1.4 Mandatary Agreements, Acts/Omissions & Criminal Liability

1. The Legal Doctrine of Vicarious Criminal Liability (Section 37(1))

In standard criminal law, a fundamental premise is that criminal guilt requires individual mens rea (a guilty mind) and actus reus (a wrongful act). However, in occupational health and safety jurisprudence, the legislature recognized that corporations could easily evade accountability by blaming rogue or careless employees. To prevent this, Section 37(1) of the OHS Act reverses the standard common law presumption:

"Whenever an employee does or omits to do any act which it would be an offence in terms of this Act for the employer of such employee or a user to do or omit to do, then, unless it is proved that— (a) in doing or omitting to do that act the employee was acting without the connivance or the permission of the employer or any such user; (b) it was not under any condition or in any circumstance within the scope of the authority of the employee to do or omit to do an act, whether lawful or unlawful, of the character of the act or omission charged; and (c) all reasonable steps were taken by the employer or any such user to prevent any act or omission of the kind in question, the employer or any such user himself shall be presumed to have done or omitted to do that act, and shall be liable to be convicted and sentenced in respect thereof; and the fact that he issued instructions forbidding any act or omission of the kind in question shall not, in itself, be accepted as sufficient proof that he took all reasonable steps to prevent the act or omission."

2. The Strict Three-Prong Evidential Test under Section 37(1)

Under Section 37(1), whenever an employee violates an OHS Act provision or regulation (for instance, operating an uninspected excavator or bypassing a safety interlock), the employer is presumed guilty of that offence. To rebut this presumption and escape criminal conviction, the Act requires the employer to prove all three statutory criteria cumulatively:

1. No Connivance or Permission (Section 37(1)(a)): The employer must prove that management did not actively encourage, passively permit, or turn a blind eye to the unlawful conduct. If site supervisors knew workers were bypassing safety rules to accelerate production schedules, connivance is established and the defense collapses.
2. Outside the Scope of Authority (Section 37(1)(b)): The employer must show that under no condition or circumstance was it within the employee's authority to do an act of that character. This is why Section 8(2)(j) requires employers to inform employees of the scope of their authority.
3. All Reasonable Steps Taken (Section 37(1)(c)): The employer must prove that they took all reasonable steps to prevent an act or omission of the kind in question. Crucially, the closing words of Section 37(1) quoted above provide that instructions forbidding the act are not, in themselves, sufficient proof of all reasonable steps.

This statutory proviso is foundational to South African safety law. An employer cannot successfully defend against a Section 37(1) prosecution simply by presenting signed safety rules, employee induction attendance registers, or disciplinary codes stating "workers must wear safety harnesses". The employer must produce auditable evidence of active enforcement: ongoing competent supervision, routine pre-task audits, verifiable disciplinary interventions for safety infractions, and the provision of suitable equipment.

3. Mandatary Relationships and Section 37(2) Written Agreements

In complex construction environments, principal contractors rely extensively on specialist subcontractors, plant hire enterprises, labor brokers, and engineering consultants. To govern these multi-tiered commercial relationships, the Act establishes the mandatary framework.

Section 1 defines a "mandatary" as:

"...includes an agent, a contractor or a subcontractor for work, without derogating from his status in his own right as an employer or a user."

Section 37(2) extends the Section 37(1) presumption to mandataries: when a mandatary (e.g., an electrical or earthmoving subcontractor) commits an act or omission that would be an offence for the employer, the employer that engaged it is presumed to have committed it. Section 37(2) also provides the way out:

"The provisions of subsection (1) shall mutatis mutandis apply in the case of a mandatary of any employer or user, except if the parties have agreed in writing to the arrangements and procedures between them to ensure compliance by the mandatary with the provisions of this Act."

Sections 37(3) and 37(5) add that the employee or mandatary who actually did the act can be convicted and sentenced as if they were the employer, in addition to the employer.

4. Legal Mechanics of the Section 37(2) Agreement

A Section 37(2) Agreement (commonly referred to in South African construction as a "Mandatary Agreement" or "37.2 Agreement") is a formal, legally binding bilateral contract executed between the client (mandator) and principal contractor (mandatary), or between a principal contractor (mandator) and a subcontractor (mandatary). The legal effect of a properly executed Section 37(2) agreement is significant:

• Removal of the Presumption: It removes the statutory presumption that the employer committed the mandatary's offences. It does not shift the employer's own duties onto the mandatary.
• Contractual Warranty of Compliance: The mandatary formally covenants that it is an employer in its own right, that it possesses the competence and resources to comply with the OHS Act and Construction Regulations, and that it will enforce all statutory duties upon its own workforce.
• Recorded in the Health and Safety File: Construction Regulation 7(1)(f) requires the principal contractor's file to include an updated list of all contractors on site, the agreements between the parties and the type of work being done, so signed Section 37(2) agreements are normally kept there; CR 7(1)(c)(v) requires each contractor to be appointed in writing.

