Knowledge@Australian School of Business Operations Management Research Article

Knowledge@Australian School of Business

Jeffrey Phillips, a Sydney-based barrister specialising in industrial and employment law, recently gave a speech about forthcoming changes to Occupational Health and Safety legislation to a Barristers' Clerks Association conference. In it, he recounted a segment from a show that ran on ABC radio, created and presented by US writer and humourist, Garrison Keillor. The show included spoof advertisements, one of which was called "Worst-Case Scenario". "It's a telephone service where you can call a pessimist named Ralph and he will tell you the worst that can happen to your proposed plans," says Phillips. "On one occasion, a guy calls Ralph to ask what the worst-case scenario will be if he takes his wife to the movies that night. Ralph replies, 'You want the worst-case scenario? Your wife will ask you to go out to the snack bar and get her something to drink. On the way back to your seat, you'll trip over someone's feet and spill your drinks on the people in the row in front of you. They'll sue you for all you're worth. You'll lose your house and car and job. Your wife will divorce you and take the kids with her. You'll start drinking and end up on skid row.' The caller says, 'Hey, thanks! I'd never thought about it that way. I guess I'll stay home tonight.'"

The message behind the humour was clear: adopting the worst-case scenario approach may be the best advice for employers come January 1, 2012. This is when new regulations come into force under the Work Health and Safety Act that aim to harmonise existing legislation on Occupational Health and Safety (OH&S) at work across all states and territories. The nationally harmonised laws require a consistent level of protection for workers no matter where they work in Australia.

With more than 764,700 Australians now working from home at least a couple of days a week, according to data from the Australian Bureau of Statistics (ABS), "companies need to be crystal clear about where work is being performed and when work begins and ends", says Phillips. "It's too expensive not to be."

The tough penalties are about to get harsher with employers liable not only for workers compensation but also for civil penalties of up to A$3 million payable to employees who injure themselves at home on the job.

In Australia, the regulation of OH&S has, for constitutional reasons, been primarily the responsibility of states and territories. Like several other countries, the Australian OH&S laws were transformed after the influential Robens report, Safety and Health at Work, was released in the UK in 1972. It saw an expansion away from the narrow specifications relating to hazards and workers and a beefing up of sanctions and enhanced inspectoral powers. During the last five years, the federal government has taken an increasingly proactive role in determining OH&S laws, culminating in the latest legislation.

Supply Chain Safety

A contributing advisor on the new legislation, Michael Quinlan, professor and chair of the Organisation & Management Advisory Board at the Australian School of Business, says the new legislation contains some of the broadest provisions covering OH&S in the world. "It no longer speaks of employers specifically, but talks about persons conducting a business or undertaking (PCBU)," he says. (Ambiguously, a PCBU is not an individual but the legal entity conducting a business.) Quinlan says the change in terminology is important because its intention is to encompass everyone in a supply chain. It reflects a world of work that is increasingly fragmented with tasks contracted out, the use of casual employees and volunteers as well as people working from home.

Employers have always had an obligation towards the wellbeing of their staff, but the new legislation relocates that responsibility and the numbers have grown, notes Rosemary Howard, executive director of AGSM Executive Education.

Over the past 15 years, the number of employed people working from home has more than doubled, according to ABS 2008 statistics. Companies such as technology giant IBM have built working from home into their culture, offering all staff the opportunity of working one day a fortnight, or a similar arrangement, from home. Across Australia, women make up the majority, comprising 55% of remote workers, with 83% aged over 35 and 39% with children under the age of 15.

Howard believes that remote working or "telecommuting" now has a direct relationship to the productivity and success of a business with happier, more motivated employees. Time spent commuting in traffic can be spent working instead and higher CBD rents are putting pressure on companies to save on space. All of which adds to the need to ensure safe and healthy home workers.

"Get the OH&S right and you will see the productivity benefits," Howard says. "Although part-time working is not nearly as embedded in Australia as it is in the UK, the new legislation reflects the virtual world and the technological advances that allow home working – and encourage women in particular to stay in the workforce."

But with change imminent, how prepared is business for what lies ahead and what will companies have to do to comply? Peter Wilson, president of the Australian Human Resources Institute, believes most companies are ready. "The senior group of HR directors I speak to have lawyers advising their boards on governance and have training programs in place for their staff."

While the larger firms seem informed, Phillips fears that the majority is not. "In fact, they're not prepared for the legislation as it stands but these new laws carry far bigger fines."

The concept for employers isn't new, insists Wilson – companies have been conducting risk assessments in their workplaces for years. It's only the location that is different. "Traditionally it was only industries with remote workers, like resources, mining and agriculture that had to worry about this. Today the minute a staff member is given formal permission to work off site, essentially the home is no different to an offshore oil rig. As their employer, you've deemed it a legitimate place of work."

Wilson believes it will require a change of mindset among employers but it's in the financial interest of both employers and employees to have clear, legally determined processes around working from home. "That's not hard to achieve, it just requires assessment and risk mitigation," he says.

Home Inspections

As each residence is different, inevitably that will mean inspecting people's homes for hazards. "In the same way that a specialist will examine seating in the office or air-conditioning," says Wilson, "risk assessors will look at home equipment for suitability and health impact. If someone is walking around in slippers on polished floors, then that's potentially dangerous and they will be given advice."

Mark Dohrmann, a consulting engineer and ergonomist whose expert advice is sought in court cases of OH&S malpractice, says working from home is accelerating. The demand for his company's services: risk-assessment of clients' homes and providing advice on health and safety best practice, has increased in the past four years. Dohrmann's checklist of the potential hazards is large. "We look at access to the home, loose steps, slippery pathways and carpets, poor seating and lighting – people may be facing a window or have a desk lamp in their eyes. There's air-management and storage to consider, worn power plugs and whether the employee is required to lift things or handle dangerous objects."

Once an inspection has taken place, a report is drawn up and employer and employee sign a Workplace Health and Safety Agreement stating their obligations under the law. Ensuring that both parties stick to the agreement is more problematic.

Quinlan says: "The real issue is not only having guidance material but inspecting strategies. Organisations do have protocols but it's under-researched. Overseeing and implementing the laws will be incumbent on the inspectorate."

Trust will be important if OH&S is to succeed, suggests Howard. "If there is trust between employer and employees, then why for example, can't the employee do their own inspection against the checklist?"

Wilson agrees that it's not a perfect system but by identifying the primary risks, people can be trained and given skills to manage the risks. "You can't have your cake and not eat it. You can't say [these are the rules] but you don't know how to manage it," says Wilson. "Cattle ranchers know how to control it, ships at sea know how to control it. And how do you then measure success? The same as you do on gas platforms. If the injury rate falls and there are no fatalities, then that's success."

A salutary reminder of what can happen when companies aren't on the ball came in the recent judgment found against Telstra for physical and psychological injuries sustained by Dale Hargreaves, a 42-year-old mother and former manager with the company. The judgment has been widely circulated by lawyers working for large corporations. Hargreaves fell down the stairs of her Brisbane townhouse twice while working from home in 2006, Telstra subsequently made her redundant and she hasn't worked since. Pending the final outcome, Telstra faces paying Hargreaves lost income for the duration of her working life.

Quinlan thinks it's inevitable that the number of court cases will rise. "There are more and more people working outside of conventional work situations and there will be more enforcement in this area – which is a good thing."

Wilson adds: "Any time there is death or a very serious injury during work, the inspectors are on the doorstep. If you haven't a paper trail then you're in big trouble. People think it will never happen to them but it's surprising how simple things can cause major accidents. I think it's a good thing. People need to protect themselves and make sure they are ready."