How to protect your business against non-compliant cladding

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The UK’s Grenfell Tower disaster has had widespread implications for professionals in Australia’s construction industry. Here’s how to help protect yourself if you’re a contractor who’s worked on any Australian building project.

The UK Grenfell Tower disaster claimed the lives of 72 people on 14 June 2017.

The tragedy unfolded on television and computer screens around the globe, serving as a sharp and tragic wake-up call to governments and regulators around the world that cheap, non-compliant cladding materials could create devastating fire hazards for high rise buildings.

In Australia, the threat combustible cladding poses remains very real. As evidenced by a recent fire at an inner city high-rise in Melbourne that forced the evacuation of hundreds of residents and required more than 60 fire fighters to bring it under control.

Authorities and insurance companies have been quick to put new procedures and policies in place, including the Victorian Cladding Taskforce and NSW’s Fire Safety and External Wall Cladding Taskforce

In NSW, new laws require owners of existing buildings with combustible cladding that fall within specified categories to register their building with the NSW Cladding Registration portal by 22 February 2019.

As non-compliant buildings are identified around the nation, owners may be ordered to remove the cladding from their buildings.

This has been seen already at the Lacrosse tower building in Docklands, Melbourne, which caught fire in 2014. In turn, the apartment owners are now suing the builder and other consultants to cover the costs.

“They’ve initiated legal action against the builder and a lot of the consultants who worked on the project,”  explains Steadfast’s Broker Technical Manager, Michael White.

“Because one thing about all these kinds of situations is that anybody who had anything to do with the project, no matter how remote, can get sued.”

To view the full article, please visit Steadfast Well Covered here.

Tougher transport laws

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Penalties to Hit Harder

Recent changes to transport laws now hold more individuals and companies in the transport chain accountable for breaches.

The Heavy Vehicle National Law (HVNL) commenced in 2014 and applies in all States of Australia except Western Australia. The legislation applies to all vehicles that have a GVM (Gross Vehicle Mass) or ATM (Aggregate Trailer Mass) of more than 4.5 tonnes.

The HVNL makes complying with transport laws the responsibility of everyone in the transport chain, not just drivers and operators. This approach recognises that actions, inactions and demands made by off-the-road parties play a role in road safety.

Under the chain of responsibility provisions of the HVNL, consignors, packers, loaders, schedulers and consignees must all take reasonable steps to prevent breaches of laws in relation to mass, dimension, loading, speed and fatigue. As well, an ‘executive officer’ of any party in the chain can be responsible for a breach of the law by another party if they knowingly authorised or permitted the conduct or if they knew or ought reasonably to have known that there was a substantial risk that an offence would be committed.

The potential penalties under the legislation are significant. For example, the maximum penalty for a single offence involving a critical breach of the fatigue regulations is $15,000 for an individual and a five times multiplier (making the penalty $75,000) can be applied if the offender is a corporation. The offence of tampering with a speed limiter attracts a penalty of $10,000. Similar fines apply for offences such as severe overloading or speeding. The law also provides for heavy penalties to be imposed on parties who enter into contracts that encourage or provide an incentive for any party in the chain of responsibility to speed.

In addition to fines and penalties, the legislation gives the courts power to impose penalties that reflect the commercial benefits that an offender has derived from offences. Persistent offenders can also be subject to intervention orders and prohibition orders banning them from being involved with the transport industry for up to one year.

Pollution Liability Insurance

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A Must-Have For Many Businesses

Many business owners are unaware their standard business package insurance will not cover pollution remediation. It’s likely that contractors and other professionals working on major infrastructure and construction projects will have appropriate cover, but the cover is not just for heavy industry. Businesses with high risk include dry cleaners and hair salons due to chemicals they store and use. Service stations are vulnerable because of the potential leakage from underground storage tanks and pipes corroding over time.

Recently there was a $300,000 clean-up claim from a contractor that had serviced pipes at a petrol station. An explosion at a sewerage plant, some kilometres away, was traced back to the service station, and it was discovered that pollutants had flowed into the water table.

