The Health and Safety Reform Bill
The Health and Safety Reform Bill heralds the greatest change to health and safety law in over two decades. With the election over, we await the Select Committee Report (due any day) and the continuing passage of the Bill. If you’re in business, this article gives you a snapshot of some of the significant proposed changes.
The Bill is due to be enacted by the end of 2014 and to come into effect as early as April 2015, completely replacing the Health & Safety in Employment Act 1992 (HSEA). The Bill’s underlying principle is to address New Zealand’s poor workplace safety record by providing the highest level of protection to workers.
The Bill confirms the government’s commitment to reduce death and serious injuries in the workplace by 25% by 2020. It is investing in considerable resources to achieve that goal through the establishment of WorkSafe New Zealand – a separate government entity with the sole mandate of ensuring compliance with health and safety legislation.
There are major changes ahead, not only for business – but also for business owners, senior management and directors. Everyone involved should start preparing for, and familiarising themselves with, the proposed changes. These include:
- Expanding the definition of primary duty holder to a ‘person conducting a business or undertaking’
- The introduction of a reasonably practicable test in the assessment of a primary duty holder complying with obligations to identify and eliminate ‘risks’ as well as hazards
- New due diligence obligations for directors and senior managers in business
- A more significant focus on worker engagement in health and safety, and
- Substantially increased penalties and new enforcement tools.
Who owes the duty?
The primary duty holder is much broader than the HSEA’s ‘person managing or controlling a workplace’ and will be owed by ‘persons conducting a business or undertaking’ (or a PCBU) – a significant change that will include anyone who can contribute to a workplace accident, in any way, including:
- Those managing or controlling a work- place (even those with no employees)
- Those managing or controlling fixtures, fittings or plant at workplaces
- Designers, manufacturers, importers and suppliers of plant (e.g. equipment), substances (e.g. chemicals) or structures to other workplaces, and
- Installers, constructors or those commissioning plant or structures (e.g. a company erecting scaffolding).
Reasonable practicability test
The HSEA requires an employer to take ‘all practicable steps’ to prevent harm to those in their workplace by identifying, eliminating or minimising hazards (a situation that has the potential to harm a person).
The Bill goes a step further, requiring a PCBU to ensure workers’ health and safety as far as is reasonably practicable, by identifying, eliminating and minimising risks to health and safety, not just hazards. ‘Risk’ is a new term and is defined as the possibility that harm might occur when a person is exposed to a hazard.
‘Reasonable practicability’ balances the likelihood of a risk occurring, against the time, trouble and cost that would be necessary to avert that risk. It takes into account all relevant matters including the potential degree of harm, knowledge as to existence of the risk and the available control measures.
This subtle but significant change in focussing on ‘risk’ rather than just ‘hazards’ suggests a much lower threshold, and an obligation on businesses to identify risks including:
- Worker behaviour (e.g. not following directions)
- Stress or fatigue
- Occupational disease
- The way work is undertaken in (and outside) a workplace, and
- Emotional harm arising from bullying behaviour.
The Bill requires ‘officers’ of a PCBU to assume a due diligence duty. An ‘officer’ is a director of a company and any other person making decisions affecting the whole, or a substantial part, of the business.
This means that any person making decisions within a business will owe broad duties of due diligence. They will be required to have up-to-date knowledge of health and safety matters, understand the risks and hazards associated with the business, and ensure the PCBU has (and uses) appropriate resources/processes to comply with their duties, which include responding, in a timely way, to information regarding incidents, hazards and risks.
The Bill imposes positive obligations on decision makers, emphasising proactivity in matters of health and safety. This is expected to result in significant changes to the way boards of directors and senior management address health and safety matters. Health and safety should be a permanent agenda item for board meetings, with analysis of incident reports being tabled at least every quarter. Directors and senior managers will need to personally make themselves familiar with the ‘ground floor’ operations of the business, consider what risks arise from those operations, and how to eliminate those risks. Prosecutions can be brought against ‘officers’ personally (even where a PCBU is charged separately), with substantial penalties available to be imposed by the court.
Workers (widely defined to include not just employees – but contractors, subcontractors, apprentices, trainees and even volunteers in some cases) play a far more significant role in health and safety matters and the PCBU must facilitate worker participation.
Under the Bill, if a worker requests a health and safety representative, the business must facilitate election of a representative who is chosen solely by the workers. This representative will have significant responsibility, representing workers on health and safety matters (including rehabilitation and return to work programmes), monitoring the PCBU’s compliance with its duties, and making recommendations to the PCBU – which must be adopted unless the PCBU provides a written statement as to why not. This representative will hold a powerful position and can issue notices to a PCBU for contravention (or likely contravention) of the Act.
The representative must be consulted on health and safety matters, allowed time off to perform their role, be provided with information, training, resources, facilities and assistance – and must be remunerated for their time at their usual rate of pay.
The Bill closes the ‘loopholes’ resulting from the Pike River investigation by imposing a duty on ‘other persons’ (anyone who is not defined as a PCBU, officer or worker) to take reasonable care for their own health and safety, to ensure acts or omissions don’t adversely affect the health and safety of others, and to comply with any reasonable instruction given by a PCBU.
The HSEA sets out a maximum penalty of $500,000 and/or two years’ imprisonment. Under the Bill, there’s a clear message to the courts to impose substantially greater penalties, with three graduated categories of offence:
1. Breaches arising from ‘reckless conduct’ carry a maximum fine of $3,000,000 for companies and $600,000 and/or five years’ imprisonment for an individual (includes a worker and an ‘officer’ of a PCBU)
2. Breaches exposing a person to a risk of death or serious injury or illness carry a maximum fine of $1,500,000 (company) and $300,000 (individual), and
3. A failure to comply with a health and safety duty that does not fall within the above two categories, will carry a maximum fine of $500,000 (company) and $100,000 (individual).
Additional enforcement tools include adverse publicity orders requiring the publication of a PCBU or person’s breach, its consequences and the penalty imposed; and an order for contribution toward WorkSafe’s costs of investigating and prosecuting a breach, as deemed ‘ just and reasonable’.
Next steps for business
• Start to familiarise yourself with the Bill, implement policies, inform ‘officers’ of their due diligence obligations and start identifying and assessing risks and hazards
• Focus on worker engagement and obligations to consult and collaborate with other duty holders that influence the workplace, and
• Policies alone will not be enough. Training, reviews and reminders should be carried out – with appropriate focus on the risk of employees not following directions or policies.
These proposed changes significantly alter the health and safety landscape for business. If you’re at all unsure of your new obligations and responsibilities, please be in touch with us so we can help you prepare.