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Friday Workplace Briefing

Reckless Endangerment Charge for Psychological Hazard – A Victorian First

In this week’s Friday Workplace Briefing, Andrew Douglas and Kim McLagan discuss a Reckless Endangerment charge for Psychological Hazards given to the Victorian Building Authority (VBA).

The VBA has been charged with Reckless Endangerment in circumstances when it would have been more appropriate as a matter of law, fact, and policy to charge them under Industrial Manslaughter. Why have they been charged? Why not Industrial Manslaughter and what does it mean for every other organisation that has similar risks?

To view the full episode and catch up with the week’s latest news and developments please visit this link.

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About the Hosts

Managing Principal - Victoria

Principal Lawyer - Head of Workplace Relations

Episode Transcript

Andrew Douglas: The VBA Case, the Victorian Building Authority is being prosecuted for reckless endangerment by WorkSafe, which is sort of fun. One regulator prosecuting another. I always enjoy that. And it was about a guy who wasn’t getting on with his supervisor. They wouldn’t change the supervisor. They had him in a performance improvement plan. They were talking to him about redundancy and performance management. He’s clearly not coping with any of it. And they made no adjustment at all. And sadly, and by the way, the problem involved, we’re going to do later, we’ll deal with the person taking their life. So I want to just…

Kim McLagan: About that, yes.

Andrew Douglas: …put a warning out there. But this is not an unusual set of circumstance. I want you to be very clear. It is… Performance management nearly always fails in the traditional method of dealing with it, because when I tell Kim she’s not doing a good job and I don’t do it in a good way, she just drops into fight-flight. And every time I push her to do things better, her performance will gradually deteriorate.

Kim McLagan: You’re not talking about me, really, are you?

Andrew Douglas: No, no, no. Because I’ve never said that about you, because I-

Kim McLagan: Just want to clarify that.

Andrew Douglas: Because you wouldn’t go down a bad path. You’d hit me. So I don’t do it, okay. I’m aware of the risks that sit around it. But the truth is that when you start performance management programme, very few people escape it. And so I want you to rethink that and go, “Hmm, is there a better way to do this?” And part of the better way of doing it is realising you’re trying to grow people. You’ve not got an end in sight of terminating them, because people feel it. And you need to make adjustments that sit around it. So please be aware that performance management, absolutely necessary thing. But the traditional method of doing a PIP, of actually making very clear that you’re going to grind the person, of catching up with ’em every two weeks, of picking up at every fault they made, rather than it being a coaching exercise of growth and improvement, usually leads to decline in the performance of the person. But more frighteningly, leads to a decline in their mental health.

Kim McLagan: Okay.

Andrew Douglas: Because no one comes to work to fail. There’s no one, you know, when I look around my office, no one out here wants to fail. No employee wants to fail. And this is a circumstance where the VBU were completely unfeeling about the impact. VBA, I put VBU and it keeps getting…

Kim McLagan: The VBA were completely unfeeling about it. And therefore, they became aware of a risk and it was a risk of serious injury and they were indifferent to it. That’s reckless endangerment. Look, it’s sort of, I noticed John Doe asking a few other guys online as we’ve sort of been corresponding, say, “Actually this is easy to prove for industrial manslaughter.” It’s an employee. So it’s within 39F. So it’s an employee, it’s a person. It’s a clear breach of duty.

Kim McLagan: Yeah.

Andrew Douglas: Section 21. Section 22 breach. So that’s a section that’s court barred under 39F. Section 25 is not court, which is third party. Okay? But a person who would have an obligation pursuant to section 32, the reckless endangerment, not to act indifferently, would be court. Very complex provision in Victoria. So, but this was a person who is definitely a person. They were definitely negligent. They, given their state of knowledge from the facts we’ve got, and they’re very limited at the moment, would suggest it was a gross form of negligence which would trigger industrial manslaughter, would’ve been easy to charge. ‘Cause reckless endangerment requires you to have a knowledge of the state of mind of a person. Whereas industrial manslaughter is a breach of duty and a gross breach, a very serious breach. So, they must have an extraordinary confidence about the state of mind-

Kim McLagan: Yeah.

