HEALTH AND SAFETY REFORM UNDERSTANDING YOUR OBLIGATIONS. Garth Gallaway, Partner, Chapman Tripp *

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1 HEALTH AND SAFETY REFORM UNDERSTANDING YOUR OBLIGATIONS Garth Gallaway, Partner, Chapman Tripp * INTRODUCTION Background 1 The tragedy at the Pike River mine in November 2010 highlighted significant issues with New Zealand s workplace health and safety system. As a consequence: 1.1 In December 2010, the Government established a Royal Commission to report on what had happened at Pike River and to make recommendations on what was needed to prevent similar disasters in the future. 1.2 In June 2012, the Government also established an Independent Taskforce to undertake a strategic review of whether New Zealand s workplace health and safety system remains fit for purpose and to recommend practical strategies achieving the Government s objective. 2 The Royal Commission and the Independent Taskforce submitted their reports to Government in October 2012 and April 2013 respectively. Both reports expressed serious concerns with the legislative and regulatory framework governing workplace health and safety in New Zealand. 3 In particular, in its April 2013 report, the Taskforce called for an urgent, sustainable step-change in harm prevention activity and a dramatic improvement in outcomes. 1 The Taskforce recommended a fundamental reform of the New Zealand system including the creation of a new Crown Agency and the enactment of a new workplace health and safety Act based on the Australian Model Work Health and Safety Law (the Model Law). 4 On 21 February 2013, the Minister of Labour announced that the Government would establish a new health and safety regulator in the form of a stand-alone Crown Agent, now called WorkSafe New Zealand (WorkSafe NZ). * 1 The comments in this paper are those of the author, and do not necessarily reflect the views of Chapman Tripp. Executive Report of the Independent Taskforce on Workplace Health and Safety (2013) at /

2 5 The workplace health and safety functions sitting within the Ministry of Business, Innovation and Employment (MBIE) were transferred to WorkSafe NZ and sit alongside a suite of additional functions intended to improve strategic and operational coordination, increase the quality of monitoring and reporting, and enhance the effectiveness of the compliance system. 6 The Government introduced the Health and Safety Reform Bill 2014 (Bill) to Parliament on 10 March As foreshadowed in the Working Safer reform package, the Bill will replace the existing occupational health and safety legislation, including the Health and Safety in Employment Act 1992 (HSEA), and is based on the Australian Model Health and Safety Law. After several delays, the Bill is due to be reported back from the Select Committee on 24 July 2015 and passed before the end of the year. Outline of this paper 7 The purpose of this paper is to provide a summary of employers obligations under the new health and safety legislation. 8 For convenience, this paper is structured as follows: Overview of the HSEA and the Bill Review of the new key definitions (including PCBUs, Officers and Workers ) Review of the new duties and offences Review of the new enforcement mechanisms Review of the new engagement, worker participation and representation provisions Review of a case involving the prosecution of an officer in Australia under the Model Law OVERVIEW The HSEA 9 The HSEA currently provides the regulatory basis for New Zealand s workplace health and safety system and follows a format commonly known as the Robens /

3 approach. 2 The duties in the HSEA are focused on the employer/employee (or principal and contractor) relationship and duty-holders are required to take all practicable steps to promote the prevention of harm in the workplace. 10 Some industry and hazard-specific regulations have been made under the HSEA, but these are not comprehensive when compared to other jurisdictions that adopted the Robens approach (e.g. United Kingdom and Australia). Some of the regulations have become outdated (e.g. they refer to dated technology or ways of working). 11 The HSEA is supported by some Approved Codes of Practice (ACoPs), which give duty-holders clarity about how duties can be complied with in practice. Again, the number of ACoPS are limited compared to other jurisdictions and some are outdated. 12 The problem is that the HSEA and its implementation has struggled to keep pace with changing nature of workplaces and working arrangements, and increasing complexity of supply. This problem has a number of components described by the Taskforce: 12.1 Duty-holders have difficulty knowing what to do in order to meet their duties or knowing whether they have done enough. This can result in duty-holders not doing enough or focusing on the wrong things The concept of taking all practicable steps is not well understood by the regulated community. It is seen as vague and difficult to apply The duties do not effectively accommodate the changes in working arrangements (such as an increase in contracting arrangements). This can lead to a focus on who has the HSEA duty, rather than the safety of workers and others The HSEA does not explicitly require positive action by directors and senior managers of duty-holders in relation to the health and safety. It effectively rewards directors who avoid involvement in matters affecting health and safety. 2 The Robens approach seeks to increase awareness, knowledge and competence in managing workplace health and safety, rather than rely on prescriptive requirements focusing on a narrow range of workplace hazards. Performance-based general duties ensure broad coverage of work and workplaces. Advantages of the all-encompassing nature of these general duties are that they do not quickly date, support innovation and provide flexibility. The duties are underpinned by industry or hazard-specific regulations, approved codes or guidance where further clarity is required /

