New South Wales has become the only Australian state where insurance for work health and safety (WHS) fines is unlawful, under revised legislation that came into effect on June 10. It is now against the law to either provide or benefit from such an insurance policy for workplace incidents taking place from that date onwards.
WHS-related legal costs, on the other hand, remain insurable.
In a contributed piece published on Mondaq, Sarah Wood and Joel Zyngier of litigation and disputes firm Gilchrist Connell pointed to how the legislative changes under the Work Health and Safety Amendment (Review) Act 2020 highlight the importance of having insurance coverage for the legal costs of responding to a WHS probe or prosecution.
“There is nothing in the new legislation that prohibits or restricts defence costs or legal fees from being subject to an insurance or indemnity arrangement,” noted Wood and Zyngier in the joint article. “Additionally, it is still lawful to insure or indemnify against the legal and implementation costs of an enforceable undertaking (EU).
“If accepted by the regulator, EUs avoid a conviction and any fine. EUs can also result in better outcomes for workers, businesses, and the community at large, and should be considered as an alternative to a conviction by a business facing a WHS prosecution.”
Meanwhile a penalty unit system has been introduced, with the maximum fine for a category 1 WHS violation rising from $3 million to $3.463 million. The maximum fines for category 2 and 3 offences have also increased – from $1.5 million to $1,731,500 and from $500,000 to $577,000, respectively.