Andrew Douglas: Which means that would’ve been a perfect reason to go to industrial manslaughter. So it’s a really odd decision. I just want to raise it as a really odd decision, but to show how much easier it would be.

And as we look at, particularly Victorian WorkSafe, for charges of industrial manslaughter in the last four months, outside of this area, it’s pretty daunting, isn’t it? Because you can see, maybe in two years time the same case would be a charge of industrial or workplace manslaughter, not a charge of reckless endangerment.

Why do I want to talk about that at this stage? Why is it such an important case? Well, it’s a psychological hazard. Major prosecution. Writ large, psychological hazards. Again, still no code or regulation in Victoria, but WorkSafe are going after it.

So, can people see that trend? We’ve seen two general duties breaches, sexual harassment and bullying in Victoria. Again, still no code or regulations that are pre. So we’re seeing psychological hazards take off and the seriousness of the charges take off.

And at the same time around Australia, we’re seeing really daunting fines being issued in the Northern Territory in the Titan case. $1.14 million. And this was about the unloading of a piece of plant being done dangerously. But in that case, the director’s fine was something like 180,000 I think. And I’m pretty sure the company was $940,000 fine for a category two offence where 1.5 is the top.

You are seeing courts go to the higher end of the scale, whereas four years ago they were staying in the lower end of the scale.

So when we’re talking about psychological hazards, I want you to think of this. We are seeing throughout Australia, a growth in the level of fine and penalty the courts are willing to allow. We’re seeing a growth in every regulator of the willingness to prosecute psychological hazards. And we’re seeing a growth in every regulator in the willingness to step up the nature of the prosecution from a general duties to a jailable offence.

So that’s the learning of this case. This is a case which is really the thin end of the wedge in psychological hazards. These are terrible and tragic circumstances. And I really want to say, this is also a great reminder that we should be caring and respecting our workers. And when things aren’t going well, just ploughing ahead, we should be stepping back and going, “There must be a better way we can do this.” I mean, I know it’s who we say we are as a business and how we work with our clients, but this is a moral question about how you manage someone. And this was immoral behaviour.

Kim McLagan: Yeah.

Andrew Douglas: Yeah. So, a great learning case on both law and how we behave as a community towards the people that we care for. Why don’t we go on to do the case study?

Kim McLagan: Yeah. It’s another heavy one, though.

Andrew Douglas: Yep.

Kim McLagan: All right.

Kath was a longstanding supervisor at Patch and Co, a VicRoads accredited road maintenance, repair and civil engineering business that designed and built roads. Neville was the supervisor on the road maintenance gang situated at Geelong. He had three permanent staff, two casuals and used a range of subcontractors for soil delivery, removal and asphalt delivery and laying. He was an award-based employee. Kath was aware that Lumps Garden Soil, one of their key suppliers of soil in Geelong, had an owner named Terry, who was a difficult man.

Andrew Douglas: Again, named after my dog. He’s a nice dog, by the way.

Kim McLagan: Yeah, Terry’s horrible. This Terry.

Terry teased all staff, was rude and abusive, and if he felt his runs were being slowed by someone else’s incompetence. He had a particular dislike of Neville, who he blamed for all of delays he suffered, and thought he was incompetent. In nearly every case, it was Terry’s fault. However, Neville had a stutter, was shy and Terry mimicked him, harassed him, and laughed at his stutter and it got worse from Terry’s harassment.

Terry called him a gimp to everyone, because of his stutter. Terry made a complaint against Neville to Kath. She didn’t investigate, but she saw that Terry had charged extra fees under the liquidated damages part of his contract, paid them, and arranged to catch up with Neville. She told Neville his performance was not acceptable and placed him on a PIP. Neville tried to explain the behaviour of Terry.

Before Neville’s stutter prevented him from speaking further, he managed to say that Terry was incompetent, that the delays were all caused by him, and he was rude and offensive, constantly teased and said hurtful things about his stutter, and was a bully on site. He didn’t feel safe dealing with him and felt very sad, not wanting to come to work. He explained that Terry rang him late at night with issues around delivery and he worked at least two hours extra a day for which he wasn’t paid.