Pollution incidents are not confined to heavy industrial sites, they can also be caused by small businesses or individuals such as contractors or subcontractors – for example, due to a failure to install proper sediment controls while undertaking earthworks.

Independent contractors need to protect themselves against any claims of damage caused by the work they do or have done. One type of cover that may be suitable is pollution liability insurance. This cover protects an entity against liability from damage caused by hazardous waste materials. The reality is that environmental clean-up projects can cost millions of dollars.

It’s too late to buy cover if you cause an incident and you should be aware that pollution liability is not covered under a general liability policy. Some policies may provide coverage only for sudden and accidental events, but exclude gradual pollution events and the cover may specifically exclude clean-up costs.

Mould, Legionella, noise and odour are also considered pollutions and may be covered by an environmental insurance policy.

If you think you may have a risk of hazardous waste exposure in your business operations, it is a good idea to consult with your insurance broker about the need for pollution liability insurance.

Closing your Business?

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Don’t Cancel Your Cover

The business has closed, it’s no longer trading, no more parts or products being manufactured or imported. No more installations or maintenance. No goods for sale.

So, time for retirement or a change in direction. We just need to cancel the insurance.

Well, not exactly. There is an element of insurance risk for a business once they have ceased trading. For a tradesman it would be the work they have installed and maintained which may cause an incident at a later date. An example would be a switchboard that causes a fire due to faulty wiring. The loss may cause subsequent damage to a building or worst case, death or injury. The time of loss is determined to be the occurrence date, therefore cover may have existed when the switchboard was installed but it should have still been in force when the incident occurred.

For the manufacturer of goods, their products may be discontinued but the element of risk remains if they cause damage or injury at a later date. So how long do you maintain run off cover?

Ideally, up to seven years is the industry standard. But not all businesses need cover for that long. For example, a restaurant would know within days or weeks of potential claims rather than years. Various States have their own legislation requirements and these would need to be addressed to clarify your situation.

Examples of run off cover for classes of insurance would include Public and Products Liability / Professional Indemnity / Directors & Officers Liability (Management Liability). Advice from your broker should be sought in these cases as to which basis of wording applies and any interruption to cover should be avoided so a claim won’t be jeopardised.

When a business is sold, the risk of potential future claims may be transferred to the new owner but this can’t be assumed, it would be negotiated and details of the sale would need to be reviewed with legal opinion.

The good news regarding run off cover is that it does get cheaper year after year due to decreasing exposure, subject to no claims activity. You can also negotiate a number of years up front with an insurer. This is suggested if a sale of the business occurs or retirement beckons. Be sure to get both legal and insurance advice for peace of mind. You can then close the door with confidence.

Workers Comp in QLD

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Changes on the Way

With the recent election of the Labor government in Queensland, the repeal of the impairment threshold for access to common law claims arising out of workplace injuries seems imminent.

Changes to the WorkCover scheme, introduced in October 2013, meant that workers assessed with 5% impairment or less do not have access to claims for common law damages against their employers. Consequently, injured workers who do not meet the threshold are more likely to make direct claims against other parties, such as host employers, occupiers and contractors. Those parties in turn will inevitably seek indemnity and contribution from employers, where they have a right to sue under the contractual agreement between the parties.

The introduction of the threshold was intended to reduce common law claims for employers, thereby resulting in reduced workers’ compensation premiums. However, in practice, it has caused problems for employers in other areas.

Notably, in many instances, employers may be uninsured for claims by third parties because other insurance arrangements that employers have in place, such as public liability policies, may not respond to these claims.

The repeal of the impairment threshold will give back to workers the right to access common law damages against employers. This will likely reduce issues for employers regarding claims made under contract by third parties, and transfer the exposure back to WorkCover Queensland.

While the repeal of the threshold appears to be imminent, it remains to be seen whether the Labor government can or will remove the threshold retrospectively.

