Recent decision: Are Principal Contractors responsible for all safety matters on site?
The decision in the recent case Diona Pty Ltd v SafeWork NSW [2024] NSWIRComm 1068 highlights that a Principal Contractor of a construction project is not necessarily responsible for all subcontractor work activities on site.
In late 2022, an employee of a Diona subcontractor was seriously injured during pipe laying works when the employee entered an exclusion zone and was struck by a pipe. SafeWork NSW issued an improvement notice (IN) to Diona stating that they should be ensuring subcontractor compliance with their Safe Work Method Statement (SWMS). Diona applied for an external review of the IN and were successful in having the notice revoked in November 2024.
Key facts associated with the case include:
Diona engaged E&M Cahill Pty Ltd (Cahill), who then subcontracted Country to Coast Services Pty Ltd to undertake pipe laying activities.
The SWMS prepared by Cahill for the works had been reviewed and approved by Diona.
Diona did not have their own SWMS for the pipe laying activity
The works being undertaken were under direct supervision of the subcontractor and not Diona. No Diona employees were at the work site at the time of the incident.
Diona had conducted forty (40) formal inspections/observations on Cahill prior to the incident whereby no significant safety issues had been identified.
Diona disputed the extent they, as principal contractor, should be accountable for monitoring and enforcing compliance of the sub-contractor’s obligations along with some discrepancies in the way in which the IN was issued and the adequacy of evidence gathered and investigated by the SafeWork inspector.
The details considered by the Commission in reaching their decision include:
Diona was not deemed to be actively involved in supervising the specific work activities which were the subject of the IN.
The SafeWork inspector did not make appropriate inquiries into the relationship between Diona and the two subcontractor companies involved.
During cross examination, the SafeWork the inspector conceded that the improvement notice should also have been issued to one of the subcontractor companies.
The SafeWork inspector did not spend adequate time reviewing the large volume of information provided by Diona in regards to the incident (i.e. less than one hour).
The SafeWork inspector did not have sufficient information to form a reasonable belief that Diona was breaching its obligations.
According to the official ruling (which can be found at Diona Pty Ltd v SafeWork NSW [2024] NSWIRComm 1068), if the inspector had conducted a proper analysis of the relationship between all three parties, an IN could have been validly issued to Diona as well as the subcontractor (Cahill). As such, Diona although Principal Contractor of the project, were not wholly responsible for these activities on site.
Key takeaways
When engaging the expertise of subcontractors for specialist tasks, a Principal Contractor of a project does not necessarily take on all safety responsibilities. Principal Contractors have overlapping obligations with its contractors and other PCBUs however it is important to understand how far those duties extend. This can be established through methods such as:
Clearly assigned safety responsibilities within contracts and project documentation
Verification and assurance activities of all subcontractors e.g. regular documented inspections, observations and audits
Thorough investigation of incidents and near misses
Proper record keeping of all assurance activities
Do you need more clarity regarding project contractor management and assurance? Shared Safety and Risk have been specialists in contractor audit and assurance for many years and are currently providing ongoing assurance activities to the largest energy infrastructure projects in NSW. We can assist in all aspects of contractor management including system design and development, implementation and audit and assurance activities. Feel free to reach out at info@sharedsafetyandrisk.com.au.
