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Officers - Due Diligence Duties

Who is an Officer?​

An officer of a PCBU is a person who:

  • Makes decisions, or participates in making decisions, that affect the whole or a substantial part of the business
  • Has the capacity to significantly affect the financial standing of the business

Officers typically include:

  • Company directors (executive and non-executive)
  • Partners in a partnership
  • Chief Executive Officers
  • Chief Financial Officers
  • Other senior executives with strategic decision-making authority

[!important] Not Based on Title Whether someone is an "officer" depends on their actual role and authority, not their job title.

Officer's Duty of Due Diligence​

Officers have a duty to exercise due diligence to ensure the PCBU complies with its WHS duties and obligations.

This is a personal duty - officers cannot delegate or contract out of it.

[!warning] Personal Liability Officers can be personally prosecuted and penalized for failing to exercise due diligence, even if they were not directly involved in the incident.

What is Due Diligence?​

Due diligence means taking reasonable steps to:

1. Acquire and Keep Up-to-Date Knowledge​

Officers must understand:

  • WHS matters relevant to the business operations
  • Nature of the industry and its hazards
  • Legal obligations under WHS legislation
  • Current WHS risks in the business

Practical steps:

  • Attend WHS training and briefings
  • Review industry guidance and codes of practice
  • Stay informed about emerging WHS issues
  • Understand the business's specific hazards

Construction Example: Directors of a construction company must understand high-risk construction work, common construction hazards (falls, plant, electrical, manual handling), and relevant construction codes of practice.

2. Understand Operations and Hazards​

Officers must understand:

  • The nature of operations being carried out
  • Hazards and risks associated with those operations
  • How those risks are being controlled

This requires:

  • Site visits and workplace inspections
  • Reviewing incident reports and trends
  • Understanding what work is actually being done
  • Knowing major projects and activities

Construction Example: A director should visit construction sites, understand the type of work being performed (excavation, concrete, steelwork, etc.), and be aware of site-specific risks (proximity to power lines, confined spaces, work over water).

3. Ensure Appropriate Resources and Processes​

Officers must ensure the PCBU has:

  • Resources to eliminate or minimise WHS risks:

    • Adequate budget for WHS controls
    • Sufficient competent WHS personnel
    • Appropriate equipment and technology
    • Time to implement controls properly

  • Processes for eliminating or minimising WHS risks:

    • Risk management systems
    • Consultation mechanisms
    • Safe work procedures
    • Emergency response procedures
    • Incident investigation processes

Construction Example: Directors must ensure:

  • Budget allocates funds for scaffolding, edge protection, and safety equipment
  • WHS manager or coordinator is appointed
  • Project planning includes time for safe work method statements
  • Consultation processes with workers are established
  • Systems exist for managing subcontractors

4. Ensure Appropriate Information and Reporting​

Officers must ensure:

  • Information about WHS matters is received and considered in a timely way
  • Processes exist for receiving information about:
    • Incidents, injuries, and near-misses
    • Hazards identified
    • WHS compliance issues
    • Progress on implementing controls
    • Changes affecting WHS risks

Practical implementation:

  • Regular WHS reports to board or management meetings
  • Systems for escalating serious incidents
  • Reporting on key WHS performance indicators
  • Reviews of WHS audit findings

Construction Example: Board meetings should include:

  • Reports on incidents and injuries
  • High-risk work being undertaken
  • Results of WHS inspections
  • Compliance with SWMS requirements
  • Subcontractor WHS performance

5. Ensure Incidents are Reported and Investigated​

Officers must ensure processes exist for:

  • Promptly reporting notifiable incidents to the regulator
  • Investigating incidents to identify root causes
  • Implementing corrective actions
  • Reviewing effectiveness of existing controls

Construction Example: When a worker falls from height, the officer's due diligence requires ensuring:

  • Incident is notified to SafeWork NSW
  • Site is preserved for investigation
  • Thorough investigation identifies causes
  • Corrective actions are implemented across all sites
  • Findings are communicated to relevant personnel

6. Ensure Compliance Processes are Implemented​

Officers must ensure:

  • Systems and processes exist to achieve compliance with WHS duties
  • Those systems are actually implemented and followed
  • Non-compliance is identified and addressed

This includes:

  • WHS policies and procedures
  • Induction and training programs
  • Inspection and audit programs
  • Contractor management systems
  • Competency verification processes
  • Document control systems

Construction Example: Officers must ensure:

  • All workers receive site induction
  • High-risk work licenses are verified
  • Safe work method statements are prepared and followed
  • Plant is inspected and maintained
  • Consultation occurs before work commences

Due Diligence is Proactive​

Due diligence requires proactive steps - not just reacting to incidents after they occur.