4 12.5 There are gaps in coverage in relation to some upstream duty-holders (designers, manufacturers, installers etc), who have a profound influence on the health and safety risks present in the workplace Some of the language in the HSEA is seen as weak compared to other jurisdictions. For example the HSEA seeks to promote the prevention of harm to people, whereas the object of the Australian Model Law is to secure the health and safety of workers The compliance and enforcement tools for the regulator are in some places not sufficiently flexible to enable the regulator to promote compliance The penalties in the HSEA, and as applied in practice, have not been sufficient to deter breaches of the HSEA. The Bill 13 The main purpose of the Bill is to provide a balanced framework to secure the health and safety of workers and workplaces, and it lists the various ways in which it seeks to achieve this. The new regime, in a nutshell 14 At the centre of the new regime sits the PCBU (the person conducting a business or undertaking). The PCBU owes duties to workers in a general sense when they are performing work in relation to that business, and to workers whose activities are directed by or influenced by the PCBU. Volunteer associations not employing anyone are excluded from the definition of a PCBU. 15 There are also specific obligations on upstream suppliers of products or machinery to ensure that the items are supplied, installed, stored and can be operated and inspected safely. 16 Company officers (directors and senior management) are subject to a new positive due diligence duty to ensure that the PCBU eliminates risks to health and safety so far as is reasonably practicable and, where risks cannot be eliminated, minimises them so far as is reasonably practicable. 17 This new duty will require directors and officers, as an absolute minimum, to: 17.1 understand the nature of the company s operations and any associated risks and hazards, and /

5 17.2 ensure that there are appropriate resources, systems and processes to manage these risks. 18 In judging what constitutes an appropriate standard of care, the courts are likely to have regard to the Good Governance Guidelines drawn up by MBIE and the Institute of Directors. 19 A large section of the new Bill is dedicated to worker participation, and engagement with workers. There are significant penalties for non-compliance with these obligations. 20 New enforcement options available to WorkSafe as the regulator include: 20.1 an ability to issue infringement notices without prior warning 20.2 enabling judges to order wrong-doers to publicise their failures, take action to remedy those failures and pay for the regulator s costs in bringing proceedings against them, and 20.3 a comparatively long period for bringing prosecutions up to two years after the breach first comes to WorkSafe s notice and up to one year after the coroner releases findings indicating that an offence may have occurred. Key changes 21 Key changes that the Bill introduces to achieve its purpose include: 21.1 the new definition of duty holder PCBU (Person conducting a business or undertaking) to replace existing definitions, including employer and principal ; 21.2 a new qualifier definition of so far as is reasonably practicable to replace all practicable steps ; 21.3 a new definition of workplace (a place where work is carried out for a business or undertaking, including any place where a worker goes, or is likely to be, while at work); 21.4 a new general duty for PCBUs to ensure, so far as is reasonably practicable, the safety of: (a) workers they have engaged; or /

6 (b) workers whose activities are influenced or directed by the PCBU; or (c) other persons; 21.5 introducing due diligence obligations for directors and senior managers; 21.6 a new duty where more than one person has a duty in relation to the same matter: each duty holder has an obligation to consult and coordinate activities with all other persons who have a duty in relation to the same matter; 21.7 increased worker participation requirements; 21.8 increased enforcement tools, including the power to issue improvement notices, prohibition notices, non-disturbance notices, suspension notices, and to accept enforceable undertakings; 21.9 significantly increased penalties for corporate entities and individuals; and amendments to related legalisation, including the ACC Act 2001, and the Employment Relations Act Changes in Bill from Exposure Draft 22 The content of the Bill is largely as expected, following the publication of the Health and Safety Reform Bill - Draft for Consultation (Exposure Draft) in November However, there have been a number of changes and clarifications to the Bill s definitions and technical terms since the publication of the Exposure Draft. 23 The notable changes are: 23.1 application of the Act to the Crown, armed forces, aircraft, ships, Exclusive Economic Zone, and high risk plant; 23.2 introduction of a number of new definitions in the Interpretation section, including hazard, high risk plant, and risk ; 23.3 inclusion of a ship in the definition of a workplace ; 23.4 that a person or court may have regard to requirements under other enactments when determining whether a health and safety duty has been complied with; /

