It is essential to include a workplace health and safety clause in a construction contract, particularly if you engage contractors. By including a clause related to workplace health and safety, you can require your contractors to comply with their obligations under the relevant Work Health and Safety (WHS) legislation. For some construction projects, you might need a ‘principal contractor’. Likewise, principal contractors have additional responsibilities under WHS legislation. This article considers when and how to engage a principal contractor and terms to include in a WHS clause.
Workplace Health and Safety Laws
There are federal laws that cover workplace health and safety, as well as different legislation in each state and territory. So, the relevant laws to your project will differ depending on where your project is located.
Principal Contractors
Under the WHS legislation, every ‘construction project’ must have a principal contractor. A principal contractor is either the person who commissions the construction work or another person appointed as the principal contractor.
So, suppose a landowner engages a contractor to design and construct a factory on their land. The factory is in New South Wales, and the project is worth $250,000. In this case, the landowner would be the default principal contractor unless they properly appoint the contractor as the principal contractor.
Continue reading this article below the formEngaging a Principal Contractor
There can only be one principal contractor for a construction project at any one time. Using the above example, suppose the landowner wishes to engage the contractor as the principal contractor. So, they need to authorise the contractor to have management or control of the workplace and discharge the duties of the principal contractor.
Note that an appointment of a principal contractor should be in writing, and the principal contractor must accept it. This is where a construction contract becomes relevant. The construction contract should include clear provisions requiring the contractor to acknowledge and agree that they are:
- engaged as the principal contractor for the construction work being performed; and
- authorised to have management or control of the workplace and discharge the duties imposed on a principal contractor under the WHS laws.
The contractor would then accept the engagement to be the principal contractor by signing the construction contract.
Engaging Other Contractors
Additionally, your construction contract should always include a WHS clause. This is the case even if the contractor you are engaging is not the principal contractor.
Likewise, this clause should require the contractor to provide assistance to the principal contractor (to allow the principal contractor to comply with its WHS obligations) and otherwise comply with their own obligations under WHS legislation.
Key Duties Under WHS Legislation
The principal contractor has duties to ensure the health and safety of workers and others while they are engaged to perform work on a construction project. A principal contractor must:
- manage and control WHS risks associated with the project;
- eliminate, or if not practicably possible, minimise health and safety risks;
- secure the workplace from unauthorised access;
- display signs visible to outsiders highlighting their name, 24-hour phone number and site office location;
- prepare a work health and safety management plan before starting the project, and keep updating this as the project progresses.
Other key duties under this legislation applicable to contractors are:
- taking reasonable care of their personal wellbeing and safety;
- ensuring they do not harm other persons by their actions or inactions;
- complying with the orders or instructions of the principal contractor, so far as is reasonable; and
- complying with any workplace policy or procedure aimed at increasing workers’ safety generally.
Important Considerations
When drafting the WHS clause in your construction contract, there are further considerations to note.
- If engaging the contractor as a principal contractor, ensure that you make this engagement properly.
- Include a provision requiring the contractor and their personnel to comply with relevant WHS legislation and any safety procedures applying on the site.
- Require your contractors to guarantee their tools and equipment are safe and used in accordance with any applicable safety procedures.
- Require your contractors and their personnel to attend work health and safety training and raise any safety concerns.
- Ensure the contract allows you to remove any of the contractor’s personnel if you become concerned about their performance concerning work health and safety.
- Pass on a responsibility to your contractors to report any incidents, accidents or near misses.
Penalties
Each state or territory has a regulatory body that looks after health and safety on construction sites. There can be severe penalties for a principal contractor if you or any of your workers breach WHS laws. In addition, a government regulator can issue an improvement notice or prohibition notice or may choose to issue you with a fine if the situation is serious.
You may receive an improvement notice if a safety issue needs to be fixed. You will generally have a specified period to fix that issue, but the worksite can continue operating while you are resolving the issue.
Likewise, you can receive a prohibition notice where the safety issue poses a serious risk to the health and safety of workers. A prohibition notice means that you have to stop work immediately and rectify the safety issue before workers can be allowed back on site. It may also include instructions on changing how workers carry out a particular activity.
As an employer, understand your essential employment obligations with this free LegalVision factsheet.
Recent Amendments to Workplace Health and Safety Laws
In March 2023, the Federal Parliament passed the Work Health and Safety Amendment Bill 2022 (Bill), introducing a series of amendments to the Commonwealth Work Health and Safety Act 2011 (Cth) (WHS Act). These changes, effective from September 21 2023, encompass significant alterations to strengthen workplace safety measures and refine the law.
The amendments brought about by the Bill include:
- Introducing a negligence element to certain offences under the WHS Act, as an alternative to the existing standard of recklessness.
- Creating a new offence for body corporates or individuals to prevent them from contracting out of the requirement to pay a fine for WHS offences, whether by use of an insurance policy or by way of contractual indemnity arrangements. Contract terms or other arrangements covered by this provision will be void to the extent they contravene the new requirement.
- Significant changes to Comcare inspectors’ powers. For example, an inspector may, within 30 days of entering a workplace, issue a written notice requiring the production of documents, written answers to specific questions, or attendance at an interview, provided the request is related to the reason for entry.
- Clarifying that Comcare may share information with other persons, including corresponding regulators, for the purpose of performing functions under relevant laws;
These amendments align with recommendations stemming from the 2018 review of the Model WHS Laws. They aim to strategically address operational intricacies and bolster the efficacy of safety legislation in practice.
Key Takeaways
Every construction project must have a principal contractor. Notably, consider the state or territory threshold for a ‘construction project’. In New South Wales, this is a project worth $250,000 or more.
The law will treat the principal contractor as the person conducting a business taking (PCBU) commissioning the project, unless they authorise another person to be the principal contractor. Your construction contract is relevant when making this appointment, and you should also include a work health and safety clause. Having a well-drafted work health and safety clause within your construction contract ensures that all contractors comply with their WHS obligations and reduce the risk to your business.
If you need help with your construction contract, our experienced construction lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 1300 544 755 or visit our membership page.
Frequently Asked Questions
A principal contractor is either the person who commissions the construction work or another person appointed as the principal contractor. The principal contractor has duties to ensure the health and safety of workers and others while they are engaged to perform work on a construction project.
Always include a health and safety clause in your contracts. Note that there can be severe penalties for a principal contractor if you or any of your workers breach WHS laws.
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