Continuing Increases in $ Costs of WHS Penalties
Time marches on and so does the potential for continuing increases each year in the $ cost of WHS penalties. The potential for increase is already built in to WHS law since June 2020 so that the $ penalty keeps up with inflation.
Current & Future Increases
WHS penalties in the WHS Act 2011 and the WHS Regulation 2017 are now expressed in penalty units instead of being expressed in dollars. The change happened when the NSW WHS Act and WHS Regulation were amended on the 10th of June 2020 and declared that one penalty unit = $100 – (WHS Act 2011 Division 2A Penalty units page 113).
However, the dollar value of a penalty unit will increase every new financial year that the Consumer Price Index (CPI) increases again.
So, in the current financial year (1/7/2020- 30/6/21), one penalty unit is now = $102 to keep in step with an increase in inflation as measured by a rise in the CPI. The result is that the maximum $ penalty for a PCBU has now increased by $69,260 since the 10th June 2020.
As the (CPI) usually increases every year we could probably expect that the dollar value of the penalty unit will continue to rise over time. In about 5 months we will be in a new financial year (1/7/21-30/6/22). If the CPI shows that inflation has risen again then the dollar value of a penalty unit would have to increase. If it was increased to say $104 it would mean that the maximum PCBU penalty would have increased by $138,520 since the 10th June 2020.*
Note:
* The PCBU maximum penalty example shown above is just that, an example. The purpose is to illustrate what has happened and will happen to the dollar value of penalties. We don’t recall any WHS or OHS court case where the Judge ordered that the maximum penalty must be paid by the PCBU, it seems to always be an amount that is less than the maximum penalty in the WHS Act for Category 1, 2, and 3 Offences.
**The amount of penalty units for a WHS offence varies considerably depending upon the severity of the offence. SafeWork NSW has listed all the sections of the WHS Act and all clauses in WHS Regulation where penalties apply in one long table at this long link to their website:
https://www.safework.nsw.gov.au/legal-obligations/legislation/accordians/increases-to-penalty-provisions-work-health-and-safety-amendment-review-act-2020-schedule-2-consequential-amendments-to-the-whs-act
Three Major Categories of WHS Offence
Everyone in your workplace has a health and safety duty under the WHS Act and one of the three categories of offence and the table of penalty units below could apply to them.
Category 1 – Gross Negligence or Reckless Conduct (Section 31 WHS Act NSW) The “gross negligence” offence applies to anyone in your workplace who has a health and safety duty, but without reasonable excuse, is grossly negligent in their conduct and exposes an individual to whom they owe that duty, to a risk of death or serious injury of illness.
The “reckless conduct” offence applies to anyone in your workplace who has a health and safety duty, but without reasonable excuse, recklessly engages in conduct that exposes an individual to whom they owe that duty, to a risk of death or serious injury of illness.
Category 2 - Failure to comply with health and safety duty (Section 32 WHS Act NSW) This Category 2 offence applies if anyone in your workplace has a health and safety duty, but fails to comply with that duty, and their failure exposes an individual to a risk of death or serious injury or illness.
Category 3 - Failure to comply with health and safety duty (Section 33 WHS Act) Anyone in your workplace commits this Category 3 offence if they have a health and safety duty, but they fail to comply with that duty.
24th February 2021