Kath explained he had a higher base salary than the award and it covered all. However, there was no set-off clause in the contract and the contract had a specific clause on overtime. Had Kath investigated, which she didn’t, she would’ve found that it was true that over a year, the amount would be less than the total base payment. But over several payroll periods, his overtime exceeded his base wage.

Kath said the PIP would fix the relationship with Terry as she would touch base with Terry weekly, and they would do a Zoom meeting after to make sure everything was going well. Neville left in tears. He sent Kath a detailed letter after, explaining what Terry said was untrue, and a note from his 2IC that affirmed it. Neville also said he should be paid for the extra hours. Kath emailed back saying everything will be okay and to stick with the PIP.

Terry inundated Neville with complaints now that he felt supported by Kath. Kath still didn’t investigate. She saw on Zoom that Neville was mentally falling apart and told him to get help. Eight weeks later, Neville took his own life whilst she was on personal leave. He had been off on work for two weeks on stress leave and neither Kath nor anyone at Patch and Co had reached out to him.

Terry had been sending escalating abusive texts about being weak, questioning where he was and YouTube clips of Mr. Bean’s stuttering videos. He had forwarded them to Kath and she emailed back, “Just delete them and don’t read them.”

Andrew Douglas: All right, so question one. That was a big story, wasn’t it?

Kim McLagan: Yeah.

Andrew Douglas: I know when I write them at seven in the morning, it’s not good, is it?

Kim McLagan: Oh, you’ve had a couple of tough ones that have been hard to read the last couple of weeks.

Andrew Douglas: Yeah, I know.

Kim McLagan: It’s not pleasant, Andrew.

Andrew Douglas: I’m sorry about that.

Kim McLagan: We need a happy one.

Andrew Douglas: That’s why you’re it. Do Patch and Co and Kath have risks under Safety Law, and what are they?

Kim McLagan: You’re the safety expert.

Andrew Douglas: Yeah, yeah.

Kim McLagan: I’ll sit back for the next couple.

Andrew Douglas: Okay. Well, the answer is they have massive problems. Kath is not an officer, but she is a person who is caught by reckless endangerment. She’s certainly a person for the purpose of that. Let’s talk about reckless endangerment.

Was there knowledge, subjective knowledge, of a risk of serious injury? Yes, there was.

Objectively, were they indifferent to that? Yes. Terribly.

Kim McLagan: Yeah.

Andrew Douglas: Kath would definitely be charged with reckless endangerment. And given what has occurred in Victoria, probably Queensland, Kath would go to jail. Okay. Certainly after the most recent attack on the VBA, not the VBU, I think this type of conduct, which is incredibly bad, where you know, so you are told about it.

Kim McLagan: Yeah.

Andrew Douglas: And the actions you say is, “Go get help,” and “Delete messages,” when it’s clearly bullying. Clearly bullying. Wow.

Kim McLagan: Yeah.

Andrew Douglas: Patch and Co’s in a lot more trouble, I would’ve thought. Because there is a clear breach as an employer of Section 21 and 22. So that’s massive. That’s the duty. It’s a massive breach by Kath…

Kim McLagan: Yeah.

Andrew Douglas: …who has specific knowledge about it and it caused death and nobody doubts that it caused death. So, industrial manslaughter and you’re looking there at sort of $18 million as a maximum fine. I think Patch and Co are probably going to be closing their doors. And I think they would definitely charged with workplace manslaughter or what we call industrial manslaughter.

Next one’s harder. Does Lumps Gardens have risks around safety law and what are they, for Terry? Can I just say to you, when you use a subcontractor, the subcontractor in any other state and territory would be a PCBU. Okay. So they would be liable for all the risks that exist here. Victoria, not quite as easy, ’cause they’re not an employer. But, would they be liable, for Lumps, when we look at section 25? Definitely. Okay. Absolutely. Definitely. So there’s a breach for them there.

