Legal update - The Health and Safety Reform Bill – Future impacts on landlords and tenants
1 April 2015
By way of legal update dated 20 March 2014, we reported on law reform that represents the most significant change to our workplace health and safety system since the Health and Safety in Employment Act 1992 (HSEA) was introduced over 20 years ago. The Health and Safety Reform Bill is currently before Parliament. If enacted, it will create the new Health and Safety at Work Act (Act), replacing the HSEA. It is anticipated that the Act will come into force late 2015, possibly early 2016 (the Select Committee is not due now to report back until 29 May this year).
The changes will bring New Zealand more into line with Australian health and safety legislation (Work Health and Safety Act 2011) which has been in force in Australia for the last three years.
The Act will impose a positive obligation on a number of duty holders, (including persons carrying out the business or undertaking (PCBU), officers of the PCBU, and workers) to ensure the health and safety of workers and other people who have contact with a business or undertaking. PCBUs can be individuals but in most cases will be a business entity.
Duty holders will be required to eliminate and minimise risks so far as 'reasonably practicable'. What is considered reasonably practicable at the time will depend on the likelihood of the hazard or risk occurring, the degree of harm that might result from the risk or hazard, what is known or would be reasonably expected to be known about a risk or hazard, how to eliminate or minimise the risk, and the costs of doing so.
The Act requires all duty holders who have an obligation to ensure the health and safety of others in relation to the same matter, to cooperate with and coordinate activities with each other. For example, a number of PCBUs may be carrying out work at the same workplace. These could include a property developer, architects, contractors, tradespersons, equipment suppliers and labour hire companies. Each of these PCBU entities has a duty to cooperate with the others to ensure the safety of workers and others at the workplace.
Current health and safety law in a leasing context
The HSEA provides a broad framework for managing the health and safety of those involved in work activities. While the primary focus of the HSEA is on employers, there are a number of other duty holders who may be liable under the HSEA. Landlords and tenants may owe duties in various capacities, including as an employer and as a principal or "person in control of a place of work".
Most leases require a tenant to comply with the provisions of all statutes, regulations and by-laws relating to its use of the premises. Standard lease provisions do not require a tenant to make any structural changes or additions to the premises, nor to replace any plant or equipment, except where required due to the particular nature of the business carried out by the tenant. Such obligations are the responsibility of the landlord.
In addition to having the responsibility to undertake structural repairs, a landlord must also take all practicable steps to ensure that no hazard harms people in or about the premises.
Notwithstanding this, a tenant employer has obligations that extend beyond the scope of its lease. The HSEA obliges employers to provide and maintain safe working environments for their employees and to take "all practicable steps" to ensure the safety of employees while at work. This obligation exists despite a lease specifying for example that it is the landlord who is responsible for making structural changes to the premises and replacing equipment.
Changes to the duties of landlords and tenants under the Act
The Act will have implications for both landlords and tenants. Landlords will become PCBUs, and where there are tenant businesses, these will also become PCBUs.
As a PCBU, a landlord must ensure, so far as is reasonably practicable, that the workplace, the entry and exit to the workplace, the fixtures, fittings and plant and anything arising from theworkplace do not put a person's health and safety at risk. Notably, the duty to provide a safe workplace extends to persons beyond employees. It is owed to all workers who carry out work in any capacity at a workplace under the control of a PCBU. For example, sales representatives, volunteers and people on work experience are also owed a duty.
A tenant business will also be a PCBU. Depending on the nature of its business, legally it will assume the same responsibilities as a landlord in terms of its duty to ensure the workplace does not put any person's health and safety at risk.
Both landlord and tenant will be required to work together to develop and operate health and safety strategies for the premises and workplace.
Under the Act, additional responsibilities will be placed on officers of PCBUs (most commonly chief executives, company directors or board members). Officers will be required to exercise due diligence to ensure that the PCBU complies with its health and safety duties. Parliament believes that this obligation places a positive duty on people at the governance level of an organisation to actively engage in health and safety matters, reinforcing the concept that improvements in the health and safety culture of an organisation must be led by its governors and executive management. These health and safety obligations on officers may place some directors of landlord companies at risk of prosecution because they are not aware of the day-to-day use and operation of their tenanted buildings. Similarly, tenant companies may have directors or board members who are detached from business operations, and may not be aware of what happens 'on the ground'.
WorkSafe New Zealand administers and enforces the current and proposed health and safety legislation under the authority of the Ministry of Business, Innovation and Employment. Information and guidance on the Act and associated Regulations is available on the WorkSafe New Zealand website. Further information will continue to become available over the next few months prior to the Act becoming law.
Prudent landlords and tenants should review, and where necessary, update their health and safety policies and procedures in anticipation of the Act becoming law to ensure they are engaging in a best practice approach to health and safety. Further, lease documentation entered into after introduction of the new laws should accurately reflect the duties held by each party to ensure the health and safety of all people connected with the workplace.