Jack and his team were exhausted. The coronial inquiry into the death of the Newcastle worker had taken 13 months. 13 months of flying to and from Melbourne and Sydney. 13 months of giving evidence on their management, quality and operational processes before the coroner. 13 months of saying “no comment” to the pushy journalists that trailed them everywhere. Jack had even had a journalist track him down at home and try to interview his wife: he put a quick stop to that!
And while the coronial inquiry was going on, sales dropped off. Jack wasn’t sure exactly why, but the coronial inquiry seemed to sap morale, with his best sales people leaving and the rest just marking time. Or maybe it was the fact that the leadership team just weren’t around much of the time. Or maybe the market was spooked by the death of the Newcastle worker.
Jack tried to get the business back on track by working extra hard. One night when he was going through his overflowing in tray, he spotted an official-looking envelope. His heart lurched when he saw it was from the ACCC (Australian Competition & Consumer Commission) … Just when Jack thought it couldn’t get any worse, a notice from the ACCC turns up.
What are your obligations when your product fails?
Running a safety business is hard enough, but when a product fails, it is literally a matter of life and death. Jack’s first reaction was to deal with the immediate fallout from failure of the harness: the angry widow, the coronial inquiry, the press and the shock of his staff. All of this meant that Jack forgot to make the mandatory report required under the Australian Consumer Law.
Since 1 January 2011, all suppliers have to make a report within two (2) days of becoming aware of any death, serious injury or illness of anybody connected with their product. Some of you might be thinking “Thank goodness I’m not in manufacturing” or “Luckily, we don’t sell consumer products”, but you might be in deeper than you think! The definition of “supplier” in the Australian Consumer Law is very broad, and includes retailers, dealers, hirers, distributors, installers, repairers, importers, manufacturers and exporters. So basically, everyone in the supply chain. And “consumer goods” can be (with some limited exceptions) anything up to $40,000 in value. So if you think importing safety products from overseas will get you off the hook, you couldn’t be more wrong!
What happens if you don’t report?
Let’s face it, we live in the information age, and while it might take some time, regulators will sooner or later hear about it if your product causes death, injury or illness. And when they do come knocking, it isn’t the kind of thing that is easy to hide: anyone can see the RIP Facebook entries, the condolence messages on Twitter or the postings on a message board.
Regulators like the ACCC have a number of powers they can use if you fail to notify within two (2) days of an incident. It’s not just money (yes, the fines are between $3,300 for an individual or $16,650 for a company), but the fact that you can be found guilty of a criminal offence. No jokes here; you’ll have a criminal record. And having a criminal record can affect many things: where you travel to, what you can do for a living and levels of access to sensitive information just to name a few. It’s much more than a speeding offence.
What should Jack do from here?
Once Jack got over the shock of seeing the notice from the ACCC, he convened a meeting with Brian, his right hand man and Head of Operations, and Matt, his CFO. They agreed that this was a serious oversight, and that they would need to get on the front foot with the regulators. At the same time, they couldn’t jeopardise the company, which was already floundering. They couldn’t risk more bad publicity or even worse, being shut down.
The three leaders decided that they needed some considered advice. They reached out to their contacts and found a law firm that understood their industry and had experience in dealing with regulators. Although it stretched the budget, they also hired a PR firm that specialised in dealing with crisis communications. The law firm and the PR firm working together gave the leadership team much-needed relief from the hungry media and the determined regulators.
Did the regulators shut them down? No, but there was a price to pay- and thankfully, it was less than the cost of the lawyers. The PR firm managed the media so they found other stories to feed on while Jack’s team recovered from the glare of the spotlight.
Slowly, Jack led his team back into the black.
Melissa Kirby is Legal Director and Strategist at Sharpe & Abel, a law and strategy firm that serves the manufacturing, engineering, infrastructure and technical professions. You can reach her at melissa.kirby@sharpeandabel.com. This article was first published in Safety Snippets.