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NSW changes to legislation for Work Health and Safety breaches put businesses at risk

One of our senior legal experts David Newey, Partner at Gillis Delaney, reviews the sweeping WH&S reforms affecting businesses and insurers in New South Wales earlier this year.

On 10 June 2020 the Work Health and Safety Amendment (Review) Act 2020 (NSW) commenced operation, making it unlawful to enter into, provide or benefit from an insurance or indemnity arrangement for a WH&S fine in NSW. Insurance for WH&S fines and penalties is still lawful in all states and territories other than NSW. The amendments highlight the importance of having insurance policies covering the legal costs of responding to a WH&S investigation or prosecution.
As a consequence of the reforms, businesses are not permitted to:
- enter into an insurance contract that provides cover for the business and or its employees for fines imposed for breaches of the Work Health & Safety Act 2011;
- enter into employment contracts or contracts with subcontractors where the business agrees to cover the employee or subcontractor for fines imposed for breaches of the Work Health & Safety Act 2011;
- entering into contracts generally which contain clauses that provide that one party to the contract must cover the other party for any liability for fines imposed for breaches of the Work Health & Safety Act 2011.

The reforms have a great impact on the business landscape as insurance policies that contain provisions for WH&S fines commencing before 10 June 2020 are no longer able to cover any fines or penalties occurring on or after this date. Statutory insurance policies and management liability insurance policies now provide less protection however the industry has not seen insurers rush to refund or reduce premiums even though they can no longer insure WH&S fines. Although the prohibition only applies to fines, businesses are still able to insure against legal costs incurred in regards to investigations or defence to avoid prosecution in a WH&S matter.

After 10 June 2020, when it comes to WH&S investigations and prosecutions, businesses in NSW can only arrange insurance cover for legal expenses for the business, officers of the business and employees to protect their interests in investigations concerning workplace accidents and potential breaches of the Work Health & Safety Act 2011 and any prosecutions.

Businesses can now look to Legal Expense Insurance as a real alternative to provide cover for legal costs for investigations and prosecutions.

ARAG’s Business Legal Expense Insurance provides this cover to businesses and its officers and employees for the legal costs incurred in investigations concerning workplace accidents and potential breaches of the Work Health & Safety Act 2011 and prosecutions. ARAG’s Legal Expense Insurance premiums are not calculated by reference to the cost of WH&S fines.

In addition to the WH&S cover ARAG’s Business Legal Expense insurance offers cover for various business-related events such as disputes against employment contracts, employee protection and tax investigations.

There is a real alternative for statutory fines insurance and management liability insurance when it comes to cover for business legal costs incurred by a business when the regulatory body investigates workplace accidents.

For a comprehensive understanding of how Legal Expense Insurance can benefit your business contact us at

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