New Workplace: Safety Regime

The much-awaited Health and Safety Reform Bill comes into effect in April 2015. The Bill is part of changes introduced following the Pike River Coal Mine tragedy and various subsequent reviews observing a poor health and safety record in NZ. By Philip McCarthy.

The Health and Safety Reform Bill is based on the Australian Model Work Health and Safety Act 2011 with some modifications for the NZ context. So what are the key changes proposed by the Bill, and what will be the likely impact of those changes in practice?

New definitions

New terms had to be defined. A key aspect of the Bill is the creation of a new duty holder, known as a Person Conducting a Business or Undertaking (PCBU). Considerations include whether the person conducts a business or undertaking alone or with others and also whether or not the business or undertaking is conducted for profit or gain. The PCBU is a broad concept, which will encompass the existing duty holder categories (such as employers, principals, and persons in control of a place of work) under the Health and Safety in Employment Act 1992 (HSE Act). A PCBU does not include employees or directors of PCBUs (directors are covered as officers), volunteer associations, and occupiers of a home who employ or engage another person solely to do residential work.

A worker is defined as a person who carries out work in any capacity for a PCBU, including work as an employee, a contractor or subcontractor, an employee of a contractor or subcontractor, or an employee of a labour hire company who has been assigned to work for the PCBU, an outworker, an apprentice or trainee, a person gaining work experience or undertaking a work trial, a volunteer, or a person of a prescribed class.

The Bill’s definition is broad, and like the PCBU definition, is designed to encompass a number of relationships that are typical in a work environment (such as employees, contractors, subcontractors, employees of contractors or subcontractors, volunteers, and trainees).

Reasonably practicable

The Bill will replace the current standard under the HSE Act (‘All Practicable Steps’) with a new ‘reasonably practicable’ standard. ‘Reasonably practicable’ is defined as: “…that which is, or was, at a particular time, reasonably able to be done in relation to ensuring health and safety, taking into account and weighing up all relevant matters. These will include the likelihood of the hazard or the risk concerned occurring; the degree of harm that might result from the hazard or risk; what the person concerned knows (or ought reasonably to know) about the hazard or risk and ways of eliminating or minimising the risk; the availability and suitability of ways to eliminate or minimise the risk and after assessing the extent of the risk and available ways of eliminating or minimising the risk, the cost associated with available ways of eliminating or minimising the risk, including whether the cost is grossly disproportionate to the risk.”

The new standard is broadly similar to the existing concept of ‘All Practicable Steps,’ except that the assessment of costs must only be taken after the assessment of the risk and the ways to eliminate that risk. This means that costs will only take precedence over safety when the cost of taking a step is ‘grossly disproportionate’ to the risk.

New duties

Primary duty to ensure safety. The Bill introduces a new general duty on all PCBUs to ensure, so far as reasonably practicable, the health and safety of workers employed or engaged, or caused to be employed or engaged, by the PCBU while the workers are at work in the business or undertaking and workers whose activities in carrying out work are influenced or directed by the PCBU while the workers are carrying out the work.

PCBUs must also ensure, so far as reasonably practicable, that the health and safety of other people are not put at risk from work carried out by the PCBU. There are also specific duties imposed on PCBUs in respect of the management and control of fixtures, fittings, and plant in the workplace, the design and manufacture of plant to be used in a workplace, and the supply, importation, and installation of plant to be used in a workplace.

Officers

The Bill introduces a positive duty on officers to exercise due diligence to ensure that the PCBU complies with that duty or obligation. This is a key change from the HSE Act, where directors of a company can only be held liable where they have directly participated in, contributed to, or acquiesced in their company’s failure. Under the Bill, officers may be convicted for a breach of due diligence regardless of whether the PCBU has been convicted of an offense.

Due diligence includes taking reasonable steps to acquire and keep up-to-date knowledge of work health and safety matters; gain an understanding of the nature of the operations of the business or undertaking of the PCBU and generally of the hazards and risks associated with those operations; ensure that the PCBU has available for use, and uses, appropriate resources and processes to eliminate or minimize risks to health and safety; ensure that the PCBU has appropriate processes for receiving and considering information regarding incidents, hazards, and risks and for responding in a timely way to that information; ensure that the PCBU has, and implements, a process for complying with any duty or obligation of the PCBU under the Act and verify the provision and use of resources and processes.

Offences

The Bill creates three offense tiers relating to breaches of the health and safety duties. The offenses and the respective maximum penalties can be summarized as follows:

• Reckless conduct (has a duty and exposes any person to whom the duty is owed to the risk of death or serious injury/illness and is reckless as to that risk) – fines up to $3 million (or $600,000 and/or up to five years’ imprisonment for individuals).
• Failure to comply with a duty (with exposure to risk of death or serious injury/illness) – fines up to $1.5 million (or $300,000 for individuals).
• Failure to comply with a duty (no exposure to death or serious injury/illness) – fines up to $500,000 (or $100,000 for individuals).

In addition to the fines and imprisonment that may be imposed, the Bill provides for new orders which the court may impose at sentencing:

• Adverse publicity orders – requiring the offender to publicize in a particular manner the offense, its consequences, and the penalty imposed.
• Restoration orders – requiring an offender to take specified steps to remedy any matter caused by the offense.
• H&S project orders – requiring an offender to undertake a specific project for the general improvement of work health and safety.
• Court-ordered enforceable undertakings – adjourning the proceeding for up to two years, during which the offender undertakes to comply with certain conditions.

Where to next?

The implementation of the new regime from April 2015 will see more onus placed on managers and company directors to proactively manage workplace health and safety. Together with stronger penalties, and wider enforcement tools for non-compliance, it is hoped that this regime will see improvement in New Zealand’s poor health and safety record.

Philip McCarthy is a solicitor with Auld Brewer Mazengarb & McEwen. Philip specializes in commercial litigation, employment law, and health and safety. Philip regularly advises clients in relation to investigations and enforcement action taken by WorkSafe New Zealand. This article was first published in and is courtesy of the NZ Law Society Magazine – Law Talk in May 2014.