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Exercising Due Diligence Guidance for Officers

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Exercising Due Diligence Guidance for Officers GUIDANCE FOR OFFICERS IN EXERCISING DUE DILIGENCE DISCLAIMER This guidance is provided by Comcare for the purpose of providing information to officers, managers and supervisors about the due diligence requirements under the Work Health and Safety Act 2011 (Cth) (WHS Act). The publication is aimed at providing guidance only, as there are a number of different ways to carry out due diligence. Comcare recommends that users exercise skill and care with respect to use of the information contained in this guidance. This is not a substitute for independent professional advice and users should obtain appropriate professional advice relevant to their particular needs and circumstances. GUIDANCE FOR OFFICERS IN EXERCISING DUE DILIGENCE | 2 CONTENTS GUIDANCE FOR OFFICERS IN EXERCISING DUE DILIGENCE 4 DUE DILIGENCE—WHERE TO START AND WHAT DOES IT MEAN TO YOU? 6 SUGGESTED APPROACHES, IDEAS AND INFORMATION AIMED AT ASSISTING OFFICERS IN DEMONSTRATING A DUE DILIGENCE FRAMEWORK 9 DO I CONFIDENTLY UNDERSTAND THE RISKS AND HAZARDS OF THE BUSINESS OR UNDERTAKING? WHY DO WHAT WE DO? 10 HOW DO WE PROTECT OUR HEALTH AND SAFETY? 11 SO WHAT DOES THE INFORMATION TELL US ABOUT OUR HEALTH AND SAFETY? 14 HOW DO YOU ENSURE THAT COMPLIANCE IS BEING MET? 15 HOW DO I KNOW THE SYSTEMS, POLICIES AND PROCEDURES ARE HELPING TO PROTECT THE HEALTH AND SAFETY OF OUR WORKERS? 17 SYNTHESIS 18 GUIDANCE FOR OFFICERS IN EXERCISING DUE DILIGENCE | 3 GUIDANCE FOR OFFICERS IN EXERCISING DUE DILIGENCE The WHS Act imposes a specific duty on officers of corporations, the Crown or a public authority in the Commonwealth jurisdiction to exercise due diligence to ensure that the corporation, the Crown or a public authority meets its work health and safety obligations. Officers determine how the business or undertaking will operate and they make, or participate in making decisions on allocating resources which affect health and safety. Due diligence in relation to ensuring health and safety is defined for the first time in the WHS Act. In demonstrating due diligence, section 27 of the WHS Act requires officers to show that they have taken reasonable steps to: > acquire and update their knowledge of health and safety matters > understand the operations being carried out by the person conducting the business or undertaking (PCBU) in which they are employed, and the hazards and risks associated with the operations > ensure that the person conducting the business or undertaking has, and uses, appropriate resources and processes to eliminate or minimize health and safety risks arising from work being done > ensure that the person conducting the business or undertaking has appropriate processes in place to receive and respond promptly to information regarding incidents, hazards and risks > ensure that the person conducting the business or undertaking has, and uses, processes for complying with duties or obligations under the WHS Act. For further information about what is ‘reasonable’, refer to Safe Work Australia, Interpretive Guideline—model Work Health and Safety Act—the health and safety duty of an officer under section 27. This approach emphasises the corporate governance responsibilities of officers. The due diligence duties of officers under the WHS Act supports improved leadership that contributes to a safety culture. SAFETY CULTURE A safety culture is that part of the overall culture that reflects the values, beliefs and practices of an organization as they relate to health and safety. As described by Patrick Hudson, the safety culture may range from pathological (uninformed and passive) through reactive, calculative (command and control) and proactive to generative (universal involvement, with safety integrated in day-to-day activities).1 James Reason and others have identified the various elements of a culture that will move an organization forward through these stages of development.2 1 Paper presented at the RTO HFM Workshop on “The Human Factor in System Reliability – Is Human Performance Predictable?”, held in Siena, Italy, 1-2 December 1999, and published in RTO MP-032. 2 James Reason, ‘Achieving a Safe Culture: Theory and Practice’, Work and Stress, 1998, Vol 12, No 3, 293–306. GUIDANCE FOR OFFICERS IN EXERCISING DUE DILIGENCE | 4 These elements are described by Reason as follows: > an informed culture—one in which those who manage and operate the system have current knowledge about the human, technical, organisational and environmental factors that determine the safety of the system as a whole > a reporting culture—in which people are willing to report errors and near misses > a just culture—a culture of ‘no blame’ where an atmosphere of trust is present and people are encouraged or even rewarded for providing essential safety-related information; but where there is also a clear line between acceptable and unacceptable behaviour > a flexible culture—characterised as shifting from the conventional hierarchical mode to a flatter professional structure > a learning culture—in which there is the willingness and the