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Section 37(2) Agreements

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There is some misconception about the Section 37(2) agreement at some organisations where I had the privilege to conduct legal compliance audits.

If a contractor conducting work on behalf of an organisation has signed an agreement in terms of section 37(2) of the Occupational Health and Safety Act, would the organisation remain responsible for the health and safety of contractors on their site?

VICARIOUS LIABILITY

Firstly, it is important that the organisation understands the basic principles of the doctrine of vicarious liability.

Employers are vicariously liable, under the respondeat superior doctrine, for negligent acts or omissions by their employees in the course of employment (sometimes referred to as ‘scope of employment’).

For an act to be considered as within the course of employment, it must either be authorised, or be so connected with an authorised act, that it can be considered a mode, though an improper mode, of performing it.

In other words, when an employee acts negligently while performing his duties and in so doing causes damages to a third party, his employer will be liable to compensate the third party for the damages caused.

This is a form of liability in our common law which is known as “liability without fault” – the employer did not commit a wrongful act himself and yet is held liable.

SECTION 37 OF THE HEALTH & SAFETY ACT

Section 37(1)(c) of the OHS Act in summary states that if an employee commits a contravention of the Occupational Health and Safety Act, the employer shall be presumed to have done or omitted to do that act, and the fact that he issued instructions forbidding any act or omission shall not in itself be accepted as sufficient proof that he took all reasonable steps to prevent this conduct.

This is therefore a form of vicarious liability as contained in legislation.

Section 37(2) further states that the situation as described in section 37(1) above also applied in the case of mandataries (which are contractors) unless the parties have agreed in writing to the arrangements and procedures between them to ensure compliance by the mandatary with the Occupational Health and Safety Act – hence the 37(2) agreement.

Note that this agreement only excludes the organisation from liability if the contractor contravenes the Act – so in this way vicarious liability in respect of contractors is excluded.

SECTION 9 OF THE HEALTH & SAFETY ACT

Section 9 places a duty on employers to ensure that all persons who are not in their employment (such as contractors) are not exposed to health and safety hazards.

It therefore goes without saying that organisations are still responsible to ensure that contractors are not exposed to hazards whilst conducting work on their behalf, even if they have entered into a section 37(2) agreement.

Further, the Construction Regulations also place duties on clients (the employer organisation) to manage, audit and supervise contractors on their sites.

It is quite clear therefore that it was never the intention of the legislator that an organisation escapes liability in respect of the health and safety of its contractors by signing the agreement – but rather that it only limits the employers’ liability in the cases where the contractor contravenes the Act.

The employer is still ultimately responsible to ensure that all parties on his site are not exposed to hazards, and could face penalties if this duty is not fulfilled.

  • Natalie Graaff is an admitted attorney. She regularly advises and assists clients with the drafting of their company specific Section 37(2) agreements.

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