New Zealand: NZ Government to overhaul health and safety in Employment Act

Last Updated: 24 September 2013

By Tim Clarke, Rachael Brown and Dianny

On 7 August the Government announced a reform package that will overhaul the current workplace health and safety legislative framework. It has been described by the Government as "the most significant reform of New Zealand's workplace health and safety system in 20 years". Significantly, the "Working Safer" package will involve repealing the Health and Safety in Employment Act (HSE Act). It is intended that the HSE Act will be replaced by a new Health and Safety at Work Act, which the Government intends to introduce into the House by December 2013, and come into force by December 2014.

The "Working Safer" package is part of the Government's response to the recommendations made by the Independent Taskforce on Workplace Health and Safety. It is also intended to deliver on the Government goal of reducing New Zealand's workplace injury and death toll by 25% by 2020.

The proposed Act will be based on the recently developed Australian Model Work Health and Safety Law (Model Law). Some of the major changes that the proposed law will introduce are summarised below.

Duty holders

The proposed legislation is intended to allocate duties to those people in the best position to control risks to health and safety, as appropriate to their role in the workplace.

As with the Model Law, the primary duty holder under the intended Act will be a "person conducting a business or undertaking" (PCBU). Whether a person conducts a business or undertaking is a question of fact to be determined in the circumstances of each case.

The term PCBU is a broad concept that is intended to capture all types of modern working arrangements, covering all relationships between those in control and those who are affected by that control. For example, duties will extend to contractors, subcontractors, employees and volunteers. Each PCBU will be required to supervise and monitor the health and safety performance of the parties beneath them in the chain. Under the proposed Act, the PCBU also owes a duty to other people affected by the work being done.

There may be multiple businesses or undertakings, and therefore multiple PCBUs, involved in work at the same location or on the same project. In addition, the proposed Act will extend duties to upstream participants in the supply chain, such as PCBUs that are designers, manufacturers, importers and suppliers.

"Reasonably practicable" test

The "all practicable steps" test in the current HSE Act will be replaced by the Model Law's "reasonably practicable" test.

In the Model Law, the term "reasonably practicable" means that which is or was at a particular time, reasonably able to be done, taking into account and weighing up all relevant matters, including the matters specified in the Model Law.

Directors' due diligence duty

The proposed Act will introduce a new due diligence duty, which means that those persons in governance roles must proactively manage workplace health and safety. The due diligence duty will be owed by directors, chief executives and others in governance roles, but will exclude anyone acting on a voluntary basis.

The due diligence duty will be defined to match the governance role of officers. For example, it will include a requirement that the officer takes reasonable steps to:

  • gain an understanding of the nature of the operations of the PCBU and the hazards and risks associated with those operations; and
  • ensure the PCBU has, and implements, processes for complying with its duties.

Under the current HSE Act, directors, officers and agents are only exposed to potential secondary liability if they have participated in, contributed to, or acquiesced in any failure of the company to comply with the HSE Act. In contrast, under the proposed Act the due diligence duty will be individual to the officer. If an officer exercises due diligence, he or she cannot be held personally liable regardless of the conduct of the PCBU or other officers.

Failure to comply with a due diligence duty could result in the duty-holder facing prosecution, and exposure to a fine and imprisonment upon conviction. The maximum level of the penalty would be determined by whether or not the officer's failure or recklessness exposed a person to risk of death or serious injury.

Modified penalties structure

As in the Model Law, there will be a new tiered liability regime under the proposed Act. There will also be an overall significant increase in the maximum penalty levels. The Minister of Labour has stated that he considers the penalty levels that apply in the Model Law would also be appropriate in the New Zealand context.

In order to illustrate the potential penalties that might apply in the proposed law, we set out below the Model Law's penalty regime:

  • for category 1 offences (reckless conduct), the maximum penalty for an individual is $600,000 or five years' imprisonment, or both. For a body corporate, it is $3 million;
  • for category 2 offences (failure to comply with health and safety duties exposing an individual to serious risk), the maximum fine for an individual is $300,000 and for a body corporate is $1.5 million; and
  • for category 3 offences (general failure to comply with health and safety duties), the maximum fine for an individual is $100,000 and for a body corporate is $500,000.

In contrast, under the current HSE Act, an offence broadly equivalent to category 1 carries a maximum fine of $500,000 and 2 years' imprisonment or both, while conduct that contravenes categories 2 or 3 carries a maximum fine of $250,000. These fines apply to both individuals and bodies corporate.

The Minister of Justice is considering the Independent Taskforce's recommendation to extend the corporate manslaughter offence and the general corporate liability framework.

In addition to the above, the proposed Act will confer on courts new powers, such as an ability to make adverse publicity orders, and will increase the range of compliance and regulatory tools available to regulators.

Regulations, ACOPs, standards and guidance

The overhaul of the HSE Act will mean that new regulations, guidance and Approved Codes of Practice (ACOPs) will need to be developed to assist PCBUs and workers to understand how the law and regulations will apply to them. The Government has indicated that the creation of regulations, ACOPs, standards and guidance will be a phased process, based on priority.

The Government has also said that risk areas will be the target of the regulator body, WorkSafe New Zealand, which is expected to be operational from December 2013.

Government to issue guidance on H&S for EPBs

On 7 August the Government announced its earthquake-prone buildings policy. In particular, earthquake-prone buildings will be identified through assessments within five years of Building Act Amendments taking effect later this year and building owners will have 15 years to carry out strengthening work or have buildings demolished. Buildings must be strengthened to 34% of the new building standard (NBS).

As part of its announcement, the Government advised that MBIE is preparing some guidance for building owners and employers on their responsibilities where the requirements of the Building Act and the HSE Act overlap. This guidance is due to be made available in October.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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