Less “guilty until proved innocent” director laws – welcome amendments
06/06/2011
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The NSW government has introduced legislation to implement new model OH&S laws.

The new Work Health and Safety Bill 2011 implements the provisions of model occupational health and safety legislation are to be implemented by the Commonwealth and all State and Territory jurisdictions.  The most important aspect of this new legislation from a director’s perspective is that the onus will no longer be on an employer to prove that it should not be held responsible for a breach.

The NSW government has also recently followed South Australia’s lead by introducing amendments to a raft of other laws that assumed directors were guilty of breaching laws unless found innocent.

The amendments change more than 35 laws currently imposing liability on directors for corporate fault.  In some instances, directors will be liable only if it can be shown that they were knowingly involved or permitted a contravention of the relevant law by their company.  In other instances, the provisions imposing liability on directors will be removed completely or will not apply for certain contraventions.

Harmonisation of these laws across jurisdictions has been a long-standing priority of the COAG Reform Council, although concern has been raised by Guerdon Associates, the AICD, and even in the Reform Council’s own 2009-10 progress report about the slow pace at which various jurisdictions were moving to implement these reforms.

Legislation to be amended to completely remove the provisions imposing personal liability on directors for corporate fault includes:

   Fertilisers Act 1985;

   Land Sales Act 1963; and

   Wine Grapes Marketing Board (Reconstitution) Act 2003.

Provisions that deem directors to be liable for corporate fault will be replaced with provisions making it necessary to prove that a director was knowingly involved in or permitted a contravention by his or her company before the director will be liable in the following legislation:

   Holiday Parks (Long-term Casual Occupation) Act 2002;

   Poultry Meat Industry Act 1986; and

   Prices Regulation Act 1948.

Other legislation is being amended to allow certain provisions to be carved out from the operation of the general provisions imposing personal liability on directors for corporate fault, either completely or so that it becomes necessary to prove that a director was knowingly involved in or permitted a contravention of the legislation by his or her company before the director will be liable for the contravention of the provision.  Acts in this category include the Mining Act 1992, Food Act 2003, Industrial Relations Act 1996, Public Health Act 1991, The Electricity (Consumer Safety) Act 2004, and Retirement Villages Act 1999.

These changes to 35 laws, when combined with South Australia’s 20 odd laws, means that there are only about 645 more laws to amend to get to workable director standards. 

This is progress.

© Guerdon Associates 2021
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