Are you an officer?
12 August 2016
WorkSafe adopts a conservative interpretation of 'officer' under the Health and Safety at Work Act 2015
The new Health and Safety at Work Act 2015 (HSW Act) specifies that those in governance roles, defined as 'officers', have a positive due diligence obligation to proactively manage health and safety in the workplace. WorkSafe recently indicated that it will adopt a conservative approach in relation to local authorities and treat only elected members and CEOs as officers. The comments by WorkSafe are not binding and care must be taken given it is a matter for the court to determine officer liability.
The approach by WorkSafe does accord with the narrow interpretation taken by the Australian courts in the first prosecution of an officer under equivalent legislation. The 2015 case involved the prosecution of a project manager following the fatal electrocution of a contractor at a project site. The Australian definition of 'officer' is a person who makes, or participates in making, decisions that affect the whole, or a substantial part, of the business. The Industrial Magistrates Court considered the individual's decision-making role in the company as a whole, rather than their role in respect to the particular matter in which it was alleged there was a breach of a duty. While the project manager had operational responsibility over the delivery of specific contracts, he did not exercise sufficient responsibility over the whole organisation so as to qualify as an officer.
While the definition of an officer is different in New Zealand it is possible that our courts might adopt a similar approach that persons (other than directors or partners) have to exercise significant influence over the management of the entire company, not just part of it, to qualify as an officer. Until there is New Zealand case law it would be prudent for any senior manager who might fall within the definition to prepare as if he/she is covered.
Who is an officer?
An officer is a director of a company, a partner in a partnership or persons in other entities occupying similar roles. It also includes a person who exercises "significant influence over the management of a business or undertaking". A liquidator or receiver of a company can also be an officer after appointment. Persons who merely advise or make recommendations to an officer are expressly excluded from the definition. Officers are likely to include CEOs and may include CFOs and other members of an organisation's senior management team depending on their level of influence over the operation of the business.
What is due diligence?
Under the HSW Act, a person conducting a business or undertaking (PCBU) owes a primary duty of care to ensure, so far as is reasonably practicable, the health and safety of its workers and workers influenced or directed by the PCBU.
If a PCBU has a duty or obligation under the HSW Act, an officer of the PCBU must exercise due diligence to ensure that the PCBU complies with that duty or obligation. If an officer has acted with due diligence, he or she will not be held liable for the conduct of other officers or the PCBU.
Officers must exercise the care, diligence and skill that a reasonable officer would exercise in the same circumstances, taking into account (without limitation):
The nature of the business or undertaking
The position of the officer and the nature of the responsibilities undertaken by the officer.
Due diligence will further require officers to:
Know about health and safety matters
Understand the operation, hazards and risks of the business
Allocate appropriate resources to address these risks/hazards
Implement a fit-for-purpose health and safety system and ensure processes are in place to respond to incidents
Report on hazards, risks and ensure it is a regular agenda item and well documented
Verify it is all happening.
The duty is not dependent on there being an incident or accident. In Australia it is not uncommon for improvement notices to be issued or for prosecutions to be taken if officers are found to be falling short of due diligence. Whether the same approach will be adopted in New Zealand is yet to be seen.
A failure to meet due diligence obligations will expose an officer to a risk of being personally convicted of a criminal office. There are significant penalties for three categories of offences:
|Without excuse, exposes individual to risk of death/serious harm and recklessness as to the risk (s47)||
5 years imprisonment
5 years imprisonment
|Duty failure exposing individual to risk of death/serious harm (does not require knowledge or actual harm) (s48)||$150,000||$300,000||$1.5m|
|Duty failure (does not require risk exposure) (s49)||$50,000||$100,000||$500,000|
These penalties have significantly increased from those contained in the previous Health and Safety in Employment Act 1992. Under the previous legislation, it was not uncommon for workers, officers and employers all to be prosecuted, convicted and fined. This trend is unlikely to change.
In a practical sense, officers must frequently observe and attend their work sites. This is not a task that can be delegated to office managers and workers. It will not be sufficient for an officer to arrange for insurance, put policies in place and then sit on his or her hands. Nor will it be enough for a board to delegate these tasks to a CEO.
Simon Arcus, chief executive of the Institute of Directors, recently noted that "the age of sleeping directors is absolutely dead." Officers who do not have hands-on involvement in the operation of their business are more likely to be at risk of prosecution because they may not be familiar with the day-to-day procedures for health and safety compliance. This issue led to the resignation of Peter Jackson as director of Weta Workshop.
Any officer must be personally satisfied as to the effectiveness of their organisation's health and safety systems and performance. As part of this, they should obtain good quality health and safety information from management, maintain a strong health and safety culture which involves worker engagement and review.
The Health and Safety Guide: Good Governance for Directors was re-released by Worksafe New Zealand and the Institute of Directors in March 2016 and is a practical tool for officers and managers The guide outlines a framework for directors and managers to identify whether their health and safety management systems are of a standard and quality that is effective in minimising risk.
The statutory due diligence obligations and the recommendations contained in the guide suggest an officer should adopt a cycle of planning, review, implementation and improvement for a company. Suggested action points for this annual cycle include:
|Obligations||Suggested action points|
|Know and understand (Plan)||
|Allocate and implement (Do)||
This article was written by Susan Rowe and Philippa Moran for Industrial Safety News print and online media platforms (July/August 2016).