Legal update - Health and Safety Reform Bill
20 March 2014
Last week, the Government introduced the Health and Safety Reform Bill to Parliament. The closing date for submissions to the Select Committee is Friday 11 April 2014.
The Bill clarifies duty-holders' core responsibilities, and increases worker participation, leaders' responsibilities, the scope for personal liability and penalties for breach. The aim is to bring about the cultural change needed to markedly improve workplace health and safety across New Zealand.
Workplace Health and Safety Reform
The Government announced its package of health and safety reforms in August 2013. Those reforms include replacing the Health and Safety in Employment Act 1992 (HSE Act) with a new Health and Safety at Work Act (HSW Act) based on the Australian Model Law. In October 2013, the Ministry of Business Innovation and Employment released an exposure draft of Parts 2 (duties) and 3 (worker participation) of the Bill to give an early indication of the key provisions of the new law (and provide an initial opportunity to comment on them).
The Bill is an omnibus bill to reform New Zealand's workplace health and safety system. Its main purpose is "to provide for a balanced framework to secure the health and safety of workers and workplaces". It is closely modelled on the Australian Model Work Health and Safety Act, with minor modifications to reflect New Zealand's specific context.
Compared to the HSE Act, which is now 20 years old and has been amended a number of times, the Bill is easy to follow. The health and safety duties are set out clearly in Part 2. The confusion flowing from the definitions of "harm" and "serious harm" under the HSE Act has been addressed; and those terms have been replaced with comprehensive definitions of "notifiable injury or illness", "notifiable incident" and "notifiable event" (set out in clauses 18 to 20).
Broadly, Part 2 of the Bill, which sets out Health and Safety Duties, aligns with the exposure draft released in October last year. The primary duty for ensuring workplace health and safety will fall on "a person conducting a business or undertaking" (PCBU, defined in clause 13 of the Bill).
The concept of a PCBU is a broad one, designed to capture all types of modern working relationships. There is no definition of "business" or "undertaking" in the Bill and guidance similar to that issued by Safework Australia (Interpretive guideline - Model Law) will likely be issued.
A PCBU must ensure, as far as is reasonably practicable, the health and safety of workers and others affected by the work (clauses 30 to 38). The equivalent standard in the HSE Act is "all practicable steps", and, while the new "reasonably practicable" test may give a better sense of what is expected of duty-holders, in practical terms the matters that are to be weighed up are largely the same.
The Bill also sets out particular duties for PCBUs who:
Manage or control workplaces
Manage or control fixtures, fittings or plants at workplaces, or
Design, manufacture, import, supply, or install plants, structures or substances that are to be (or could reasonably be expected to be) used at or within a workplace.
The Bill will create a positive duty on "officers" (defined in clause 12) to exercise due diligence to ensure that the PCBU complies with its duties or obligations under the Act (clauses 39 to 41). This is a significant change from the current law. While individuals can be liable currently, there is less scope for personal liability, and the HSE does not impose positive and specific duties on officers.
This new 'due diligence' requirement will extend to directors, chief executives and some senior managers, and require officers to take reasonable steps to:
Understand the PCBU's operations and associated hazards
Ensure that the PCBU has, and implements, appropriate health and safety processes, and that these processes are sufficiently resourced and verified.
An "officer" is defined as:
Where the PCBU is a company, a director of the company
Where the PCBU is a partnership, a partner
Where the PCBU is a limited partnership, any general partner
Where the PCBU is another type of incorporated or unincorporated body, any person occupying a position comparable with that of a director of a company
Any other person who makes decisions that affect the whole, or a substantial part of the business or PCBU (for example, the chief executive).
The last part of this definition ("any other person") has been narrowed from that set out in the exposure draft, which included a person who participated in decision-making and referred specifically to both chief financial officers and chief executives.
Some officers and organisations not liable
The Australian Model Law expressly excludes elected members of local authorities from the definition of "officer". The Bill does not contain a similar exclusion so elected members making decisions that affect the whole or a substantial part of the PCBU will have 'officer duties'. However, clause 47 of the Bill provides that appointed or elected community board members, elected local authority members, elected local board members and appointed or elected school trustees do not commit an offence for failure to comply with their officer duties.
Similarly, the Bill excludes liability for volunteers who breach their health and safety duties as an officer or PCBU. A volunteer is anyone acting on a voluntary basis who receives only out-of-pocket expenses.
Unincorporated associations are also excluded from prosecution (although an officer or a member of the association will still have due diligence duties and could be liable).
The Bill introduces a tiered penalty regime with a significant increase in the maximum liability levels. The most serious offending has a maximum penalty of $3,000,000 for a body corporate (a six-fold increase), and $600,000 or five years imprisonment (or both) for individuals (a three year increase to the prison term and $100,000 increase to the maximum fine).
Engagement, worker participation and health and safety representatives
Part 3 of the Bill includes a duty on PCBUs to consult with workers on health and safety matters and procedures for electing health and safety representatives (as well as their functions and powers). It provides details as to the nature of consultation required, and particular circumstances in which consultation is required (eg when making decisions about the adequacy of facilities for the welfare of workers, and when proposing changes that may affect the health and safety of workers). While the duty of consultation is not new, the scope is wider and more prescriptive.
Under the Bill, all PCBUs are required to have worker participation practices that provide reasonable opportunities to participate in improving work health and safety on an on-going basis. Currently, employee participation systems are required only where there are 30 or more employees (or where it is requested by an employee or union).
The current right of employees to refuse to perform work that is likely to cause them serious harm is extended under the Bill to include all workers (ie it includes contractors), and to allow workers to refuse to carry out work that may expose another person to a serious health and safety risk.
There are also protections for workers who are discriminated against in relation to health and safety matters. The Bill proposes to amend the Employment Relations Act to specifically allow an employee to raise a personal grievance if the employee has been dismissed or disadvantaged for a reason related to the employee's participation in workplace health and safety or performance of a health and safety function.
Part 4 of the Bill deals with enforcement and follows the Australian Model law. Inspectors will be empowered to issue improvement, prohibition, non-disturbance (with the inspector's functions) and suspension notices. Individuals will be liable for a fine of up to $50,000 and entities up to $250,000 for breaching an improvement or non-disturbance notice. The fines are twice those amounts for breaching a prohibition notice.
While the changes proposed are significant and the HSE Act is to be replaced with an entirely new Act, the philosophies underpinning the legislation will not change. Businesses that engage in a best practice approach to health and safety are unlikely to need to make more than minor adjustments. Individuals though – particularly directors and senior managers – need to understand that they will have a personal obligation to exercise due diligence and keep people safe, and that they may be personally liable if they don’t.