Duties of officeholders and board members in relation to child safety

Although awareness of child safety is increasing, some organisations still struggle to engage their board on child safety matters. It can be common for directors, committee members and trustees of not-for-profits (referred to as ‘directors’ and ‘board’ more generally from here on) to think that child safety is an operational matter only. However, a clear lesson from the Royal Commission into Institutional Responses to Child Sexual Abuse (Royal Commission) is that a child safe culture needs to start from the top, with poor leadership being a significant risk factor for child abuse. Legal obligations are beginning to reflect this with specific requirements being imposed personally on directors.

The role of the board in child safety

Child safety intersects with several of the board’s key obligations, including directors’ duties. The Royal Commission was scathing of boards that failed to take action when allegations emerged regarding employees or worse, helped hide the abuse. For example, the board of Swimming Australia in 2004 was criticised for appointing Mr Scott Volkers as Head Coach of the Australian Swim Team competing in Europe, despite several child abuse complaints against him and an arrest in 2002.

Boards should be aware that there are a range of obligations that apply to them in relation to child safety, including:

1. Directors’ duties – these apply under the Corporations Act 2001 (Cth) for companies and under common law for all directors. Committee members of incorporated associations have duties under the Associations Incorporation Reform Act 2012 (Vic) or equivalent state based legislation and trustees owe fiduciary duties. These duties are similar and several of the duties, including the duty to exercise powers with care and diligence and in good faith in the best interests of the organisation, are relevant in the context of child safety.
2. Duty of care – Boards owe a duty to children in the care of the organisation to take reasonable care to prevent harm and abuse from occurring. In some states such as Victoria and New South Wales, a reverse onus applies, meaning if child abuse occurs and is caused by an individual associated with the organisation, the organisation may be found to have breached its duty unless it can prove that it took reasonable care. Boards will need to ensure the organisation is complying with its legal obligations and duty of care.
3. Strategic alliance and reputation – an organisation’s response to child protection and redress includes consideration of strategy and reputation management. For example, directors of organisations with a possibility of historical abuse should be consider whether they should join the National Redress Scheme. In a post-Royal Commission environment, organisations that fail to protect children are also at risk significant adverse publicity.  
4. Funding agreements and financial risk – a failure of duty of care opens organisations up to costly negligence claims. We are seeing claims as high as in the millions, threatening the financial viability of organisations. Merely investigating and responding to allegations may involve significant cost. Child abuse claims or mishandling of claims could also lead to funding agreements being revoked or not renewed.
5. Culture and Purpose – boards of charities and not-for-profits need to keep their purpose at the centre of their work. All boards also need to consider the culture they are setting within the organisation. A child safe culture must begin with the board.

ACNC’s role and standards

The Australian Charities and Not-for-profit Commission (ACNC) oversees compliance with governance obligations that apply to registered charities. At present, one of the ACNC’s compliance priorities is the protection of vulnerable individuals, including children. This priority will inform the ACNC’s use of resources and compliance response to charities that fail to take reasonable steps to protect children. Failure to comply with the ACNC Governance Standards and External Conduct Standards (discussed below), particularly in respect of safeguarding children, is likely to result in ACNC compliance action such as imposing conditions, disqualifying responsible persons and (in serious cases) revoking the organisation’s registration as a charity. 

This priority is also reflected in the ACNC’s involvement in the development of the National Principles for Child Safe Organisations (it is a member of the Implementation Advisory Group). While these Principles are not compulsory, the ACNC will view this as best practice for registered charities. Charities should also comply with the applicable Child Safe Standards in each state.

Governance Standards

The ACNC Governance Standards are a set of five standards that apply to all registered charities. These include complying with Australian legislation such as child safety legislation (standard three) and acting consistently with the organisation’s purpose (standard one).

Significantly, the duties imposed on responsible persons (standard five) impose duties on the board members (or committee members) to comply with obligations that reflect directors’ duties in legislation and common law. Again, many of these duties are relevant to child safety, including the duty to act with reasonable and care and diligence, acting in the best interests of the registered charity and managing financial affairs.

External Conduct Standards

The External Conduct Standards (ECS) came into effect on 23 July 2019. You can read more about the ECS in our previous article. These standards apply to charities with overseas operations.

Registered charities that operate outside Australia or with third parties that operate outside of Australia need to be cognisant of ECS. Importantly, standard 4 expressly requires registered charities to take reasonable steps to ensure the safety of vulnerable individuals outside Australia involved in their programs or programs provided by third parties in collaboration. This includes not only beneficiaries of a charity’s programs, but also those vulnerable individuals involved in the delivery of programs.

The reach of the ECS is broach and requires registered charities in Australia to ensure the protection of vulnerable individuals in their own activites, the activities of any third parties with whom they collaborate and the third party’s partners involved in any collaboration.

Personal liability for directors

Criminal penalties may apply to director’s personally if they do not meet child safety requirements.

For example, in Victoria, the failure to protect legislation under the Crimes Act 1958 (Vic) states that a person in a position of authority will commit a crime, punishable by a maximum of five years’ imprisonment, if they know there is a risk of child abuse by an adult associated with the organisation and fail to reduce or remove the risk. Similarly, criminal penalties apply in Victoria, New South Wales and Tasmania for failure to report allegations of child abuse.

Key lessons and next steps

Child safety is everyone’s responsibility. For organisations, the prioritisation of child safety needs to begin with the board. With the increased focus on the safeguarding of children by regulators including the ACNC, it has never been more important for For Purpose boards to actively engage with child safety.

We recommend that organisations:

1. Consider whether the External Conduct Standards apply to your organisation and of so, take reasonable steps to comply, including implementing appropriate policies and procedures.
2. Consider placing child safety as a recurring item on the board agenda to raise any key concerns, risks and strategic decisions that need to be discussed.
3. If you haven’t already, determine whether your organisation should join the National Redress Scheme, noting that the deadline for organisations to join is 1 July 2020.
4. Run child safety training with your board so that they understand their child safety obligations, the intersection between their duties and child safety and the relevant risks.

For more information or assistance with your officeholders and board members in relation to child safety, please do not hesitate to contact us.

Click here to watch our short video on LinkedIn as part of National Child Protection Week 2019.