Enforceable Undertaking update

Recently we have seen a spike in the number of prosecutions commenced. This has led to an increase in the number of entities seeking to enter into enforceable undertakings, and in turn, an increase in the number of enforceable undertakings.

Key takeouts

A recent flurry of enforceable undertakings have been accepted by regulators across the country.
In New South Wales in particular, enforceable undertakings are now commonly stretching the $1m mark, reflecting expectations of the respective regulators.
In other jurisdictions, enforceable undertakings have been accepted for incidents involving fatalities. But how long will this trend continue?

Enforceable undertakings (EUs) are an attractive alternative to clients facing a work health and safety prosecution. There are clear upsides to entering into an EU – making a meaningful contribution to safety in your business, industry and community, while avoiding a prosecution and potential for a criminal record at the same time – but at what cost?

Since the beginning of 2019 in New South Wales, the average expenditure under EUs accepted by SafeWork NSW has been about $934,000 (excluding one EU entered into by an individual).

The value of EUs are certainly on an upwards trend, and it is nowadays common (if not expected) for an EU to reach the $1m mark.

For example, a company in NSW recently entered into a $1.1m EU, after a worker refuelling a tyre handler at a mine was burned when the fuel spilled and caught alight.

Another emerging trend is the acceptance of EUs where there has been a fatality. There have been a number of recent examples of this also. For example a $967,700 EU was entered into following the death of a worker in a prawn trawler in the Gulf of Carpentaria.

These trends can be contrasted with penalties handed down in prosecutions for category 2 offences under the respective work health and safety legislation. While the maximum penalty for such offences is $1.5m for bodies corporate, fines for category 2 breaches have not reached the maximum level, and have typically been less than $500,000.

Of course, EUs are entered into in lieu of a prosecution (and result in a prosecution being withdrawn). While the benefits of EUs have made them an attractive alternative to a prosecution since their inception in the WHS space, organisations are embracing them now more than ever to deliver and effect real culture change to their own environments. In our experience, this is the case notwithstanding the fact they are likely to cost more than the anticipated fine for a defended prosecution or a guilty plea – at least on face value and before taking into account the time and expense of defending a prosecution.

These trends are perhaps reflective of changing community expectations and scrutiny of prosecution outcomes. At a basic level, the community expects that where a worker is harmed at work, there will be consequences. In recent times, regulators have been criticised for not taking a hard enough line on commencing prosecutions.

In addressing that criticism, we have seen a spike in the number of prosecutions commenced. This has led to an increase in the number of entities seeking to enter into EUs, and in turn, an increase in the number of EUs. However – in some cases an EU, as an alternative to a finding of guilt, is not an acceptable alternative for regulators. We have experienced regulators refusing to engage on some EU applications, pressing ahead with prosecutions where it is consistent with the respective prosecution guidelines to do so, and where in their view the culpability of the defendant is at the high end of the spectrum.

With WHS regulators continuing their proactive approach to enforcement, we expect more prosecutions will be commenced, and more businesses will be seeking to enter into EUs in the near future. However, we don’t think this will necessarily result in a continuous spike in the number of EUs being accepted. Regulators naturally cannot accept all EU applications that come their way.

Please get in touch with our Workplace team if you would like more information on anything we have discussed in this article.