Join our

mailing list.

Keep up to date with our latest insights.

  • This field is for validation purposes and should be left unchanged.
Friday Workplace Briefing

When Can HR and OHS Manager Be Liable For Their Actions?

For this week’s Friday Workplace Briefing, Andrew and Kim discuss when HR and OHS Managers can be liable for their actions and examining new case law that is going to explain the do’s and dont’s.

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

Stay updated with our Friday Workplace Briefing

Subscribe to receive the latest Friday Workplace Briefing in your inbox every Friday, where you can hear the critical news and developments that affect your workplace.

Listen to podcast

About the Hosts

Managing Principal - Victoria

Principal Lawyer - Head of Workplace Relations

Episode Transcript

Andrew Douglas: Now what I thought I’d do first, is I’d go through some older cases. So I’ll go through be Bervar first. So I might get the next slide if we can jump onto it, we mightn’t have slides here for those, I don’t think. Didn’t I do that? God, I’m a bum, aren’t I? So look, I’ll read.

AWU v Bervar is a case that was about a pizza place and a woman who worked there was given aggressive and racist remarks about her. Terribly distressed, went home, told her husband, HR manager rang up to try and fix everything up. Husband got on the phone, explained it and said they’re going to go to the Fair Work. And the HR manager thought, well, I’ll take that as a-

Kim McLagan: Resignation.

Andrew Douglas: Resignation, yeah. That’s okay by me, that’s resignation. And of course it wasn’t a resignation. Now the case didn’t end up having the HR manager being…

Look, there it is up, Seb, you are a star.

Didn’t end up having a liability question that sat around the HR manager. But what I want to say is, very well could have, and modern plaintiff lawyers would definitely have added the HR manager to this process of treating someone adversely as a result of-

Kim McLagan: Making a complaint.

Andrew Douglas: Of making a complaint. Does that make sense? So this is a case that shows where HR managers are complicit in behaviour that relates to a protected attribute or a workplace, right, they will be named. Discrimination Lawyers have been doing it forever and a day, but they are a specialised group. We’ve now got general plaintiff based firms who will do this very happily.

Kim McLagan: Yeah.

Andrew Douglas: So let’s move on. I’m just giving you a heads up on that. Probably the cases, if we can go to the next case, please, Seb.

So this is Baulderstone. Baulderstone was a case of a guy who was the HSR on site of a building company. They wanted to move him off to salary. The CFMEU got pretty distressed about all that, but what they really wanted to do is to roll up his wages and to move him outside of where he was.

It was clearly a freedom of association issue. In other words, his right to be involved in a union. Two HR managers were involved in it along with a manager and both were named and shamed, the HR managers, and both were fined. Okay, and you can, I’m not giving you their names, but you can Google the case and you’ll find their names, like every subsequent employer will do forever and a day.

Kim McLagan: Yeah.

Andrew Douglas: Fines weren’t large. I think they were about 4 grand and 10 grand at the end of the day, they weren’t huge fines. But I want you to know when you are named and prosecuted, it’s your brand. And here was something that the organisation wanted to do that the HR manager was involved in through sleight of hand and said, look, I didn’t understand the legal effect of what I did and all that sort of stuff. But the bottom line is they just looked at it and said, but you did it.

Kim McLagan: You did it, yeah.

Andrew Douglas: You tried to get around the award. So there you go. Next case.

All right, Centennial Finance. This is the original case. Okay. This is where a business got a bit of financial difficulty, tried to engage people as contractors, even some of whom were originally employees, had some free training that they undertook, which they didn’t get paid for, was necessary for them, which clearly should have been paid for. The manager wanted this to happen because the financial stress they’re under. The HR manager said, I didn’t know the legal impact of what I was doing, but quite clearly ought to have known it given her role as an HR manager. This is the case that sets HR, it has a good and a bad side. What it shows is HR and safety managers are now a profession. So they are assumed to have a body of knowledge and the courts will go to that body of knowledge and you can’t plead ignorance in it.

Kim McLagan: Yes.

Andrew Douglas: And in this case, she was found guilty of accessorial liability to the actual organisation. But it was such a dumb thing for her to do.

Kim McLagan: Mm.

Andrew Douglas: And she did it because she was trying to please a boss.

Kim McLagan: Mm.

Andrew Douglas: That’s the truth.

Kim McLagan: Yeah.

Andrew Douglas: So whenever you think about issues of, I’m not sure what the law is, but doesn’t smell right, bring Kim. Don’t do it, you know, right. And you are a professional now, so if you do it, you are going to stand alone and be liable for it. And that’s what I want you to understand from this. You are assumed to have a body of knowledge about the area you practise in, just like lawyers are. Okay, let’s swing to the last case. Okay, Fair Work. I think that’s the second last case, not the last case.

