Next month the Government will begin to introduce a new Health and Safety (H&S) regime in its bid to achieve a 25% reduction in workplace fatalities and serious injuries by 2020.  As a result, most businesses will need to immediately up skill, perform due diligence and then implement the necessary change in order to be compliant by the go-live date of 1 April 2015. Failure to do so will expose organisations and those responsible for H&S to hefty fines and, for the worst breaches, prison sentences.

IS THIS RELEVANT FOR SMALL AND / OR RELATIVELY LOW-RISK BUSINESSES? 

Yes.  The Government has signalled that it will do more to help all businesses and employees to understand their obligations and rights ahead of the new regime becoming law.  To this end, it is creating a new, purpose-built and adequately-resourced regulator, WorkSafe NZ, to: provide more accessible and understandable guidance to assist businesses to comply with the new regime;  and appropriately punish any transgressions.  Once the improved assistance is in place, there will be no defence if an injury occurs to your staff, or to anyone affected by a small business’ activities, in circumstances that would not have arisen had reasonable H&S measures been taken. 

WHO SHOULD BE PRIMARILY INTERESTED?

Organisations

Failure to meet the requirements of the new regime will expose PCBUs to fines of up to $3M per transgression.  

The new legislation will allocate duties to those people in the best position to control risks to health and safety, as are appropriate to their role in the workplace.  The core duty is that of a person or organisation conducting a business or undertaking (PCBU) which must so far as is reasonably practicable, ensure the health and safety of everybody: who works in or for the business; or who enters its workplaces.  PCBUs must firstly consult with their workers, and secondly consult, coordinate and cooperate with other duty holders regarding matters affecting health and safety.

Duties will be owed by the PCBUs to upstream participants in the supply chain (e.g. PCBUs that are designers, manufacturers, importers and suppliers of plant, substances, and structures).  Further, multiple businesses or undertakings and therefore multiple PCBUs might be involved.  For example, in a typical supply chain, all of the members of the chain are a PCBU, except the workers. 

The PCBU at the head of a construction contracting chain (usually, the construction firm) will need to ensure that the principal contractors, contractors and sub-contractors are properly selected and managed via the contract and instruments such as compliance guides.  Each PCBU has to manage the health and safety performance of the parties beneath them in the chain through supervision and monitoring. The construction firm and principal contractor will lead the coordination of the work, and health and safety performance of all the parties.  You can see why ALL businesses/organisations in a construction supply chain will need to be compliant in order to be eligible to enter the chain.

Other examples of people who might be PCBUs if they have people contracting to them, are:

• The owner of a shopping centre, the manager of the shopping centre, each of the businesses operating from shops in the shopping centre and those carrying out ancillary activities such as cleaning, security and shopping trolley collection.
• A service station owner, the service station operator (if different from the owner), the mechanic (if running a separate business), the PCBU carrying out the supply of gas cylinders to the public at the service station and the operator of an attached fast food outlet.

Individuals

The new Act places a positive duty on every owner/operator, every director and every member of the senior management of a PCBU, however small or large (an Individual Duty Holder or IDH) to exercise due diligence to ensure that workers involved in their businesses and all other persons visiting their workplace(s) receive the highest level of protection against harm to their health, safety, and welfare that is reasonably practicable, taking into account all relevant factors.   A window into the intent of the new regime is that a relevant factor is whether the cost of a measure to eliminate or minimise a risk is grossly disproportionate to the risk faced.

Failure to meet the requirements of the new regime will expose an IDH to personal fines of up to $0.6M AND up to 5 years in prison. 

STEPS TO TAKE NOW

In May this year the Ministry of Business, Innovation & Employment (MBIE) and the Institute of Directors (IoD) jointly released a guide for managing H&S risks.  Whilst the guide sets out a recommended, as opposed to mandatory, path to follow, shortly following their release the Minister for Labour observed that he believed the Courts would treat them as a guide to good H&S practice.  The guide emphasises that whilst an IDH can delegate H&S roles and seek specialist external advice as necessary, responsibility for H&S remains with the IDH.  The guide recommends that IDHs should:

• develop a specific charter which defines: their role in leading H&S within the organisation; and the roles of each IDH; 
• perform a vigorous due diligence of their organisation’s H&S system against that charter, i.e., develop a sound understanding of: the hazards and risks faced; the control methods and systems used and whether the current systems are of the required standard;
• update the existing control methods and systems as necessary;  and
• understand how to measure H&S performance (including the use of lag indicators (like injury rates) AND lead indicators (like the number of its workers who are appropriately trained)) so they can evaluate whether the revised control methods and systems are being implemented effectively. 

Please contact Chris Lee to discuss the new regime’s potential impact for your business and how you can begin to get ready.