It is important for employers to ensure they understand their rights and obligations under the workers’ compensation regime, and are aware of how contractual agreements with third parties may impact on these rights and obligations, and what additional insurance arrangements may be required to adequately protect themselves against third party claims.

ATO turn the spotlight on employees as contractors

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The Australian Taxation Office (ATO) has stated their intention to increase their audit focus on businesses that use contractors.

An incorrect employment classification of an employee / contractor could be a breach of both ATO and Workers Compensation legislation.

If ATO determine that your contractors are employees, you would have a shortfall in your Superannuation and PAYG payments and subsequently incur interest and penalties. In theory ATO can go back an unlimited period to collect the superannuation and PAYG for employees.

In past years there was confusion for business owners about the definition of a worker as the ATO definition was different to WorkCover Queensland’s definition.

Today the definitions have been aligned. WorkCover Queensland has adopted the same definition as the ATO who supply a simple online decision tool to identify ‘Employee or Contractor’.

You can check your circumstances by logging on to:

http://www.ato.gov.au/Calculators-and-tools/Employee-or-contractor/

You are asked to answer a series of questions

  • Is there an Agreement in place with the individual
  • Occupation of the individual
  • Does the individual have an ABN
  • Details of Subcontracting arrangements
  • Basis of payment for services
  • Responsibility for provision of equipment / tools
  • Who is responsible for Rectification of work?

At the end of the questionnaire a decision is provided based on answers given. You are able to enter personal details and a report can be produced for you to print /save. Retain a copy for your records and if audited, you have a documented basis on which you made your decision.

An important factor is the existence and content of a written agreement between you and the individual. You should consider obtaining legal advice in regard to any contractor’s agreement.

It is important to discuss all your labour arrangements with your CQIB insurance broker as contractor or labour-hire alters your exposures hence the need to tailor your insurance program to your specific needs.

 

Pre-existing injury disclosure…employers can ask

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Late last year the Queensland government made some significant changes to the Workers’ Compensation and Rehabilitation Act 2003. One particular change that employers should be aware of is that employers may now ask a prospective employee to disclose any pre-existing injury or medical condition that they believe or should suspect would be aggravated by the duties of the position applied for.

Further, the employer is entitled to access a prospective employee’s claims history. The request must be in writing and the prospective employer needs to provide the prospective employee with information about the nature of the duties involved in the job. They also need to advise the prospective employee that if they do not comply with the request, or supply false or misleading information, they will not be entitled to compensation or damages under the Workers’ Compensation and Rehabilitation Act 2003 for any event that aggravates the non-disclosed pre-existing injury.

The prospective employer may also apply to the Workers’ Compensation Regulator for a copy of the prospective worker’s claims history. The application needs to be in the prescribed form and requires the prospective employee’s consent. This information can only be used by the prospective employer for the purpose of considering that person’s application for employment.

Whilst these changes will definitely be beneficial to employers, employers need to be mindful that they still need to comply with discrimination laws and the Fair Work Act 2009 (Cth) when considering a prospective employee’s application for employment. If a prospective employee discloses a pre-existing injury and they can establish that the employer has discriminated against them based on their knowledge of that pre-existing injury the employer may be liable to pay compensation.

Employers will also need to take account of a possible increased exposure to negligence claims in circumstances where the employee has made disclosure of pre-existing injuries or conditions. If an employer has knowledge that the employee suffers from a pre-existing injury this may give rise to a special or higher duty of care to that employee than it would otherwise owe as a result of being furnished with that knowledge.

Before making any changes to their employment practices based on these changes it is recommended that expert advice be sought regarding the above matters.

 

Household workers need cover too

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Do you have a regular gardener or cleaner at your home or holiday home? Or maybe you have a paid child-minder at your residence on your social nights out? Have you considered if you require Household Worker Insurance?

If you have paid help at your domestic residence, Household Worker Insurance is critical. A single work-related accident can leave you, the employer, liable for thousands of dollars in medical bills. Even worse, it could lead to a common law claim, which could involve a lump sum payment for loss of future earnings, pain and suffering, permanent impairment etc., which could amount to millions of dollars.

