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ICA Submission to NSW OH&S Inquiry
10 August 2005
Independent Contractors of Australia (ICA) is an association which was formed to protect the rights of independent contractors. Independent contractors are small business people. ICA operates through its Website at www.contractworld.com.au.
With the dramatic changes in the nature of work and workforce engagement systems over the last 20 years or more, it is important that government regulatory regimes understand and respond to the new environments in positive and constructive ways. ICA was formed to assist that understanding.
Amongst its activities, ICA has made submissions to:
- The Personal Services Income tax legislation reviews;
- The Cole Commission Inquiry into the construction industry;
- The Dawson Review of the Trade Practices Act;
- The South Australian Review of Workers' Compensation;
- The Senate Inquiry into Insolvency laws;
- The Victorian Occupational Health and Safety Inquiry 2003; and
- Response to the Maxwell Report Vic OHS 2004.
In addition, in June 2003, ICA was appointed an observer to, and attended, the International Labour Organisation debate on the 'Scope of Employment'.
ICA welcomes the opportunity to contribute to the New South Wales Review into Occupational Health and Safety.
Note: Reference is made in this submission to:
- The Productivity Commission, 'Interim Report National Workers' Compensation and Occupational Health and Safety Frameworks', October 2003.
- International Labour Organisation, Provisional Record Ninety-First Session, Geneva 2003, 'The Scope of the Employment Relationship. Report of the Committee on the Employment Relationship'.
- International Labour Organisation, C155 Occupational Safety and Health Convention.
- Discussion Paper and Report on the Review of the Victorian Occupational Health and Safety Act 1985 by Chris Maxwell QC. (The Maxwell Review/Report 2004).
- Victorian Occupational Health and Safety Act 2004.
A1. OHS Principles
The Productivity Commission describes the principles of OHS regulation used internationally by all jurisdictions as those espoused by the Robens Committee in the United Kingdom in 1972:
This involves a general duty of care imposed on those having control over aspects of the workplace, backed by detailed regulations and codes of practice. (p. xxv)
and
involves a principal OHS Act that codifies the duties of care that are owed under common law.... The duty is imposed on employers, the self employed, owners, occupiers of premises and suppliers. The duty is owed to both employees and others (workers other than employees, customers and visitors) who may be affected by the worksite, activity or equipment. Workers have obligations not to put others at risk and to obey the reasonable instructions of their employer in relations to OHS. (p. 40)
The International Labour Organisation has reflected these principles in Convention 155, to which Australia is a signatory and has compliance obligations. Convention 155 states:
Article 4.2. The aim of the policy shall be to prevent accidents and injury to health arising out of, linked with or occurring in the course of work, by minimising, so far as is reasonably practicable, the causes of hazards inherent in the working environment.
Article 6. The formulation of the policy referred to in Article 4 of this Convention shall indicate the respective functions and responsibilities in respect of occupational safety and health and the working environment of public authorities, employers, workers and others taking account both of the complementary character of such responsibilities and of national conditions and practice.
ICA supports these principles, re-expressed in simple lay language as: 'persons who have measures of control over worksites must ensure that all people on the worksite are safe'.
ICA believes, however, that this core principle is subject to corruption by the language, concepts, practices and legalities of 'employment'. This tendency to corruption of the Robens principles is evident in the New South Wales Review's discussion paper and is the focus of ICA's submission.
A2. The interplay of OHS principles and 'employment language'
Employment is a legal and managerial state which in many respects presupposes that an employee is a person who is less than an adult. In other words, that in exchange for payment, adults enter a work environment where they agree to surrender significant levels of control over their own actions to the managerial group (delegates of the employer) within the firm. The legal idea of employment holds that the employer has the 'right to control' the employee.
Around the period when the Robens principles were established, employment was the predominant form of work engagement used inside firms. Further, full-time, permanent and loyalty- and career-based employment was very much the norm. It was only natural that legislative draftspeople crafted OHS legislation and regulation using the language of 'employment'. Hence, OHS legislation almost universally identifies the 'controllers' of worksites by describing them as 'employers' and describes the persons to whom 'employers' owe a 'duty of care' as 'employees'. In order to embrace others who are not employees, legislation generally attempts to describe contractors and others under 'employment deeming'-type language.
This structuring of OHS legislation around employment language has created two flaws which have the potential to limit the full implementation of the Robens principles:
- The 'employment deeming' approach creates potential confusion about the duty of care---its range and to whom it is owed. That is, it can lead to particular types of people being overlooked in legislation. The New South Wales Review discussion paper's lack of clarity over the OHS status of volunteers, for example, is a demonstration of this possible limitation.
