An Explanation of Some Areas of Risk for Director's

Consequences of breach of the TPA

Any breach (or alleged breach) of the Trade Practices Act must be taken seriously.

If you (personally) breach the Act, both you and the organisation may be prosecuted.  If convicted, both you and the organisation may have to pay significant penalties.

The maximum penalties the organisation may have to pay are:

• $10 million per offence for any anti-competitive conduct; and
• $1,100,000.00 per offence for any misleading, deceptive or unfair conduct.

The maximum penalties you may have to pay are:

• $500,000.00 for any anti-competitive conduct; and
• $200,000.00 for any misleading, deceptive or unfair conduct.

If you are prosecuted and penalised for breaching the Act you will have to pay the penalty yourself.  The Company is not obliged to and will not pay the penalty for you.

There are other consequences of breaching the Act too.  The courts can:

• Require either you or the organisation to pay damages to compensate competitors, suppliers or customers who have suffered as a result of your breach.
• Require that conduct in breach of the Act stops; and
• Order you and/or the organisation to try to remedy the damage caused by the breach (eg the court may order the Company to public corrective advertising or to pay refunds to customers).

Corporations and individuals engaging in conduct in breach of the Act risk lengthy and expensive investigations; litigation from competitors, clients or suppliers and government agencies; and severe monetary penalties and damage to reputation and goodwill. 

It can have a negative effect on the organisation’s standing in the business community.  For the person concerned it means facing penalties of up to $500,000.00 and internal disciplinary reaction.  It is not good for your career.

Penalties for anti-competitive conduct

The maximum penalties for anti-competitive conduct is:

• $10 million for the organisation; and
• $500,000.00 for individuals.

If you breach these provisions and are penalised, the organisation will not pay the penalty for you and you will be out of pocket.

But that is not all.  If you engage in anti-competitive conduct, the court can:

• Require either you or the organisation to pay damages to compensate competitors, suppliers or customers who have suffered as a result of your breach.
• Require that the conduct stops; and
• Order you and/or the organisation to try and remedy the damage caused by the breach.

SOME MAJOR RISK AREAS

• Occupational Health and Safety
• Workers Compensation
• Human Resource Policies and Practices
• Recruitment and training

OCCUPATIONAL HEALTH & SAFETY  ACT

Under the OHS Act 2000, an employer must provide:

• safe premises;
• safe machinery and substances;
• safe systems of work;
• information, instruction, training and supervision; and
• a suitable working environment and facilities.

An Employer is also responsible for the health and safety of people other than employees, which may be present at the workplace.

Additional  obligations for employers under:

• the Workers Compensation Act 1987 and
• Workplace Injury Management and Workers Compensation Act 1998.

What should you do to comply?

• implement OHS policy and procedures (including insurance policies);
• identify workplace hazards;
• monitor and enforce corrective action;
• consult with your employees and OHS representatives;
• investigate incidents;
• provide relevant induction and ongoing training;
• respond and take corrective action to OHS issues raised by employees;
• develop appropriate OHS solutions (including return to work, rehabilitation and retraining policies);
• submit statistics and reports of incidents;
• ensure workplace systems are reviewed and continuously improved.

What will happen if you do not fulfill your responsibilities?

The OHS Act 2000 operates as a piece of criminal legislation, imposing onerous obligations and monetary penalties for a breach upon employers.

The Employer may be fined and/or prosecuted. The fines payable for non-compliance with the OHS Act 2000 range from $200.00 to $825,000.00. Some penalties even include imprisonment for periods of up to 2 years.

Under the Workers Compensation legislation, if an employer fails to comply with the insurance policy requirements, such an employer may face a penalty of up to $55,000.00 and or 6 months imprisonment.

Who will be liable?

• The Company
• The Company Director

In the case of a corporate employer the OHS Act 2000 extends liability, under Sections 26 and 28 to company directors, managers and supervisors.

Manufacturers

An important issue in OHS liability arises in circumstances where a manufacturer supplies a product to an employer for use by employees. Section 11 of the OHS Act 2000 imposes a duty on a manufacturer of a product to ensure that the product is safe and without risks to health when used properly, and to provide adequate information about the product to whom it is supplied to ensure safe use of the product. This duty is an absolute obligation of a manufacturer; Inspector Ankucic v AJM Machinery Pty Ltd (1991).

Penalty under s 11

Penalties for a breach of Section 11 of the OHS Act 2000 by a manufacturer range from $55,000.00 to $825,000.00.

Should you require any further information please contact LAC Lawyers.