7 23.5 certain office holders (elected members of: community boards, local authorities, local government boards, and school boards of trustees) do not commit an offence for a failure to comply with the due diligence obligation for officers; 23.6 amendment to the definition of categories of persons in the offence clauses. What was body corporates is now any other person ; 23.7 removal of the procedure for determining work groups; 23.8 removal of provisions related to the election of health and safety representatives; and 23.9 new provisions relating to appeal processes for health and safety representatives that have been removed from office, obligations of PCBUs in relation to health and safety committees, and information to be used by health and safety committees for health and safety purposes only. HEALTH AND SAFETY AT WORK KEY DEFINITIONAL PROVISIONS 24 Part 1 sets out the preliminary provisions, application, definitions and key principles relating to health and safety duties relevant to the balance of the Bill. 25 The Government's aim is to remove the confusion associated with definitions under the current legislation. The new definitions are intended to provide much needed clarity as to who has duties in the workplace and how the duties are to be met. 26 The key aspect of Part 1 is the new definitions. The legislation relates to a workplace, which: means a place where work is carried out for a business or undertaking; and 26.2 includes any place where a worker goes, or is likely to be, while at work. 27 As foreshadowed, the Bill introduces new duty holder categories to remove existing confusion around employer, principal and person who controls a place of work under the HSEA. The new duty holder categories include: 27.1 PCBU (person conducting a business or undertaking); 3 Health and Safety Reform Act 2014, cl /

8 27.2 Officer ; and 27.3 Worker. 28 These categories are addressed, in turn, below. PCBU (person conducting a business or undertaking) 29 A PCBU means, a person conducting a business or undertaking: whether the person conducts a business or undertaking alone or with others; and 29.2 whether the business or undertaking is conducted for profit or gain. 30 But a PCBU does not include: 30.1 a person conducting a business or undertaking to the extent that the person is employed or engaged solely as a worker in, or as an officer of, the business or undertaking; 30.2 a volunteer association; 30.3 an occupier of a home to the extent that the occupier employs or engages another person solely to do residential work; 30.4 a person, or class of persons, that is declared not to be a PCBU for the purposes of this Act or any provision of this Act by regulations. 31 The new PCBU definition encourages PCBU s to be aware of their legal obligations and to take steps to meet these duties. The Bill aims to move away from the HSEA s simple emphasis on employers and employees. Instead, duties are placed on defined persons, including principals, self-employed persons, those who control a place of work and suppliers of plant. 32 The purpose of this shift is to recognise the complexity of work places, for example the fact organisations may be spread across different locations and workers may answer to different levels of management. Officer 33 In relation to a PCBU, officer means: 5 4 Health and Safety Reform Act 2014, cl /

9 33.1 any person occupying the position of a director of a company (whatever name called); 33.2 any partner in a partnership; 33.3 any general partner in a limited partnership; 33.4 any person occupying a position in a body corporate that is comparable with that of a director of a company; and 33.5 any other person who makes decisions that affect the whole, or a substantial part, of the business of the PCBU (for example, the chief executive). Worker 34 Worker means a person who carries out work in any capacity for a PCBU, including work as an employee, contractor or subcontractor, an employee of a contractor or subcontractor, an employee of a labour hire company who has been assigned to work in the business or undertaking, an outworker (including a homeworker), an apprentice or a trainee, a person gaining work experience or undertaking a work trial, a volunteer or a person of a prescribed class The definition of worker is intended to be broad and to address previous confusion under the HSEA with respect to a principal or employer's obligations to persons on a worksite, such as contractors, employees of contractors, and volunteers. Workers have been assigned duties under the Bill to ensure that all persons share in the responsibility for upholding health and safety at work. HEALTH AND SAFETY DUTIES 36 Subpart 4 of Part 1 of the Bill sets out the key principles relating to health and safety duties. Part 2 of the Bill imposes duties on PCBUs, officers, workers and other persons (such as visitors). Key principles relating to duties 37 The key principles relating to duties are as follows. 5 6 Health and Safety Reform Bill 2014, cl 12. Health and Safety Reform Bill 2014, cl /