5. The Critical Legal Boundary: Non-Absolvable Employer Duties

A dangerous, pervasive misconception in the construction industry is that signing a Section 37(2) agreement acts as an absolute waiver or indemnity, relieving the client or principal contractor of all further safety responsibilities. The legislation itself rejects this interpretation.

A Section 37(2) agreement records how compliance will be achieved, but it cannot contract out of the duties imposed directly on the client and principal contractor by Section 8, Section 9, or the Construction Regulations. Specifically, a principal contractor or client retains affirmative legal duties that cannot be outsourced:

1. Duty of Competency Verification: Under Construction Regulation 5(1)(h) and 7(1)(c)(iii), the mandator must verify that the appointed mandatary has the competence, knowledge, and resources to execute the work safely before appointment.
2. Adequate Resource Verification: The mandator must ensure that the contractor's tender pricing makes adequate provision for health and safety measures (CR 5(1)(g) for clients; CR 7(1)(c)(ii) for principal contractors).
3. Active Monitoring and Auditing: Under Construction Regulation 5(1)(o) and 7(1)(c)(vii), periodic health and safety audits and document verification must take place at agreed intervals, but at least once every 30 days, to verify that the mandatary is actually implementing its approved Health and Safety Plan.
4. Duty to Halt Dangerous Work: Under CR 5(1)(q) (client) and CR 7(1)(c)(viii) (principal contractor), any contractor whose work departs from the specification or plan, or threatens the health and safety of persons, must be stopped. A principal contractor that stands by while workers enter an unsupported 4-metre trench has breached its own duty, whatever its Section 37(2) agreement says.

6. What a Workable Section 37(2) Agreement Contains

Because the agreement must record the actual "arrangements and procedures" for compliance, a one-line indemnity is of little value. A defensible agreement typically records:

• Scope and parties: the work package, site and duration, signed by people with authority to bind each company;
• Compliance commitments: that the mandatary will comply with the OHS Act, the Construction Regulations, the client's specification and the approved health and safety plans;
• Appointments and competence: the mandatary's CR 8 supervisors, risk assessors and other competent persons, and its registered construction health and safety officer where one is required;
• COIDA status: registration and good standing with the Compensation Fund or a licensed insurer (CR 7(1)(c)(iv));
• Monitoring rights: access for audits and document verification at least every 30 days, and the principal contractor's right to stop non-compliant work;
• Reporting: incident reporting lines and timeframes, so the employer can meet Section 24 and the General Administrative Regulations; and
• Further subcontracting: that any contractor the mandatary appoints takes on the same obligations (CR 7(3)).

7. Section 38: Penalties, Criminal Offences, and Prosecutorial Framework

Section 38 prescribes criminal penalties for contraventions of the OHS Act, establishing severe sanctions for corporations and individual managers:

• Section 38(1) — General Offences: Any person who contravenes listed provisions (including Sections 7, 8, 9, 10(1)–(3), 12–15, 16(1) or (2), 17(1), (2) or (5), 18(3), 19(1), 20(2) or (4), 22–23, 24(1) or (2), 25, 26, 29(3), 30(2) or (6), 34 or 36), ignores certain directions and notices, obstructs or misleads an inspector, tampers with or fails to use safety equipment, or wilfully or recklessly endangers others is liable on conviction to a fine not exceeding R50 000 or imprisonment not exceeding one year, or both.
• Section 38(2) — Injury That Would Have Been Culpable Homicide: An employer (or user of plant or machinery) whose act or omission injures a person commits an offence if it would have been guilty of culpable homicide had that person died, whether or not the injury could have been fatal. The maximum is a fine of R100 000 or imprisonment of two years, or both.
• Regulation Offences: Each set of regulations prescribes its own penalty; Construction Regulation 33 provides for a fine or imprisonment of up to 12 months, plus daily penalties for continuing offences.
• Common Law Culpable Homicide: Section 38 statutory fines do not preclude the State from charging directors, construction managers, or safety managers with culpable homicide in the High Court or Regional Magistrates Court. When gross managerial negligence causes a fatal site incident, individual managers face prison sentences under South African common law.
• Section 332 of Criminal Procedure Act 51 of 1977: Operates in tandem with Section 38, allowing the State to prosecute the corporate entity as an artificial person (resulting in crippling corporate fines) while simultaneously prosecuting individual executives and managers in their personal capacities.

8. Structural Comparison: Section 37(1) vs Section 37(2)

9. Construction Health and Safety Manager Strategic Mandate

For the registered Construction Health and Safety Manager (CHSM), Section 37 governance is a vital risk control protocol. The CHSM must ensure that no subcontractor enters the site without an executed Section 37(2) agreement, a verified Letter of Good Standing with the Compensation Commissioner under COIDA, and an approved, site-specific Health and Safety Plan. The CHSM must establish a formal monthly subcontractor auditing schedule under CR 7(1)(c)(vii) to verify ongoing physical compliance, creating an unbroken evidentiary trail demonstrating that all reasonable steps were continuously enforced.