- The identification of the 'employer' as the expected person in control of a worksite creates possibilities that other people, who are not employers but who exercise some form of control over a worksite, may escape their duty of care.
- To address and deal with the potential legislative and regulatory holes created by employment language, legislation has tended to add descriptions of classes of people to cover other possibilities, for example, describing contractors as employees. This approach, however, has tended to heap confusion upon confusion rather than creating simplicity and ease of comprehension. These elements of legislative confusion are reflected in education and OHS administration and enforcement policies, procedures, practices and attitudes. It is probable that the confusion and lack of clarity could be a contributing factor to workplace injury. Certainly the lack of clarity would not assist good quality OHS practices.
A 3. A changing society
The recent shift away from employment (and more particularly away from permanent and full-time employment) has further complicated the historical form of OHS legislation. This change in the nature of work is well recognised and was a core issue covered in the Maxwell Review into Victorian OHS laws and in the New South Wales Review's discussion paper.
Employment is on the decline. According to the ABS, only 51 per cent of the workforce are full-time, permanent employees. Twenty-eight per cent of the private-sector workforce are not employees. It would appear that this massive shift in the nature of work away from permanency, full-time engagement and employment is continuing. It represents a challenge to all those levels and sectors of government that regulate labour.
OHS is challenged because the legislative and regulatory holes already in evidence as a result of the dependence on employment language are likely to be enlarged by changes in the way in which work is organised.
There are two possible responses to the changes:
- Demonise the changes. Create legislation, regulation and enforcement practices that attempt to frustrate the changes and try to push businesses and people into traditional (and OHS familiar) employment structures of full-time and permanent engagement. ICA believes that this approach will not improve OHS outcomes and runs a high risk of worsening OHS outcomes.
- Seek to understand the changes. Work with the new forms of work engagement to ensure that any re-crafting of legislation, regulations and OHS practices is aligned with the Robens principles. ICA supports this approach, believing that this offers the best opportunity to further improve OHS outcomes.
B1. General
ICA supports the following quote from the Productivity Commission:
The National Research Centre for Occupational Health and Safety Regulation noted that there is the need of OHS regulators to pay greater attention to work relations outside the traditional employment relationship ... regulators need to develop standards, guidance material, inspection programs and enforcement strategies that accommodate subcontracting, labour hire, home based work and franchise arrangements. (p. 50)
ICA agrees that accommodating the new arrangements is the process most likely to improve OHS outcomes. The starting points are:
- Not to demonise forms of work that are not traditional and to accept changes in work engagement arrangements.
- Ensure terminology in OHS legislation and regulation is not employment-dependent, but written in language aligned to OHS principles, namely, to keep people safe.
- Ensure that all parties who are in work situations or influencing work situations, including government, unions, committees and others, have liability and responsibility apportioned according to their respective roles.
Within this framework, ICA recommends that the following approach should be closely considered:
One possible solution to avoid the complexity of 'deeming' and any associated issues is to abolish the concept of imposing an obligation on an 'employer' and substitute instead the notion of placing an obligation on all 'persons' to ensure the health and safety of the person's workers [more broadly defined] in the conduct of the person's undertaking. (Queensland Department of Industrial Relations, p. 52 Productivity Commission)
A reasonable question arising from all the foregoing is perhaps why each category of person (employee, contractor, employee of contractor etc) needs to be referred to at all when it is intended that all those in the workplace be protected. By specifying each category of person it leaves open the possibility for the creation of other (work) arrangements, which could be entered into in order to avoid the obligation. It seems the most effective course is to protect everyone and provide them with duties to protect themselves and others at the workplace. In that regard the employer might be specified as the co-ordinating agency or principle. (Laing, p 52 Productivity Commission)
B2. International Labour Organisation Definition
In 2003, the ILO came to a Conclusion on definitions of employment/non-employment after struggling with the issue since 1996. The ILO Conclusion states:
The term employee is a legal term which refers to a person who is party to a certain kind of legal relationship which is normally called an employment relationship. The term worker is a broader term that can be applied to any workers, regardless of whether or not she or he is an employee. Employer is used to refer to the natural or legal person for whom an employee performs work or provides services within an employment relationship.... Self-employment and independent work based on commercial and civil contractual arrangements are by definition beyond the scope of the employment relationship.
This precision in definition by the ILO is helpful in indicating the limitations of employment-dependent language in OHS regulation.
