New Zealand: Health and safety reforms brings increased obligations

This year the Government will introduce new legislation as part of its long term commitment to introduce major health and safety reforms. Its target is to achieve a 25% reduction in serious workplace fatalities and injuries by 2020.

The Health and Safety in Employment Act 1992 will be replaced by the Health and Safety at Work Act. An important focus of the new Act will be making it easier for both business and workers to understand their roles and responsibilities by setting out clear obligations for duty holders.

The Act will be backed up by regulations, Approved Codes of Practice, standards and guidance documents for each industry against which to benchmark compliance. A new government agency, WorkSafe New Zealand has already been established as the new health and safety regulator.

New primary duty holder and clearer statement of duty

The new Act will do away with particular categories of duty holder . In their place is the concept of a single inclusive primary duty holder, or PCBU. A PCBU is simply a "person conducting a business or undertaking."

The intention is to allocate duties to those people best placed to control health and safety risks in the workplace. The PCBU covers all relationships between those in control and those affected. This means that upstream participants in the supply chain (such as suppliers, manufacturers, designers and so on) also owe a duty of care in relation to workers under their control or influence. Practically, this means upstream PCBUs will have duties to manage and monitor the health and safety performance of those beneath them in the supply chain.

A PCBU will be required to take all reasonably practicable steps to eliminate or minimise a specific risk. What that requires will depend on the knowledge and seriousness of the risk and what can be done to avoid it. Cost will rarely be a reason for not taking a particular step, unless it is prohibitive.

New Positive due diligence obligation on "Officers"

The new Act will establish a positive duty of due diligence on those with governance roles in organisations to actively manage workplace health and safety. This duty will extend to those who make or participate in making decisions that affect the strategy and resourcing decisions in a business. Company directors, partners, General Managers, CEOs, corporate counsel, CFOs and senior advisors will all come within the definition if they are involved in such decisions. People performing those functions will have to:

  • Understand how the PCBU operates and the hazards and risks associated with those operations; and
  • Ensure the PCBU has, and implements, proper processes for complying with its duties.

Increased penalties and improved compliance tools

The Act will introduce a three-tiered penalty regime with an increase in maximum penalties.

For the most serious offending, involving reckless conduct, the penalty will be up to five years imprisonment and a fine of up to $3 million for a company and $600,000 for an individual.

Lower level compliance tools will also be strengthened. For example, the requirement for prior warning for infringement notices will be removed, meaning that an infringement notice can be issued on the first visit if necessary.

Enforceable undertakings from duty holders in relation to contraventions will also be introduced.

A better regulator – WorkSafe New Zealand

A major focus in the reform package is improving health and safety delivery through better regulatory leadership. Increased resources have been provided to enable WorkSafe New Zealand to develop a Workplace Health and Safety strategy and to be more actively engage with industry, particularly in high risk sectors. There is an increased focus on prevention and support for business. Employers, particularly in high risk industries, can expect that inspectors will visit them more often.

The Christchurch Rebuild will be a specific focus for WorkSafe, including an inspectorate skilled in construction to focus on enforcement and high risk activities, such as asbestos.

Earthquake Related Hazards – Workplace Buildings

New Zealand's recent earthquake history has heightened awareness of the risk of harm from buildings and associated failures in the event of earthquakes.

Under the new legislation, there will be an onus on PCBUs and their officers to ensure that they are aware of, understand and manage any risks associated with any buildings they own, lease and/or occupy.

WorkSafe New Zealand has issued information for employers and owners of workplace buildings. This information will continue to be relevant under the new Act. In short, if organisations comply with their obligations under the Building Act, WorkSafe New Zealand will not impose a higher standard in relation to the building's earthquake relisilience under health and safety legislation.

If the requirements of the Building Act are not met, and someone is seriously harmed following an earthquake, duty holders could face enforcement action under health and safety legislation.

Conclusion

The focus is still, as it always has been, on ensuring that people are safe when they are at work. But, there appears to now be a greater recognition of the importance of health and safety and the penalties that will flow if businesses do not get it right. Certain industries are definitely under the spotlight. For example, the forestry industry has had numerous fatalities meaning that a greater focus is likely to be placed on workplace safety there. The construction industry is another key player. Although WorkSafe New Zealand has already engaged with the the construction industry over ensuring workplace safety, the level of construction (current and expected) in Canterbury means that despite that focus, claims will flow.

Those working in other sectors cannot simply rest on their laurels. Health and Safety is also under the spotlight more generally. Given the significance of these changes and the focus on health and safety, it is likely insurers will see greater inquiry about the level of cover and, particularly, the extent to which "officers" will have cover if they are individually prosecuted under the new legislation, either in conjunction with or separate from a prosecution against the PCBU.

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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