Fines under the OHS Act: Apparently the cost of doing business

The Sentencing Advisory Council is consulting on the level of fines imposed under the Occupational Health and Safety Act 2004 (Vic). Here is the Council's consultation paper.

The Council says this occurred in its preliminary consultations with stakeholders:

“We heard from numerous stakeholders during preliminary consultation that there are businesses, especially larger businesses, that currently view potential fines for OHS offences as ‘the cost of doing business’, especially as businesses know the likely size of the fine that could be imposed (based on current sentencing practices).”

The footnote to this statement does not identify the numerous stakeholders who said to them that business view OHS fines are viewed as the “cost of doing business”. Instead, the footnote cites articles and case law about how the Federal Courts have approached the imposition of civil penalties under Commonwealth legislation.

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Civil penalties under Commonwealth legislation and the “cost of doing business”

The principle that a civil penalty must not be seen to be a “cost of doing business” first arose in ACCC litigation. The precise lingo was first used by a Full Court of the Federal Court in Singtel Optus Pty Ltd v Australian Competition and Consumer Commission (2012) 287 ALR 249 at [61]-[64]. The principle has spread to other federal legislative schemes.

The concern in this field is to ensure that businesses do not make a conscious choice to depart from a consumer law standard in their promotion and marketing activities (by for e.g. being misleading or deceptive) in the pursuit of profits. In other words, the Federal Courts do not wish to perpetuate a situation whereby a business chooses to court the risk of contravening a consumer law standard if it means that they will realise a higher amount of profit – with such profits absorbing the eventual cost of a civil penalty.

Thus, when it comes to contraventions of federal legislation, civil penalties must have a profit-stripping purpose to make sure this situation does not ever arise.

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Fines under the OHS Act as a “cost of doing business”?

Thankfully, I have never heard an accused business say to me that the fine they are to receive under the OHS Act is a cost of doing business.

The accused business that pleads guilty is typically stricken with grief – knowing that they have departed from their OHS duty and that somebody at their workplace was exposed to a risk and/or was injured. A plea almost always includes evidence tendered from the accused about how they have corrected the shortcoming that caused the risk/injury. The evidence on this score is thorough, is reflexive of the accused's grief, and is clear evidence of contrition and remorse.

This type of evidence diminishes the Court’s need to specifically deter the accused. Maybe this explains the level of fines imposed under the OHS Act, rather than some sentiment held within Victorian businesses that OHS fines are just the cost of doing business.

The ritual that is repeated to me from clients is that there is no competitive advantage to be gained in OHS practice. I have never seen a client ever engage in type risk-versus-reward exercise when advising them what is required to comply with their OHS duties. I’ve never seen a business consciously decide to court an OHS risk in the hope it brings more profit to them.

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Submissions to the Council due by Friday, 31 May 2024

It is remarkable that such a thing has been suggested to the Council, and remarkable that the Council has seemingly adopted it without critical inquiry.

Who are these “numerous stakeholders”? They must have never advised a business charged with an OHS offence. They must be versed in how civil penalties work under federal legislation.

If you would like to participate in consultation, you can do so at this link. Consultation closes on 31 May 2024.