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Insolvency Practitioners - positive duties of due diligence for occupational health and safety upon appointment as receivers, managers and liquidators

With new harmonised work health and safety laws (WHS laws) now in force across five jurisdictions (Cwlth, ACT, NSW, NT and QLD) and the expectation that the remaining four jurisdictions (SA, TAS, VIC and WA) will adopt the model WHS laws starting from 1 January 2013, insolvency practitioners are reminded that receivers, receiver managers, administrators and liquidators are captured by the WHS laws’ officer provisions. 

Insolvency practitioners become officers upon appointment as receivers, managers and liquidators

The model WHS laws incorporate the meaning of ‘officer’ as it is defined in section 9 of the Corporations Act 2001 (Cwlth).  The Corporations Act definition of ‘officer’ in turn includes "a receiver, or receiver manager, of the property of [a] corporation", and "an administrator of the corporation".  It also includes "an administrator of a deed of company arrangement executed by [a] corporation", and "a liquidator of [a] corporation".

Duties imposed on officers for OHS

When an insolvency practitioner is appointed, the officer provisions of the model WHS laws are activated.  Under the WHS laws, if a person conducting a business or undertaking (PCBU) has a duty or obligation under the WHS laws, an officer of the PCBU must exercise due diligence to ensure that the PCBU complies with that duty or obligation.

The term ‘person conducting a business or undertaking’ or PCBU replaces the term ‘employer’ utilised in pre-reform health and safety legislation and captures natural persons, corporations, joint venture partners and partnerships.  Accordingly, on appointment, to almost any entity that operates in Australia, insolvency practitioners attract duties to exercise due diligence in relation to health and safety.

What do the duties of due diligence require officers to do?

For officers, due diligence under the model WHS laws includes taking reasonable steps:

  • to acquire and keep up-to-date knowledge of work health and safety matters;
  • to gain an understanding of the nature of the operations of the business or undertaking of the PCBU and generally of the hazards and risks associated with those operations;
  • to ensure that the PCBU has available for use, and uses, appropriate resources and processes to eliminate or minimise risks to health and safety from work carried out as part of the conduct of the business or undertaking;
  • to ensure that the PCBU has appropriate processes for receiving and considering information regarding incidents, hazards and risks and responding in a timely way to that information;
  • to ensure that the PCBU has, and implements, processes for complying with any duty or obligation of the PCBU under the WHS laws; and
  • to verify the provision and use of the resources and processes referred to above.

What should insolvency practitioners do in response to these due diligence obligations?

The new WHS due diligence requirements impose significant positive obligations on officers.  Receivers, administrators and the like should be particularly focused on these obligations because they aren’t typically familiar with the activities or machinations of the businesses they are appointed to.  Adding to the burden is the fact that it is often difficult for businesses struggling financially to maintain necessary standards - the flow on effect being degradation in key business areas including health and safety. 

Insolvency practitioners operating in jurisdictions which have adopted the WHS laws should take positive steps to:

  • stay up to speed with general work health and safety matters;
  • consider attending training courses conducted by legally qualified OHS practitioners on the due diligence obligations;
  • familiarise themselves with relevant Codes of Practice, both general and specific to the business to which they are appointed;
  • make an assessment of the work health and safety situation upon being appointed to a PCBU and then act to address any issues flowing from that assessment; and
  • develop tools that they can use when appointed to demonstrate that they are meeting their duties of due diligence.

Insolvency practitioners who are in jurisdictions that are yet to nationalise should also be taking similar steps in order to prepare for when the laws are introduced in their jurisdiction. 

For a more detailed analysis of where each jurisdiction currently stands on introducing the harmonised laws, refer to our recent ‘state of play’ alert.

For an overview of other key changes that will flow from nationalisation, refer to our earlier alerts in relation to the WHS laws’ implications for directors and for the mining industry and to our soon to be released Directions 2012 report. 

For further information we welcome you to contact our OHS team.

​Who does this affect?

Insolvency practitioners, particularly, receivers, administrators, receiver managers and liquidators.

​What do you need to do?

You should be taking positive steps to ensure that you will be compliant upon appointment including, but not limited to, attending training about compliance with the duties and developing tools and acquiring manuals and the like to assist in demonstrating compliance.

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