Work Health and Safety – A Complete Guide to Due Diligence for Senior Management Teams

In this article, we outline some tips on how Senior Management Teams can exercise Due Diligence to promote work health and safety in their workplaces.

WHS Act and Due Diligence

Due diligence has been defined in the WHS Act in association with ensuring work health and safety and is linked to the roles and responsibilities of officers.

Officers hold a key position in deciding the functioning of a business. They are responsible for participating in or making decisions on the allocation of resources that impact the health and safety of a Company.

Senior management teams like officers of corporations, the Crown, or public

authorities within the jurisdiction of the Commonwealth are specifically obligated by the WHS Act to exercise due diligence to ensure that these entities comply with their work health and safety obligations.

Guide to Exercise Due Diligence

Exercising Due Diligence in the context of work health and safety means taking all necessary precautions to ensure the welfare and health of all employees and anyone else who may be at risk due to work being done as part of a business or Undertaking.

This also applies to work done abroad as part of remote teams.

Due Diligence is a robust and proactive management tool that will support the thorough, systematic identification and assessment of workplace hazards and the establishment of control measures to prevent work-related illnesses and injuries.

Section 27 of the WHS Act mandates that officers prove they have exercised due diligence by demonstrating the following:

• Obtain and keep up with new information on health and safety issues.
• Comprehend the activities carried out by the person conducting the business or Undertaking (PCBU) where they work, and the risks and hazards related to those activities.
• Ensure the person running the business or Undertaking has the right tools and procedures to lessen or eliminate health and safety risks associated with the work being done.
• Ensure the individual running the business or Undertaking has the correct procedures to receive and act on
• information about incidents, risks, and hazards.
• Ensure that the person running the business or Undertaking has processes for adhering to any obligations imposed
• by the WHS Act and that they are being used.
• This approach puts an emphasis on the corporate governance responsibilities of officers.
• As an officer, you should exercise due diligence by taking all necessary measures to address each criterion listed in section 27 of the WHS Act.
• Each component aims at one or more safety culture components and factors influencing safe behaviour.
• Everyone at work must understand and follow their responsibilities as outlined in the WHS Act as the first step.
• Due diligence requires officers to take proactive steps to ensure that a department, agency, public authority, or corporation complies with its obligations, including employees posted or working abroad.
• The next step is for officers to identify workplace safety, health, and welfare risks, including those mentioned in approved Codes of Practice and WHS legislation.
• Due diligence demands that you address risks through a properly operating and documented health and safety system once they have been identified.
• Take extra precautions to prevent possible hazards, the more harmful or severe they are to avoid workplace injuries and illnesses.
• The exact due diligence requirements apply to managing employees abroad as they do at home.

Precautions Essential to Comply with WHS Act

To comply with the WHS Act and show that you have taken the necessary precautions, you should take the following general actions:

• Ensure safe practices, controls, and procedures are in place and specific to the hazards in your workplace. They
• Should either meet or exceed the requirements set out in the WHS legislation-including applicable approved Codes of Practices, including establishing a well-documented system for detecting, reporting, and reacting to potential hazards at the workplace.
• They provide constant guidance and training to managers, supervisors, and employees, especially the ones who do manual labour.
• Regularly informing employees about potential health and safety risks.
• Allocating enough time and resources for health and safety, including health and safety committees.
• It is regularly monitoring and auditing health and safety programs.

Elements of Due Diligence

Implementing the theory of exercising due diligence requires an ongoing commitment to learning, comprehending, implementing refining responding and verifying.

Officers need to synthesize available information by adopting a system thinking approach to due diligence and moving through the cycle repeatedly.

This will make them increasingly aware of the interconnections between the parts, seeing the whole, including patterns and trends, rather than a single component.

