9.1 Crown employees appointed to boards
The Government policy guidelines titled Crown Acceptance of Legal Liability for Actions of Crown Employees, (contained in the Public Service Personnel Management Handbook dated 1/2/89) set out the Government's policy regarding the issue of liability of persons who are in the 'employment of the Crown'. The term 'employment of the Crown' includes not only employment in the Public Service but also employment by any Minister of the Crown, public officer, person, Board or corporate body acting for or as the agent of or as representing the Crown.
To determine whether a particular Board is an agent of the Crown or represents the Crown, the particular enabling legislation for the body should be examined. The enabling legislation may not expressly state that a Government Board is an agent of the Crown. In such a case it is a question for the courts to determine whether the Board is an agent for or representing the Crown and can therefore take advantage of the indemnity contained in the policy. The nature of the business undertaken by the Board and associated risk exposure and the position of the body in terms of the Crown are relevant considerations. Generally speaking, where the enabling legislation is silent the courts have been reluctant to presume that the Board does represent the Crown.
In essence, the policy is that the Crown will accept full and sole responsibility for all claims, including the costs of defending or settling them, in cases where the Crown employee concerned has diligently and conscientiously endeavoured to carry out his or her duties. The policy also applies to any claim for defamation brought against an officer of the Crown where the claim arises from the employee properly discharging his or her duties. No protection or indemnity is provided under this policy for criminal liability or criminal penalties such as those created under certain sections of the Corporations Act 2001 (external link).
The Department of Justice and Attorney-General is revising the current indemnification and legal assistance guidelines for Crown employees. Such revision will cover the scope and manner of the indemnification and provision of legal assistance to Crown employees.
Following this process of revision, it is expected that the following advantages will be gained:
- uniformity across all government entities;
- standardisation and therefore control of the costs;
- the adoption of simplified procedures; and
- the establishment of a system which will maintain certainty and minimise the need to constantly seek Cabinet approval.
The revision is expected to be completed by late 2002.
The policy recognises that many Crown employees have difficult and delicate duties and functions and that they are exposed to claims and damages. The policy states:
It is not desirable that such employees should be restricted in the carrying out of their duties and functions by any fear that they may have to make payment out of their own pockets in respect of any claim arising out of the due performance of these duties and functions.
The Crown will accept full and sole responsibility for all claims including the cost of defending or settling them, in cases where the Crown Employee concerned has diligently and conscientiously endeavoured to carry out assigned duties.
The Crown does not however accept any liability for any act of one of its employees, which act is not related to or connected with his/her employment.
It follows that it must be part of the Crown employee's duty to act as a member of the Government Board. Accordingly, any Crown employee in such a position should obtain and retain a copy of a written direction from his or her supervisor to that effect.
The policy is a unilateral statement of intent by the Crown and does not confer any right of indemnity on Crown employees and is not enforceable as such. Individual directors may take out private insurance or seek a more express or specific Government indemnity.
Last reviewed: 17 July, 2009
Last updated: 22 July, 2009
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