Officers must:

  • Anticipate risks before they materialize
  • Question whether current controls are adequate
  • Seek assurance that systems are working
  • Verify compliance, not just assume it

[!tip] Trust but Verify Officers can rely on competent managers and advisors, but must verify that systems are working through regular reporting, audits, and oversight.

What Due Diligence Looks Like in Practice​

Board/Management Meeting Practices​

WHS should be a standing agenda item:

  • Reviewed at start of meeting (not rushed at end)
  • Officers ask probing questions
  • Trends and systemic issues are discussed
  • Resources for WHS controls are approved

Construction Example - Board Meeting:

  • Review incident statistics and trends
  • Discuss upcoming high-risk projects and controls
  • Approve budget for fall protection equipment
  • Review results of site WHS audits
  • Consider reports on subcontractor WHS performance

Site Visits and Workplace Inspections​

Officers should:

  • Visit workplaces regularly
  • Observe work activities firsthand
  • Talk to workers about WHS concerns
  • Check whether procedures are being followed
  • Identify gaps between policies and practice

Construction Example: During a site visit, a director observes:

  • Whether edge protection is installed on elevated floors
  • Workers wearing required PPE
  • Safe work method statements displayed
  • Plant inspection tags current
  • Workers able to explain WHS procedures

Reviewing Information and Reports​

Officers should receive and review:

  • Incident reports (including near-misses)
  • Results of WHS inspections and audits
  • Consultation meeting minutes
  • Training completion rates
  • Compliance with regulatory requirements

Asking the Right Questions​

Effective officers ask:

  • "What are our highest WHS risks and how are they controlled?"
  • "Have we allocated sufficient resources for WHS?"
  • "How do we know our controls are working?"
  • "What are workers telling us about WHS?"
  • "Are we compliant with relevant codes of practice?"

Due Diligence Does Not Require​

Officers are not expected to:

  • Become WHS experts
  • Personally conduct risk assessments
  • Personally develop procedures
  • Be present at workplaces daily
  • Have operational control over day-to-day activities

However, officers must:

  • Ensure competent people are doing those tasks
  • Verify that systems are in place and working
  • Hold managers accountable for WHS performance

Relationship with PCBU Duties​

The PCBU (company, business) has the primary duty to ensure health and safety.

Officers have a duty to exercise due diligence to ensure the PCBU complies with its primary duty.

Both can be prosecuted:

  • The PCBU for failing to comply with its primary duty
  • The officer for failing to exercise due diligence

[!example] Example If a worker is seriously injured due to inadequate fall protection:

  • The company (PCBU) can be prosecuted for failing to provide a safe workplace
  • The directors (officers) can be prosecuted if they failed to ensure the company had adequate systems and resources for managing fall risks

Penalties for Failing to Exercise Due Diligence​

Officers who fail to exercise due diligence face:

Category 2 offence (exposing to risk):

  • Fines up to $300,000
  • Imprisonment up to 5 years (in serious cases)

Category 3 offence (other failures):

  • Fines up to $100,000

Demonstrating Due Diligence​

Officers should document evidence of due diligence:

  • Attendance at WHS training
  • Records of site visits
  • Board meeting minutes showing WHS discussions
  • Approvals for WHS resources and budgets
  • Responses to WHS reports and recommendations
  • Actions taken in response to incidents

This documentation demonstrates proactive engagement if due diligence is ever questioned.

Practical Application​

Scenario: Construction Company Director

Due diligence activities include:

  1. Knowledge:

    • Complete directors' WHS training
    • Review construction codes of practice
    • Understand company's highest risks (falls, excavation, plant)

  2. Understanding operations:

    • Visit sites quarterly
    • Review major project plans
    • Understand types of work being performed

  3. Resources and processes:

    • Ensure budget includes funds for scaffolding, edge protection, plant maintenance
    • Approve appointment of WHS manager
    • Ensure systems exist for SWMS preparation and review

  4. Information and reporting:

    • Require monthly WHS report to board
    • Ensure incidents are reported within 24 hours
    • Review key WHS indicators (injuries, near-misses, audit findings)

  5. Incident investigation:

    • Ensure notifiable incidents are reported to SafeWork NSW
    • Review investigation findings
    • Verify corrective actions are implemented

  6. Compliance:

    • Ensure high-risk work licenses are verified
    • Check plant inspection and maintenance systems
    • Verify consultation processes are operating