New South Wales is the first jurisdiction to outlaw insurance for WHS monetary penalties with the commencement of amendments to the Work Health and Safety Act 2011 (NSW) on 10 June 2020.
The changes are the result of the NSW Government implementing key recommendations from the Review of the Model Work Health and Safety Laws conducted by Safe Work Australia.
The review, which resulted in a report released in December 2018, considered the operation of WHS laws in all Australian jurisdictions and made recommendations aimed at improving the consistency, effectiveness and enforcement of these laws.
The recommendations were wide-ranging. From harmonising maximum penalties across jurisdictions to implementing industrial manslaughter laws, the review put all jurisdictions on notice about what the future of work health and safety holds.
While amendments on a national level are unlikely to progress in the near future, Kevin Anderson, the NSW Minister for Better Regulation and Innovation, said when introducing the amendments into Parliament that “New South Wales cannot afford to wait.”
So what do the changes look like in New South Wales?
Insurance arrangements have changed
Previously, a company and its directors, principals, partners and employees could take out insurance to cover any liability arising out of breaches of WHS legislation.
However, the Review recommended that such insurance be prohibited – specifically, that it be an offence to enter into a contract of insurance, or to provide insurance or a grant of indemnity, which covers liability for a monetary penalty under the model WHS laws.
Why? Because, according to the Review, the deterrent effect of the laws is likely to be reduced if companies can take out insurance to indemnify against WHS penalties.
The amendments to the Work Health and Safety Act 2011 (NSW) that commenced on 10 June 2020 implement this recommendation (see section 272A).
Moving forward, insurance cover will no longer be available for monetary penalties. It’s now an offence for a person to enter into a contract of insurance or other arrangement where that person (or another person) is covered for liability for a monetary penalty under the Work Health and Safety Act.
And the changes cut both ways. It’s also now unlawful to provide insurance or grant an indemnity for liability for a monetary penalty under the Work Health and Safety Act. This means insurers can no longer offer this coverage in New South Wales.
Important to note is that the changes don’t prohibit an insurer offering, or a person taking, a benefit of an insurance policy for defence or investigation costs for WHS matters.
Managing workplace health and safety risks
While these changes only apply to New South Wales, it’s possible that other jurisdictions may follow. That’s why it’s essential that you’re up to date with the latest laws.
Every business has exposures.
Sometimes a single risk turning into a reality can deliver a knockout blow. In other cases, a combination of risks has the potential to sink a project. At worst, a risk coming to fruition can result in major injury or even fatality.
Managing health and safety is critical to ensuring a workplace is safe, so it goes without saying that risk management is a must.
If the risk management process seems daunting, don’t despair. There are experts on hand to guide you.
Make sure you seek advice from a specialist who has lots of experience when it comes to the risks that may impact a business like yours. They’ll be able to help you identify and assess the risks relevant to your business, work out how best to control and manage those risks, and then put a plan in place to regularly monitor and review risks.
At Emjay Insurance Brokers, our experts have a wealth of experience across many and varied industries. We can work with your business to do a comprehensive review of your work health and safety arrangements and tailor a workable program to fit your unique needs. Our solutions are aimed at reducing exposure to workplace hazards by implementing higher level controls.
Having the right cover
Even with an effective work health and safety management program in place, accidents may still happen. That’s why having the right insurance package in place is critical.
Emjay Insurance Brokers has a deep understanding of what can go right – and wrong – when it comes to your business. Our goal is to help your business manage and balance risk against your insurance spend, so you’re covered how you need to be based on your business’s complexities.
We understand the work health and safety risks your business may face and have access to the leading insurance policies on the market.
Contact us today to discuss your needs on (02) 9796 0400.