OCCUPATIONAL HEALTH AND SAFETY IN BOARDS July 2006

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1 OCCUPATIONAL HEALTH AND SAFETY IN BOARDS July 2006

2 CONTENTS Introduction Good health and safety means good business Roles and responsibilities of boards and their members Checklist/Action Plan Further support and advice This publication is protected by copyright. WorkSafe Victoria encourages the free transfer, copying and printing of this publication if such activities support the purposes and intent for which the publication was developed.

3 INTRODUCTION This booklet aims to show the advantages of leadership and commitment to occupational health and safety being driven from the top level of the organisation and provide guidance on how it can be done successfully. Good health and safety means good business. Recent corporate practice places increasing emphasis on corporate social responsibility which has a positive impact on overall business performance, leading to social benefits such as public, investor and stakeholder trust. WorkSafe Victoria is seeking to promote occupational health and safety as a key issue in every Victorian boardroom. WORKSAFE VICTORIA / OCCUPATIONAL HEALTH AND SAFETY IN BOARDS 1

4 GOOD HEALTH AND SAFETY MEANS GOOD BUSINESS There are two reasons for board members, company directors, officers and executives to take a leadership role in relation to their organisations occupational health and safety (OHS). The first is legal. The Occupational Health and Safety Act 2004 (the Act) has increased the focus on officers taking a lead role in health and safety in their organisations with new provisions to cover officer liability. If a company contravenes a legal provision of the Act and the contravention is attributable to an officer s failure to take reasonable care, that officer is guilty of an offence. There may be financial, legal and/or reputational consequences to bear 1. The second is that good occupational health and safety is good business. Successful organisations have integrated the concepts of Corporate Social Responsibility or the Triple Bottom Line for their businesses. This covers economic, social (which includes OHS), ethical and environmental concerns as well as future sustainability. These organisations see good health and safety performance creates a competitive advantage. Effective management of health and safety risks has helped to: reduce the potential for people getting injured, ill or killed at work; avoid negative effects on turnover and profitability, such as lost time and high workers compensation costs; minimise the likelihood of prosecution; maximise productivity and wellbeing of all employees by reducing downtime, labour turnover and absenteeism; encourage better relationships with contractors; and improve the organisation s reputation in the eyes of investors, customers, competitors, suppliers and the wider community. 1 See boxes 1 and 2 on the following pages for a brief description of relevant provisions of the Occupational Health and Safety Act 2004, for board members, officers, etc. 2 WORKSAFE VICTORIA / OCCUPATIONAL HEALTH AND SAFETY IN BOARDS

5 GOOD HEALTH AND SAFETY MEANS GOOD BUSINESS BOX 1. THE OCCUPATIONAL HEALTH AND SAFETY ACT 2004 IMPLICATIONS FOR SENIOR OFFICERS AND BOARD MEMBERS There are new provisions in the Act which are specific to officers of bodies corporate, partnerships and unincorporated bodies or associations. Officers are considered those at the most senior levels of organisations that are genuinely in a position to influence the direction the organisation takes. The definition of an officer in the Corporations Act has been adopted for the purposes of the Act. An officer is: a director or secretary of a corporation; an office holder or a partner in a partnership, unincorporated body or an association; a person who makes, or participates in making, decisions that affect the whole, or a substantial part, of the business; a person who has the capacity to significantly affect the corporation s financial standing; a person in accordance with whose instructions or wishes the directors of the corporation are accustomed to act (unless the person is providing advice in a professional capacity); a receiver, or receiver and manager, of the property of the corporation; an administrator of a corporation; an administrator of a deed of company arrangement executed by the corporation; a liquidator of the corporation; or a trustee or other person administering a compromise or arrangement made between the corporation and someone else. The Act places the duty on an officer to take reasonable care to ensure that their organisation complies with the Act. Roles and responsibilities of boards and their members Research has demonstrated that good health and safety is material to good business performance. Poor OHS can lead to injuries and illnesses, resulting in absenteeism, dissatisfaction with working conditions, slowdown in production and loss of profits. Eliminating work hazards not only reduces injuries and illnesses, but also leads to improvements in productivity, profitability and competitiveness of a company. The following roles and responsibilities provide examples for board members and officers of how health and safety can be included in an organisation s corporate governance to ensure ongoing health and safety success and compliance with the Act. Boards should monitor their own decisions and actions and those of their organisations on a regular basis 2. 2 Suggestions for a checklist/action plan are provided at the end of this publication. WORKSAFE VICTORIA / OCCUPATIONAL HEALTH AND SAFETY IN BOARDS 3

