The Health and Safety at Work Act 2015 (‘the Act’) came into force on 4 April 2016, bringing new responsibilities for everyone in the workplace. The Act is part of a reform package aimed at reducing the number of serious work-related injuries and deaths in New Zealand by at least 25 percent by 2020.
The Act has significantly changed how directors and other officers can be personally liable for a health and safety failing. Under the Act, directors’ and other officers’ liability is no longer dependant on the organisation’s breach. Directors and other officers will now be directly liable if they fail to exercise due diligence to ensure their organisation complies with the Act.
Who is an officer under the Act?
An officer is a director, a partner (or a general partner in a limited partnership), or a person occupying a position in a body corporate or an unincorporated body that is comparable to that of a director (Section 18 of the Act).
An officer also includes a person who holds a position that allows them to exercise significant influence and control over the management of the person who is conducting the business or undertaking (known as a ‘PCBU’). In this regard, the Act provides the specific example of CEOs. It will ultimately be a factual question as to whether someone is deemed an officer under the Act.
Who is not an officer under the Act?
Officers do not include:
- a minister of the Crown acting in that capacity;
- a person that merely advises or makes recommendations.
Due diligence duty
If a PCBU has a duty or an obligation under the Act, then an officer of that PCBU must exercise due diligence to ensure that the PCBU complies with that duty or obligation (Section 44 of the Act).
When determining the extent of the due diligence that must be taken, the nature of the business, the position of the officer, and the nature of the responsibilities undertaken by the officer will be taken into account (Section 44(2) of the Act).
The due diligence duties that apply to officers include taking reasonable steps to (Section 44(4) of the Act):
- 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 or undertaking of the PCBU 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 or undertaking;
- 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 compliance; and
- verify all of the above steps.
The Institute of Directors has several useful reference guides on their website – https://www.iod.org.nz/healthandsafety.
Offences and penalties
A breach of the duty is a criminal offence attracting a maximum penalty of $600,000 and up to five years’ imprisonment for serious offences. These penalties are imposed on officers personally and are over and above any penalty that is imposed on the PCBU arising from any incident (Note that volunteer officers (section 51 of the Act) and elected members of a governing body or territorial authority, local boards and community boards and a school board of trustees (section 52 of the Act) are immune from prosecution as officers whilst still holding officer duties). Being criminal in nature they cannot be insured against – nor can the officer seek an indemnity from the PCBU.
The best that one can do is ensure that legal costs associated with a defended prosecution are covered by the relevant insurance policy or indemnity from the company in relation to those legal costs and other expenses with defending a prosecution.
In summary, the officer’s duty is not the same as the PCBU’s duty. Officers do not have to ensure the health and safety of the PCBU’s workers. Officers must exercise due diligence to ensure that the PCBU is complying with their duty or obligation. This due diligence duty complements and supports the primary duty of care of the PCBU – it does not replace it. The due diligence duty is a duty imposed on officers personally and is separate from the duty imposed on the PCBU. Further, the duty cannot be delegated, modified or transferred. It must be discharged by the officers themselves.
The key message is that the Act introduces a proactive approach to safety rather than a reactive response after an accident has happened. These due diligence duties make officers safety leaders which (it is hoped) will in turn promote a better culture of safety in New Zealand workplaces.