Below are the elements of Due Diligence

1) Context

s.27(5)(a) Up-to-date Knowledge

1. WHS Act, Regulations, and Codes of Practice
2. Investigating contemporary industry issues
3. Principles and practices for health and safety management.
4. Consideration of health and safety concerns at meetings on a regular basis

s.27(5)(b) -Understanding

1. An Operational Strategy that identifies risks in core activities that identify risks in core activities
2. Advice from appropriately qualified individuals. Ensure that employees have access to information about health and safety procedures.
3. Continuous improvement safety management system approach.

2) Prevention

s.27(5)(c) Resources

1. Establish/maintain safe working practices.
2. Implement/regularly review safety management systems.
3. Hire qualified workers and adequate safety personnel; ensure adequate staffing levels for safety in operations.
4. Grant access to decision-makers for urgent matters to safety personnel.
5. Upgrade and maintain infrastructure.

s.27(5)(e) Processes for Compliance

1. Legal compliance audit of policies, procedures, and practices.
2. Testing policies, procedures, and practices to ensure compliance with WHS legislation and safety management planning.

3) Detection and Response

s.27(5)(d) Analysis and Response

1. Risk management procedure.
2. Timely and effective reporting.
3. Giving employees the authority to stop performing risky work.
4. Process for promptly evaluating and responding to information about incidents, risks, and hazards.
5. Corrective measures.
6. Taking lessons from mistakes.

4) Review

s.27(5)(f) Verifying

1. Provision and use of resources.
2. Compliance processes.

Guide for Management Teams to know if they have met all Due Diligence Requirements

Officers’ proper precautions depend on whether they adhere to all current laws and rules.

An officer’s position within a company or Undertaking must be considered when determining what might be essential to comply with the duty of due diligence.

For instance, it is essential to consider an officer’s ability to influence decisions and how resources are allocated for work health and safety.

In some circumstances, exercising due diligence might not be appropriate. This is because every situation and workplace is unique and would call for individualised assessment. This guidance looks at the WHS Act’s listed due diligence components, but it shouldn’t be used in place of an actual due diligence procedure. Officers may legitimately rely on the knowledge and conduct of others to satisfy some aspects of the due diligence requirements while managing and governing health and safety more directly in other instances.

If an officer does attempt to rely on others, they must be able to demonstrate that it was reasonable to do so. This can be accomplished by securing trustworthy information and advice from the appropriate sources.

The due diligence duties of officers under the WHS Act support improved leadership that contributes to a safe culture.

Safety Culture

Safety culture is that aspect of an organization’s overall culture that represents its values, beliefs, and practices about health and safety.

1. The various components of a culture that will advance an organisation through these stages of development are as follows:
2. An informed culture, where those in charge of running the system are knowledgeable about the environmental, organisational, technical, and human factors that affect system safety as a whole.
3. A reporting culture, where people are willing to report mistakes and near-misses.
4. A just culture, where there is a climate of trust and people are encouraged or even rewarded for good behaviour a flexible culture characterised by a change from the traditional hierarchical mode to a flatter professional structure
5. In a learning culture-where, there is the willingness and competence to draw the appropriate conclusions from its safety information system, as well as the will to carry out significant reforms when the need is indicated.
6. A Psychologically safe workplace, where people feel safe to speak up without fear of reprisal or censure.

Each of these components has to do with the accessibility and sharing of information, the encouragement of adaptability and innovation, and the support of integrity and openness (and, consequently, avoiding obstacles to the free flow of

information) through a ‘no blame’ approach.

Role of Leaders

A successful health and safety management system have recognised the importance of the role of leaders and how they should be involved in promoting health and safety in several ways.

The Australian standard AS/NZS ISO45001:2018 (Occupational health and safety management systems – Requirements with guidance for use) reflects this and aims to empower organisations to actively enhance workplace health and safety performance.

This standard offers detailed instructions on how senior and middle management should act in safety-related situations, including:

1. Approving the work health and safety policy.
2. Planning, including target setting and responsibility designation.
3. Allocating resources.
4. Reporting, auditing, and review.
5. Incident reporting and correction.  A commitment to health and safety from the ones who run and manage the business or undertaking is the first step in effective risk management.