B3. Resolving OHS definitional issues
The following quotation from Professor Johnstone in the Maxwell Review discussion paper is also useful:
What the OHS statutes need to do is to recognise expressly modern forms of capital organisation, and modern work relationships ... The OHS statutes, or more particularly regulations made under the statutes need to particularise more clearly the different organisational forms ....
If these suggested reforms are introduced, the general duties can then remain, as a 'catch all' to ensure that new forms of work organisation will be covered as and when they emerge. (Paragraph 251, Maxwell Discussion Paper)
Importantly, Professor Johnstone makes it clear that the 'general duties'---that is, OHS objectives for safe worksites---constitute the 'catch all'.
ICA believes that the conceptual approach offered by Professor Johnstone offers scope for OHS, as does the precise language adopted by the ILO. ICA takes the view that to achieve good legislative and regulatory design, attempts to use 'employment' as the catch-all approach distort and confuse the specific objectives being targeted. Each regulatory environment (for example, OHS, taxation, Workcover) should look to its specific and particular objectives and seek to embrace the new forms of work without prejudice, study each of the forms, and seek to align each form to the specific objectives of the particular regulatory regime involved.
ICA takes the view that the new Victorian OHS Act 2004 largely achieves this objective. ICA believes that the Act, which came into effect on 1 July 2005, successfully accommodates new work environments, enhances the application of the Robens and ILO convention principles, and creates a greater chance of significant improvements in work safety.
B4. The Victorian OHS Act 2004
The key to understanding the Victorian legislation is the way in which it equitably and successfully allocates responsibilities to all persons in the work environment, according to what they 'control' within the bounds of what is 'reasonable and practicable'.
General
20(1) To avoid doubt, a duty is imposed on a person by this Part of the regulations to ensure, so far as is reasonably practicable, health and safety requires a person...
Employers
21(1) An employer must, so far as is reasonably practicable, provide and maintain for employees or the employer a working environment that is safe and without risks to health
21(3)(a) a reference to an employee includes a reference to an independent contractor....
23(1) An employer must ensure, so far as is reasonably practicable, that persons other than employees of the employer are not exposed to risks....
Self-employed
24(1) A self employed person must ensure, so far as is reasonably practicable, that persons are not exposed to risks....
Employees
25(1) While at work an employee must
- take reasonable care for his or her own health and safety; and
- take reasonable care for the health and safety of persons who may be affected by the employees' acts or omissions....
Managers or controllers of worksites
26(1) A person who (whether as an owner or otherwise) has, to any extent, the management or control of a workplace must ensure so far as is reasonably practicable....
Designers of plants
27(1) A person who designs plant who knows, or ought reasonably to know, that the plant is to be used at a workplace must
- ensure, so far as is reasonably practicable, that it is designed to be safe....
The legislation continues to describe obligations of other persons in a similar manner---including designers of buildings or structures, manufacturers and suppliers of plant or substances, and persons installing, erecting or commissioning plant. In each and every instance the penalties imposed are identical and equitable. For example, it imposes up to 1800 penalty units for a natural person for OHS breaches---and this includes employees.
In essence, the Victorian Act:
- Imposes clear obligations on all persons to ensure safe work environments.
- Places the obligations within the framework of what persons can reasonably and practicably control.
- Ensures that the obligations apply in an equitable manner regardless of legal or other status.
ICA commends this approach.
B5. The NSW OHS Act 2000
ICA submits that the NSW OHS Act fails to align the duties of all persons in a work situation to the reality of what they actually, in fact, 'control'. The Act is largely based on an assumption that the theoretical 'control' that employers have over employees under the 'contract of service' (employment) equates to a totality of control for OHS purposes. This is an assumption that is not only false but one which also distorts OHS policy, work cultures and work safe objectives.
Duties under the NSW OHS Act 2000 are described in Part 2:
Employers
8(1) An employer must ensure the health, safety and welfare at work of all the employees of the employer.
That duty extends (without limitation) to the following....
Self-employed
9 A self-employed person must ensure that people ... are not exposed to risks....
Managers or controllers of worksites
10(1) A person who has control of premises used by people as a place of work must ensure that the premises are safe....
Designers of plants
11(1) A person who designs, manufacturers or supplies any plant or substance for use by people must: (a) ensure that the plant or substance is safe....
Employees
20(1) An employee must, while at work, take reasonable care for the health and safety of people ... who may be affected by the employee's acts or omissions at work.
When comparing the Victorian Act with the NSW Act, there is a subtle but importantly significant difference in language. This difference has wide ramifications:
- In NSW, employers, the self-employed, managers, etc must ensure safety.
- In Victoria, employers, self-employed managers, etc must ensure safety, so far as is reasonably practicable.
