One would think there are enough risks being a director of a private or public BC company but, here’s one more you need to be aware of – Workers Compensation Act.
Most directors will be aware of WorkSafeBC and legislation whereby workers and employers do not sue each other regarding injuries occurring in the workplace. Premiums are paid by employers and workers enjoy protection for wage loss and other benefits in a no fault scheme.
Part 3 of the Act is entitled “Occupation Health and Safety”. This section has provisions to promote occupational health and safety and protection of workers through education, accident prevention programs and consultative relationships. These provisions apply to every employer in B.C.
To achieve this function WorkSafeBC establishes standards and requirements for the protection of the health and safety of workers. These regulations cover things such as inspections, investigations, worker health and safety representatives, education, creating health and safety programs and other activities to promote occupation health and safety.
Every employer must ensure the health and safety of its workers and comply with WorkSafeBC regulations Under Part 3 of the act, workers, supervisors of worker, owners, suppliers and directors have duties related to promoting and ensuring occupational health and safety.
Section 121 of the Act stipulates that “every director and every officer of a corporation must ensure that the corporation complies with this Part, the regulations and any applicable orders”.
Directors must be alert to this section.
Take the example in the media recently of a mushroom growing and composting business where workers were killed and seriously injured by poisonous gas encountered when they were working in a closed environment on a plumbing system. This type of work had been performed many times in the past with no problem, but on the day in question, a rather unforeseeable sequence of events resulted in tragedy.
Had the directors of this company observed section 121 and made sure that the corporation had complied with Part 3, the regulations and any applicable orders? The directors included both an active director and a silent director who really had little to do with the operation and management of the business.
WorkSafeBC concluded that the workers were not properly trained and informed through an adequate occupation health and safety program, among other concerns. WorkSafeBC referred the breach by the employer and directors of the health and safety regulations to the Crown and charges were laid not only against the employer but the active director, silent director and a supervisor.
The fines for this type of offence can amount to hundreds of thousands of dollars and a prison sentence not exceeding 2 years.
The three accused directors and supervisors plead guilty and were fined substantial amounts by the Court. These fines included a director who had very little to do with the operation and management of the business.
Directors should be alert to Part 3 of the Act and Section 121 because if a serious accident occurs and the regulations have been breached by inadequate attention to occupational health and safety in the workplace the director may face personal responsibility and prosecution for substantial fines and imprisonment.
This article by David Hobbs was quoted in the Vancouver Board of Trade Sounding Board, March 2012.