You also need the participation and cooperation of your employees, and they are more likely to follow your lead if you demonstrate to them that you take health and safety seriously.

Under the WHS Act, not all leaders will necessarily be officers.

If an officer doesn’t exercise due diligence service in a serious or careless manner, they may be held criminally liable.

How can an officer get the required information?

As an officer, you must learn about workplace health and safety issues and keep your knowledge current.

This can be accomplished by:

Obtaining up-to-date latest knowledge of the WHS Act, WHS Regulations, and work health and safety management principles. And approved Codes of Practice.

examining present market issues through seminars, conferences, informative and awareness sessions  through industry groups and circulating newsletters

Ensuring that work health and safety problems are taken into account at meetings.

This might consist of

1. Technical, situational, and strategic knowledge.
2. Legal obligations.
3. What is happening and what does it mean?
4. What should the PCBU be doing and why?

The above information should be obtained from senior managers, subject matter experts, managers/supervisors, and employees.

Work systems that consider pertinent information will be more likely to ensure health and safety and take into account the resources and other needs for the work to be done.

This is made easier by including all parties involved in managing, supervising, and carrying out the work in the decision-making process.

This informational contribution is intended to be ensured by the consultation requirements in the WHS legislation, including the applicable Codes of Practice.

Information should flow continuously and not only when requested during official consultation and incident reporting procedures.

After this, information must be gathered, examined, and reported – to gain understanding.

An understanding of the nature of business, Company owner or Undertaking, can be achieved by doing the following:

1. Creating a plan of activities that detects hazards in primary tasks
2. Ensuring that other officers and employees have quick access to data about the protocols to ensure the safety of particular operations that present health and safety risks at the workplace.
3. Continually enhancing the safety management system.

Understanding Business Risks, Hazards or Undertaking

Depending on the circumstances at work and the officer’s knowledge of work health and safety, they might need additional expertise occasionally to reduce the risks.

When establishing new operations or projects, for instance, or when a hazardous exposure or incident, injury, or illness, etc., indicates that risk control measures are insufficient, for example,

1. During periodic reviews of the business’s operations.
2. When developing and implementing systems for the long-term management of work health and safety.
3. When planning to modify the work premises, plant, substances, or materials for use at work.
4. Before introducing changes to work practices and systems of work.
5. Officers may adequately rely on information from and activities of others to meet some due diligence requirements while engaging in more direct health and safety management and governance in other areas.

If an officer attempts to rely on others, they should demonstrate that doing so was reasonable. They can achieve it by showing that they received reliable information and advice from the right people.

Considerations for Officers

As an officer, you should think about whether the following things are true:

1. the business or Undertaking has the appropriate structure in place.
2. the appropriate individuals are in the proper locations.
3. effective means of information flow and advice.
4. the relevant information is available in the right time.
5. the management of work health and safety is proactive as well as responsive.
6. there is a clear designation of responsibility and accountability.
7. there is a system for regular verification and correction of information.

Officer’s Accountability

If an officer accepts work-related incidents or safety concerns but does nothing about them, then they may not be acting with due diligence.

If a person doesn’t have the power to solve a problem, they should promptly inform those who can and ask them to fix it.

As an illustration, please ensure that you accurately address significant problems with a contractor’s health and safety performance.

Taking proactive steps to address issues and manage risks is part of being diligent. If you can fix it and have the power to, do so instead of just reporting it.

Steps to Health and Safety Protection

Risk management is a crucial factor you should consider when fulfilling your due diligence obligations. You should ensure that there are appropriate processes for receiving and taking into account information about incidents, hazards, and risks, as well as for promptly acting on that information.

You can achieve it by establishing and maintaining safe working practices, implementing a safety management system, and ensuring the right tools are available and used for health and safety.

