When accidents happen on Australian construction sites, the question of responsibility can be complex and costly.
Whether it’s a worker injury, property damage, or public safety incident, understanding the division of responsibilities between principal contractors and subcontractors is critical for any business operating in the construction industry.
Recent developments in Australian WHS law, including NSW’s introduction of industrial manslaughter offences carrying penalties up to 25 years imprisonment for individuals and $20 million for corporations, have raised the stakes significantly for all parties involved in construction projects.
In this article, our Brisbane building and construction lawyers, explain how responsibility is shared between principal contractors and subcontractors, what the law requires, and how to manage compliance effectively.
Key Takeaways: What Construction Companies Need to Know
Principal contractors carry overarching site coordination duties and safety management obligations.
Subcontractors remain fully accountable for safety within their work areas.
Liability depends on practical control, not just what’s written in the contract.
A project valued at $250,000 or more triggers additional principal contractor duties.
Both parties can be jointly liable for workers’ compensation or civil claims.
Understanding the Legislative Framework for Construction Safety
Principal Contractor Duties Under Australian WHS Law
Under the Work Health and Safety Act 2011 (Cth) and corresponding state legislation, the principal contractor bears primary responsibility for overall site safety management and coordination.
These responsibilities become mandatory for construction projects valued at $250,000 or more, establishing comprehensive duties that extend far beyond basic safety compliance.
The legislation requires principal contractors to:
Prepare and implement a WHS Management Plan before work begins.
Define health and safety responsibilities for all persons at the site.
Install clear signage identifying the principal contractor and emergency contact details.
Obtain and monitor Safe Work Method Statements (SWMS) for all high-risk construction activities.
These duties ensure that the principal contractor maintains visible, practical, and documented control over site safety.
Universal PCBU Responsibilities for All Contractors
Section 19 of the Work Health and Safety Act establishes that every person conducting a business or undertaking (PCBU) must ensure, so far as reasonably practicable, the health and safety of workers and others who may be affected by their work.
This fundamental duty applies equally to principal contractors, subcontractors, and all other business operators on construction sites.
The primary duty encompasses providing and maintaining safe systems of work, ensuring safe use of plant and structures, providing information, training, instruction and supervision, monitoring workplace conditions and health of workers, and maintaining appropriate workplace facilities.
Remember: These obligations cannot be contracted out or transferred to other parties, establishing individual accountability for every business operator.
Direct Subcontractor Safety Obligations
Subcontractors are responsible for direct safety compliance within their scope of work.
They must prepare SWMS for any high-risk construction work and ensure that workers follow these statements in practice.
Recent prosecution examples demonstrate regulators actively pursuing both principal contractors and subcontractors where safety failures occur. In cases involving worker falls from scaffolding, both the principal contractor (for failing to ensure adequate fall protection systems) and the scaffolding subcontractor (for unsafe scaffold construction) have faced separate prosecutions over the same incident.
How Liability Is Determined: The Control and Influence Test
Liability allocation depends on the practical control and influence each party exercises over the relevant work or workplace.
Recent Industrial Relations Commission decisions have clarified that principal contractors are not automatically responsible for all subcontractor activities – the focus is on actual control and whether reasonable enquiries were made about specialist subcontractor competencies.
This test means that courts and regulators examine who actually controlled the work activity that caused the incident, rather than simply looking at contractual relationships.
For example:
A principal contractor may be liable if they failed to verify subcontractor competency.
A specialist subcontractor may be liable if they controlled the method or equipment that caused the incident.
To learn more about how long contractors remain liable for defects after practical completion, check out our guide on defects liability in construction contracts.
High Court Guidance: Limits to Contractor Duties
High Court authority establishes that principal contractors do not automatically owe detailed training duties to subcontractor workers for specialised tasks where the subcontractor retains control. However, this does not eliminate statutory WHS obligations or duties arising from actual control exercised.
Legal Takeaway: The High Court’s approach emphasises that while principal contractors have broad site coordination responsibilities, they are not automatically liable for all activities performed by competent specialist subcontractors.
Examples of Liability in Real Construction Scenarios
Worker Injury
For worker injuries, both the direct employer (subcontractor) and principal contractor may face liability depending on immediate control over the work activity causing injury, adequacy of risk assessments and control measures, compliance with SWMS and site management plans, and whether proper consultation and coordination occurred between the parties.
Consider a scenario where an electrician employed by a subcontractor is injured while working near live electrical services. Both the principal contractor (for site services management, coordination, and WHS plan compliance) and the electrical subcontractor (for task-specific SWMS, isolation procedures, and supervision) may face prosecution. The key question becomes who had the capacity and responsibility to implement the safety measures that could have prevented the incident.
Property Damage and Public Safety
For property damage or public safety incidents, principal contractors bear primary responsibility for site security, traffic management, and public protection measures, whilst subcontractors remain liable for damage caused by their specific work activities or failure to follow site protocols. Both parties may face prosecution if their combined failures contributed to the incident.
In property damage cases, civil liability is usually subject to proportionate liability statutes, meaning courts split damages by responsibility among wrongdoers (principal contractor, subcontractor, designers). Contract Works and Public Liability insurance policies, along with contractual indemnities, then determine who ultimately funds the loss between the parties.
High-Risk Construction Work
For high-risk activities like working at heights, excavation, or demolition, subcontractors must prepare and implement SWMS before commencing work, whilst principal contractors must review and approve SWMS and ensure compliance. Both parties bear responsibility for ensuring adequate control measures are in place and maintained throughout the work.
The regulatory emphasis is on ensuring that the party performing the high-risk work (usually the subcontractor) develops detailed safety procedures in consultation with their workers, whilst the principal contractor ensures these procedures integrate effectively with overall site safety management.