Would they be liable for reckless endangerment? You don’t have to be an employee for reckless endangerment. Okay. So yes, Terry’s behaviour was aware of the risk of serious injury. Guy’s on personal leave, knew it, was still texting you. Indifferent to it, yes. Terry’s definitely going to be charged with reckless endangerment. Lumps, definitely reckless endangerment. But here’s the thing. If we say there’s a duty that arises through reckless endangerment, it triggers industrial manslaughter. So the section 25 says you can’t, that’s not a duty. But the reckless endangerment sits. So Lumps could be charged with reckless endangerment as well. Not reckless endangerment, with workplace manslaughter as well. And I reckon they probably would be. Because it’s one of those cases that WorkSafe would say, “This shows the extent of industrial manslaughter. Let’s go over it. We may drop down to reckless endangerment in a plea deal, but let’s actually put it out there that we’re going to do it.”

So these set of facts would have both Patch and Lumps with industrial manslaughter. They’d have both Kath and Terry with a reckless endangerment.

Okay, let’s go to the third one. Would the estate of Neville have a claim under the Wrongs Act for the death benefit?

Kim McLagan: Yeah, definitely. So his dependents could bring a workcover claim.

Andrew Douglas: Yup.

Kim McLagan: And all they would need to establish to bring a claim up for damages under the Wrongs Act would be negligence on behalf of-

Andrew Douglas: Even though the death was not at work.

Kim McLagan: Yup.

Andrew Douglas: There you go.

Kim McLagan: Yup.

Andrew Douglas: Okay, let’s try the next one. Would the estate and the Fair Work Ombudsman be able to claim, that’s for the estate, and for the Fair Work Ombudsman to prosecute an underpayment case? And would they be liable and what’s the likely penalty?

Kim McLagan: Yeah.

Andrew Douglas: Can I say to you the estate definitely has a claim. Okay. And they’ve got plenty of time to make it. So that’s the other part of it. But the Fair Work Ombudsman in these circumstances would definitely go after. So Turner’s case is really simple, which is if you don’t have a set-off clause and there’s not a specific clause identifying how payment should be occur, you may be able to have a general set off. Okay.

But here you have a specific clause that deals with overtime. So then you have to kick up to the next level, which says, “Do you have a set-off clause that identifies the set-off?” And the answer is no, you don’t. So the set-off won’t work at all. So for every single period of employment there is a breach. And there’s no doubt here they’d be seeking significant penalties because of the manner in which they behaved upon notification. So you’re looking at high penalties in Victoria. Individual penalties against Kath who controls the payment.

Kim McLagan: Yeah.

Andrew Douglas: Her penalties, if it’s taken on case-by-case basis. So each pay period, which the Fair Work Ombudsman’s not been doing, but could as a matter of law. Could be well over 200,000, could be seven, $800,000 penalties. Likely to be something around about 80 to $100,000. Business in Victoria. I’d say they’d be looking at maybe a 200,000. But if they took them, each level could be massive. Whatever it is, it’s a very substantial part.

Then there’d be entitlement to the back payment of wages, then they’d be entitled to interest. Pretty worrying. Okay. So just interesting bit on the side I wanted to take.

What action could Patch and Co have taken to help Neville and prevent Terry’s behaviour? Terry’s company was under a variant of AS4300 and usual safety clause. That’s just a contract which actually says that if a contractor breaches a primary safety obligation, you can terminate the contract.

So that’s one of the things they could have done straight away. But the more obvious things are stop bullying orders. The more obvious thing is just telling Terry to stop. You know, like just actually having a conversation, to investigate correctly. But there are so many things they could have done along the way. They could have even called in WorkSafe and say, “Look, we’re powerless to stop this. We’re not sure what to do. Can you give us a hand?”

Kim McLagan: Yeah.

Andrew Douglas: But there was these opportunities along the way. They could have got a Brady’s order. They could have gone and said to him, “Look, let’s join with you and go and see the police together.” They could have done any of those types of things. And by doing nothing, the failure to do any of those things resonates in penalty. Resonates if in this case Neville hadn’t taken his life, in a common law claim, it would’ve been a massive.

Now that’s it for this week. We got through, Kim. Thank you very much for listening. We just loved having you. We are a bit exhausted. Nina, come home.

Kim McLagan: She’ll be back on Tuesday.

Andrew Douglas & Kim McLagan: [Both] Oh!

Andrew Douglas: See you later. Bye bye.

Kim McLagan: Bye.

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