What is a Principal Contractor and When Do I Need to Appoint One in Victoria?

If you are a property owner looking to commission construction works, it is important that you consider your obligations under the occupational health and safety legislation (OHS legislation) in Victoria. One of your key obligations is to appoint a principal contractor, who is responsible for ensuring the health and safety of people on the construction site. If you fail to comply with your obligations under the Victorian OHS legislation, you could face penalties which significantly affect your business. This article explains:

• what a principal contractor is;
• when you need to appoint one;
• your other health and safety obligations; and
• penalties for failing to comply with your OHS responsibilities.

Victorian OHS Legislation in the Context of Australian Law

The relevant OHS legislation in Victoria is consistent with the corresponding law in Western Australia. However, Victoria and Western Australia are the only Australian States that have not harmonised their OHS regulations with Commonwealth law. This means that you will need to consider your differing obligations if you are commissioning construction works in multiple States.

What is a Principal Contractor?

If you are commissioning a construction project in Victoria, you may need to appoint a principal contractor. This is a person who is appointed by the owner of a premises to:

• have management or control of the workplace; and
• discharge the duties of a principal contractor under the OHS legislation.

This role was established under the OHS to ensure that certain construction projects benefit from having a person responsible for the construction site’s:

• work;
• health; and
• safety.

Importantly, you can only appoint one principal contractor on a construction project. For construction works that involve multiple trades working at different times, you would typically make the head builder your principal contractor. They would then be responsible for ensuring the occupational health and safety of all other workers on the site, including:

• tilers;
• painters;
• plumbers; and
• electricians.

When Do I Need to Appoint a Principal Contractor?

In Victoria, you will need to appoint a principal contractor if the construction project is worth $350,000 or more. This is true for all construction contracts entered into or after 1 July 2014, when a new set of regulations replaced the old $250,000 threshold.

Construction work involves any development of a building or structure, including:

• alteration;
• building;
• conversion;
• fitting out;
• renovation;
• refurbishment;
• decommissioning; or
• demolition.

It is very important that you correctly appoint a principal contractor, otherwise you will be considered the default principal contractor. This will impose a range of obligations upon you to manage OHS matters for the entire construction project. Consequently, the risk of facing legal penalties for breaching these responsibilities will increase.Therefore, you should draft clear provisions into your contract with the person who you intend to make the principal contractor, to:

• appoint them as the principal contractor for the construction work being performed for you; and
• authorise them to control the workplace to the extent necessary to discharge the duties imposed on a principal contractor.

If you own residential premises where construction works are taking place and you engage a person to manage the workplace, they will be considered the principal contractor.

I’ve Appointed a Principal Contractor. What Are My Other Obligations?

In Victoria, you will not have many obligations placed on you as an owner commissioning construction work. This is a key difference between Victorian OHS law and the work health and safety legislation covering the rest of Australia.

However, to the extent that you have control or management of the workplace, you must ensure so far as is reasonably practicable that the workplace and the means of entering and leaving it are: 

• safe; and 
• without risks to health.

This means that, if you have engaged a builder to carry out office fit-out works and the builder does not have complete control or management of the workspace, you would still have to comply with this obligation.

You should ensure that your contract with the builder clearly sets out which party has management of the workplace.

What Happens if I Fail to Comply With My Obligations?

There are no penalties strictly related to the failure to appoint a principal contractor. Rather, you will become the principal contractor by default and be expected to meet a range of responsibilities under OHS legislation. This is undesirable because it opens you up to an increased risk of penalties should you fail to comply with these obligations.

If you have appointed another person as the principal contractor, you could still face a penalty for your remaining obligation, as outlined in the table below.

Key Takeaways

If you are commissioning construction works in Victoria with a value of $350,000 or more, you should appoint a principal contractor. This will help to minimise your responsibilities and risk, otherwise you will automatically become the principal contractor and need to fulfil all of the associated OHS obligations. Additionally, you will need to ensure the safety of people entering and exiting the site, to the extent that you have control or management of the workplace. You could face severe financial penalties for failing to comply with this obligation. If you would like legal advice concerning your obligations when commissioning a construction project, contact LegalVision’s construction lawyers on 1300 544 755 or fill out the form on this page.