The role of a director is becoming increasingly difficult and onerous. There is a tension between allowing management to address and deal with the operations of the business and the legal obligations imposed on directors which require that they sometimes delve deep into operational matters. This can cause conflict with management but also with the director who may perceive their best contribution differently.
The obligations of directors when it comes to safety are well known but those associated with the engagement of a workforce for the business are not so well known but increasingly the focus of regulators.
This articles looks at some of the key areas that boards need to focus on including through recent changes to the Fair Work Act 2009 (FW Act) by means of the Fair Work Amendment (Protecting Vulnerable Workers) Act 2017.
The uniform safety legislation now introduced in most states and territories contains a useful framework for directors to follow when it comes to safety governance. It can also be applied to other areas of workplace governance.
Under this legislation directors have a duty to ensure a corporation complies with its obligations. The standard of this duty is to exercise due diligence. In turn, for example, s 27(5) of the Work Health and Safety Act 2011(NSW) provides a definition of due diligence which contains six key elements and requires taking reasonable steps to:
- acquire and keep up-to-date knowledge of work, health and safety matters
- gain an understanding of the nature of the operations of the business and generally of the hazards and risks associated with those operations
- ensure that there are available for use, and used, appropriate resources and processes to eliminate or minimise risk to health and safety
- ensure there are processes for receiving and considering information regarding incidents, hazards and risk and responding in a timely way to that information
- ensure that there is, and its implemented, processes for complying with any duty or obligation under this Act
- verify the provision and use of the resources and processes referred to in points 3–5.
This definition of due diligence provides a guide for the approach and systems that a board needs to adopt in relation to safety. It is also a helpful guide when dealing with broader governance issues in the workplace area.