational Safety and Health Amendment Act 2018 (WA) (OSHAA) received the royal assent. The OSHAA amends the Occupational Safety and Health Act 1984 (WA) to increase penalties for offences as follows below. Penalty levels are defined under section 3A of the OSHAA and range from level 1 to level 4, depending on the degree of seriousness and culpability: Offence Maximum Penalties for a Body Corporate Before: First Offence Current: First Offence Before: Subsequent Offence Current: Subsequent Offence Level 1 penalties: (Breach of duty) $50k $450k $62.5k $570k Level 2 penalties: (Breach of duty exposing individual to risk of death or serious harm) $200k $1.5m $250k $1.8m Level 3 penalties: (Breach resulting in serious harm or death) $400k $2m $500k $2.5m Level 4 penalties: (Gross negligence causing death or serious harm) $500k $2.7m $625k $3.5mOffence Maximum Penalties for an Individual Before: First Offence Current: First Offence Before: Subsequent Offence Current: Subsequent Offence Level 1 penalties: (Breach of duty) $25k $100k $31.25k $120k Level 2 penalties: (Breach of duty exposing individual to risk of death or serious harm) $100k $250k $125k $350k Level 3 penalties: (Breach resulting in serious harm or death) $200k $400k $250k $500k Level 4 penalties: (Gross negligence causing death or serious harm) $250k and imprisonment for 2 years $550k and imprisonment for 5 years $312.5k and imprisonment for 2 years $680k and imprisonment for 5 years Model Act In 2011, Safe Work Australia developed a single set of work health and safety laws to be implemented across Australia, known as the model Work Health and Safety (WHS) Act (Model Act). The Model Act has been implemented in most jurisdictions across Australia except Victoria and Western Australia and is currently under review. The purpose of the review is to examine whether the Model Act is achieving its objectives, and whether any unintended consequences have resulted. The public consultation process for the review has now closed and the review will be finalised by the end of 2018. OSHAA v Model Act Compared to the Model Act, the OSHAA treats first offenders slightly more leniently, but subsequent offenders more harshly. An OSHAA Level 1 first offence for a body corporate carries a maximum penalty of $450,000 and a maximum penalty of $570,000 for a subsequent offence. In comparison, the maximum penalty in the Model Act is $500,000. An OSHAA Level 2 first offence for a body corporate carries a maximum penalty of $1.5 million and a maximum penalty of $1.8 million for a subsequent offence. In comparison, the maximum penalty in the Model Act is $1.5 million. An OSHAA Level 4 first offence for a body corporate carries a maximum penalty of $2.7 million and a maximum penalty for a subsequent offence is $3.5 million; the maximum penalty in the Model Act is $3 million. Work Health and Safety Bill On 12 July 2017, the government announced the development of a modernised Work Health and Safety Bill for Western Australia, which is based on the Model Act. This Bill intends to replace three acts; the Occupational Safety and Health Act 1984, Mines Safety and Inspection Act 1994 and Petroleum and Geothermal Energy Safety Levies Act 2011. The development of the Bill has involved extensive consultation with stakeholders and the community prior to introduction into State Parliament. As part of this consultation process, the WA Minister for Mines and Petroleum, Commerce and Industrial Relations has established a Ministerial Advisory Panel on Work Health and Safety Reform. The two-month public consultation period ended on 31 August 2018, and 66 submissions were received. The Work Health and Safety Bill is not expected to be introduced to State Parliament until mid-2019. The Bill aims to improve consistency with the rest of Australia and to provide the primary legislation for workplace safety and health for all Western Australian industries. Due to the State’s unique conditions, the Bill will contain industry specific regulations, allowing the resources sector to continue to use a risk-based approach. Implications Fortunately for employers, the increased penalties provided for the OSHAA only apply to breaches of duty that occur after its commencement. Additionally, the extent to which the increased maximum penalties will translate to increased fines in practice, remains to be seen. It is clear, however, that the landscape is rapidly changing. In the meantime, however, employers should factor in the dramatically increased penalties outlined in the OSHAA into their risk management practices.