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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 legislation (WHS). 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. 

In New South Wales, a construction project is any project that involves construction work, where the cost of that work is valued at $250,000 or more.

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.

Engaging 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 principal contractor.

Importantly, you must correctly appoint a principal contractor. Failure to do so would result in the person commissioning the construction work (for example, the landowner) remaining as the principal contractor. If this occurs, they will become liable for the overall management of work health and safety for the project. 

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 for 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. 

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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. By having a well-drafted work health and safety clause within your construction contract, you ensure 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

What is a principal contractor?

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. 

Does my construction contract need a health and safety clause?

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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