10 Duty to manage risk 38 A duty imposed on a person under the Bill to ensure health and safety requires the person: to eliminate risks to health and safety, so far as is reasonably practicable; and 38.2 if it is not reasonably practicable to eliminate risks to health and safety, to minimise those risks so far as is reasonably practicable. Duty not transferable 39 A duty under the Bill may not be transferred to another person. 8 Person may have more than one duty 40 A person may have more than one duty under the Bill if the person belongs to more than one class of duty holder. 9 More than one person may have the same duty 41 Under the Bill, more than one person may have the same duty at the same time. Where this occurs, each person: Retains responsibility for their duty in relation to the matter; and 41.2 Must discharge their duty to the extent to which their capacity to influence or control the matter allows (or to the extent the person would have had that capacity but for an agreement or arrangement purporting to limit or remove that capacity) 42 The Bill has intentionally created overlapping duties to protect workers affected by a PCBU s work, rather than only protecting a direct employee or a contractor. While the HSEA recognises similar overlapping duties, the Bill highlights the importance of PCBUs working together to ensure protection is afforded to a wider group of workers. Further, to ensure that protection is potentially given by more than one PCBU Health and Safety Reform Bill 2014, cl 22. Health and Safety Reform Bill 2014, cl 24. Health and Safety Reform Bill 2014, cl 25. Health and Safety Reform Bill 2014, cl /

11 Duty to consult concurrent duty holders in relation to the same matter 43 In addition to the primary duty, the Bill introduces a new obligation for concurrent duty holders. Under cl 27, all duty holders who have a health and safety duty in relation to the same matter are required to consult, cooperate and coordinate activities with all other persons who have a duty in relation to the same matter. 44 Going forward, all parties with duties in relation to the same matter will have to consult with each other, irrespective of whether they directly have health and safety duties to each other. 45 An individual who contravenes cl 27 is deemed to have committed an offence and is liable for a fine not exceeding $20,000. Any other person (for example, a PCBU) is liable for a fine not exceeding $100, PCBU must not levy workers 46 A PCBU must not impose a levy or charge on a worker for anything done or provided in relation to health and safety. 12 This includes a PCBU requiring an employee to provide his or her own protective clothing or equipment as a pre-condition of employment or as a term or condition of an employment agreement. This section will apply regardless of whether the PCBU pays the worker an allowance, extra salary or wages instead of providing the protective clothing or equipment. No contracting out 47 Any term of an agreement or contract that purports to exclude, limit or modify how the Act operates (including any duty owed or any transfer to another person of any duty owed) will have no effect to the extent that it does so. Having said this, it will not be considered an illegal contract under the Illegal Contracts Act PCBU s must collaborate to decide how responsibility will be shared to ensure all duties are fulfilled. General duty of PCBUs 49 Part 2 introduces the general duty for all PCBUs to ensure, so far as is reasonably practicable, the health and safety of: 49.1 workers employed or engaged, or caused to be employed or engaged, by the PCBU while the workers are at work in the business or undertaking; and Health and Safety Reform Bill 2014, cl 27(2). Health and Safety Reform Bill 2014, cl 28. Health and Safety Reform Bill 2014, cl /

12 49.2 workers whose activities in carrying out work are influenced or directed by the PCBU, while the workers are carrying out the work. 50 In addition, a PCBU must ensure, so far as is reasonably practicable, that the health and safety of other persons is not put at risk from work carried out as part of the conduct of the business or undertaking. 51 PCBUs that are involved in management or are in control of worksites have additional duties, 14 as do PCBUs involved in the design, manufacture, import, supply, installation, construction, or commission of plant. 15 Reasonably practicable 52 A definition of reasonably practicable 16 will replace the current standard of all practicable steps. The definition includes, as a last step, an assessment of whether the cost to address the risk is grossly disproportionate. 53 In relation to the duties to ensure health and safety, reasonably practicable means that which is, or was, at a particular time, reasonably able to be done in relation to ensuring health and safety, taking into account and weighing up all relevant matters, including: 53.1 the likelihood of the hazard or the risk concerned occurring; 53.2 the degree of harm that might result from the hazard or risk; 53.3 what the person concerned knows, or ought reasonably to know, about (a) the hazard or risk; and (b) ways of eliminating or minimising the risk; 53.4 the availability and suitability of ways to eliminate or minimise the risk; and 53.5 after assessing the extent of the risk and the available ways of eliminating or minimising the risk, the cost associated with available ways of eliminating or minimising the risk, including whether the cost is grossly disproportionate to the risk Health and Safety Reform Bill 2014, cl 32. Health and Safety Reform Bill 2014, cls Health and Safety Reform Bill 2014, cl /

