Breach of Director liability results in prison term
We often hear about Director liability and for most Directors it is an abstract concept that we think will never impact us. The greatest risk has historically been attached to those Directors in high risk (physical injury) industries where breaches of workplace health and safety obligations are more likely to have catastrophic outcomes. However, this is not always the case and all Directors need to be aware of their obligations and ensure risk management is a key feature of their management across all aspects of the business, and particularly workplace health and safety. Workplace health and safety is not merely about physical injury risk, increasingly the focus is on the risks leading to psychological injury.
On 7 February 2019 the Maroochydore District Court found Director Gary Lavin, and his company Multi-Run Roofing, guilty of reckless conduct. The tragic circumstances which brought the matter before the Courts was the death of an employee who fell 6 metres from a roof. The worker died of his injuries. The Judge stated that although Mr Lavin was not “legally responsible” for the employee’s death, his “flagrant disregard” for safety measures exposed him to risk.
Mr Lavin was sentenced to 12 months in prison (to be suspended after 4 months) and the company was fined $1 million. A fine of this magnitude would not be sustainable for most small and many medium sized businesses.
Director liability is real, and it is not restricted to workplace health and safety. However, workplace health and safety is a growing risk area for all businesses with particular focus being placed on the psychological health of employees. In the above case, the Court stated that a safety rail would have “likely be effective”. Employers have the same obligation to provide a metaphorical ‘safety rail’ to prevent psychological injury in the workplace and potentially face similar penalties if they fail.
To learn more about psychological risks in the workplace and strategies to minimise risk, attend the upcoming training course on mental health in the workplace http://providencehr.com.au/mental-health-in-the-workplace/ or contact us on email@example.com or 3218 3919.