The Health and Safety Reform Bill was introduced into Parliament yesterday. The Bill is part of the Government’s “Working Safer” package, which has been described as the most significant reform in New Zealand health and safety law in the past 20 years. The Bill reflects a substantial shift in approach from the current Health and Safety in Employment Act (the HSE Act).
As expected, the Bill is closely based on the Australian Model Law Health and Safety law (Model Law). The implications of this were discussed in our August 2013 newsletter.
Key aspects of the Bill are set out below.
New concept of PCBUs
The Bill introduces a new concept of a person conducting a business or undertaking (PCBU) as the primary duty-holder under the Act. “PCBU” is defined broadly to include all persons conducting a business or undertaking alone or with others and regardless of whether it is for profit or gain. A PCBU is a business or “business-like” activity, and the term is broad enough to include all types of modern working arrangements such as joint ventures, principal – contractor, and franchise arrangements.
There are some exclusions to the definition including:
- people who work in, or are officers of, a PCBU;
- volunteer associations; and
- occupiers of homes who engage people solely to do residential work.
Standard of care required
Where a duty is imposed on a person under the Bill, a person is required to:
- eliminate risks to health and safety, so far as is reasonably practicable; and
- if it is not reasonably practicable to eliminate risks to health and safety, to minimise those risks as far as is reasonably practicable.
The term “reasonably practicable” is a defined term in the Bill.
New “due diligence” duty imposed on officers
The Bill imposes a personal obligation of due diligence on officers of PCBUs to ensure that the PCBU complies with its duties and obligations.
“Officer” is defined in the Bill to include directors (and people who are in comparable positions to directors), partners, and people who make decisions that affect the whole or a substantial part of the business of the PCBU. A Chief Executive is given as an example of the last category. Although the Exposure Draft of the Bill released in October 2013 also included Chief Financial Officers in this category, the Bill does not refer to them. However, the Bill does expressly record that examples are only illustrative of the provisions to which they relate and do not limit those provisions.
The Bill states that the “due diligence” duty 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 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 minimise risks to health and safety from work carried out as part of the conduct of the business;
- 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, processes for complying with any duty or obligation under the Act; and
- verify the provision and use of the resources referred to above.
An officer of a PCBU must discharge the duty personally, and may be convicted or found guilty of an offence whether or not the PCBU has been convicted or found guilty of an offence under the Act.
These provisions represent a significant change from the HSE Act but are consistent with the information contained in the Good Governance Practices Guideline for Managing Health and Safety Risk produced by the Ministry of Business Innovation and Employment and the Institute of Directors last year (see the discussion on this in our June 2013 newsletter).
New penalties regime
The Bill includes three tiers of offences with maximum penalties which are substantially higher than the penalties currently available under the HSE Act.
For an offence of reckless conduct in respect of a health and safety duty the maximum penalties are:
- for an individual who is not a PCBU or an officer of a PCBU, a term of imprisonment not exceeding 5 years, or a fine not exceeding $300,000, or both;
- for an individual who is a PCBU or an officer of a PCBU, a term of imprisonment not exceeding 5 years, or a fine not exceeding $600,000, or both; and
- for any other person, a fine not exceeding $3 million.
For the offence of failing to comply with a health and safety duty that exposes an individual to risk of death or serious injury or illness the maximum penalties are:
- for an individual who is not a PCBU or an officer of a PCBU, a fine not exceeding $150,000;
- for an individual who is a PCBU or an officer of a PCBU, a fine not exceeding $300,000; and
- for a body corporate, a fine not exceeding $1.5 million.
For the offence of failing to comply with a health and safety duty the maximum penalties are:
- for an individual who is not a PCBU or an officer of a PCBU, a fine not exceeding $50,000;
- for an individual who is a PCBU or an officer of a PCBU, a fine not exceeding $100,000; and
- for a body corporate, a fine not exceeding $500,000.
The Bill carries over the provision in the HSE Act which provides that insurance against fines or infringement fees under the Act is unlawful. However, it may be possible for a duty-holder to insure or indemnify themselves in relation to reparation orders or the legal costs of defending proceedings.
The Bill goes on to provide that contravention of this provision is an offence. An individual who is convicted of this offence is liable for a fine not exceeding $50,000 and any other person is liable for a fine not exceeding $250,000.
The Government has indicated that it expects the Bill to be passed into law by the end of this year and to come into force in April 2015. In order to meet these timeframes the Bill will need to be referred to the Select Committee for public consultation soon, before being reported back to Parliament. The timing of the general election may, however, impact on this.
The majority of the Bill will have a deferred commencement date to allow sufficient time for regulations under the new regime to be developed, including regulations regarding mining and other high hazard industries.