Insurance Banned for WHS Fines

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The Work Health and Safety Amendment (Review) Bill 2020 (NSW) passed through the NSW Upper House on 4th June 2020 and was assented to (became law) on 10th June 2020. This Bill introduced a raft of new amendments to the Work Health and Safety Act 2011 (NSW) (WHS Act) and Work Health and Safety Regulation 2017 (NSW).

One particularly significant change for business owners is the inclusion of a new offense for entering into, providing, or benefiting from either insurance or any other indemnity arrangements in relation to the payment of a penalty or fine incurred under the Act.

Ultimately this means you can no longer purchase an insurance policy to cover fines arising from a WHS prosecution.

The changes go further to make it an offense as an officer of the company to aid, abet, counsel, induce or commission insurance or any other indemnity arrangements to cover penalties under the Act, this may capture those indirectly involved in the establishment of these arrangements.

Insurance policies can still be purchased to provide cover for legal and other defense costs.

Some other changes introduced by the bill included the broadening of a Category 1 offense under the Act including “gross negligence” as a fault element. This captures more parties in business to create a stronger incentive for duty holders to manage their Workplace Health and Safety risks. You can review all the changes in the legislation here.

We would encourage you to seek advice on the appropriateness of your insurance arrangements.

Ultimately, your best defense will be a proactive approach to safety.  To take your safety from reactive to proactive, contact us here.