It is expected that the new measures, together with new tax treaties with the USA and the UK, will help attract more multinational investment to Australia.

Bullying in the workplace: liability of companies and their directors

Kathryn Dent, Partner and Natalie Shaw, a Solicitor of Gadens Lawyers, Sydney specialising in Workplace Relations law.

New paradigm in occupational health and safety

In a landmark case in New South Wales, Australia, a company and two of its directors have been fined a total of $A26,000 for failing to ensure their workplace was free from bullying. This represents a new paradigm in occupational health and safety, particularly because bullying in the workplace is not unlawful under any Australian Federal or New South Wales legislation, yet this case links bullying to a risk to health and safety. Ensuring a bullying free work environment is now undoubtedly a strict responsibility of employers and their managers. Background

In the decision of Inspector Gregory Maddaford v M A Coleman Joinery (NSW) Pty Ltd, Brian Gerard Coleman & Graham Gerard Coleman , M A Coleman Joinery (NSW) Pty Ltd and its two directors, Brian Coleman and Graham Coleman, were charged with offences under the Occupational Health & Safety Act 2000 (NSW) (the Act).

The company was charged with a breach of section 8(1) of the Act, arising out of an incident that occurred in December 2001 on the company’s premises in Lidcombe, New South Wales.

Section 8(1) of the Act provides that an employer must ensure the health, safety and welfare at work of all their employees. Pertinent to ensuring psychological, as apposed to physical health of employees are sub-sections that provide that the duty of employers extends to:

Ensuring that premises are safe and without risks to health
Ensuring that systems of work and the working environment are safe and without risks to health
Providing adequate facilities for the welfare of employees at work.

In addition, two directors of the company were also deemed to have contravened section 8(1) of the Act. Section 26 of the Act provides that if a company contravenes any provision of the Act, each director of a corporation is taken to have contravened the same provision unless the director satisfies the Court that they were:

Not in a position to influence the conduct of the corporation about its contravention of the Act
In such a position, and used all due diligence to prevent the contravention by the corporation.

The incident of bullying

The company was engaged in the timber joinery and shop fitting industry and operated a workshop in Lidcombe. In December 2001, a 16 year-old labourer was called to the upstairs area of the factory to assist with the moving of cabinets. He was immediately grabbed by fellow workers who proceeded to wrap him from his feet to his neck in cling-wrap using a manual cling-wrapping machine. He was then picked up, placed on a wheeled work trolley and secured to the trolley using more cling-wrap. His shoes and ’bum bag’ were removed and filled with sawdust.

When asked to be freed the labourer was taunted by the other workers. The trolley was pushed from side to side and spun around. Sawdust was thrown over the labourer, down his pants and in his shirt, and glue was squirted into his shoes, over his body and in his mouth.

The trolley was then pushed to the edge of an access penetration 4.2 metres above ground level. One worker shoved sawdust into the labourer’s mouth, which was then washed out by other workers using a fire hose. Although the labourer was asthmatic and became unable to breathe, there was no respite in the workers’ treatment. The incident lasted for around half an hour until the labourer was finally cut free by a contracted site foreman.

None of the men involved in the incident were subjected to disciplinary action by the Company. At the time of the incident, the Company had no policy addressing violence in the workplace.

Medical evidence

Doctors who examined the labourer after the incident could not agree on whether the labourer had a permanent psychiatric injury as a result of the incident. However, the Court held that that did not diminish the seriousness of the breach as there had been present a potential risk of serious injury to the labourer, such as suffocation. The Court explained that what had started out as a simple episode of bullying got out of control, leading to a serious physical threat to the labourer’s health and safety.

The purpose of the Act

The Court explained that the purpose of the Act was to eliminate risks to health and safety at the workplace and the incident, which had been described as an initiation, was essentially a polite term for bullying. A culture of bullying has been known to exist in some workplaces, and was often seen as a bit of fun at the expense of someone else. Such a culture needed to be stamped out.

