Written by William Paull
Co-Founder & Account Director
On this page
Key points
- A regulator's case can name a director personally as well as the company.
- Check how much of your limit is there for a work health and safety defence. It can be less than the full limit.
If a worker is hurt, can WorkSafe come after you personally?
It can. Work health and safety law makes a business responsible for the health and safety of the workers it engages or directs, including contractors and subcontractors. It reaches the people running the business too. A WorkSafe investigation can end with a director prosecuted by name.
Doesn't statutory liability insurance pay the fine?
Not in most states and territories. Statutory liability is the part of a management liability policy that can help the business defend itself when a regulator comes after it. The name leads many business owners to think it pays the fine. Across most of Australia it is now illegal for an insurer to pay, or for a business or director to be indemnified for, a WHS monetary penalty itself.
What has not changed is the size of the defence bill, and what your own policy pays towards it comes down to its wording.
So what pays your lawyer?
A management liability policy can, if it carries work health and safety cover. On the policies we place most often, that cover can pay the legal costs of the investigation and of the defence. If the investigation starts while your policy is running, the policy can pay your legal costs as a director. If the matter goes to court, it can pay your defence costs as the case runs, with the insurer's consent.
Management liability normally needs its own policy, separate from a business pack. On the management liability wordings we place, statutory liability is included by default, and it is very rare for us to place a policy without it. What each section does is on our management liability insurance page.
Is the whole limit there for your defence?
Not always. Say your policy limit is $1 million. Statutory liability can carry its own lower limit inside it. On some cheaper policies, that is a $250,000 sub-limit, while the directors and officers section (the part that protects you personally) can draw on the whole $1 million. If the regulator's defence sits inside statutory liability, the $250,000 is what you have. Other policies put the defence in a section of its own, and some of those put the company's own defence costs under a separate cap.
A cheaper policy can come with smaller caps, so read the price and the caps together. We go through that cap with you, and what a higher one costs, before you choose a limit.
If a regulator ever writes to you
Ring the broker who looks after your policy, or your insurer if you bought it direct, before you reply. The insurer's consent comes before defence costs are paid. Some policies tie the cover to the date the regulator's first notice arrives. On those, you claim on the policy in force when the letter came, so cover taken out afterwards may not pick up that investigation.
If we look after your policy, our specialist claims manager runs the claim with the insurer and follows up its progress, so you are not the one chasing it while you run the business. The broker who knows your business stays involved. A claim already being handled by another broker or the insurer stays with them.
Frequently asked questions
Can a sole trader get management liability?
Yes. Consolidated Insurance Brokers can arrange management liability for sole traders. The check is the same as for a company. Look at what the policy pays if the regulator comes, and whether a lower limit applies to it.
Will my public liability policy pay a WHS fine?
No. Public liability responds when someone is physically hurt or their property is damaged, and a work health and safety fine is neither. The cost of defending the case is where management liability comes in, if your policy includes that cover.
Will the policy help if the regulator only wants an interview?
It can, if your policy has that cover. The policies we place most often can pay the legal cost of attending an interview or producing documents for the regulator, and the cost of defending a prosecution.