Can You Insure Against WHS Penalties?

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Can You Insure Against WHS Penalties?

02/09/2013

A recent court case raised the issue - Can you insure against workplace safety penalties?

The South Australian case related to a serious accident that occurred in July 2010, and therefore the charges were laid under the now repealed Occupational Health, Safety and Welfare Act 1986 (SA).

This case accepted that the director, who was found guilty of breaches against the 1986 Act, was legally entitled to have directors liability insurance, but in calling upon the insurer to pay his WHS fine was clear evidence of his “immoral efforts to avoid the legal consequences of his criminal behaviour” (our emphasis). The court therefore did not offer any discount on the fine for early guilty pleas or contrition.

The court imposed a fine of $200,000 on the company and a fine of $20,000 for the director.

Note: No insurance, even where available, can indemnify a person against a custodial sentence, if such a serious penalty is imposed by a court.

Harmonised WHS Prohibit Contracting Out

The new harmonised WHS Act which now operates in every Australian jurisdiction, except WA and Victoria, prohibit contracting out or transferring duties under the Act.

Section 272 is yet to be tested in court, but is reasonably assumed to have the intent to prohibit insurance against WHS penalties, and even if a person was insured for WHS penalties the section makes the contract void and therefore unenforceable.

Note: The Victorian OHS Act is silent on this matter, so you should seek professional legal advice if concerned.

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