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Safeguard OSH Solutions - Thomson Reuters

Safeguard OSH Solutions - Thomson Reuters

Safeguard Magazine

The true cost of accidents

JACKIE BROWN-HAYSOM talks to Kensington Swan partner Grant Nicholson about what happens after an accident, and how any penalty imposed by the court is just one element in the associated costs – both financial and human.

What are some of the non-financial costs?

There are a lot of financial costs associated with accidents, but the non-financial costs can be even more significant.

I’ve had clients give up profitable contracts or abandon particular types of work after a significant accident, and if you start thinking about things like recruitment, staff retention, loyalty, and culture, there are negative impacts on all those as well.

In organisations with a poor culture there’s often a lot of blame and shifting of responsibilities, and as a result individuals can end up leaving the business because of the stress and pressure that builds up.

What happens within an organisation immediately after an incident?

There’s a lot of uncertainty and lack of knowledge – you’ve got people without complete information who are trying to understand what’s happened so they can support staff, and report to senior managers. They also need to interact with emergency services, and with the families of the injured.

In a big incident they’ll have to deal with media as well – and think about things like brand issues for the organisation.

A lot of personnel are involved, and often managers have to put their own feelings aside so they can look after those around them.

From a financial perspective it means an enormous amount of lost productivity. But more than that, people who have been associated with major incidents are often personally affected – even if they weren’t directly involved – because it happened on their watch. People really take that to heart.

Does WorkSafe always turn up at an accident scene?

WorkSafe adopts a triage approach, which means they’re likely to go to anything involving really serious injury or fatality, or priority sectors like construction, forestry, fisheries, and manufacturing. The police also attend fatal accidents, to investigate on behalf of the coroner.

Whether or not WorkSafe decides a site visit is required, the obligation is to freeze the scene immediately after the accident to preserve the site until an inspector releases it.

Generally an inspector will arrive the same day, or next morning at the latest, but if freezing the scene overnight is a problem, you could say: “How about I take photos of everything as it is, so we can get on with our work?” It will depend on the nature of the incident but, in my experience, WorkSafe will often agree.

How much time will the inspector spend on site?

On the first day it will often be only a couple of hours. They want to see where things are and get a sense of what goes on, and won’t necessarily want to formally interview people at that stage. However they will want to ask questions and make notes.

Over time, however, dealing with WorkSafe can be a massive time commitment. Even for a straightforward incident they could turn up four, five or six times, to do site inspections and talk to people.

They normally try to be flexible and accommodate business operations – I’ve even had an inspector volunteer to call after hours – but they prefer to do interviews at the WorkSafe office rather than on site, which means more lost time.

Although WorkSafe can’t compel you to talk, my view is you’re better to cooperate. There’s a range of offences for obstructing an inspector, and the short term gain from not answering a question will be outweighed in the longer term if you go on the list of people who WorkSafe keep a closer eye on because they can’t trust you to do the right thing.

What other powers does WorkSafe have?

They can make a multitude of requests for documents and business information – and you are required to provide it. WorkSafe is entitled to call for any documents that relate to work, the workplace and the workers who work there – which covers pretty well everything.

Typically they’ll ask for employment contracts and wage records to prove that A works for B, and was at work at the time of the incident, but also for things like training records, standard operating procedures and risk assessments.

They’ve even been known to say: “Give us all your documentation about every incident involving this piece of equipment in the last five years”, which means you have to locate and go through hundreds of records, most of which will have no connection to the accident.

In some cases WorkSafe will also take away pieces of plant as part of the investigation – and you might not get them back for months.

If they take your only truck, or loader, or whatever, it can cause a lot of problems, but you won’t get compensation. If you can’t access a replacement, you just don’t get to do the work.

Will WorkSafe want to talk to board members?

I haven’t seen it happen yet but I’m anticipating it – and that opens up an entirely separate line of enquiry. The investigative work to decide how this person’s hand went into that machine is quite separate from the enquiries that will be made of the officers regarding what they’ve done, in a due diligence sense, to satisfy their personal obligation to oversee the affairs of this company.

