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In March 2022, new amendments to the Occupational Health and Safety Act 2004 (Vic) (OHS Act) expanded the health and safety framework for labor hire workers and their hosts in Victoria. In September 2022, a second set of amendments will take effect in the OHS Act, making it a criminal offense to enter into a contract or insurance arrangement covering an OHS Act penalty, or to seek or accept the benefit of such an arrangement. Chris Hartigan (Partner), Mark Caile (Associate), and Olivia De Angelis (Lawyer) review the series of amendments being made to the OHS Act in 2022.
The Occupational Health and Safety and Other Legislation Amendment Act 2021 (Vic) (Amending Act(amended the OHS Act to expand the scope of occupational health and safety)OHS) obligations on organizations when they use labor hire workers in Victoria. Although host organizations already owed OHS duties to labor hire workers, a key practical implication of the Amending Act is the new express obligation requiring consultation and cooperation between host employers and labor hire suppliers in relation to OHS issues.
Deemed employees for the purpose of OHS obligations
From 22 March 2022, the Amending Act added a new deeming provision to the OHS Act. That deeming provision stated that, for the purposes of the OHS Act, a person is taken to be an employer of a worker including if a labor hire services provider supplies the worker, recruits the worker, or places the worker, to perform work for the first person. The result is that the express obligations of employers in relation to employees now apply in relation to hosts and labor hire workers.
The OHS Act, at section 22 (b) and 23 (1), already included obligations on employers which would have applied in relation to the health and safety of labor hire workers. For example, section 22 (b) established an obligation on employers to “so far as is reasonably practicable … monitor conditions at any workplace under the employer’s management and control… “That obligation covered conditions at the workplace generally, regardless of whether it is related to direct employees or also related to labor hire workers. Similarly, section 23 (1) has already imposed an obligation on employers to ensure”so far as is reasonably practicable, that persons other than employees of the employer are not exposed to risks to their health or safety arising from the conduct of the undertaking of the employer“.
However, the expanded definition of “employee“For the purposes of the OHS Act means that broader obligations under the OHS Act expressly apply in relation to labor hire workers. For example, section 21 states that an employer must”so far as is reasonably practicable, provide and maintain for employees of the employer a working environment that is safe and without risks to healthThe result of the amendments in March 2022 is that section 21 now applies in relation to both an organization’s own employees and any labor hire workers.
Other obligations under the OHS Act, previously only applied in relation to direct employees, also now apply in relation to labor hire workers. For example, section 35 of the OHS Act will now be read as requiring employers to consult with both their direct employees and any labor hire workers in certain circumstances (such as when identifying or assessing hazards or risks to health or safety at a workplace under the organization’s management and control or arising from the conduct of the undertaking). This is separate from the new obligation for labor hire providers and clients to consult, co-operate and co-ordinate with the labor hire service provider (see below).
Consultation and co-operation between labor hire providers and clients / hosts
The first set of amendments in 2022 mean that labor hire providers and their clients both need to be able to demonstrate that they have taken all reasonable steps to consult, co-operate and co-ordinate in relation to OHS matters on a site. The circumstances of each industry and workplace will affect the kinds of issues that labor hire service providers and hosts must coordinate together in relation to the duties that they both owe to the labor hire workers.
The introduction of this new obligation in the OHS Act is broadly reflective of the requirement for duty holders to “consult, co-operate and co-ordinate” under the Model WHS Act as implemented in multiple other Australian jurisdictions. For example, under the Work Health and Safety Act 2011 (NSW)(NSW WHS Act), section 46 applies where multiple persons owe duties in relation to the same matter under the NSW WHS Act. In those circumstances, the two duty holders are each liable in relation to their duties, and also have an individual obligation to “consult, co-operate and co-ordinate“with each other.
Insurance arrangements and new criminal offenses
The first set of 2022 amendments included amendments rendering void any provision of an insurance contract or arrangement to the extent it provided an indemnity from liability for a pecuniary penalty imposed under the OHS Act. That amendment, to render void such terms, took effect from 22 March 2022. However, the second step, slated to come into effect from 22 September 2022, will make it a criminal offense to enter into a contract or insurance arrangement indemnifying an employer from an OHS Act penalty, or to seek or accept the benefit of such an arrangement.
There is a risk of potentially being prosecuted for this new offense, including where a contract is entered into or renewed including such an insurance “arrangement” (with a formal insurer or labor hire customer / supplier).
For many organizations, the imminent introduction of this new criminal offense results in an urgent need to review the terms of any insurance or contractual arrangements prior to renewing them. This amendment, combined with the other amendments taking effect from March 2022, will result in many organizations needing to reassess their financial risk exposure in relation to OHS issues and the engagement of labor hire workers.
The expanded legislative framework for labor hire providers and hosts, including the duty for labor hire service providers and hosts to consult, co-ordinate and co-operate in relation to OHS matters, came into effect from 22 March 2022.
As part of step one in these amendments, organizations can no longer rely upon contracts or agreements for insurance or indemnities in relation to pecuniary penalties imposed under the OHS Act. However, related criminal offenses are slated to come into effect on 22 September 2022.
In light of these changes, it is critical for organizations to review their practices relating to communication and coordination with labor hire service providers concerning OHS compliance. Furthermore, organizations should review their insurance contracts, and contracts with labor hire service providers, to determine if they have entered into a contract which provides an indemnity or insurance arrangement in respect of penalties imposed under the OHS Act.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.