Don’t assume you have domestic worker protection under your home and contents policy.

Under the Household Worker Insurance policy offered by WorkCover Queensland, you are covered for the cost of compensating a household worker in your employ who sustains a work-related injury while working for you. These costs may include lost wages, travelling expenses, hospital, medical and rehabilitation expenses and other associated costs.

The policy is only $50 for a two-year term. For more details head to the WorkCover Queensland website or contact your insurance broker.

 

Travel Compensation Fund scrapped – Holiday plans at risk

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Nothing spoils a holiday more than being stranded following the financial collapse of a travel operator. Until recently, a traveller’s problems with a travel agent or transport operator going belly-up had some protection offered by the Travel Compensation Fund. This government legislated fund compensated travellers if the operator or agent collapsed and failed to account for money paid by you the traveller.

However, this particular safety net is no more. From 30 June 2014 the Travel Compensation Fund is closed. The fund has been replaced with a series of insurance options for the prospective traveller; one of these is ‘end provider insurance’.

Choosing the right cover is important.  A possible complication is that some insurance provider organisations may suggest that two insurance covers are now required – one to cover the usual travel risks and a second to cover insolvency of the travel agent or transport operator.

Not all insurers cover insolvency; in fact some of Australia’s best known travel insurer agencies do not offer this cover so a wise traveller will select a Comprehensive Travel policy that covers both risks.

Check also that your travel policy wording includes insolvency with a limit of at least $10,000 cover for a single traveller or $20,000 cover for a family for the costs that can be incurred in rebooking or cancelling your journey.

Another tip before selecting your transport operator is to check if their name appears on the Travel Insurer’s website which lists airlines that have a history of financial stress. If you purchase an airfare with one of these stressed airlines you are not covered in the event of the airline entering receivership. These lists are regularly updated to reflect the financial status of an airline, either adding or removing airline companies as situations change.

An example was Air Australia / Strategic Airlines which became insolvent in February 2012 when the airline halted all flights and went into administration.

Your insurance broker is best placed to make sure you have the right travel insurance policy and your best chance of having that happy holiday.

 

Employers’ Rights – WorkCover claims questioned

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Employers are sometimes faced with a situation where they disagree with a decision of WorkCover to accept a claim for statutory benefits made by one of their employees who allege that they have been injured during the course of their employment. The employer may disagree with the acceptance of the claim for a variety of reasons, including a belief that the claim is fraudulent or that the injury did not actually occur at work.

Many employers do not appreciate that they have a right to challenge such a decision. If an employer is unhappy with a decision made by WorkCover on a claim they can seek to have the decision reviewed by the Workers’ Compensation Regulator. Conversely, an employee whose claim is rejected can also seek a review of the decision.

The Workers’ Compensation Regulator is a body independent from WorkCover Queensland and is required to impartially review decisions made by WorkCover.

There is no cost involved in having a decision reviewed by the regulator, other than, of course, if the employer chooses to engage legal representatives to assist them with the review application.

Once WorkCover has made a decision on the claim the employer is entitled to ask for written reasons for the decision within 20 days of being notified of the decision.

WorkCover has five business days to supply the employer with the written reasons for the decision. The employer then has 3 months from the date of that letter to apply for a review with the regulator. The employer is entitled to provide the regulator with additional evidence it wishes to rely on in support of the review application.

The regulator has 25 business days to hand down a review decision unless an extension has been agreed upon. The employer has a “right of appearance” on the regulator during the review process, which can either be done in person or over the phone. It is not necessary to have legal representation during the review process.

If either party is unhappy with the ultimate decision of the regulator they can appeal the decision to the Queensland Industrial Relations Commission. The regulator will normally appoint legal representation to defend their decision in the Industrial Relations Commission. Should the worker appeal the review decision the employer needs to apply to the Commission for the right to be heard on the appeal.