It’s now been more than a year since the Health and Safety at Work Act 2015 took effect. But we’ve noticed that some businesses have some misconceptions about what the law actually means for them – particularly in light of their statutory liability.
READ MORE: 5 Unexpected Business Risks that Could Sink Your Company
Here’s what you need to know:
According to WorkSafe, the new law is intended to encourage a broader focus on health and safety in the workplace. It makes significant changes to the duties of companies in this regard, most notably the creation of Person(s) Conducting a Business or Undertaking (PCBUs) and redefining the roles of directors as PCBU officers.
Put briefly, a corporate entity is considered a PCBU. The PCBU has the primary duty of care to its employees i.e. the company is held responsible for the health and safety of its workers. Within the PCBU, the senior management (director-level), are considered ‘officers’.
These officers carry the duty of due diligence. That is, they are required to ensure that the company (i.e. the PCBU), is committing reasonable resources to eliminate or minimise health and safety issues, as well as be proactive in the identification, reporting and removal of any threats to the workers’ safety. They also have some other duties.
The PCBU has the primary duty of care to its employees i.e. the company is held responsible for the health and safety of its workers.
For example, Carl’s Contractors Ltd is a PCBU. Director Carl is the PCBU officer. Carl’s Contractors Ltd has to ensure its workers are safe. Director Carl has to ensure the processes and resources required to do that go to the right places, and is proactive in minimising risks.
If one of Carl’s Contractors Ltd is hurt, Carl’s Contractors Ltd can be held responsible as a business. Director Carl can also be charged, as an individual officer. Not only the project manager. Not only the workers. Not only the health and safety representative. Carl as well.
What this means for your business is that health and safety issues go all the way up. Unfortunately, we’ve seen a lot of enterprises failing to take these changes seriously enough.
One of the most common issues we’ve seen is a misunderstanding over who is an officer. You don’t assign PCBU officers—in fact, the law explicitly prohibits that. You either are an officer, or you aren’t. If you have enough say to affect the management of the company on a wide scale, you’re an officer. If you’re a director of a company, you’re an officer—the responsibility stops with you, even if you have a health and safety manager or other responsible party. You can be held responsible in addition to these responsible parties.
The responsibility stops with you, even if you have a health and safety manager or other responsible party.
The new law is heavily based on the Australian equivalent, so here’s a good example of what we mean from across the ditch.
A worker from a contracting company was operating a tip-truck when it accidentally came into contact with a power line. The worker was electrocuted and died as a result, and the contracting company was prosecuted for a failure to comply with its primary duty of care, along with the project manager whom was responsible for the worker, and initially considered an officer of the company.
However, the project manager did not fit the definition of an officer of the contracting company; he did not have enough authority in the company to affect processes and procedures on a wide enough scale. He was responsible for the individual contract—but not for the health and safety of the contracting company as a whole. As such, his prosecution did not continue.
However, it was a different story for the contracting company. As it was the PCBU and thus held the primary duty of care for the deceased worker, it was held ultimately responsible for the failure to adhere to the simple safety changes that would have prevented his death. They were fined AUD$1.1 million.
A Palmerston North plastics company has been fined $138,500 after a worker’s hand was partially amputated when it was caught in a plastic extrusion machine.
“One very interesting point to note is the fine to reparation ratio which has been applied,”
says Butler. “This is the opposite to what many initially thought was going to happen—bearing in mind the fine is not covered by insurance.”
The project manager in the above story was not considered an officer, and the same would be true here in New Zealand. Even if you’ve got someone who is directly responsible for operational safety, you as a director and an officer can be held additionally responsible for health and safety breaches. The project manager can be charged as wekkm byt you can’t delegate your own authority completely. You need to be proactive personally.
In larger corporations, it is understood that your role is more organisational rather than hands-on, so you need to make sure the health and safety policies are clear and being upheld. You put the system in place, and make sure it continues to work.
In smaller outfits, however, the role is more practical. You need to take reasonable steps to ensure that not only are the processes in place, but that they are being adhered to. This might translate to visiting sites yourself and checking regulations are being followed.
You can see the required level of involvement on the WorkSafe site.
"We often hear from business owners that Health and Safety is almost a fulltime job and they don’t have the time for it. "
However, one last important thing to note: this is a relatively new law, and not too many precedents have been set yet. How the law is interpreted is still under discussion:
“There are cases underway, as Worksafe has 12 months to take an action against a PCBU––they are taking their time to ensure they get it right and set ongoing precedents. These cases and precedents will have future effects for businesses,” explains BRAVEday Principal Kane Butler.
“However, as nothing has happened as yet, we are seeing a common trend of a continued lacklustre or ‘she’ll be right’ approach to health and safety. We often hear from business owners that Health and Safety is almost a fulltime job and they don’t have the time for it. But the reality is you have to make the time or the consequences could be catastrophic.”
To summarise, the Health and Safety Act 2015 creates an environment where responsibility for health and safety goes all the way to the top. If you’re a director, you’re an officer. The ultimate duty of care lies with your business, but you still hold an obligation of due diligence: being proactive in the prevention of health and safety issues.
As with all new laws, we’re still in a relatively tumultuous period where the exact application of the law is being put to the test. Because the definitions are now quite broad, there is a lot of room for interpretation, and now that the fines are so large for both your company and your individual self, there is a great deal of capital on the line.
Expect to see statutory liability become all the more important for the business world, as both directors and their companies try to adapt to their new responsibilities under the new laws.
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