Key takeaways: Outsourcing services to third‐party contractors is common among organisations who are known as a Person Conducting a Business or an Undertaking (PCBU) in Australia and New Zealand. In fact, the International Association of Oil and Gas Producers (IOGP) indicates that many organisations are using contractors up to three times as often as company employees. See the full article below to read more about the following:
Outsourcing services to third‐party contractors is common among organisations who are known as a Person Conducting a Business or an Undertaking (PCBU) in Australia and New Zealand. In fact, the International Association of Oil & Gas Producers (IOGP) indicates that many organisations are using contractors up to three times as often as company employees. Outsourcing provides organisations flexibility and a way to secure expertise on an as-needed basis. However, these third-party contractors can expose companies to risks in several areas, such as worker health and safety, environmental sustainability, property, and business reputation. In IOGP’s 2018 data, for example, serious incident and fatality rates for contractors were reported as four times higher than company employed workers.
By law in Australia and New Zealand, a PCBU has a primary duty of care to its workers, including contractors. According to Australia’s Comcare, PCBUs must ensure any active contractor has the knowledge it claims to have, and that appropriate safety systems are in place. They must also, so far as is reasonably practicable, review and verify contractors are complying within their systems. A PBCU cannot contract out its Work Health and Safety (WHS) duties. That duty involves undertaking everything that is reasonably practicable to ensure all workers are safeguarded from risk to their health and safety.
Officers in Australia and New Zealand have a duty to exercise due diligence to ensure that the PCBU complies with its health and safety duties. Officers must take reasonable steps to support the PCBU’s health and safety culture, accountability, allocation of resources, implementation of appropriate systems and development of appropriate policies.
Compliance and Due Diligence
Compliance and due diligence are often closely associated; however, they are principally different. Each situation and each workplace is unique, therefore what might constitute adequate due diligence in one case may be inadequate in another.
With regards to Officer duties, compliance can be described as meeting minimum requirements achieved by following pre-determined regulations outlined by legislation, as a means of managing all types and levels of risk.
According to Australia’s Comcare, due diligence is a proactive safety management approach that effectively supports the systematic identification and assessment of workplace hazards and risks. In doing so, diligent control measures are formed to prevent workplace injuries and illnesses. Due diligence is often closely connected with the term ‘best practice’ and forms the basis of industry proven processes to minimise the risk of safety incidents occurring.
Comprehensive Contractor Management Systems
Well-developed and properly implemented health and safety programs are necessary to minimise workplace injuries, illnesses and fatalities across a myriad of job tasks and environments.
Thorough contractor management programs help ensure that everyone, both employees and contractors, are aware of the hazards associated with the work they perform, as well as understand how to perform their job safely. Open communication allows workers to understand expectations, requirements and provide feedback.
Hiring organisations can set and communicate clear expectations and requirements about safety systems and performance. They should find ways to facilitate and encourage collaborative feedback from contractors through consistent and ongoing consultation on applicable health and safety matters. Actively engaging contractors to participate in safety management processes and activities strengthens safety culture.
An effective and thorough contractor management system helps centralise critical information. These systems allow a hiring organisation to track, review, verify and monitor both company and employee-level qualifications along with licencing, trainings, competencies, performance, and other pertinent information in a single platform.
Due Diligence and the Contractor Management Lifecycle
Continual monitoring throughout the contractor management lifecycle, allows an organisation to actively assess and measure contractor health and safety systems. Unlike a point-in-time assessment, ongoing monitoring helps PCBU officers gauge contractor performance against internal systems, manage expectations, and track performance indicators as they change and evolve. Open communication and ongoing monitoring can support safety improvement through the contractor lifecycle for both contractor and client with the potential for positive safety outcomes, strong working relationships and reduced site incidents.
Learn More
ISN assists Hiring Clients, PCBUs and Officers exercise due diligence by supporting the complete contractor management lifecycle with access to a configurable contractor management platform. The ISN team provides guidance on global best practices and industry knowledge with a combined more than 1,800 years of experience in HSEQ, risk management and data science.
To learn more about ISN’s resources to support your contractor management and due diligence goals, please contact the team at isnaustralia@isn.com or isnnewzealand@isn.com.