13 Duty of officers 54 The Bill introduces a duty on officers to exercise due diligence to ensure that the PCBU complies with its duties. 55 Officers are considered key players under the new reforms as they influence whether a PCBU will comply with its duties. For example, an officer will decide what resources are put towards improving work health and safety and then upholding any policies put in place. 56 Certain officers will be exempt where they fail to perform their due diligence duty. These include: volunteers; 56.2 community board members; 56.3 elected members of local authorities or local boards under the Local Electoral Act 2001; and 56.4 members of school boards of trustees. Due Diligence 57 The due diligence obligation includes taking reasonable steps to: acquire, and keep up-to-date, knowledge of work health and safety matters; 57.2 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; 57.3 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; 57.4 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; Health and Safety Reform Bill 2014, cls Health and Safety Reform Bill 2014, cl /

14 57.5 ensure that the PCBU has, and implements, processes for complying with any duty or obligation of the PCBU; and 57.6 verify the provision and use of the resources and processes. 58 The Bill includes reasonable steps to practice due diligence, suggesting that the list above is only a starting point. Courts may take other matters into account in determining whether due diligence was undertaken Accordingly, it is helpful to unpack further the meaning of due diligence. Australian commentary notes due diligence in the health and safety context requires an individual be actively engaged in the governance of the corporation to ensure that the PCBU complies with its obligations. 20 Building on this, Safe Work Australia notes that due diligence requires technical, situational and strategic knowledge of work health and safety matters where the officer actively analyses information, engages in dialogue with workers, and takes a hands-on approach In Insp Kumar v Ritchie, Mr Ritchie was found guilty under s 26 of the Work Health and Safety Act 2011 (Australia) for failing to exercise sufficient care to create a safe system of work. The Court recognised that, while Mr Ritchie had ensured written systems were in place, he had failed to ensure these systems were properly complied with to satisfy due diligence. Haylen J noted that a defendant would need to show that he had laid down a proper system to provide against contravention of the Act and had provided adequate supervision to ensure that the system was properly carried out Similarly, in Inspector Aldred v Herbert, 23 the directors of the company argued they had appointed a manager to look after day-to-day issues meaning they were not at fault for a young boy s death by electrocution on their hotel premises. Backman J ruled that the directors failed to satisfy due diligence requirements. The directors Neil Foster Leading the Safety Conversation as a Manager: Exercising Due Diligence in Workplace Safety on the Frontline (paper presented to Comcare National Conference, Sydney, September 2012). Rebecca Best The effectiveness of the duty of officers to exercise due diligence under section 27 of the Work Health and Safety Act in achieving good corporate governance (University of Melbourne, 2013) 15. Safe Work Australia Interpretive Guideline Model Work Health and Safety Act: The health and safety duty of an officer under Section 27 (26 September 2011) < swa/model-whs-laws/model-whs-act/interpretiveguidelines/pages/interpretive-guideline> 6. Insp Kumar v Ritchie [2006] NSWIRComm 325 at [177]. Inspector Aldred v Herbert and Others [2007] NSWIRComm /