competence to draw the right conclusions from its safety information system, and the will to implement major reforms when the need is indicated. Each of these elements relates to one or more of the availability and sharing of information, the promotion of flexibility and innovation, and supporting honesty and transparency (and through that, avoiding barriers to the free flow of information) through a ‘no blame’ approach. THE ROLE OF LEADERS The significance of the role of leaders and how they should be involved in driving health and safety, has been recognised in various measures of an effective health and safety management system. This is reflected in the Australian standard, AS/NZS ISO 45001:2018 (Occupational health and safety management systems - Requirements with guidance for use), which aims to enable organisations to proactively improve work health and safety performance. This standard provides specific guidance on the role of senior and middle management in safety matters including: > the authorisation of the work health and safety policy > planning, including the setting of targets and designating responsibilities > providing resources > reporting, auditing and review > incident reporting and rectification. Effective risk management starts with a commitment to health and safety from those who operate and manage the business or undertaking. You also need the involvement and cooperation of your workers, and if you show your workers that you are serious about health and safety they are more likely to follow your lead. Not all leaders will necessarily be officers under the WHS Act. An officer may be criminally liable for a serious or reckless failure to demonstrate due diligence requirements. Penalties apply to individuals. Consideration needs to be given to who may be an officer. An officer under the WHS Act includes: …a person who makes, or participates in making, decisions that affect the whole, or a substantial part, of a corporation (business or undertaking)… That definition of an ‘Officer’ was included to achieve the objectives of the duty, by placing the duty on those who make the key decisions and provide leadership for an organization. For more information on the meaning of an Officer for the purposes of the WHS Act, refer to Comcare’s officer fact sheet and Safe Work Australia’s interpretive guidance on officers. GUIDANCE FOR OFFICERS IN EXERCISING DUE DILIGENCE | 5 DUE DILIGENCE—WHERE TO START AND WHAT DOES IT MEAN TO YOU? Due diligence—in the context of work health and safety—means taking every precaution that is reasonable in the circumstances to protect the health, safety and welfare of all workers and others who could be put at risk from work carried out as part of the business or undertaking. This includes work carried out overseas. Due diligence is a powerful and proactive management tool that will help to foster the careful and systematic identification and assessment of specific workplace hazards and the establishment of control measures to prevent injuries and illnesses at work. If you are an officer, due diligence requires you to take reasonable steps to address each of the definition elements for due diligence outlined in section 27 of the WHS Act. Each of the elements is directed at one or more of the elements of a safety culture and the drivers of safe behavior. The first step requires every person in the workplace to understand and comply with their duties set out in the WHS Act. Due diligence requires officers to be proactive in ensuring that a department, agency, public authority or corporation complies with its duty, including workers working or posted overseas. The next steps include the need for officers to identify risks to safety, health and welfare in the workplace, including risks identified in the WHS legislation and approved Codes of Practice. Once risks are identified, due diligence requires that you address these risks through a properly functioning and documented health and safety system. The more harmful or serious the potential dangers are, the more you must guard against them to prevent workplace injury and illness. An officer’s due diligence obligations in respect to managing workers overseas are identical to those onshore. Some general measures to comply with the WHS Act and demonstrate due diligence include: > setting up a well-documented system for identifying, reporting, and responding to all actual and potential hazards in the workplace > ensuring safe practices, procedures and controls are in place that are specific to the hazards in your workplace that either meet or exceed the requirements set out in the WHS legislation—including relevant approved Codes of Practice > providing ongoing instruction and training to supervisors, managers and workers > communicating regularly with workers about foreseeable health and safety hazards > allocating adequate time and resources for health and safety, including health and safety committees > monitoring and auditing health and safety programs on a regular basis.3 Compliance with each of the elements of due diligence will mean officers have a greater understanding of what is needed to effectively manage health and safety risks.
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