Engineers Australia

Engineering implications of theharmonised safety legislationby Richard Robinson

he implications of the new modelWork Health and Safety Act willforcefully change the way Australianbusinesses and governments operate.

The act is aimed at corporate governance.It requires the most senior decision mak-€rs (excepting government ninisters) topositively demonstrate due diligence forthe safeq hazards created by their busi-ness or undertaking. The penalties forreckless failure to achieve this duty arecriminal in nature (up to five years' jail

and $600,000 fine).Philosophically, the act adopts the

Iegal view of causation, which necessar-

ily is hindsighfbiased. By their nature,the courts only examine the minority ofthings that went wrong, not the majoritfof things that went right. That is, afterthe event, the fact is certain. This means

that, from the courtt viewpoint, prior to-the-event estimates of rarity for seriousloss events were presumably flawed andthosewho made such estimates are, pimafacie, guiltyof negligence. Historically, duediligence is the primary defence againstcommon law negligence claims.

The obligation under the act is forofficers to positively demonstrate duediligence. This would appear to createpotential opportunifies and difficultiesfor engineers.

As an opportunity, it should increasethe need for technically competentdirectors and execulives for technologi-cally based businesses and undertakings.The notion of a mining company boardcomprised exclusively of legal and fi-nance directors who have never beerrunderground, and whose knowledge of

science and engineering is insufficient tocomprehend the hazards associated withsuch an undertaking will be eliminated.This should provide greater opportunitiesfor engineers at the most senior levels, asthe duty cannot be delegated.

That is, under the act, boards can nolonger decide on the b€st commercialcourse of action and then delegate theresponsibility of safely achieving theseoutcomes to managers, and health andsafety advisers. One of the lawyers whohelped draft the act has been reportedas saying that, if board members cannot positively demonstrate that safetydue diligence has been achieved in theircompany's operations, then the intentionof the act is the company should not bein business. How such an idea might beapplied to government deparlmenl. isperplexmg.

This need for due dil igence require<a paradigm shift in the way risk man-agement has typically been conductedin Australia. As shown in the table, thetraditional approach described in the riskmanagement standard AS/NZS ISO 31000hasbeen to identiffhazards, analyse themand then evaluate them by comparison torisk criteria.Ifthe criteria are not satisfied,then dsk treatments are applied until thecriteria are achieved.

The due diligence approach specifically rejects this method. It does not careabout small issues that never get to court.It focuses on events that maim or kill orcause serious damage and tests to see ifall sensible practicable precautions arein place, based on the balance of thesignificance ofthe risks versus the effortrequired to reduce them. This is probably best represented by the diagram onthis page, adapted from Sappideen and

The due dil igence approach focuses on events that maim or kil l or cause seriousdamage and tests to see if all s€nsible practicable precautions are in place, based onthe balance ofthe significance ofthe risks ver5us theeffort required to reducethem.This diagram is based on Liability for Electficql Accidents (1995), published by EngineersMedia.

ENG NEEFS AUSTBAI. A jANUARY 2012l *

Stlllman Liability for Electrical Accifuxts(1995), published by Engineers Media.

Such an approach means that post-event legal review of formally documented, quantif ied risk assessmentsthat rely on target levels of risk or safetywill almost certainly provide beyondreasonable doubt proof of the failure ofthe riskdecision-makingprocess. This willthereby create criminal Iiabilities for therelevant officers. The impact of this onman)r current risk assessment processescannot be overstated.

From the perspective of the new act,technical engineering organisations mustengineer due di l igence. That is. theymust ensure the laws of man and thelaws ofnature are congruent. In terms ofachieving safety outcomes (lackof harm),managing the laws of nalure i r logical lyprior to dealing with the laws of man.This is obvious to engineers but not, itseems, to many lawyers.

Most legal advice regarding demon-strating du€ diligence as required by theact is focused on a compliance audit tothe relevant section and clauses. But this t

should be the outcome ofthe due diligenceprocess, not the cause. An alternative Ymodel approach in the diagram abovewas developed by R2A with the GladstoneArea Water Board in 20l l to speci f ical lyaddress the requirements of the act. Theresulting case study is available on wra'w.12a.com.au. The process has been appliedto several companies and authorit iessince, all to the satisfaction of relevantlegal counsel.

The essential point is that if the due

An alternative Y model approach was developed for the Gladstone Area Water Board in20'l 1 to specifically address the requirements of the act.

diligence review is arguable at a commonlaw duty of care standard (the balance ofprobabi l i t ies) then lhe l ikel ihood ofbeingsuccessfully prosecuted on a beyondreasonable doubt basis (the requiredproof for statutory mischief) is minimal.

Overall, engineers should step up, takea leadership role and use this act as anopportuniq/ to be heard at board level.Action in your businesses is required if:. your current OH&S system was estab-

lishedto comply with the riskmanage-ment standard, especially an earlier

version such as AS/NZS 4360 2004using the 5 x 5 risk characterisation/evaluation system.internal riskmanagers have not briefedthe management team on the newlegislation changes and how they willaffect your organisation.no-one in your organisation is the "go

to" person for the new legislation,no action has been taken to ascertanif your current system complies withthe new act.there is a general consensus that "we

will be compliant'iyour risk regi"ter has integrated busi-

precaut ionary decis ion making i rbased on a target level ofrisk or safetyand not the common law balance. :,

Richard Robinson is chairman anddirector of R2A Due Dil igence Engineers.

He also presents the public two-dayRisk & Liabil ity Management colirse for

Engineering Education Australia,The traditional approach described in the risk management standard A,/NZS ISO 37000has been to identify hazards, analyse them and then evaluate them by comparison torisk criteria. The due dil igence approach specifi<ally rejects this method.

Credible,crit icai

\ISSUES

\

Practicable,precautronary

Common lawdisproportionalitydecision making

engine

Precautionimplementalion

QA system

AS/NZS tSO 31000(Hazard-based)

Due Diligence(Precaution-based)

Establish the contextRisk assessment:

(Hazard) risk identif ication(Hazard) risk analysis(Hazard) risk evaluation

Risk treatment

Establish the contextRisk assessment:

ldentify credible, crit ical issuesldentify precautionary optionsRisk-effort balance evaluation

Risk treatment

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