Directors and officers should be careful of insurance policies which purportedly cover criminal penalties arising out of Work Health and Safety law breaches, according to an OHS legal expert.
While the law allows directors and officers to take insurance against their liability to pay civil damages for harm, Newcastle Law School’s associate professor Neil Foster said insurance coverage for criminal proceedings was a different story.
“There is a very long-standing and important rule of public policy that it is not possible to take out a valid insurance policy covering possible criminal penalties exacted in criminal proceedings, where there is any element of ‘personal fault’ in the offence,” he said.
“Sadly, some insurance companies seem to be offering such policies which on their face purport to allow recovery of such penalties under the policy.”
Speaking at Comcare’s recent national conference in Sydney, Foster said any such insurance is not enforceable, and criminal penalties for personal failure to ensure due diligence will have to be paid out of a director’s personal funds
He also said the model Work Health and Safety Act “presents a clear danger” in that the goal of achieving uniformity of laws will lead to a watering down of safety provisions that have previously provided important protections for workers.
“It is to be hoped that the courts, in applying the new law, will keep the importance of these matters in mind.”
In adopting the model laws, he said governments are presented with a unique opportunity to send a clear message about the importance of safety in the workplace, and in particular the key role senior management plays in building safety cultures.
“It is up to management to lead the conversation in the workplace and to set the tone to create a safety culture which starts at the top,” he said.