Kim McLagan: I don’t know that one.

Andrew Douglas: Yeah, I do know that case. I just read it about seven seconds ago. So, bearing with me just a second. This is a payroll, another payroll issue. Okay. This is a restaurant in Sydney where there was direction to falsify records, again by the HR manager and again they were found liable. So very simple case.

Kim McLagan: Yeah.

Andrew Douglas: I don’t know if the safety case is in here, I was going to talk about. So the safety case I was going to talk about, is the case where… we’ll go to the case study actually, but I’ll just keep talking. There’s been a couple of cases where safety practitioners have been found liable. And it is where their body of knowledge sitting around safety, is drawn to an issue. There’s a recognition they should do something and they choose not to do it. Like an appropriate risk assessment.

Kim McLagan: Okay.

Andrew Douglas: Like managing a SWIMS process when they’re aware it’s not working. So when they have a stated knowledge, which is contrary to their body of knowledge and they have an accountability and responsibility and they don’t act, we’re starting to see regulators prosecute.

Kim McLagan: Okay.

Andrew Douglas: Okay. And that’s my fault. Sorry guys. I meant to put the case in. There’s only one major successful prosecution on this. But there is a number of other prosecutions in the flow that are about to happen to OHS managers. And it sits around, I have a responsibility operationally. I’m seized with a piece of knowledge that tells me there’s something wrong and I choose not to do something about it, or I acquiesce with a management view, look, we just don’t want to do that, when you’re doing something that places someone’s life at risk. Okay.

Kim McLagan: Okay.

Andrew Douglas: So let’s go onto the case study.

Kim McLagan: It’s relevant to our case study.

Andrew Douglas: Yeah.

Kim McLagan: Strap yourselves in-

Andrew Douglas: This is a long one. I wrote this this morning, guys. I’ll just take a break and a smoke outside for this one. Off you go, Kim.

Kim McLagan: Alright. I really need to get new glasses too.

Blensfield Grammar or BG had 1300 students. It was a school centred around sport and had an internal elite sports academy that engaged coaches as casuals or as contractors. The two sports it focused on were basketball and rowing. Its teams and crews dominated in national titles. And the academy had direct links to US based university programmes.

BG offered a variety of scholarships, from full fee to part fee.

Andrew Douglas: Part fee. There you go.

Kim McLagan: It was notorious within the school that the children in the Academy commonly had very driven parents who did not respect the school, the common school boundaries as they motivated and drove their children for sporting success and recognition. On 12th November ’22, the head coach Terry-

Andrew Douglas: My dog.

Kim McLagan: A full time position. Was he licking your ankle at that time?

Andrew Douglas: Probably.

Kim McLagan: Met with the principal, Madge, of the school and the Chief People Officer, Campbell, to plan for 2023. Campbell had responsibilities for all people related issues including safety.

Andrew Douglas: Let me do a couple, ’cause this is a long one.

Kim McLagan: Yeah.

Andrew Douglas: Terry explained the coaching group would need to be expanded to include a conditioning coach and an exercise physiologist. He would also need all staff to increase their hours by around about 10%. He wanted the new roles to be contractors and explained he would need them on a regular basis throughout the year. He raised issues with his budget and how the 10% extra would be managed. 70% of the staff were contractors.

Their hours varied based on seasonal requirements, but they were working long hours, over 38 hours a week, and were paid flat rates, around $5 an hour over the general award.

All coaching staff were required to attend a strategy week each year in January that was unpaid. The strategy week was an in-house session at BG’s, at the Grammars Beach Campus with accommodation and food provided.

He developed the elite programme for the following year and honed how each coaching and staff support would work together and deliver the best results.

Finally, Terry raised the vexed and constant problem of parental misconduct, which included offensive abusive emails and messages sent at all hours of the day and night, and at times included misconduct of events and training by parents.

There had been two occasions where this escalated into physical contact with coaching staff, once grabbing by the arm and shouting at the coach, another striking the coach in the chest with a forefinger to make a point.

Madge and Campbell responded in the following way. Campbell explained that some of the roles were clearly full of part-time roles.

Now remember Campbell was the HR manager, effectively.

…part-time roles and should be remunerated that way. He tabled a spreadsheet. It showed despite the higher than award hourly rate because much of the work was weekend work and several did more than 38 hours. Both penalties and overtime applied to the casuals. He explained why the contractors were unquestionably employees. None of the contractors ran their own business, couldn’t delegate their work and used no personal assets.

