Following on from the changes to NSW Work Health and Safety Act in June 2020, Western Australia has followed suit. After receiving royal assent on 10th November 2020, a new Work Health and Safety Act (2019) has been passed in Western Australia, due to come into effect in 2021. Replacing the previous Work Health and Safety Act, the change in legislation could have ramifications for your business and insurance policy. Here at GSK Insurance Brokers, we aim to ensure you understand the amendments to the Act, how it may affect your business and business insurance, and what you need to do to ensure you are covered. 

Due Diligence Duty

It’s paramount that the officers of your business (this includes directors and any key decision makers) be aware of these changes, and act in line with the amendments. Due diligence duty applies to the senior members and ensures that everyone under the umbrella of the business – including contractors and subcontractors – meets and upholds the safety guidelines, and adheres to WHS rules. The senior management and key officers of an organisation are expected to be proactive in regards to safety, not simply reactive. 

General changes and how they affect you

Generally, insurance already does not indemnify a person from liability if the offence is committed with ill intent. The amendments to the Act will mean that insurance cannot cover fines and penalties that are the result of an offence against Work Health and Safety. These changes may have different ramifications for different classes of insurance.

‘Workers’ rather than ‘employees’

Under the broader term of ‘workers’ rather than ‘employees’, the new Act makes it clear that contractors, subcontractors, apprentices and similar are all included. This means that no matter how the work is structured, there is no doubt that the business has a duty towards all of those that fall under the ‘worker’ category. It is in the best interest of the business or organisation that each ‘worker’ is familiar with and competent in correct Work Health and Safety practices.

Increase in penalties

Failing to understand and implement the changes to the Act could lead to harsh penalties for your business or organisation. In addition, penalties for misconduct are expected to increase. For example, the maximum penalty for a serious offence that results in serious injury or death is increased to $3.5 million. These penalties cannot be covered by your insurance policy, so it is important that each member of the business (including contractors and subcontractors) be aware of possible misconducts, and actively avoid breaking WHS guidelines. 

Directors’ and Officers’ Liability Insurance

Previously, Directors’ and Officers’ Liability insurance may have covered some penalties that arose under breaking WHS guidelines in relation to a breach of statute. Under the changes to the WA Act, the policy will no longer cover fines and penalties that result as an offence against the new Act. Ensure each member insured by your policy understands and upholds safety guidelines in relation to WHS standards. 

Profession Indemnity Insurance 

Generally, cover provided from Profession Indemnity Insurance should remain the same under the new changes to the WA Act. The changes to the WA Act may mean that some civil penalties are no longer covered by the PI insurance policy. It’s important to note the individual wording of your policy, as it may limit the cover of civil penalties. In the event that there are no specifications in the PI policy, the Act is likely to prevent cover of civil penalties. Ensure you understand the implications of these changes on your specific Profession Indemnity policy. 

Crime Insurance, Cyber Insurance and other 

The nature of Crime Insurance generally does not cover fines and penalties – usually this will be expressly outlined in your policy. Therefore, the changes to the WA Act are unlikely to change this. Likewise, the WA Act is unlikely to cover a fine or penalty as a result of a WHS offense under a Cyber Insurance policy. Each case will be individually scrutinised under Employment Practices Liability (EPL) Insurance as to whether fines and penalties as a result of an offence will be covered. 

What does this amendment mean for your policy?

As with any amendments to legislation, it is of the utmost importance to understand the changes and how they may affect you and your business. The changes to the WA Act will have various ramifications for different classes of insurance, so it is important to understand these changes before they come into effect. If you are not sure how the new changes to the WA Work Health and Safety Act affects your business and your insurance policy, or if you need to make amendments to your policy, reach out to your GSK Insurance Broker. 

February 16, 2021

By Graham Knight

Founder and Managing Director of GSK Insurance (established in 1981). Graham draws upon more than 50 years’ experience in the insurance industry, working in both insurance and broking across various private, public and government sectors in Australia.

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