Is your start-up business running in safe shoes?


Posted By on 5/05/17 at 10:22 AM

Start-ups and entrepreneurial businesses in Australia are faced with a gamut of legal requirements with which they must comply. This can be daunting for a new business that started with a brilliant idea on a shoestring budget.

As a business gains momentum with increased sales and product range and general busyness, less attention is often paid to important legal compliance aspects of running a business, such as workplace safety requirements.

Do you know which work health and safety (WHS) laws apply to your business?

WHS laws – an overview

Each state and territory of Australia has WHS laws which set out the general safety requirements businesses must follow. Some of these requirements are specific to the state/territory in which the business operates.

Legal safety rules must be followed for both workers (including employees, contractors and subcontractors) and others (such as visitors and customers) who may be placed at risk from the business’ work activities.

What does case law show?

WHS cases are littered with examples of small businesses and sole directors who have failed to ensure compliance with their WHS duties.

It’s a mistake to think that someone must be seriously hurt before the WorkSafe authorities will investigate and prosecute a business for a breach of WHS laws.

Based on the multiple prosecutions we have been involved in over the last 12-18 months, and the published prosecution outcomes generally, there has clearly been a significant increase in “observational breach” prosecutions – ie the various WorkSafe authorities have pursued statutory WHS duty breaches even though no one has suffered an injury.

With fines up to $25,000, as well as convictions and/or good behaviour bonds of up to 12-24 months per breach, this has become a significant issue rather than merely something that is easily correctable by “promising to do better next time”.

A fine imposed by a court may not necessarily end a business. However, in some cases, it may be financially damaging and may constitute a significant business setback – such as potential reputational damage, which may impact prospects of being granted projects or contracts.

In addition, the court may impose a jail sentence of up to 5 years for offences involving reckless conduct by individuals who fail to comply with their duties under the laws and expose a person to risk of death or serious injury.

What does this mean for start-ups?

As working environments change and adapt to suit business drivers, it’s important to consider the implications and review and update your WHS risk management planning to ensure that your workers (and others) are not exposed to risks from conducting your business activities.

For example, it’s not uncommon for starts‑ups to use co‑sharing workspaces where there are multiple businesses in different fields of expertise working alongside each other, often bringing customers and others into the shared space. This presents a range of safety risks to be carefully managed by your business. Whilst you don’t want to wear the tag of the “fun police” and stifle innovation and creativity, your WHS duties are ongoing and apply even in a more flexible and interactive work environment.

Who’s responsible to ensure compliance?

Each member of a business’ leadership team who meets the definition of “officer” under WHS laws (which is the same definition as the Corporations Law) has a duty to ensure the business complies with statutory safety requirements. A failure by an officer to exercise due diligence to ensure that the business complies with its safety duties and obligations may result in a prosecution against the individual(s) personally.

WHS risk management planning

When considering your WHS compliance requirements, you must consider the following:

  • A safety management system, ie policies and procedures to manage the safety risks in the business.
  • A process of identifying and introducing controls to manage safety risks.
  • Are workers informed and trained on applicable procedures? Are updated procedures effectively communicated?
  • Policies and procedures to manage safety risks in applicable working environments eg working from home, customer’s office, on the road, co-sharing space etc.
  • Incident reporting and notification procedure. There is a duty on a business to notify the WorkSafe authorities of specified safety incidents.
  • Procedures for emergency evacuation ‑ are your workers trained in this?
  • Training registers are completed and up to date.
  • Safety consultation procedure.
  • As the business expands (eg your range of business products or service offerings expands or new equipment is introduced or upgraded), are these developments taken into account in your safety risk management plan, review and updates?

It’s not a sufficient or reasonable response to a WorkSafe Authority inspector for a business to say a worker was injured or exposed to a near miss because he/she did not use common sense. If investigated, the business will be required to demonstrate that it did everything that was reasonably practicable to provide for the safety of workers and others who might be at risk from the work activities of the business, including demonstrating that the matters listed above have been implemented in the business.

WHS risk management planning is just as important as working on any other aspect of your business such as marketing, protection of intellectual property, tax minimisation, employment contracts etc.

The takeout

No business wants to face telling the loved ones of a worker that he or she has been in a fatal incident but the reality is that, in Victoria alone in 2016, 26 people lost their lives at work.

A leadership that demonstrates and enforces a safe culture, addresses unsafe behaviours, and reviews and updates its business safety plan, systems and training on an ongoing basis, is likely to have good success at minimising prospects of a WHS prosecution.

This article was written by Gina Capasso (Principal Solicitor). 

Chris Gianatti

Chris Gianatti Director

Chris worked for a number of years with Corrs before moving in-house to Telstra as HR Legal Counsel for the “Factory” (covering Telstra’s back of house operations including the field... Read More