Good management practices and sounds corporate governance both depend on effective risk management.

Effective Work Health and Safety risk management require that it become ingrained in an organisation’s culture.

WHS risk management ought not to be viewed as a distinct endeavour. Instead, it should be integrated into an organization’s procedures and methods.

For more information on managing health and safety risks, consult the SafeWork Australia guide-How to manage work health and safety risks.

Any health and safety prevention programme must include risk management and the effectiveness of such programmes depends on the practical implementation of risk management.

Officers must create, implement, and review a safety management plan to identify potential workplace hazards and take the required corrective action to stop accidents or injuries caused by these hazards. This is known as exercising due diligence.

At the workplace level, risk assessment, risk management, and hazard identification are the systematic application of management policies, procedures, and practices to the following four steps:

The steps in the risk management process are identifying hazards, evaluating and analysing the risks, controlling the risks, and monitoring and reviewing the process.

Officers can use the below questions to effectively analyse the various business risks:

Are there strong safeguards in place?

1. How can you tell if all potential risks and hazards have been identified and evaluated? Are risks being managed by all technically feasible means?
2. Have any residual risks been assessed?
3. Have all systems, policies, and procedures relevant to the business’s or undertaking’s operations been successfully implemented?
4. What technology is available for work health and safety? Is it adequate, requires updating, or needs to be reviewed?
5. How well do the controls work?
6. Has anyone tested them?

Advantages of Effective Risk Management

The advantages of using the right tools and procedures to eliminate or reduce risks are as follows:

1. Workers, middle management and senior management have a greater awareness of the risks in their workplaces.
2. Risks are identified, assessed, and controlled as per the legal requirements of the WHS Act.
3. Risk management becomes ingrained in the organisation and corporate culture.
4. The severity and frequency of workers’ compensation claims are reduced, leading to a reversal of the trend.

Factors to be Examined when performing Due Diligence

Officers, you should know that current corporate governance structures and procedures may not meet the WHS Act’s due diligence requirements.

To fulfil your duties and obligations under the WHS Act, you should ensure the following have been met:

1. A relevant structure, with clear charters and key performance indicators to support effective communication and accountability.
2. Reporting processes for timely, accurate information to officers.
3. Operations are in place to give confidence as well as accurate, up-to-date, reliable information on health and safety issues.
4. Means for ongoing advice and decision-making (delegations).
5. Auditing.

Confidence in Your Business and People

The below list of questions will help you in building confidence in your business and the people working with you:

1. What are the demographics of your leadership team and staff, for example, in your organisation?
2. What are the management team’s qualifications for managing risk and their strengths and weaknesses?
3. Have you given authorised and qualified delegates the proper authority and responsibility?
4. Are you aware of the operational risks facing your company?
5. Do you comprehend the aspects of the business or Undertaking that you have significant control or influence over, whether on a whole or in part?
6. What additional factors, such as monetary and cultural norms surrounding safety, project deadlines, and business expectations, could affect workplace health and safety?
7. Do you have efficient, consultative processes, and do you comprehend your employee?
8. Who works for you, for instance?
9. They do what?
10. Do you employ freelancers as employees?
11. Do you employ technical or dangerous workers?
12. Do you employ individuals abroad?
13. Do you know the representatives and advocates for your health and safety?

Officer Leave and Acting arrangements

1. Will someone else play your part instead of you?
2. Will they be given the same authority to make decisions, such as becoming officers?
3. Do they possess all the knowledge required to exercise due diligence if they are an officer?
4. Do the new officers who make decisions on your behalf have all the information they need to exercise due diligence?
5. Are all pertinent managers and assisting staff informed of the change?

Measuring Health and Safety Performance

You can understand management, investment, and resource decisions by measuring health and safety performance.

Officers must ensure that the business or Undertaking has relevant processes for getting and considering information about workplace incidents, hazards, and risks and responding promptly to that information as part of their due diligence obligations.