The language of the NSW legislation imposes a totality of responsibility in a god-like manner on employers, the self-employed, managers and so on to ensure safety. NSW imposes legislative responsibility on these persons in ways that are beyond what is humanly possible. In this respect, NSW breaches the Robens principles and ILO Convention 155.
Defenders of the NSW approach argue that the concepts of 'reasonable and practicable' apply to employers, the self-employed, managers and so on, as defences that an accused person can mount when prosecuted for an OHS breach. However, this is not consistent with the NSW approach to employees.
- In NSW, employees must take reasonable care.
- In Victoria, employees must take care so far as is reasonably practicable.
NSW applies the Robens principles to employees in a different manner from employers and others. This inequitable allocation of OHS responsibility and liability in NSW is a distortion of the Robens principles rather than an application of them. And it is a distorted and inequitable allocation of responsibility and liability which is further demonstrated in the differences in penalties.
- NSW employers, the self-employed, managers, etc., face penalties of up to 750 units and/or imprisonment.
- NSW employees face penalties only up to 45 units and no imprisonment.
(NB: This does not refer to the Deaths Act 2005)
This clear distortion of work safety principles must lead to unsafe work cultures in which the avoidance of accountability is encouraged and the transfer of blame occurs.
ICA does not believe that this has been done intentionally---rather it reflects the historical approach to the drafting of OHS legislation (as mentioned earlier).
This NSW Review of OHS laws creates an opportunity to remove distortions and enhance and improve work safety objectives in NSW.
That the Review investigate the use of legislative language and structures that align the obligations and responsibilities of all parties in a work environment to the Robens principles and ILO Convention 155. ICA believes that this can be achieved---as has largely been demonstrated in the Victorian OHS Act 2004.
Question One
Comment is sought on whether the policy objectives of the OHS Act 2000 remain valid.
The policy objectives to achieve safe work environments for all persons are valid and necessary.
Question Two
Do the objectives omit any important principles?
The objectives fail properly to apply the important and necessary principles which allocate responsibility and liability according to what people actually control, constrained by what is reasonable and practicable. This has led to the distortions of the objectives.
Question Three
Comment is sought on any issues in regard to the scope of the general duties.
The scope of the general duties (Part 2) fails to apply the duties in an equitable manner consistent with what persons actually control, measured by what is reasonable and practicable.
Question Four
Are the general duties appropriate for securing the objective of the OHS Act 2000?
No. The misalignment of duties between employers (managers and directors), self-employed persons (independent contractors), controllers of sites on the one hand, and employees on the other, creates significant distortions to the application of OHS laws 'on the ground'. This contributes to, and can possibly even be a cause of, unsafe work cultures and practices.
Question Five
Comment is sought on the current legislative provisions in relation to outsourcing or contract work.
Outsourcing and contract work fall within the generic ambit of self-employment/independent contracting because the distinguishing feature is the presence of a commercial contract which drives the relationships, as opposed to the employment contract. Outsourcing and contract work are legitimate forms of work arrangement that should appropriately fall within the ambit of OHS laws. In other words, no-one should escape or avoid their OHS responsibilities simply because of the existence of a commercial contract. However, responsibilities and liabilities of persons under outsourced or contract work should be consistent with the Robens principles. In short, people should to be held responsible and liable for what they control within the framework of what is reasonable and practicable.
Question Six
Comment is sought on the issues associated with the defences in the OHS Act.
The current defences under the 2000 Act create a distortion of the Robens principles. The distortion is created because the Act applies a god-like requirement for safety (an employer etc must provide a safe work site) and only applies the Robens principles of 'control' within what is 'reasonable and practicable' as a defence. The defence of 'reasonable and practicable' directly conflicts with the legislative requirement of 'must'. The legislation creates a classic 'catch 22' for the courts and for defendants which results in confusion and high levels of complexity. Worse, it can leave the community distrustful of OHS laws and their application. There is evidence of this distrust emerging in NSW---something which can only be bad for work safety.
Question Seven
Comment is sought on the issues in relation to the obligation for the controllers of premises.
Controllers of premises should be held responsible and liable within the context of the Robens principles. The comments already outlined in our responses to questions 1 to 6 apply equally to controllers of premises where presumptions of control exist that may not reflect reality. The outcome is distortions and omissions in the allocation of responsibilities.
For example, a significant omission in the 2000 OHS legislation and the Review discussion paper is the question of the liability and responsibility of unions for the control that they exercise on worksites. This is a surprise. Unions exercise considerable, significant and sometimes near-dominant control of some worksites, yet are not, it appears, currently held liable or responsible (nor are they likely to be made liable or responsible) for the level of control they may demonstrably exercise.
