Recently, increased workplace safety attention has been directed toward the governing level of employer organisations.
Particular catalysts for this have been the two recent Royal Commissions of Inquiry (Pike River and Canterbury Earthquakes), and a report from the cabinet appointed Independent Taskforce on Workplace Health and Safety (the Taskforce).
The Taskforce has recommended sweeping reforms including new legislation (the new Act) to replace the Health and Safety in Employment Act 1992 (HSEA). The new Act is intended to be based on Australia's Model Work Health and Safety Act (the Australian Act).
Two matters for consideration by directors that have come from the above are:
a) The newly introduced Best Practice Corporate Governance Guidelines, a joint initiative by the Institute of Directors and MBIE1
b) The proposed new due diligence duty, attracting personal liability for directors and others in governing roles.
The Best Practice Guidelines
The guidelines are targeted at directors (and other governing roles) of organisations with twenty or more employees, although they may still be relevant to smaller organisations. The guidelines paper, after discussing present concerns in workplace safety, sets out four "key elements" for directors and managers to consider and implement: Policy and Planning, Delivery, Monitoring, and Review
These elements cover an organisations workplace safety scheme from concept to conclusion. Each element is thoroughly discussed in the paper with case examples and diagnostic questions provided for reflection and analysis.
The paper concludes each key element by providing both a minimum suggestion (the "base line actions", which could be seen as providing for basic compliance only), followed by recommended suggestions/practice (the "recommended practice").
It is recommended that directors consider the paper and particularly the key elements discussion and recommended practices. The paper can be found at: https://www.iod.org.nz/Publications/Healthandsafety.aspx
In terms of legal relevance, it must be noted that the guidelines have not been issued as a "Code of Practice" under the HSEA. If issued in that way a breach of them
would be a breach of the HSEA. Rather, they have been issued as a voluntary guideline.
However, given the authorship of the guidelines, and the easy alignment of the key elements with the current HSEA test of "taking all practicable steps", a court is likely to consider any departure from the guidelines as relevant in any prosecution.
Therefore, it is now important for directors and others in governing roles to familiarise themselves with the guidelines and to take steps to operate in accordance with them.
Proposed new due diligence duty for governing roles
Currently under the HSEA, directors and officers can be prosecuted personally, but secondary to the company being prosecuted. The threshold is high and personal prosecutions are the exception.
The new Act however will create a new personal legal duty on directors and officers of the company to carry out workplace safety due diligence.
It is expected that the specifics of the duty will be similar to the Australian Act, which currently requires directors to take reasonable steps to:
a) acquire and update their knowledge of health and safety matters
b) understand the operations being carried out by the person conducting the business or undertaking in which they are employed, and the hazards and risks associated with the operations
c) ensure that the person conducting the business or undertaking has, and uses, appropriate resources and processes to eliminate or minimise health and safety risks arising from work being done
d) ensure that the person conducting the business or undertaking has appropriate processes in place to receive and respond promptly to information regarding incidents, hazards and risks
e) ensure that the person conducting the business or undertaking has, and uses, processes for complying with duties or obligations under the WHS Act.7
Although the bar is not being set at a level of perfection, those whom the duty applies to will however need to show that they took reasonable steps to undertake due diligence of the requirements that the new Act will set out.
Those that cannot show that they did undertake reasonable steps to address the Acts requirements may find themselves personally liable to criminal conviction, and significant (and increased) penalties in the case of serious accidents.
1 Ministry of Business Innovation and Employment, formerly the Department of Labour, responsible for enforcing the Health and Safety in Employment Act 1992.