The move to exempt fines for work health and safety (WHS) breaches from indemnity in insurance cover has extended to Queensland, with the change coming into effect from 28 September 2024.
This has important implications for company directors who can be held liable for fines related to WHS violations. For businesses with pending WHS cases it means considering their strategy before appearing in court and possibly altering their plea.
Queensland joins Victoria, New South Wales, the Australian Capital Territory and Western Australia which have already passed this legislation. Affected businesses are advised to review their WHS insurance to avoid incurring penalties.
Under Queensland's Work Health and Safety and Other Legislation Amendment Act 20241, after 28 September 2024 it will be illegal for businesses to enter an insurance arrangement that purports to cover penalties, and for insurers to provide it.
This applies to fines imposed for failing to meet requirements of, or regulations under, the Work Health and Safety Act 2011 (WHS Act)2 or Safety in Recreational Water Activities Act 2011 (SRWA Act)3.
The role of WHS business insurance under the new legislation
The amendment applies only to workplace health and safety and brings insurance cover into line with other legislation that imposes personal liability on directors and holds businesses liable for the fines and penalties awarded.
While insurance to pay WHS fines is now illegal, cover can still apply to legal fees and defence costs. Cover is available for costs incurred in investigation and defence in WHS cases, and these changes do not impact other fines and penalties which may be covered by statutory liability insurance.
The intention behind these changes is that they reinforce the requirement for businesses to monitor and observe WHS standards, and it is expected that the remaining states' and territories' WHS legislation will follow suit.
The WHS insurance position across Australia
- New South Wales has legislated against the insurability of WHS fines to reinforce the importance of compliance and the personal accountability of business leaders.
- Victoria introduced measures that prevent the insurance of WHS fines, emphasising the role of penalties as a deterrent.
- ACT businesses are no longer able to be indemnified for breach of WHS regulations and penalties.
- Western Australia has introduced measures to prohibit insurance or indemnity against a WHS fine or penalty.
- South Australia: SA is reviewing WHS laws on insuring against fines.
- Tasmania and the Northern Territory currently do not prohibit insuring WHS fines but are likely to align with other states.
The need to check business insurance terms
Businesses renewing their insurance cover should look carefully at their policy terms to make sure they don't indemnify fines and penalties for WHS breaches.
This is important because under the new amendments it is an offence to enter into a policy agreement under these terms, with substantial penalties for both individuals and businesses found to have contravened WHS Acts.
The Gallagher Professional and Financial Lines specialism can guide larger companies with national branches in regard to compliance with and exposure to these changes in statutory liability.
Get expert workplace health and safety advice
Find out more by talking to one of the experts on the Gallagher Workplace Risk team. Our services encompass safety mentoring and training through to health and wellness programs, hazard and risk profiling, and incident management and investigation.