Unions exercise their formal control of worksites by being delegated instruments of industrial relations legislation. Unions can exercise considerable informal control over worksites through their relationships with employees and managers of worksites. Unions rarely have common-law contracts with parties to a worksite, but are normally formal parties to industrial instruments. Through their formal involvement over awards and enterprise agreements, through their positions on OHS committees and through their informal powers, unions can and do exercise considerable power of veto over managers' actions and options for actions. In effect, unions frequently assume a level of quasi-managerial control.
Normally, unions can be said to exercise a positive control over OHS, but this should not be presumed within OHS policy discussions, parameters, legislation or systems. The fact is that unions exercise control and this should be recognised and encompassed within OHS legislation and, as with all other parties who exercise control, unions and union officials should be accountable and liable for actions commensurate with the level of control they exercise.
To exclude unions from the OHS accountability umbrella is to create OHS inconsistency and is likely to diminish the objective of achieving safer worksites.
Question Ten
Comment is sought in regard to issues arising from the provisions, principles and defences (section 26) for directors and managers.
Both the discussion paper and the 2000 OHS legislation focus on the assumption that 'employers' exercise total control of worksites. Further, there is an excessive focus on assuming that employer control is exercised through directors and managers of 'corporations'. This is an assumption which does not accord with the realities of human behaviour in organisations. This leads to distortion of OHS objectives.
First, corporations are only one form of human organisation. OHS legislation should clearly embrace all forms of human organisation where work is done. Second, managers and directors may exercise significant and important control, but this is never total and is often and regularly subverted by factors beyond their control.
'Employers' are better thought of as being a 'business' (considered in the broad sense of an entity undertaking an activity). For OHS purposes, in most businesses, control is exercised by delegated employees acting as 'managers'. This particularly applies in large public and private corporations, and in the public service.
OHS considerations tend to be historically bedded in the concepts of industrial organisation. It is cultural preconditioning to assume that the managers of capital control the worksite and, as a consequence, that 'management' is assumed guilty until proven innocent for workplace accidents. But work activity is no longer exclusively structured along the simple lines of industrial organisation. Often capital and labour are the same. Many different forms of legislation have diminished the authority and control of management. Changed and changing social and moral expectations create more complex human interplay in organisations than was the case 50 years ago.
OHS legislation and systems need to recognise that organisational control is now complex, multi-faceted and is exercised by persons both within and external to the organisation.
Question Eleven
Comment is sought regarding the Panel's 2004 recommendation of a code for directors and managers and, if a code is supported, what form and status such a code should have.
Given the comments under Question Ten, a code for directors and managers does not seem realistically achievable and may create additional confusion. The approach to codes in Victoria is to develop instruments that are industry- and activity-specific, describing practical things that need to occur in practical situations. NSW has developed or is developing similar codes. Directors and managers then have obligations to achieve these practical outcomes. This seems a sensible approach that should lead to greater clarity in identifying the practical things that need to occur to improve safe work environments.
Question Twelve
Comment is sought on issues relating to the responsibilities and rights of employees and other persons under the OHS Act 2000.
At common law, employers are vicariously liable for their employees. Because of this, there has tended to be a policy drift under OHS in terms of accountability: although employees have, in theory, been accountable for those of their actions that lead to accidents, in practice that accountability has been significantly and systemically ignored. By comparison, independent contractors are fully accountable for their actions both de jure and de facto. ICA believes that, as a consequence, the law creates an environment in which employees may be less likely to behave in a safe manner at work than are independent contractors.
The parallel with car driving is strong. Driving laws do not assume any difference in responsibility for driver actions because of a driver's legal status. Holding all drivers responsible is considered important for achieving safer roads. The Victorian legislation has an emphasis on considering 'worker responsibility', making this akin to 'driver responsibility'. ICA is concerned that, in looking to a generic definition (worker), the responsibilities apportioned to workers for their actions should parallel those of independent contractors---that is, that people are held genuinely accountable and liable for their actions.
The idea of transference of responsibility and liability---because of the vicarious liability of employers for employees' actions---is not consistent with the objective of safe work practices.
Question Fourteen
Comment is sought on issues in relation to the penalty provisions.
The 2000 OHS Act applies penalties inequitably, thereby sending conflicting signals about responsibility to employees in comparison to others. This could create the situation where employees believe that they have lesser responsibility to behave safely than do others. This must create unsafe work cultures. Penalties should be aligned so that all persons are allocated equal levels of penalties if they breach OHS laws.
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