03 Feb 2014

The challenges of the work health and safety legislation - principal contractors

by Dr Graham Smith, Joanne Teagle

Rather than harmonise laws, a better approach might be for states to refer their relevant legislative powers over work health and safety to the Commonwealth.

It is now just over two years since the Work Health and Safety Act 2011 (Cth) (Commonwealth WHS Act) and the Work Health and Safety Regulations 2011 (Cth) (WHS Regulations) (collectively, Commonwealth WHS Legislation) commenced operation. We discuss below some challenges that have been encountered by the authors regarding the interpretation and implementation of the Commonwealth WHS Legislation provisions — in particular, those concerning:

  • principal contractors;
  • the obligations of the Commonwealth as a person conducting a business or undertaking (PCBU); and
  • issues of interpretation and implementation of the new legislative scheme.

WHS legislation: not so harmonised

In July 2008, the Council of Australian Governments committed to the national harmonisation of occupational health and safety (OHS) legislation across Australian jurisdictions. To date, in addition to the Commonwealth WHS Legislation, largely mirror legislation has been enacted in Queensland, New South Wales, South Australia, Tasmania, the Northern Territory and the Australian Capital Territory (State WHS Legislation). However, Victoria and Western Australia have retained their traditional legislation regarding OHS (OHS Legislation). Each of the jurisdictions has also retained its respective work health and safety (WHS) regulators — for example, Work Cover in New South Wales. Comcare remains the regulator under the Commonwealth WHS Legislation. Also, not all the harmonised states have rigorously adopted the model Act and regulations.

The lack of true harmonisation of WHS legislation presents a number of challenges when PCBUs operating across multiple jurisdictions seek to engage or appoint (in the case of Victoria) a principal contractor. Further challenges are presented when the PCBU in question is the Commonwealth, and the question of jurisdictional application of State WHS Legislation or OHS Legislation arises when project works are undertaken on Commonwealth land. We discuss these challenges below, in the section entitled “Jurisdictional challenges: Commonwealth Places (Application of Laws) Act”, and we also explore the particular jurisdictional challenges and uncertainties that are encountered in interpreting and implementing the principal contractor provisions in the Commonwealth WHS Legislation, State WHS Legislation and OHS Legislation.

WHS legislation (and OHS Legislation) and principal contractors

Under the Commonwealth WHS Legislation, where the Commonwealth commissions a construction project, the Commonwealth will be the principal contractor under the WHS legislation for the purposes of that construction project, unless the Commonwealth engages another person (ie, the contractor) as the principal contractor.

What is a construction project and what is a structure?

The WHS Regulations contain a broad definition of “construction project” that includes activities that traditionally may not be considered to constitute a construction project. Importantly, under the WHS Regulations, a construction project is any contract that includes construction work valued at $250,000 or more, and construction work is defined to include work carried out in connection with the construction, alteration, conversion, fitting-out, commissioning, renovation, repair, maintenance, refurbishment, and demolition, decommissioning or dismantling of a structure.

The term “structure” is also defined in the WHS Regulations and, relevantly for the Commonwealth, specifically includes a ship and a submarine.[1] The expansion of the definition of structure to include ships and submarines[2] has caused considerable difficulty in applying the principal contractor provisions in the Commonwealth WHS Legislation to circumstances that do not naturally lend themselves to “management or control” of a workplace. The reason for this is twofold:

  • because ships or submarines are generally subject to the control of a captain; and
  • because the nature of the structure itself often means that multiple contractors are at work in the relevant workplace (whether because of a shared facility or because multiple contractors are working concurrently in the relevant workplace at the structure).[3]

The WHS Regulations only allow one principal contractor for a construction project at any given time. Accordingly, either the contractor or the Commonwealth (but not both) must be the principal contractor with respect to construction work the subject of a Commonwealth construction project.

Principal contractor duties and obligations

The duties of a principal contractor generally concern the management and coordination of activities concerning health and safety at a particular workplace. In addition to complying with the general duties concerning working environments and management or control of a workplace, a principal contractor must, with respect to the relevant construction project:

  • display signage showing its name and contact details;
  • prepare and review a written WHS management plan (WHSMP) in relation to the work;
  • inform all persons carrying out construction work of the WHSMP;
  • obtain copies of, and review, safe work method statements (SWMSs) for any construction work that is designated as high risk under the WHS Regulations;
  • manage risks related to:
     
    • storage, movement and disposal of materials and waste;
    • storage of plant not in use;
    • traffic in the vicinity of the workplace; and
    • essential services;
  • ensure that general construction induction training is provided for workers who carry out construction work.

What does the engagement/appointment of a principal contractor mean for a PCBU?

Where the contractor is engaged (or, in the case of Victoria, appointed) as the principal contractor, the contractor will have management or control of the workplace necessary to coordinate work performed at the workplace (including work performed by any sub-contractors) to ensure that WHS matters are managed at the workplace.