What should a prudent employer be doing during the WorkSafe investigation?

You should be doing your own internal investigation, trying to ascertain what went wrong, why it happened, and what can be done to stop it happening again.

Businesses are sometimes a bit nervous about this because they think that if they tell WorkSafe they’ve decided to put a bigger guard on a machine, then they’ve provided the regulator with a practicable step that hadn’t been taken. But their strongest obligation must always be to stop anyone else getting hurt.

Internal investigations often run in parallel with WorkSafe’s. If you have a complicated incident where it’s taking you a while to work out what’s happened, it can be difficult to have WorkSafe asking questions before you’ve reached your own conclusions.

I did a prosecution last year where WorkSafe took away the piece of plant that was central to what had occurred. We wanted to test it to determine whether it caused the accident, but we couldn’t because WorkSafe had it.

In the end, months down the track, we arranged to test it with WorkSafe.

How long will a WorkSafe investigation take?

It goes on for months. Under the old law they had six months to decide whether to prosecute, but now it’s 12 months. Work-Safe say they don’t plan to use 12 months if they don’t have to, but I think realistically we can expect the more complicated cases to take more than six months, if not the full 12. WorkSafe also has more access to information and I think this will create additional delays because there will be more material to work through.

So you may have a lot of extra costs even if there isn’t a prosecution?

Absolutely. It’s not cheap if you have a lawyer assist you through the investigation process, and even if you don’t there is the management time and distraction of actually considering responses from the inspector, finding all the necessary information and providing it to them, briefing people internally about what’s going on, briefing people who might be interviewed, going along as a support person for interviewees…

Taking somebody away from their usual business role to take responsibility for engaging with WorkSafe is expensive, but some of my clients have ended up with people working on these things full time, on secondment, for varying periods of time.

There are also costs associated with looking after your staff – providing emotional support for co-workers post-incident, and rehabilitation and return to work support for the injured.

If the matter goes to prosecution what does that involve?

At this point businesses have no option but to appoint a lawyer to investigate the case, enter a plea and deal with the court on their behalf. This means more management interruption because they’ll have to talk to the lawyers about everything, and potentially go along to court hearings.

Once it’s in the court system it can be reported in the media, so businesses also need to consider a media strategy, and decide what to do if asked for comment.

When it comes to the court process itself, even a guilty plea will probably take 3 to 6 months and be in court on three occasions, but you can deal with at least two of those without having to actually appear. Your lawyer can just file the paperwork instead – although that may turn out to be more expensive because it involves negotiations with WorkSafe and getting everything prepared, filed and served, rather than just going to court and doing it orally. Of course doing it face-to-face means it may end up in the media, while if it just done as paperwork there’s nothing to report on.

For a not guilty plea there has to be a lot more engagement to prepare the defence, and the hearing won’t happen until 12 months or more after the prosecution is laid, which could be two years after the incident.

Realistically defending a court action is phenomenally expensive. One of the reasons we haven’t seen many defended cases is because the [potential] fine was dwarfed by the costs of defending it. But with the new penalties we may have reached the tipping point, where the cost of defence will be less than the potential fine, so more people may give it a go.

Fines are going up. What about reparations?

These are entirely distinct from the fine, so in theory the new legislation won’t impact on the quantum of reparations. In practice, however, it seems they are going up – in part because of an unrelated law change which means you can now be ordered to pay injury victims the 20% ACC earnings shortfall. Someone who suffers permanent or long-term disability can be compensated for their future income shortfall.

Of course many businesses have insurance for reparations and legal costs, but premiums will go up – and will you have enough cover if you hurt an 18-year-old so badly they can never work again?

As a lawyer do you see the emotional cost of serious accidents?

My experience is that really serious accidents are life changing for everyone involved.

People who thought that they “got” health and safety before gain a new appreciation for it when they’ve had to sit with a widow and explain why her beloved husband isn’t coming home.

It becomes really personal – and that’s a good reason for making sure you keep people safe in the first place.


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