15 had not monitored safety in general and had not required the manager to report on any safety issues. 62 The due diligence requirements are consistent with the recommended steps in the Institute of Directors Good Governance Practices Guideline for Managing Health and Safety Risks, published in early Officers should review these Guidelines to consider whether they can do more to understand their business and take steps to ensure their business has the necessary health and safety processes in place. 63 A key message is on the importance of boards ensuring that they can exert informed leadership: Directors need to be aware of the organisation s hazards and risks. They should have an understanding of hazard control methods and systems so that they can identify whether their organisation s systems are of the required standard. They should understand how to measure health and safety performance so they can understand whether systems are being implemented effectively. 64 This requirement to be informed includes staying up-to-date with legislative changes. Boards are also persuaded to develop a specific charter which defines their role in leading health and safety within the organisation and the role of individual directors. It says that a board may consider delegating a lead role to a special committee or to an individual board member with particular expertise. It may also seek specialist external advice as necessary. However, while tasks can be delegated, directorial responsibility cannot. 65 Boards should use targets to lift the organisation s performance. Such targets should be measurable, challenging but realistic and should contain a mix of lag and lead indicators. Reasonable Steps 66 Clause 39 of the Bill states that due diligence includes taking reasonable steps. However, this term is not expressly defined in the Bill. 67 The Australian position is that the standard of reasonable steps will: Safe Work Australia Interpretive Guideline Model Work Health and Safety Act: The health and safety duty of an officer under Section 27 (26 September 2011) < swa/model-whs-laws/model-whs-act/interpretiveguidelines/pages/interpretive-guideline> /

16 67.1 require all officers to actively exercise due diligence; 67.2 relate to the position of the officer within the PCBU, specifically with regard to the role and influence that the individual officer was able to exercise; 67.3 depend on the particular circumstance of the case; and 67.4 require the officer to demonstrate the reasonableness of their reliance, where they have relied on others. 68 The standard allows for flexibility through the use of the term reasonable and there will be instances where the officer was unable to take reasonable steps. This was recognised by the NSW Commission who noted that there may be situations where, for a variety of reasons, a director was not able to influence the conduct of the corporation. [For example] a director may have been in a minority of the Board in urging a more costly but effective system of safety [yet] at the relevant time the director was on leave of absence or suffering from some disability when a particular policy decision was taken Having said this, it is likely officers will be required to, at minimum, familiarise themselves with health and safety issues, prudently analyse all information received and actively oversee and manage all safety policies and procedures in order to satisfy the reasonable steps requirement. Duty of workers 70 Similar to the employee duty under the HSEA, workers have a duty to: take reasonable care for his or her own health and safety; 70.2 take reasonable care that his or her acts or omissions do not adversely affect the health and safety of others; 70.3 comply, as far as reasonably able, with any reasonable instruction that is given by the PCBU to allow the PCBU to comply; and 70.4 co-operate with any reasonable policy or procedure of the PCBU relating to health or safety at the workplace that has been notified to workers Inspector Kumar v Ritchie [2006] NSWIRComm 325 at [170]. Health and Safety Reform Bill 2014, cl /

17 Offences relating to Health and Safety duties 71 Subpart 3 of Part 2 sets out the offences relating to a breach of the health and safety duties in the Bill. 72 For simplicity, we have summarised the offences as follows: OFFENCE ELEMENTS MAXIMUM PENALTY Individual Officers and Any other (excluding Self employed person Officers and persons (including self employed Body persons) Corporates) Reckless conduct in respect of a health and safety duty has a health and safety duty; without reasonable excuse, engages in 5 years imprisonment and/or $300,000 fine 5 years imprisonment and/or $600,000 fine $3,000,000 fine conduct that exposes an individual to whom the duty is owed to the risk of death or serious injury; and is reckless to the risk of death or serious injury. Failure to comply with a health and safety duty exposing an individual to risk of death or serious injury has a health and safety duty; fails to comply with that duty; and conduct exposes an individual to whom the duty is owed to $150,000 fine $300,000 fine $1,500,000 fine the risk of death or serious injury. Failure to comply with a health and safety duty has a health and safety duty; and fails to comply with $50,000 fine $100,000 fine $500,000 fine that duty /

18 ENGAGEMENT, WORKER PARTICIPATION, AND REPRESENTATION 73 Part 3 of the Bill gives workers and their representatives an increased role in workplace health and safety. The Bill carries over much of the content in the Exposure Draft, particularly the requirement for all PCBUs to implement a worker participation system. 74 A PCBU must, so far as is reasonably practicable, engage with workers: who carry out work for the business or undertaking; and 74.2 who are, or are likely to be, directly affected by a matter relating to work health or safety. 75 If the PCBU and the workers have agreed to procedures for engagement, the engagement must be in accordance with those procedures Engagement with workers requires workers receive: relevant information about the matter; 76.2 a reasonable opportunity to express their views, to raise work health or safety issues, and to contribute to the decision making process in relation to the matter (with the PCBU taking into account these views); and 76.3 advice about the outcome of the engagement in a timely manner. 77 Engagement with workers is required when: identifying hazards and assessing risks to work health and safety arising from the work carried out or to be carried out as part of the conduct of the business or undertaking; 77.2 making decisions about ways to eliminate or minimise those risks; 77.3 making decisions about the adequacy of facilities for the welfare of workers; Health and Safety Reform Bill 2014, cl 61. Health and Safety Reform Bill 2014, cl 61(2). Health and Safety Reform Bill 2014, cl 62. Health and Safety Reform Bill 2014, cl /

