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Brief Counsel

Ambitious prescription from Health and Safety Taskforce

02 May 2013

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A new Act, a new regulator, new standards, new penalties, new duty holders, and new systems – the Independent Taskforce on Workplace Health and Safety has delivered a prescription for radical change. 

But that was always going to be the case, given the size of the job it was asked to do.

The Government tasked it with coming up with a reform package capable of slicing 25% off New Zealand’s workplace death and serious injury rate by 2020. The Taskforce thinks that target is achievable, but only if all of its recommendations are implemented.

Timeline from here

The Government has already committed to a stand-alone health and safety agency, which it expects to have up and running by 1 December this year, and is now calling for nominations to the establishment board. 
It has indicated that it will respond to the rest of the Taskforce’s 15 recommendations by July.
The Taskforce has included a timetable for implementation in its final report which would see significant steps being taken in the next 12 to 18 months.

The recommendations

The Taskforce was unable to identify any single factor behind New Zealand’s extremely poor performance in health and safety.  Instead, it is of the view that there is a systemic problem across all areas, including the regulator, the legislation, implementation, and attitudes. 
Accordingly, the recommendations are broad ranging and essentially propose a complete overhaul of the system, and the enactment of a new Act based on the Australian Model Law.  (As an aside, given the impetus the Pike River disaster gave to the Taskforce, it is interesting that Australia’s three primary mining states (NSW, Queensland, and WA) have resisted application of the Model Law in their mining sectors, as being too generic.)
The Government has welcomed what it considers to be a thorough and comprehensive piece of work, and which it believes provides it with a solid foundation for system-wide changes.
The full list of recommendations can be found here.  We outline some of the more significant ones below.

A new regulator

We will need to wait to see exactly what that new Crown agency will look like, but the Taskforce has emphasised that it needs to be well resourced and equipped with the tools to do the job.  This would include the power to: 
  • execute search warrants
  • issue improvement, enforcement and infringement notices, including without prior warning
  • recover its costs, presumably from those prosecuted for non-compliance or breach, and
  • apply to the court for adverse publicity orders.

New standards

The Taskforce recommends that the objective of the new Act should be “securing” workplace safety, rather than simply “promoting” it as the current Act requires.

It envisages a risk based standard that would require duty holders to take reasonably practicable steps to secure a safe work environment.  The new test would set out a mandatory list of relevant factors (including cost-related factors) to be taken into account when balancing the competing interests.  But there would also be a presumption in favour of the highest level of protection against harm.  The Taskforce sees this as an ongoing and continuous obligation for employers, and other duty holders.

As we noted in a previous Brief Counsel, we are not convinced that the change from “all reasonably practicable steps” to the Australian “reasonably practicable” test is particularly significant.  However, we welcome the introduction of a more specific risk-based assessment to help clarify for businesses what factors should be considered, together with the clear presumption in favour of health and safety. 

It remains to be seen whether this presumption will change the current view of what is in fact “reasonably practicable” when compared with the costs involved.  We think it could well require more cost outlay of businesses in order to meet health and safety obligations.  The most significant of those is likely to be in requirements to strengthen earthquake-prone buildings.

New duty holders: directors and officers

The Taskforce wants leadership from the top down with those in governance roles (directors, chief executive officers, chief operating officers etc) who participate in decisions required to exercise due diligence in relation to health and safety matters. 

It says that the duty should be of a similar nature and importance to the fiduciary duties that are already held by directors and officers to various stakeholders.  This recommendation mirrors the sentiments expressed by the Royal Commission into Pike River that directors should be actively involved in health and safety. 

The Taskforce wants to explore positive reporting obligations (such as on the stock exchange and in annual reports) along with guidance for directors as to how they might go about exercising due diligence.
We expect that the Government will introduce some form of positive obligation on directors, but we would like to see criminal sanctions reserved for reckless or other deliberate conduct. 

New penalties

The Taskforce recommends extending the crime of manslaughter to corporations and significantly increasing the penalties that apply to breaches by duty holders.  Although it has shied away from creating a new stand-alone offence of corporate manslaughter, it does suggest extending the existing offence in the Crimes Act to include corporations. 

It sees this as simply removing an anomaly in the law, in that corporations can already be held liable for intentionally wounding or injuring a person and so there is no good basis for the distinction with manslaughter.  The Taskforce recognises, however, that a number of other changes would be required to make this change workable. 
As with many of its recommendations, the Taskforce has looked to Australia.  The current maximum fine in New Zealand is $500,000 and/or imprisonment for up to two years.  The Australian maxima are $600,000 for individuals and/or five years’ imprisonment and $3 million for corporations.  That disparity was the subject of judicial comment in HSE sentencing arising from the Pike River tragedy, the judge observing that the “overarching compliance imperatives… and commercial incentives in Australia” were “far better” than their New Zealand comparators.
The Taskforce recommends a scale of penalties ranging from deliberate/reckless conduct at one end to strict liability failures that do not expose persons to serious harm at the other.
In its submission to the Taskforce, the Ministry of Business, Innovation and Employment (MBIE) reported that 92% of all fines are under $50,000, which is 20% of the maximum and which MBIE considered was a very poor deterrent. 
The Taskforce agreed wholeheartedly.  It was also critical of the courts’ practice of taking various discounting factors into account when sentencing, including an offender’s financial means to pay.  In the Taskforce’s view, the best outcome could well be that firms are put out of business where profit is being made on the back of shoddy safety standards.
The comments by the Taskforce in this regard are more wide-reaching than simply the health and safety arena.  Sentencing decisions for health and safety breaches are approached using the principles that the Government has previously decided should be applied to all offenders.  A change to this approach would require the establishment of a new sentencing regime, a principled approach to which has yet to be articulated.

Thanks to Marie Wisker for writing this Brief Counsel. For further information, please contact the lawyers featured.

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