The company’s failures

The Court identified the following failures by the company:

Failure to adequately supervise and train its employees to ensure they took reasonable care for the health and safety of people at the premises

Failure to prevent a premeditated act which had resulted in violence by employees to the labourer

Failure to implement adequate policies or procedures governing violence in the workplace.

The Court noted that the company had around 40 employees, and despite working in a hazardous industry, had no previous convictions in this jurisdiction. The company had an excellent record given the duration, size and nature of its business.

The company’s efforts after the incident

At the time of the incident, the company did have occupational, health and safety policies and programs. After the incident, however, additional procedures were developed in consultation with employees, including anti-violence/bullying/harassment and sexual harassment policies. An occupational health and safety specialist was now employed and the company had been so successful in implementing safety policies that an audit was to be undertaken for accreditation under the WorkCover premium discount scheme. Safety policies were continually reinforced at regular factory meetings, the minutes of which were attached to employees’ pay slips.

The directors

The Court accepted that one of the directors had known that an initiation ceremony was going to take place that day. However, he did nothing to prevent it. The director said that pranks had occurred in the factory in the past, but verbal warnings and official warnings had been issued. He also noted that a lot of people involved in the current incident had resigned and the remaining employees had be reprimanded in a group meeting.

Although subjective factors mitigated highly in favour of the two directors charged under the Act, including the fact that they had no prior record, the Court said that the directors were the directing mind of a corporation that had seriously failed to ensure the health and safety of an employee who on the company’s evidence was a vulnerable person. One director had known that an initiation ceremony may take place that day, but apparently did nothing to prevent it while the other director was in charge of supervision on the factory floor where the incident occurred.

The Court noted that both directors were actively involved in the local community, church and charitable works. Through the company, the directors had provided employment opportunities for vulnerable young people that would be affected as a result of the bullying incident, having cost the company losses of around $200,000.Testimonials presented to the Court were highly in favour of the directors and both directors accepted responsibility for the actions of the Company.

Penalty

The maximum penalty for first offences under the Act was $A550,000, however, the Chief Industrial Magistrate’s Court has a jurisdictional limit of $A55,000, and for each director the maximum penalty was $A55,000.

In considering an appropriate penalty, the Court noted that the nature and quality of the breach fell into the serious range of matters coming before the Court. In addition, there was a late guilty plea, and subjective matters, particularly the impact of the fine upon the directors and their families and the steps taken by the company following the incident, mitigated heavily in the company’s favour. In allowing for the community’s expectation in regard to breaches of this legislation to be met, the Court imposed a fine of $A24,000 on the company.

With respect to the impact any fine would have upon the directors and their families, the Court convicted and fined each director $A1,000.

Recommendations

This decision highlights the need for companies to not only implement and police anti-bullying and violence policies in the workplace but also ensure that directors and managers discharge the company’s responsibilities, including eliminating any culture of bullying.

Companies, directors and managers are advised to take the following preventative measures:

Companies should develop a written policy on bullying in the workplace and ensure that they communicate and disseminate the policy to all new and existing employees

Companies should ensure that there is adequate induction and training provided to all new and existing employees regarding bullying

Companies should ensure that they have in place an adequate process to receive and investigate complaints and should formally appoint contact and grievance officers to ensure that all grievances or complaints are dealt with in a confidential manner and with expediency. In addition, complainants should not be victimised as a result of their complaint

Companies should ensure that they cultivate a safe organisational culture in conjunction with their management style which not only prevents bullying acts but also encourages those who are victims or witnesses to such acts to report them immediately

All employees who are found to have breached bullying policies should be disciplined in accordance with the policy. Additionally, the policy must be applied consistently throughout the organisation

Any dismissals for breaches of the policy should be executed observing procedural fairness to ensure the Company minimises its exposure to unfair dismissals and other causes of action that might be available to dismissed employees.

Kathryn Dent is a Partner and Natalie Shaw is a Solicitor of Gadens Lawyers, Sydney specialising in Workplace Relations law.

This publication is provided to clients and correspondents for their information on a complimentary basis. It represents a brief summary of the law applicable as at the date of publication and should not be relied on as a definitive or complete statement of the relevant laws.