Their roles were closely managed by Terry. In other words, the control test, underwater as a contractor, how you do it, what you do, was managed by Terry. He went on to say that the unpaid strategy week was work week and should have been paid. Terry said he would need more budget. Madge said they didn’t have it. She explained it was a scholarship programme and that few paid full fees. They agreed to develop a package that showed staff were better off and focus on how it advanced their career in sport. Many of them had gone on to roles in elite sport. And Campbell would manage payroll figures to ensure the review would demonstrate all were paid in accordance with the award.

Madge asked Campbell about what controls they can use for the parental behaviour. Now remember Campbell was the chief people officer, but also responsible for safety. Campbell said he had managed several cases of staff concerns, including two accepted stress related workers’ comp claims for the casuals, and three coaches who were contractors last year resigned because of parental behaviour.

Kim McLagan: Okay.

Andrew Douglas: Yeah, you go. Go on.

Kim McLagan: He had added a parent’s induction night, a new parental code of conduct and said they would step up the management of parents to give a few examples. Madge asked, had he done any form of risk assessment? Both Terry and Campbell said they started one, but soon realised the problems were intractable and the issues were too hard to stop. All coaches knew not to respond to direct emails or messages, Terry did that. Any direct behaviour, Terry would talk with the parents, send letters and the like.

Campbell made it clear, if he completed the assessment, he was creating liability for the school because seeking to control the risks that attached to the hazards would cause huge parental and board problems, with the major two offenders being the chair and the treasurer of the board, both ex Olympians. Madge nodded and said, “Best to let sleeping dogs lie.”

Andrew Douglas: That’s Terry again. That’s my dog.

Kim McLagan: At the Inter-Grammar basketball final, BG boys team lost, with the opponent’s nailing a three pointer in the last four seconds to win by one point. The chair was furious. He came down from the stand, abused the student playing guard who said he should have stopped the shot, calling him an effing idiot, grabbed his arm and lifting him up to show what to do. He then turned on the coach, shouting and screaming in an abusive manner what a fool she was and how she didn’t know sh*t from clay.

I can say that.

Andrew Douglas: Interesting.

Kim McLagan: He wrenched his son away from the other players and left the stadium, loudly criticising the other players and coach. Throughout the night, he unleashed a torrent of abusive emails and texts to the coach, Jenny, an ex-NBA captain. Jenny rang Madge at 9:00 PM, four hours after the game was over. She cried throughout the call and was obviously very distressed. She explained what was happening and Madge said to turn off her phone, not read the emails, and Madge would speak to the chair early the next day and fix things.

Andrew Douglas: My turn.

Jenny was distraught, felt alone, had a few stiff drinks to numb the hurt and arranged to meet colleagues across the road at a bar at 10:30. At 10:35, she went to wander across the road to the bar. By that time she’d consumed a third of a bottle of vodka, was unaware how drunk she was and was still distressed and distracted by what had happened. As she stepped out from behind a parked car, she was struck by an oncoming truck, suffering fatal injuries.

Kim McLagan: On the day it was a third of a bottle. When I was reading it in the car, driving in, I thought it was a third bottle.

Andrew Douglas: No, that was me last night. Okay.

So, were the contractors really employees? So we are now faced with the change in the law that goes back to the old, old multifactorial test.

Kim McLagan: Yeah.

Andrew Douglas: The key issue is control. Okay, in other words, if Terry told you to do this job and you had a programme and you had to do it his way, that’s control.

Kim McLagan: Yeah.

Andrew Douglas: But the inability to delegate, the lack of assets, they weren’t using own vehicles or doing things, all those things suggest unquestionably-

Kim McLagan: They were employees.

Andrew Douglas: They were employees. Some of them were clearly permanent employees, some of them were casual employees. This is a real problem.

Kim McLagan: Yeah.

Andrew Douglas: And yet it’s very, very common when people see someone who’s not a mainstream teacher, whether it’s a grounds person, whether it’s somebody else who’s itinerant or working around the organise. They go, why don’t we just take one as a contractor? Big mistake. And then the rules of what an employee is, attached to it. No leave, none of those things.

So this is, not only were they contractors, but this was sham contracting which caused financial harm.

So it brings us probably to the next question, which is who could be prosecuted for underpayment of wages and failure to accrue and pay entitlements like overtime, penalties, annual leave and long service leave? The difficulty with this is, Kim, every one of them could be prosecuted.

Kim McLagan: Mm.

Andrew Douglas: I don’t want to start that. But not just prosecuted by the federal prosecutor, but by the state prosecutor for long service leave.

Kim McLagan: Okay.

Andrew Douglas: So this is pretty naughty because casuals do accrue long service leave but contractors don’t.

Kim McLagan: Mm.

Andrew Douglas: And what’s happened here is a device that’s been used, maybe not intentionally understanding the effect of it, but I think probably, which means you’ve got two, both of which have jail sentences that attach them independently, both of which fall into different jurisdictions.

Kim McLagan: Yeah.

