In an important legislative update, Queensland has recently made it illegal to insure against fines related to Work Health and Safety (WHS) contraventions. This change, announced in March of 2024, aligns Queensland with several other states in Australia that have introduced similar prohibitions.
While businesses can no longer secure insurance cover against fines, there are still measures businesses can take to reduce the financial consequences of WHS violations.
Overview of the New Legislation in Queensland
The Queensland Government’s recent amendment to the WHS legislation marks a significant shift in how penalties for safety breaches are managed. Under the new law, it is now prohibited for businesses to take out insurance policies that cover WHS-related fines.
This legislative move aims to ensure that penalties serve their intended purpose as a deterrent against non-compliance with safety regulations.
This change was introduced by the Work Health and Safety and Other Legislation Amendment Act 2024, which explicitly outlaws any insurance arrangement that purports to cover penalties incurred under WHS laws. The Queensland Government’s stance is clear: businesses must take full responsibility for maintaining safe practices without relying on insurance to mitigate the financial repercussions of failing to do so.
Breakdown of WHS Penalties by State
The approach to WHS penalties and insurance varies across Australia, with each state adopting its regulations. Here’s a quick overview:
- New South Wales: Similar to Queensland, NSW has legislated against the insurability of WHS fines to reinforce the importance of compliance and the personal accountability of business leaders.
- Victoria: Victoria has also 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 by another party for penalties caused as a result of breaching WHS regulations.
- Western Australia: similar to other states, WA has introduced measures to prohibit insurance or indemnity against a WHS fine or penalty.
- South Australia: SA have been reviewing their WHS laws, with discussions around similar bans on insuring against fines.
- Tasmania and the Northern Territory: Current legislation does not prohibit insuring WHS fines, but there is ongoing debate about aligning with other states.
Implications for Businesses
The inability to insure against WHS fines underscores the necessity for businesses to invest in robust safety systems and practices. Fines are designed to penalise and deter non-compliance; therefore, the focus must shift towards prevention and adherence to safety standards. However, while fines themselves are uninsurable, other related costs, such as legal expenses incurred while defending WHS claims, remain insurable. Businesses can still seek financial protection for these costs, which can be significant.
How Insurance Can Still Help
Believe it or not, insurance can still help.
Defending against WHS claims can be complex and costly. Legal expenses insurance plays a crucial role in helping businesses manage these costs. This coverage supports businesses in funding the legal defence, which can be a financially draining process, particularly for small to medium enterprises. It is important for businesses to understand that while they cannot shield themselves from fines, they can still mitigate other financial risks associated with WHS breaches.
The recent legislative changes across Australia reflect a broader trend towards reinforcing safety compliance and accountability in the workplace. While the prohibition of insurance against WHS fines might seem like an added challenge for businesses, it fundamentally serves to emphasise the importance of safety and compliance.
Companies must now focus more than ever on preventive measures and maintaining rigorous safety standards to avoid the legal and financial penalties of non-compliance.
In this changing landscape, businesses should review their insurance policies and safety protocols to ensure they remain compliant and well-prepared to manage any potential risks associated with WHS contraventions.
Crucial Insurance and Risk Advisors are here to guide you through these changes. We work hard to tailor insurance solutions that meet the evolving needs of your business, ensuring that while you can’t insure against fines, you’re still protected against the myriad other risks that come with running a business.
Need More Information?
Reach out to our expert team for detailed guidance on how these changes might affect your business and how to navigate the new WHS landscape.
We’re here to help you keep your business safe and compliant, so you can focus on what you do best.
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This article was written by Tony Venning,
Managing Director at Crucial Insurance and Risk Advisors.
For further information or comment please email info@crucialinsurance.com.au.
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