19 77.4 proposing changes that may affect the health or safety of workers; 77.5 making decisions about the procedures for the following (a) engaging with workers; (b) monitoring the health of workers; (c) monitoring the conditions at any workplace under the management or control of the PCBU; (d) providing information and training for workers; (e) when making decisions about the procedures (if any) for resolving work health or safety issues at the workplace; (f) when developing worker participation practices; and (g) when carrying out any other activity prescribed by regulations for the purposes of this section. 78 A PCBU must have practices that provide reasonable opportunities for workers to participate effectively in improving work health and safety in the business or undertaking on an ongoing basis. 31 To comply with this requirement, the PCBU must: 78.1 comply with prescribed requirements relating to worker participation, including requirements relating to a particular industry, sector, or kind of workplace; and 78.2 take into account any relevant approved code of practice. 79 The Bill omits the provisions of the Exposure Draft that related to the election of health and safety representatives. Under the Bill, it is no longer an offence for a PCBU to fail to supply resources, facilities or assistance reasonably necessary to allow elections to be conducted. These provisions may later find their way into the accompanying regulations. 80 Parties to an issue about work health and safety must make reasonable efforts to achieve a timely, final and effective solution. A party may seek the assistance of 31 Health and Safety Reform Bill 2014, cl /

20 WorkSafe to resolve the issue. An inspector may then be appointed to assist and may, if the issue is of a type specified by the regulations, decide the matter conclusively. ENFORCEMENT 81 Part 4 sets out a number of enforcement mechanisms that can be exercised by WorkSafe or other parties. These sit alongside the possibility of infringement proceedings that may be filed in the District Court. 82 The enforcement mechanisms under the Bill are summarised as follows: NOTICE DESCRIPTION MAXIMUM FINE FOR NON- COMPLIANCE Individual Others Improvement notice Issued where an inspector believes that there is a breach, or likely breach, of the Act or regulations $50,000 $250,000 Prohibition notice Issued to prevent serious risks to health and safety for an immediate or imminent hazard $100,000 $500,000 Non-disturbance notice Issued to a person with management or control of the workplace by an inspector to facilitate his or her compliance power $50,000 $250,000 Suspension notice Issued by health and safety medical practitioner to suspend an activity that constitutes, causes or increases a worker's exposure to a hazard $10,000 $50, If issued with one of the above notices, a party may apply to WorkSafe for an internal review of the decision. It is possible to apply to have the effect of this notice stayed pending the decision of this review. A limited right of appeal to the District Court is granted that allows a party to challenge an internal review on the basis it is unreasonable. 84 WorkSafe can accept enforceable undertakings from a person for a breach, or alleged breach, of the Act or regulations. WorkSafe must give reasons for accepting or rejecting the undertaking. If the undertaking is not complied with, WorkSafe can apply to the District Court to enforce the terms of the agreement, along with costs /

21 of the enforcement proceedings and ongoing monitoring costs in the future. The person who has breached the undertaking may also face a maximum fine of $50,000 for an individual or $250,000 for all others. 85 Other powers include the ability for a court to: 85.1 issue injunctions following a conviction requiring the offender to cease particular conduct; 85.2 order an offender to undertake a specified course of training; or 85.3 make an adverse publicity order. 86 The Bill provides that an insurance policy that indemnifies a person against a fine or infringement fee under the Act will be of no effect. MISCELLANEOUS ISSUES 87 Part 5 outlines the role of WorkSafe as the primary health and safety regulator, as well as the functions and powers, such as monitoring and enforcing compliance, of other regulators under the Bill. 88 Under Part 5, the Minister responsible for the regime must publish a Health and Safety at Work Strategy which identifies the Government's strategic direction for improving health and safety. This forms part of the wider co-operation between Crown agencies which allows for information sharing and joint initiatives (such as the injury prevention action to be undertaken by ACC and WorkSafe as part of the Bill). 89 This also includes an assortment of mechanical provisions, including those that enable regulations relating to health and safety to be made under the Bill, and similarly, for codes of practice and safe work instruments to be approved. AMENDMENTS TO OTHER ACTS 90 Part 6 amends other legislation to give effect to the policies to be implemented by the Bill, and to ensure consistency in the wider health and safety regulatory regime. 91 The key Acts to be amended are: 91.1 Hazardous Substances and New Organisms Act to integrate the regulation of workplace use of hazardous substances into the workplace /