This can be achieved by implementing a risk management process:

1. Establishing effective, prompt reporting systems.
2. Empowering employees to stop performing risky tasks and ask for better resources.
3. Establishing procedures for promptly evaluating and reacting to information about incidents, hazards, and risks.
4. Evaluate performance against positive performance indicators to spot flaws (for example, the percentage of issues actioned within agreed timeframes).

Officers should:

• Be responsible for the implementation, verification, and review of any change management processes.
• Guarantee that health and safety are incorporated into business planning and do not get downgraded due to competing priorities, profit margins, and a lack of resources.
• Encourage and promote regular discussion of health and safety at all business levels to ensure that officers and workers can achieve outcomes based on open communication, consultation, and negotiation.
• Ensure that health and safety are integrated into business planning.

Officers should critically assess the following to help them measure health and safety performance:

• Work system.
• Governance and accountability.
• Application of policies and procedures.
• Measurement of behaviour and monitoring of attitudes.
• indicators of organisational health, such as staff surveys, workforce planning, attendance management, etc.

Unless the information is received promptly and adequately analysed, investing in hazard and incident reporting systems will not reduce injuries and premiums.

Human Factors and Workplace incidents

According to research, between 80 and 90 per cent of all incidents are caused by human factors.

Because of this, it’s crucial to have a reporting and tracking system that methodically analyses risk focuses mainly on human factors and divides general risks into specific risks.

The PCBU will be able to fulfil its obligations, including notifying the regulator in accordance with WHS laws (Legislative law), by having clear, efficient, and practical reporting processes.

As an officer, you should promote a reporting culture with straightforward channels and communication options that do not seek to hold accountable or punish those who report incidents, near misses, and hazards.

By creating a culture of open reporting within your company, you can show your employees that there is no place for blame in situations where there has been a near-miss, an accident, an injury, or a breach of policy or procedure.

It would be best if you thought about how you, as an officer, can promote and aid in a reporting culture that aids in determining the risks and hazards to the company concerning work health and safety.

By motivating employees to report near misses and other incidents, it is possible to take timely, preventive action in accordance with the requirements of due diligence.

Where practical local reporting procedures are in place that supports business policies or guidelines and are compliant with WHS legislation, you will have a clearer picture of the overall business hazards/risks.

The PCBU can fulfil its obligations if its reporting processes are transparent, efficient, and practical.

Steps Senior Management Teams should take to achieve Compliance

An officer’s due diligence requirements confirm procedures followed to adhere to specific obligations and duties under the WHS Act.

These include disclosing incidents, consulting with employees, and ensuring that workers receive training and information about work health and safety.

This can be obtained by conducting an audit of policies, procedures, and practices for legal Compliance and assessing them to ensure they comply with safety management planning.

The PCBU, through its officers, should:

Have suitable WHS policies, practices, and procedures.

• A document that the PCBU performs workplace safety audits to identify unsafe practices and conditions and makes the required changes to correct these conditions.
• Offers workers with information to enable them to work safely (in appropriate languages).
• Offer the essential training and education to workers so that they comprehend and carry out their work as per the WHS policies.
• To satisfy the requirements for due diligence, organisations must use written documentation and procedures for progressive disciplining of safety rule violations.

Officer-Related Factors

As an officer, you should consider:

• How you consult and communicate with your managers, WHS advisers, prosecutor, and workers.
• Whether the processes and procedures you have in place allow you to hear and see the happenings at the coal face of your business.
• What other methodologies may be appropriate for you to ensure that you are aware of and involved with the occupational safety and health aspects of your business, such as management committees, WHS committees, regular reporting processes, and inspections?

Anitech offers training solutions on exercising Due Diligence and implementing ISO 45001 Standard, you can give us a call on 1300 802 163 or e-mail us at info@anitechgroup.com or enquire here.

We will be happy to help!

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