NSW Industrial Manslaughter Laws: Higher Penalties in NSW
NSW has introduced industrial manslaughter offences where a person commits industrial manslaughter if they have a health and safety duty and engage in conduct that constitutes a failure to comply with the duty and causes death, when engaging in that conduct with gross negligence. Maximum penalties include imprisonment for 25 years for individuals and $20 million for corporations.
This legislation applies to both principal contractors and subcontractors whose grossly negligent conduct causes death on construction sites. The conduct may be established on the part of a body corporate, despite no individual authorised person having engaged in conduct with gross negligence, if the body corporate has engaged in conduct with gross negligence when viewed as a whole, determined by aggregating the conduct of more than one authorised person.
The industrial manslaughter provisions create additional personal liability for senior officers and require enhanced due diligence processes to demonstrate reasonable steps were taken to prevent workplace deaths. This represents a significant escalation in the potential consequences for safety failures beyond traditional WHS prosecutions.
Risk Management Strategies for Construction Companies
1. Reasonably Practicable Standard
All duty holders must eliminate or minimise risks “so far as reasonably practicable”
The reasonably practicable test requires parties to consider what they knew or ought to have known about hazards, available risk control methods, and whether the cost of implementing controls is grossly disproportionate to the risk. This creates a contextual standard that varies based on the specific circumstances and the party’s role and capacity.
2. Coordination and Communication Requirements
Effective safety management requires systematic consultation, cooperation and coordination between all duty holders. Principal contractors must establish systems for this coordination through their WHS management plans, whilst subcontractors must actively participate and communicate safety issues promptly.
The coordination obligation extends beyond formal documentation to require active, ongoing communication about emerging hazards, changes in work methods, and incidents or near-misses that could affect other parties on site. This creates a dynamic safety management system rather than static compliance with initial planning documents.
3. Insurance and Contractual Allocation
Even though WHS duties cannot be contracted away, contracts and insurance arrangements determine who ultimately bears the financial consequences of safety failures. Head contracts and subcontracts typically include downstream indemnities from subcontractors for injury to their personnel, damage caused by their activities, and breach of law.
Contract Works insurance usually covers loss or damage to “the Works” during construction, often arranged by the principal and extending to head contractor and subcontractors as insureds. Public Liability insurance responds to third-party injury and third-party property damage arising from the works, with cross-liability clauses ensuring each insured is treated separately.
The effectiveness of these risk allocation mechanisms depends on careful drafting that aligns contractual indemnities with insurance coverage and accurately reflects the practical division of control and responsibility between the parties.
4. State Variations and Jurisdictional Differences
While the model WHS Act provides national consistency, states implement specific additional requirements. Queensland imposes enhanced regulator powers and penalties for failing to manage safety risks. Western Australia requires specific notice periods for safety interventions. Victoria maintains separate OHS legislation under the Occupational Health and Safety Act 2004, with distinct principal contractor coordination requirements and employer duties extending to independent contractors for matters within the employer’s control.
These jurisdictional variations mean that construction companies operating across state boundaries must understand not only the harmonised national framework but also the specific additional requirements in each jurisdiction where they operate.
Frequently Asked Questions
Can a principal contractor eliminate their safety responsibilities by engaging competent subcontractors?
No. WHS duties cannot be contracted out or transferred to other parties. While engaging competent subcontractors may demonstrate reasonable steps towards risk management, the principal contractor retains their statutory duties for site coordination, WHS management plan implementation, and overall safety oversight. The legislative framework deliberately creates overlapping duties to ensure comprehensive safety coverage.
Effective construction contracts clearly allocate risk between parties – our article on risk allocation in construction contracts explains how to manage risk under Australian law.
What happens if both the principal contractor and subcontractor are prosecuted for the same incident?
Both parties can face separate prosecutions and penalties for the same incident if each had the capacity to prevent it. The legislation recognises that more than one person can have the same duty, with each required to comply to the extent of their capacity to influence and control the matter. Recent enforcement demonstrates regulators actively pursuing both parties where their combined failures contributed to serious incidents.
Unexpected events can disrupt even the best-planned projects – learn how to manage them in our article on force majeure clauses in Australian construction law.
How does the $250,000 threshold for principal contractor duties work in practice?
For construction projects valued at $250,000 or more, a principal contractor must be appointed with enhanced duties including preparing WHS management plans, ensuring appropriate signage, managing site-wide risks, and coordinating SWMS oversight for high-risk construction work. Below this threshold, the general PCBU duties still apply to all parties, but the additional principal contractor coordination requirements do not apply.
What are Safe Work Method Statements (SWMS) and who is responsible for them?
SWMS are required for high-risk construction work and must be prepared by the PCBU carrying out the work (usually the subcontractor performing the task). The subcontractor must prepare, keep, comply with and review the SWMS, and provide it to the principal contractor. The principal contractor must obtain and monitor these SWMS to ensure they align with the site WHS management plan.
How do the new NSW industrial manslaughter laws affect construction site responsibilities?
NSW’s industrial manslaughter offences apply to both principal contractors and subcontractors whose grossly negligent conduct causes death, with penalties up to 25 years imprisonment for individuals and $20 million for corporations. This creates additional personal liability for senior officers and requires enhanced due diligence processes to demonstrate reasonable steps were taken to prevent workplace deaths, significantly raising the stakes beyond traditional WHS prosecutions.
Need Construction Law Advice?
Our experienced construction lawyers can help you navigate the complexities of Australian WHS law, draft effective contracts with appropriate risk allocation, and ensure your safety management systems meet legal requirements. Contact us today for a confidential consultation about your construction law needs.