6 GOOD HEALTH AND SAFETY MEANS GOOD BUSINESS 1. Leadership The board s role in providing health and safety leadership should be stated formally and publicly in a way that demonstrates the leadership is committed to continuous improvement in health and safety. For example: endorse an OHS policy in consultation with employees and communicate it to the workforce; set health and safety objectives and targets for the organisation; understand the organisation s OHS performance and monitor it over time; report on the organisation s OHS performance publicly; employ and/or engage sufficient numbers of suitably qualified and competent people to advise on and to implement OHS requirements. 2. Knowledge Members of the board should know what their OHS obligations are and about those relating to their organisation, and how they are managed. They should stay up-to-date on current issues and be alert to and prepared to act on emerging issues. Understand legislative responsibilities, including relevant regulations. Ensure everything done reinforces the messages in the company s OHS policy. BOX 2. THE OCCUPATIONAL HEALTH AND SAFETY ACT 2004 FAILURE TO COMPLY Where an organisation has failed to comply with the Act or regulations, the Act provides that in some circumstances the failure can be attributed to an officer not taking reasonable care. If so, the officer could be guilty of an offence. This will be determined having regard to: Did the measures, which might reasonably have been taken to avoid the incident, fall properly and reasonably within the duties, responsibilities and scope of the officer s functions, including making arrangements for facilitating ongoing training and supervision and creating, monitoring and maintaining systems for identifying, assessing and controlling hazards and risks to health and safety? Did the officer fail to take obvious steps to prevent the incident? What was the degree of blameworthiness involved in the officer s behaviour? Has the officer had previous advice or warnings regarding matters leading to the incident or should the officer have reasonably known about the advice or warnings? Did the officer knowingly compromise safety for personal gain or for commercial gain of the organisation without undue pressure from the organisation to do so? Was the contravention attributable to an act or omission of another person? What could reasonably be expected of the officer bearing in mind all the relevant circumstances including the officer s role, knowledge and the nature and context of the relevant activity being conducted by the organisation? 4 WORKSAFE VICTORIA / OCCUPATIONAL HEALTH AND SAFETY IN BOARDS

7 GOOD HEALTH AND SAFETY MEANS GOOD BUSINESS 3. Responsibility Appoint a board member and/or executive to champion health and safety. The chair/chief executive may take on the role, but at the very least appoint a member of senior management to lead health and safety functions and ensure they are dealt with. Define, document and communicate to all levels in the organisation their specific health and safety responsibilities, authority to act and reporting requirements. Hold managers accountable for their health and safety responsibilities. 4. Decision-making Ensure decision-making includes consideration of health and safety implications. This will assist in complying with legal obligations as well as avoiding the possibility of costly changes later. Consider health and safety at the initial stages of decision-making for the introduction of new plant, design of new workplaces, relocation of premises and new or changed practices, processes and people. Establish criteria for health and safety standards you expect of your suppliers, contractors and other service providers. 5. Consultation Ensure the organisation has procedures and mechanisms in place to consult with employees on OHS. Ensure mechanisms are in place to increase ease and effectiveness of information sharing. Comply with the legal requirement to consult with employees on OHS matters. 6. Oversee efficacy of OHS systems and programs Monitor the implementation and review of systems for improving OHS. There may be a number of systems and programs in place, including: OHS induction and training programs for all employees, managers and contractors; risk management system which includes hazard identification, risk assessment and control of associated risks; and system for reporting and investigating hazards and incidents and taking followup action. WORKSAFE VICTORIA / OCCUPATIONAL HEALTH AND SAFETY IN BOARDS 5

8 CHECKLIST/ACTION PLAN This checklist/action plan is by no means exhaustive and may be adapted to suit the organisation s operations. ITEM YES NO ACTION WHO WHEN (REVIEW) Leadership Is there a company OHS policy endorsed by the board? Is the policy effectively communicated? Does the board regularly communicate on OHS matters to employees and other stakeholders? Knowledge Do all officers and members of the board know their OHS legislative obligations and duties? Are officers aware of their role when: The risk management process has been completed and a request for resources is put forward? An incident occurs? A notice has been issued by a health and safety representative (HSR) or an inspector? An investigation is being conducted? Responsibility Has a member of the board been given overall responsibility for or management of OHS? Do all managers have health and safety in their performance measures? Are there competent people to advise on OHS? Decision-making Do recruitment practices include health and safety requirements? Do design and purchasing procedures include health and safety requirements? Do board decisions take into account health and safety requirements? Consultation Is there an open and transparent process for: Employees to raise OHS issues? employees to be consulted on changes to the workplace, practices, processes, etc that will affect OHS? Is it endorsed by the board? 6 WORKSAFE VICTORIA / OCCUPATIONAL HEALTH AND SAFETY IN BOARDS

9 CHECKLIST/ACTION PLAN ITEM YES NO ACTION WHO WHEN (REVIEW) OHS Committee Is an officer or a member of the board on the OHS Committee? Does the board receive regular reports and recommendations from the OHS Committee? OHS program Has an OHS program been developed? Does the program cover all health and safety issues in the workplace? Is it endorsed by the board? Are regular reports on its progress reported to the board? Is it effectively communicated? Are different components regularly monitored and reviewed: Training and induction program? Risk management? Reporting and investigating? Prevention activities? Reporting Is OHS included in the corporate report? Does the report include lead and lag indicators? Does it include future targets? WORKSAFE VICTORIA / OCCUPATIONAL HEALTH AND SAFETY IN BOARDS 7

10 FURTHER SUPPORT AND ADVICE This information is based on the Occupational Health and Safety Act 2004 and should not be considered a legal document or a substitute for the Act. This booklet should be read in conjunction with the Act. Further information can be obtained at including: Summary of the Occupational Health and Safety Act 2004; Information for Senior Officers of Organisations; Information for Employers; and Information for Occupiers and Those Who Manage or Control Workplaces. 8 WORKSAFE VICTORIA / OCCUPATIONAL HEALTH AND SAFETY IN BOARDS

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12 WORKSAFE VICTORIA Advisory Service 222 Exhibition Street Melbourne 3000 GPO Box 4306 Melbourne, Victoria 3001 Phone Toll-free Head Office 222 Exhibition Street Melbourne 3000 Phone Toll-free Publications Website... Local Offices Ballarat Bendigo Dandenong Geelong Melbourne (628 Bourke Street) Mildura Mulgrave Preston Shepparton Traralgon Wangaratta Warrnambool VWA1018/01/07.06

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