WHS Due Diligence Checklist: Buying a Trades Business in Australia

The Complete WHS Due Diligence Checklist: Buying a Trades Business in Australia

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Phase 1: SafeWork Compliance History

Request from the seller — in writing, before you proceed to confirmatory due diligence:

• List of all SafeWork/WorkSafe improvement notices received in the past five years, with evidence of remediation for each
• Any prohibition orders issued against the business or its equipment in the past five years
• Any enforceable undertakings entered into with SafeWork/WorkSafe, with current status
• Any ongoing or unresolved SafeWork/WorkSafe investigations or inquiries
• Any incident notifications submitted to SafeWork/WorkSafe in the past five years (notifiable incidents under the WHS Act must be reported)

Verify independently:

• Search SafeWork NSW enforceable undertakings register (public, free): safework.nsw.gov.au
• Search WorkSafe Victoria prosecution register if the business operates in Victoria
• Search SafeWork SA compliance register for South Australian operations
• Contact the relevant state regulator to ask whether any investigations are current — they won't always confirm but it's worth asking
• Search the business name and ABN in your state regulator's public register

What you're looking for:

A single, properly remediated improvement notice is not alarming. Multiple notices in a short period, any open prohibition orders, or a current investigation are significant issues that require explanation, price adjustment, or a warranty in the SPA.

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Phase 2: WorkCover / Workers' Compensation Claims Review

• Request claims summary for the past five years — number of claims, nature of each, current status
• Confirm whether any claims are currently open and active
• Request the business's current WorkCover premium rate and the insurer's experience rating
• Ask the seller to obtain a formal premium estimate from the insurer for a new owner (most insurers will provide this pre-settlement on request)
• If the business is self-insured (very large operators only): request the actuarial report on outstanding claims liabilities
• Check whether any injured workers have lodged common law damages claims — these can take years to resolve and aren't always captured in routine claims summaries

Red flags:

• More than two serious injury claims in any 12-month period for a small team (under 10 workers) — this indicates a systemic safety problem, not bad luck
• Any catastrophic or fatality-adjacent incidents, even if legally resolved
• High experience rating (above 1.2 in most states) — this directly increases your premium
• Open claims that haven't been managed — a stalled return-to-work plan is your problem post-settlement

Premium calculation:

Get the difference between the current premium and what a new owner with a clean record would pay. If the current business carries a premium loading, that loading is a direct cost to you for the duration of the experience period (typically three years in most states). Capitalise it: multiply the annual loading by three and deduct it from your offer, or negotiate a vendor credit.

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Phase 3: Equipment and Plant Certification

Electrical equipment:

• Test-and-tag records for all portable electrical equipment — check dates and confirm records are current (testing frequency depends on equipment type and environment)
• RCD (residual current device) testing records for any portable RCDs
• Electrical compliance certificates for any fixed installations that have been modified

Plant requiring registration (check with your state regulator):

• Elevated work platforms (EWPs) — registration and annual inspection current
• Pressure vessels above the registration threshold — current design registration and inspection
• Certain cranes and hoists — registration and engineer certification current
• Mobile plant operated on public roads — registration and roadworthiness current

Tools and equipment:

• Scaffolding — current inspection certificates from a competent person; check whether it's system scaffolding (easier) or tube-and-coupler (higher compliance burden)
• Ladders — confirm regular inspection records exist; check for any retired or damaged ladders still in service
• Power tools — confirm any manufacturer-specified inspection intervals are being met
• PPE inventory — check that appropriate PPE exists, is in serviceable condition, and is the right type for the hazards present (a single shared hard hat is not a PPE program)
• Gas equipment (if applicable) — compliance certificates for any gas appliances or reticulation the business uses

Vehicles:

• Current roadworthy certificates for any vehicles used to transport workers, equipment, or hazardous materials
• Confirm whether any vehicles carry dangerous goods — this triggers additional obligations under the ADG Code
• Check whether any driver has had their licence endorsed, restricted, or suspended

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Phase 4: Documentation Review

Safe Work Method Statements (SWMS):

• Request the complete SWMS library — every high-risk construction work activity should have a current SWMS
• Confirm SWMS exist for: work at height, electrical work, work in confined spaces, demolition, work near traffic, work with hazardous materials (if applicable)
• Check that SWMS are actually being used — ask to see sign-on records or toolbox talk logs; a SWMS that exists on a computer and never reaches the workers is not a functioning SWMS
• Review 2-3 SWMS in detail: are hazards actually identified, or are they generic? Are controls specific and achievable?

