June 2014... The Health and Safety in Employment Act 1992 is to be repealed and replaced with new legislation.
The Health and Safety Reform Bill was introduced into Parliament on 10 March 2014 and had its first reading three days later. The Bill has been referred to the Transport and Industrial Relations Select Committee, and submissions closed on 9 May 2014. The Select Committee is due to report to the House on 13 September 2014.
The Bill is a direct response to the Pike River tragedy and draws on both the report of the Royal Commission, and the independent investigation conducted by the Ministry of Business Innovation and Employment. Those inquiries recommended:
The first two key recommendations have already been acted upon. The WorkSafe New Zealand Act 2013 was enacted in December which created a stand alone entity responsible for workplace health and safety.
Better regulation of the mining sector has occurred through the enactment of the Health and Safety in Employment (Pike River Implementation) Act 2013 which put in place a number of industry specific rules governing the mining sector.
The remaining two key recommendations are addressed in the Health and Safety Reform Bill. The Bill itself is based on the Australian model law which has been adopted by the Federal Government by each state jurisdiction in Australia except Victoria and Western Australia.
The key features are:
Clause 3 of the Bill states the object of the legislation.
Workers and other persons should be given the highest level of protection against harm where health, safety, and welfare from hazards and risks arising from work or from specified types of plant as is reasonably practicable.
The concept of “all practicable steps” will be repealed, and replaced with the criterion of “reasonably practicable”, defined thus:
reasonably practicable, in relation to a duty to ensure health and safety, means 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, including—
(a) the likelihood of the hazard or the risk concerned occurring; and
(b) the degree of harm that might result from the hazard or risk; and
(c) what the person concerned knows, or ought reasonably to know, about—
(i) the hazard or risk; and
(ii) ways of eliminating or minimising the risk; and
(d) the availability and suitability of ways to eliminate or minimise the risk; and
(e) after assessing the extent of the risk and the 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.
While this appears broadly the same as the existing definition of “all practicable steps”, the assessment of cost can only occur after assessment of the risk and ways to eliminate the risk. Cost can only feature in decision making where the cost is grossly disproportionate to the risk.
The new legislation moves away from the classification of duty holders. Instead of “employers”, “persons controlling a place of work”, “principal”, “contractor”, “supplier” and so on, the focus is on whether an entity or person is a “person conducting a business or undertaking, or PCBU. That is defined as a person who conducts business or undertaking whether alone with others, and whether or not for profit or gain, though excludes employees or directors of the PCBU.
The PCBU will be subject to a number of duties including to eliminate risks to health and safety so far as is reasonably practicable, and if not reasonably practical then to minimise those risks.
A PCBU’s duties are not transferable, and a PCBU may have more than one duty. In a situation where there is more than one PCBU, for example a construction site with multiple contractors, more than one PCBU may owe the same duty.
Duty holders are required to consult amongst themselves as to the best approach to ensuring health and safety in relation to any task.
The Act broadens and clarifies rules relating to suppliers, and imposes particular duties on PCBU’s who:
Probably the most far reaching change is the obligation on officers to comply with a due diligence requirement. The term “officers” is widely drawn:
officer, in relation to a PCBU,—
(a) means, if the PCBU is—
(i) a company, any person occupying the position of a director of the company by whatever name called:
(ii) a partnership (other than a limited partnership), any partner:
(iii) a limited partnership, any general partner:
(iv) a body corporate or an unincorporated body, other than a company, partnership, or limited partnership, any person occupying a position in the body that is comparable with that of a director of a company; and
(b) includes any other person who makes decisions that affect the whole, or a substantial part, of the business of the PCBU (for example, the chief executive)…
The last definition is broad, and can encompass Chief Executives, and senior management.
If a PCBU has a duty or an obligation under the Bill, an officer of the PCBU must exercise due diligence to ensure that the PCBU complies with that duty or obligation. That due diligence obligation is prescribed in the following terms
(2) In this section, due diligence includes taking reasonable steps—
(a) to acquire, and keep up-to-date, knowledge of work health and safety matters; and
(b) to 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; and
(c) to ensure that the PCBU has available for use, and uses, appropriate resources and processes to eliminate or minimise risks to health and safety from work carried out as part of the conduct of the business or undertaking; and
(d) to 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; and
(e) to ensure that the PCBU has, and implements, processes for complying with any duty or obligation of the PCBU under this Act; and
(f) to verify the provision and use of the resources and processes referred to in paragraphs (c) to (e).
This change reflects the disconnect between the board of large businesses and the work that is done “on the factory floor”. Under current law, officers only face person liability if knowledge of the likelihood of serious harm can be established. That criterion has been seen to insulate the officers of large corporates, by comparison to small companies where the officers may well be working on the factory floor.
Officers will be required to understand the work done by employees, the safety practises available and be able to verify implementation of health and safety systems.
The penalties for breaches of the legislation are increased, with a new category of “reckless conduct” introduced.
The most serious offence is “reckless conduct” where a person who has a health and safety duty, without reasonable excuse engages in conduct that exposes any individual to whom that duty is owed to a risk of death or serious injury or illness and is reckless as to the risk to an individual of death or serious injury or illness.
Recklessness involves a conscious appreciation of the risk, and acting in the proscribed manner regardless of that risk.
The maximum penalties for reckless conduct are:
(a) An individual (who is not a PCBU or the officer of a PCBU) 5 years imprisonment / $300,000 fine;
(b) An individual (who is a PCBU or the officer of a PCBU) 5 years imprisonment / $600,000 fine;
(c) Any other person: a fine not exceeding $3,000,000
Other offences (and maximum penalties) include:
(a) Failure to comply with duty exposing person to risk of death / serious injury
(i) Individual $150,000
(ii) Individual PCBU or officer of PCBU $300,000
(iii) Body Corporate $1,500,000
(b) Failing to comply with H&S duty
(i) Individual $50,000
(ii) Individual PCBU or officer of PCBU $100,000
(iii) Body Corporate $500,000
The range of orders available has also increased including:
(a) Orders that the Defendant pay the regulator’s costs of bringing the prosecution;
(b) Adverse publicity orders – requiring the offender to publicise in the way specified in the order, the offence, its consequences, the penalty imposed, and to notify a specified person or specified class of persons, of the offence, its consequences, the penalty imposed, and any other related matter;
(c) Restoration Order - requiring an offender to take the specified steps, within a specified period, to remedy any matter caused by the commission of the offence that appears to the court to be within the offender's power to remedy;
(d) Work Health and Safety Project Order - requiring an offender to undertake a specified project for the general improvement of work health and safety within the period specified in the order; and
(e) Release on giving of court-ordered enforceable undertaking - The court may (with or without recording a conviction) adjourn a proceeding for up to 2 years and make an order for the release of the offender if the offender gives an undertaking with certain conditions as to health and safety matters.
The legislation is intended to be in place from 1 April 2015. We expect it to result in an increased prosecution focus by WorkSafe, particularly in relation to officers and the imposition of significantly increased penalties by the Court.