It is important to understand that engaging the contractor as the principal contractor for a construction project under a contract does not absolve a PCBU (including the Commonwealth) from responsibility for meeting a range of WHS duties and obligations. The Commonwealth will continue to have the “standard” obligations and duties under the Commonwealth WHS Legislation in respect of construction (and any other) work to the extent that it can influence and control how that work is performed, and to the extent that it has management or control of the relevant workplace (shared with the principal contractor).[4] In the case of the Commonwealth, shared duties often concern access to a workplace (security).

Further, when a PCBU, including the Commonwealth, commissions construction work, the PCBU must provide to the principal contractor information that it holds in relation to hazards and risks at, or in the vicinity of, the workplace where construction work will be carried out.[5]

Principal contractor provisions in OHS Legislation

In addition to the principal contractor provisions in the Commonwealth WHS Legislation, there are also principal contractor provisions in the Victorian OHS Legislation. These provisions largely mirror those in the Commonwealth WHS Legislation, save that the “owner” of the land the subject of the relevant construction project is the party charged with “appointing” (rather than “engaging”) a principal contractor.[6]

In Western Australia, the OHS Legislation provides for a “main contractor”. The main contractor’s obligations are not dissimilar to those of a principal contractor. Importantly, the definition of main contractor in reg 1.3 of the Occupational Safety and Health Regulations 1996 (WA) acts as a deeming provision. If the person for whose direct benefit all the work done at a construction site exists upon its completion engages another person to carry out construction work at a construction site, that person is the main contractor. Furthermore, the Western Australian OHS Legislation uses the terminology “construction site”, not “workplace”, to delineate the area of which the main contractor is said to have control.[7] Consequently, the goal of harmonisation has not been achieved when a construction project is a national project and a principal contractor is to be engaged/ appointed, or if it is not practically possible (for the reasons referred to above) to appoint only one contractor as principal contractor for that project.

Jurisdictional challenges: Commonwealth Places (Application of Laws) Act

It is not in dispute that the Commonwealth as a PCBU will be wholly governed by the Commonwealth WHS Legislation and that Comcare will have jurisdiction in relation to the Commonwealth (and its workers).

In relation to the Commonwealth, there is no capacity for a state or territory WHS law to apply to it, because section 12(3) of the Commonwealth WHS Act provides that:

(3) A corresponding WHS law does not apply in relation to the Commonwealth or a public authority.

It should be noted in this context that the term “corresponding WHS law” is defined under the Commonwealth WHS Act (in section 4) as each of the harmonised WHS Acts of the states and the territories and any other law of a state or territory prescribed by the Regulations. The Regulations have prescribed non-harmonised state OHS laws (ie. OHS laws in Victoria and Western Australia) as being “corresponding WHS laws”.

Commonwealth Places (Application of Laws) Act 1970

Large areas in Australia are Commonwealth land or Commonwealth property. Of relevance to the question of jurisdictional operation of State WHS Legislation is the Commonwealth Places (Application of Laws)Act 1970 (Cth) (CP Act). The CP Act has the effect, subject to certain constitutional and statutory limitations, of applying a state law at a Commonwealth place as a law of the Commonwealth. The CP Act does this because the High Court held that state laws cannot have application on or at Commonwealth places.[8] In simple terms, the CP Act picks up and applies the relevant state law as a mirror Commonwealth law applicable on or at the Commonwealth place. The CP Act has no operation in respect of the Australian Capital Territory or the Northern Territory because territory laws apply according to their terms at Commonwealth places in a territory.

Given the discussion above concerning the CP Act, the question arises as to what law applies to a contractor (including a principal contractor) carrying out work at or on a Commonwealth place in a state (such as a Defence base) where the contractor is not a non-Commonwealth licensee (these licensees are governed by the Commonwealth WHS Legislation).[9] Because there is no provision of the Commonwealth WHS Act which applies that Act to a principal contractor, it appears that ordinarily the relevant state law would apply (as picked up and applied as a Commonwealth law under the CP Act).

Application of Commonwealth and state WHS legislation to contractors (and workers)

The fact that the work is carried out at or on a Commonwealth place means that, by virtue of the CP Act, the state law will apply as a Commonwealth law but in the same terms. The contractor will therefore be bound by that law. So, for example, at a Defence base in Victoria, a contractor appointed as a principal contractor would be bound by the Occupational Health and Safety Act 2004 (Vic), which applies as a Commonwealth law rather than as a state law by virtue of the CP Act. There is a somewhat contrary possibility that turns on the meaning of section 12(1)(e) of the Commonwealth WHS Act. That subsection provides: 

(1) This Act applies to each of the following:

(e) if work is carried out by a worker at a place (as defined for the purposes of section 8 [ie, a “workplace” as defined]) for a business or undertaking conducted by the Commonwealth or a public authority — that place;    

It is possible to interpret section 12(1)(e) as meaning that if even only one worker who is engaged by a contractor to the Commonwealth (including a principal contractor) carries out work at a place for the Commonwealth, then the Commonwealth WHS Act applies to the contractor in respect of all work carried out at that place.[10] In other words, the Commonwealth WHS Act and not the state OHS or WHS Act will apply.