Training records and licences:

• Confirm that all workers performing licensed work hold a current, appropriate licence — get licence numbers and verify with the relevant authority
• Check High Risk Work Licences (HRWLs) for scaffolding, rigging, crane operation, EWP operation, pressure equipment — verify currency and class
• Confirm first aid coverage: does the business have adequate first aiders for the team size and work type?
• Check induction records — can the business demonstrate that workers were inducted into the safety management system?
• Check any specialist training required for the work (confined space entry, working at heights, chemical handling)

Hazardous chemicals:

• Request the chemical register — a list of all hazardous chemicals used in the business with Safety Data Sheets (SDS) for each
• Confirm SDS are current (under 5 years old for chemicals still in use)
• Check storage compliance — chemicals must be stored in appropriate containers, correctly labelled, and segregated where required
• Confirm disposal records for any hazardous waste — incorrect disposal creates regulatory and environmental liability that can follow the business

WHS management system documentation:

• WHS policy — does one exist, is it signed by the business owner, and is it reasonably current?
• Hazard identification and incident reporting procedure — is there a process, or do incidents get managed informally?
• Incident register — request the last three years of incidents, near misses, and hazard reports; a blank register is not a clean record, it's a sign the system isn't being used

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Phase 5: Pricing, Warranty, and Negotiation

Costing remediation items:

For each gap or deficiency found, estimate the remediation cost before finalising your offer:

• Test-and-tag for a typical team of 8-10 (mixed equipment): $500–$1,500
• SWMS library development by a WHS consultant: $2,000–$5,000
• Scaffolding inspection and certification: $500–$2,000 per scaffold structure
• Equipment registration (EWP, pressure vessel): varies widely — confirm with the state regulator
• PPE restock: $200–$800 per worker depending on hazard level
• WHS management system setup (from scratch): $3,000–$8,000 for a consultant-led engagement

Premium loading calculation:

1. Get the current annual premium from the seller
2. Request an estimate for a new-owner premium from the insurer
3. If there is a loading (i.e., the current premium is above what a clean-record business would pay), multiply the annual difference by 3 to estimate the three-year cost
4. Treat this as a price adjustment

What to include in the SPA:

Work with your solicitor to include:

• Warranty that no outstanding SafeWork/WorkSafe improvement notices, prohibition orders, or investigations exist other than those disclosed
• Warranty that all equipment is registered, certified, and compliant as at the date of settlement
• Warranty that all staff performing licensed work hold current, appropriate licences
• Indemnity from the seller for any pre-settlement WHS liability that arises post-settlement (note: indemnities are only as good as the seller's ability to pay — assess accordingly)
• Disclosure schedule listing any known WHS issues, so the warranty carve-out is explicit and documented

Negotiation posture:

Minor deficiencies (expired test-and-tag, a few outdated SDS): seek a price reduction equal to the remediation cost, or a credit at settlement.

Moderate deficiencies (missing SWMS for high-risk work, a single unresolved improvement notice): seek a price reduction plus a warranty. Consider requiring the seller to remediate before settlement.

Serious deficiencies (open WorkSafe investigation, multiple open claims, equipment with prohibition orders, unlicensed workers performing licensed work): walk away or require full remediation with independent verification before settlement. The risk of buying into an active regulatory problem is not adequately managed by a warranty.

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Quick Reference: State WHS Regulators

• NSW: SafeWork NSW — safework.nsw.gov.au
• VIC: WorkSafe Victoria — worksafe.vic.gov.au
• QLD: Workplace Health and Safety Queensland — worksafe.qld.gov.au
• SA: SafeWork SA — safework.sa.gov.au
• WA: WorkSafe WA — worksafe.wa.gov.au
• TAS: WorkSafe Tasmania — worksafe.tas.gov.au
• ACT: WorkSafe ACT — worksafe.act.gov.au
• NT: NT WorkSafe — worksafe.nt.gov.au

Each regulator maintains public registers of enforcement actions. Check the register for your state before you proceed with any acquisition.

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This checklist is a starting point, not a substitute for professional WHS advice on complex or high-risk acquisitions. For businesses with more than 15 employees or significant high-risk work activities, consider engaging a WHS consultant for a site-based assessment before settlement.

See also: WHS due diligence guide | Operational due diligence checklist | Full due diligence checklist