Andrew Douglas: So the answer is, school is terribly liable. They’re going to be paying back with penalties and interest, very substantial penalties and interest.

Kim McLagan: Yeah.

Andrew Douglas: The HR manager in huge trouble for falsifying records. The school principal is in deep, deep trouble for refusing resources and budgets. And Terry’s going along with it, probably not understanding, nor completely knowing it, if that’s what he pleaded, would lead him down the bottom. But these are fines for the HR manager, of more than 50 to $60,000, under just the federal legislation. So we could have someone going to jail for this very, very easy, ’cause it’s pure wage theft.

Kim McLagan: Mm.

Andrew Douglas: Okay. All right, could the chair face prosecution under the safety law, and if so, what? Now why did I ask that? Well, because under the general duties, other people can’t be liable in Victoria. But they certainly can be under reckless endangerment ’cause the definition of who is liable, is a person.

And would the chair be liable under 144 as an officer? Absolutely, because the chair knew the behaviour, ’cause they were doing the behaviour, could cause harm. So in Victoria they have the subjective knowledge. They’re liable here under section 27, work, health and safety. Everywhere else in Australia, definitely liable. The chair is in a lot of trouble because he could have caused serious harm or death, which is a, they’re slightly different test that exists across the jurisdictions. Not only was he careless, he was deliberate.

So that’s reckless endangerment. But it’s moving closely towards industrial manslaughter because although the death happened outside of work that’s not part of industrial manslaughter or workplace manslaughter as they call in Australia. So he could be going to jail.

Kim McLagan: Does the death have to be foreseeable from the conduct?

Andrew Douglas: Yes, ’cause it, well, it has to be the substantial cause of it.

Kim McLagan: Right.

Andrew Douglas: Yeah, I think. So, this is such a good question because in a way it is foreseeable. If I treat you horrendously, if I barrage you with things, I’ve got to expect there is conduct that comes out the back end. And I’ve got to understand, not knowing you, that there is a likelihood it’s going to cause mental health issues. And those could range from becoming depressed to doing something much sadder. So the fact of the nature of the accident doesn’t have to foreseeable. It’s the risk that has to be foreseeable. Okay. So, great question.

Okay, could the school and Madge be prosecuted under safety law and what for? Well, they’re employees. Okay. So they can be section 25 breaches, you know, not done exercise reasonable care, bringing risk to another person.

Kim McLagan: Yep.

Andrew Douglas: Yep. They’ve got that liability. Madge is definitely an officer, so section 144. And at that stage, I’m afraid it’s got a bit worse ’cause they really are on the path to reckless endangerment because they know of the specific risk that does exist and they’re chosen not to do something about it. So they’re off to reckless endangerment land and they would be charged. If we look at the Victorian Building Authority case where people knew of a specific risk in performance management and restructuring, much lower set of facts than what occurred here.

Kim McLagan: Hmm.

Andrew Douglas: They’re in real strife.

Was Campbell at risk under safety law? No one could be more at risk than him, the person who had the body of knowledge, who started doing a risk assessment and walked away from, ’cause it might create liability. And yes, could have looked and worked out how to manage these, but, and knew that it was their own officers who were the major problem. So what could have they done?

I’ll tell you what, if I was Campbell, I would’ve brought in WorkSafe the moment I started doing the risk assessment, saying, look, we need some education and help around this issue. Not to give them all the evidence, so they’re going to go and prosecute you, but you’ve got to scare the shit out of them somehow, don’t you, you’ve got to start the process.

And I’d bring WorkSafe along to talk to the parent group. That’d be a start. Why? Because then when I roll out a code of conduct and it would say, look, behaviour like this will lead to your child being exited from the programme. It won’t happen because this is everything. So there’s an easy way through this.

So look, fun, ’cause it’s lovely having you along. You notice in the case study, I didn’t put in words you can’t pronounce, which I do to Nina every week. So you’d be trembling. I didn’t want to do it.

Kim McLagan: I trip over the most simple words anyway.

Andrew Douglas: Now look, we’ve got some exciting news too, just before we jump off.

All pain, no gain, it’s happening. Okay, the legislation’s come through. We’d love to talk to you. It’s now on in a bigger premises. Still in here, still in our office, but downstairs. Come along, we’ve got about five or six on a waiting list, but I think we’ve still got a little bit of room, so please jump in now. And can you give Kim a thumbs up for turning up and doing this today? Cheers guys.

Kim McLagan: I’ll be back next week.

Andrew Douglas: Yes, see you then.

Kim McLagan: See you then.

Andrew Douglas: Bye-bye.

Kim McLagan: Bye.

Check this next

Andrew and Kim discuss: who will be charged next with Industrial Manslaughter? Who are the safety regulators charging and why?