Applying this potential argument to a practical example shows how unlikely the interpretation is. Take, for example, a hanger at a Defence airforce base where a contractor has a licence with the Commonwealth to use the hangar to carry out largely private commercial aircraft maintenance activities. Suppose that occasionally the Commonwealth contracts with the contractor to carry out maintenance work on a Defence aircraft in the hangar. The interpretation under discussion would have the result that the contractor would be bound by the Commonwealth WHS Act in respect of all the work that it carries out in the hangar.

A more absurd example is where a lawyer in a private law firm carries out work for the Commonwealth (the provision of legal advice) in the premises of the law firm in a city office building in Melbourne. Assume that, for the purposes of section 8 of the Commonwealth WHS Act, the workplace consists of all the floors of the building occupied by the law firm. On the interpretation under discussion, the law firm would be bound by the Commonwealth WHS Act in respect of the whole of that workplace.

The better view is that section 12(1)(e) merely means that where a worker is governed by the Commonwealth WHS Act by virtue of section 12(1)(c) and (d) (which state that the Commonwealth WHS Act applies to a worker who carries out (or is taken to carry out) work for a business or undertaking conducted by the Commonwealth), then the Commonwealth WHS Act applies to that worker at the place where they work.

Commonwealth Places (Application of Laws) Act and a corresponding WHS law

Further jurisdictional complexities arise from section 12(9) of the Commonwealth WHS Act, which provides:

(9) Both this Act and a corresponding WHS law may apply in relation to a worker or a workplace.

The legislative policy intent of this provision appears to be that no inconsistency of laws will arise (in the sense of section 109 of the Constitution) in respect of a “worker” where the Commonwealth and state or territory WHS or OHS laws are capable of applying. The apparent assumption behind the provision is that there is complete harmonisation, in which case the text of the laws applying to the “worker” would be identical. However, section 12(9) appears to have no application when state WHS or OHS legislation is applied as Commonwealth legislation via the CP Act. This is because the state WHS or OHS legislation is not a “corresponding WHS law” referenced or contemplated in reg 6A of the WHS Regulations. In the repealed Occupational Health and Safety Act 1991 (Cth), section 4(4) specifically noted:

"In this section, a reference to laws of a State or Territory includes a reference to such laws as they have effect as applied provisions within the meaning of the Commonwealth Places (Application of Laws) Act 1970."

No such reference to the CP Act exists in the Commonwealth WHS Legislation and, consequently, a worker engaged by a Commonwealth contractor on Commonwealth land would only be bound by the Commonwealth WHS Legislation.

Jurisdiction of regulators

As to which regulator has jurisdiction to inspect/ prosecute a contractor (including a principal contractor), we think the better view is that the state regulator will have jurisdiction in relation to the contractor (and its workers) while the contractor is engaged to carry out work at a Commonwealth place (irrespective of our conclusions above).

The CP Act appears to give the state regulator all of its normal statutory powers, notwithstanding that the Act is a Commonwealth Act (we refer in particular here to section 4(12) and (14) of the CP Act). Also, the CP Act gives state courts jurisdiction in relation to Commonwealth Acts that have force as Commonwealth laws under the CP Act (see section 7 and note also that section 12 of the CP Act applies in the relevant state procedures). This is subject to whether there is anything in the relevant state WHS legislation that might inhibit the power of a state regulator or state court in relation to any Commonwealth law that applies as such by virtue of the CP Act.

Conclusion

The issues canvassed above show that harmonisation of laws, in this context WHS and OHS laws, is an imperfect legislative policy model in a federal system and under the Australian Constitution. Perhaps a better approach is for states to refer their relevant legislative powers so that the Commonwealth can enact a uniform national law, which is the model that has largely been applied under the Fair Work Act.

This article was first published in the Employment Law Bulletin, Vol 20, No 1, February 2014

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[1] See reg 290(2) of the WHS Regulations, which suggests that a ship or submarine is plant, but for the examples provided in reg 290(1) specifically referencing a ship or submarine. [back]

[2] Although repealed legislation in some jurisdictions did extend the definition of structure to submarines and ships. [back]

[3] These circumstances may mean that the Commonwealth must remain the principal contractor if management or control cannot be provided to a principal contractor or separate workplaces cannot be delineated for multiple construction projects. [back]

[4] Under repealed OHS legislation that had principal contractor obligations, there was a pervasive (although incorrect) view that the “principal” of a construction project had no duties or obligations concerning safety at a construction site if it appointed a principal contractor. [back]

[5] See reg 296 of the WHS Regulations. [back]

[6] See Pt 5.1 Subdiv 2 of the Occupational Health and Safety Regulations 2007 (Vic). [back]

[7] See reg 1.6 of the Occupational Safety and Health Regulations 1996 (WA). [back]

[8] Worthing v Rowell & Muston Pty Ltd (1970) 123 CLR 89; 22 LGRA 417; 44 ALJR 230. [back]

[9] See the Safety, Rehabilitation and Compensation Act 1988 (Cth). [back]

[10 ]This is the position put by Comcare in its draft guidance document entitled Contractor Engagement in the Commonwealth. [back] 

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.