South Australia moves to prevent insurance “loophole” for OHS fines

After being given a $200,000 criminal fine for safety breaches that led to the death of an employee, a company director avoided personally paying because he was indemnified under an insurance policy.

The Industrial Magistrate was scathing of the director’s avoidance of the penalty and now the South Australia looks set to close this liability “loophole”.

South Australian Attorney General John Rau (also Minister for Industrial Relations) said that he would investigate Federal and State-based solutions to close the loophole allowing such “dodging” of liability. It is unclear at this stage how he will go about effecting such change. The difficulty he will face is preventing a commercial agreement between two parties, neither of whom wish to invalidate the arrangement. This will be an interesting area to watch, both in South Australia and nationally and may have serious implications for directors.

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