22 health and safety system in order to consolidate and simplify health and safety legislative requirements; 91.2 Accident Compensation Act to enable WorkSafe and ACC to work together to improve injury prevention; 91.3 Employment Relations Act to integrate expanded health and safety rights and obligations with existing employee protection mechanisms, so that employees who are subjected to adverse conduct may take a personal grievance; and 91.4 WorkSafe New Zealand Act to ensure the statutory role, functions and powers of WorkSafe are consistent and appropriate for it to carry out its role under the Bill as the primary regulator of health and safety. 92 Notably, the Bill provides for the development of improved incentive schemes by ACC and WorkSafe that were proposed as part of the Working Safer reforms. The schemes will include the Star Safety Rating Scheme (SSRS) that was announced by ACC Minister Judith Collins in December The voluntary scheme rates businesses workplace safety history and those with a good safety star rating will be rewarded with ACC levy discounts. SCHEDULES TO THE BILL 93 Schedule 2 establishes a mining sector-specific worker participation in health and safety regime, which grants powers to industry health and safety representatives in addition to those contained in Part 3, including the power to: 93.1 suspend mining operations; 93.2 require mining operations to stop in case of serious risk to health and safety; and 93.3 cancel or suspend a mining operation. 94 Schedule 2 contains provisions requiring WorkSafe to establish a new entity, the New Zealand Mining Board of Examiners, the functions of which include advising WorkSafe on the competency requirements for mine workers and certifying mine worker competency via a certification regime /

23 PROSECUTION OF DIRECTORS IN AUSTRALIA UNDER THE MODEL LAW 95 The Australian Capital Territory recently became the first jurisdiction to charge an officer under its newly harmonised workplace health and safety legislation. 96 This case includes a prosecution of both an organisation for allegedly failing to meet the primary health and safety duty and an officer for allegedly failing to exercise due diligence under the Work Health and Safety Act 2011 (ACT) which commenced on 1 January This case is ostensibly the first prosecution of an officer under the new harmonised WHS laws. 97 Kenoss Contractors Pty Ltd (Kenoss Contractors) and one of its officers are charged with breaches of their respective duties under the Work Health and Safety Act 2011 (ACT) (WHS Act) following upon the 2012 death of a 48 year old worker/truck driver, who died as a result of electric shock injuries sustained at work. This fatality was one of the 4 fatalities (3 of which had been in the ACT construction industry) in a 7-month period which led to the Getting Home Safely Report being commissioned by the ACT Government. Charges against Kenoss Contractors 98 Kenoss Contractors has been charged as the person conducting a business or undertaking (PCBU), with allegedly breaching the primary duty under section 19 of the WHS Act to ensure the health and safety of its workers while at work in the business or undertaking by failing to provide and maintain a work environment without risks to health and safety. 99 Kenoss Contractors has also been charged with a category 2 offence under section 32 of the WHS Act as a consequence of the alleged failure to comply with a health and safety duty, where that failure exposed Mr Booth to a risk of death, serious injury or illness. This offence carries a maximum penalty of $1.5 million for a PCBU that is a corporation and $300,000 for a PCBU as an individual. Charges against the relevant officer 100 The individual officer has been charged with allegedly failing to exercise due diligence under section 27 of the WHS Act to ensure Kenoss Contractors complied with its work health and safety duties under the WHS Act. 101 The officer has also been charged with the same category 2 offence under section 32 of the WHS Act. Category 2 offences carry a potential maximum penalty of $300,000 for officers /

24 The prosecution of the officer 102 An interesting aspect is that the individual officer was not a director of Kenoss Contractors, but a director of a related company. A central issue to be determined at trial will be whether as such, he is an officer (of the PCBU) as defined in section 9 of the Corporations Act 2001 (Cth) (Corporations Act). 103 The officer pleaded not guilty to both charges under sections 27 and 32 of the WHS Act. 104 The decision is pending but should be released imminently /