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Directors on the front line in battle to raise workplace safety

03 December 2012

This article first appeared in the December issue of Boardroom magazine.

As the Government’s response to the regulatory weaknesses exposed by the Pike River tragedy takes form, it is clear that directors will be required to take more direct responsibility for ensuring workplace safety.

This is a theme of both the Royal Commission’s report and of the proposals raised in the consultation paper released toward the end of October by the Independent Taskforce on Workplace Health and Safety.

The Taskforce, which is to produce its final recommendations to the Government by 30 April, has been asked to develop a reform package capable of slashing 25% off our workplace death and serious injury rate by 2020. 

It’s a big ask which – even if achieved – will still have us trailing behind Australia, the UK and most of Western Europe.  Our current workplace injury rates are twice as high as Australia’s and almost six times as high as Britain’s.  We’re also significantly more likely than the Australians or the British to be injured outside work or on the road.

The Taskforce puzzles over why New Zealand lags so far behind other ostensibly similar societies but concludes that the reason for the gap is less important than what we do about it:

“We don’t know what it is about our culture that contributes to our high rates of harm.  But do we need to?  We could simply accept that there is “something” about our culture that is influencing our health and safety outcomes, and instead focus our effort toward moving our culture to where we want to be: a safer New Zealand”.

New Zealand, Australia and the UK all follow what is known as the ‘Robens approach’ to health and safety in employment (HSE).  This takes its name from an inquiry conducted by Lord Robens for the British Government in 1974 which led to the UK Health and Safety at Work Act.  The Robens model assumes that the risks to occupational health and safety are best managed at the workplace with the State providing a regulatory backstop. 

Breaches of the HSE Act attract fines and criminal penalties and ACC has a number of programmes designed to incentivise good safety practice.  But our poor performance relative to other countries suggests that there is significant room for improvement – including of our regulatory framework. 

Both the UK and Australia have recently reviewed their frameworks, whereas the New Zealand Act has been unchanged since 1992.  Probably of most relevance in terms of the reform direction that the Taskforce will take is the Australian Model Work and Safety Act 2011, which has been enacted by the Federal Government and in the Australian Capital Territory, New South Wales, Northern Territory and Queensland.

So what has Australia done, and how does it compare with current New Zealand law?

Raising the bar

While both the Australian and the New Zealand Acts require duty holders to take all “reasonably practicable” steps to ensure safety at work, the Australian Act also stipulates that “although the cost of eliminating or minimising risk is relevant in determining what is reasonably practicable, there is a clear presumption in favour of safety ahead of cost”.
Our HSE Act creates no such presumption.

New duties for directors

Australia has created a new positive duty on directors and company officers to exercise “due diligence” to ensure that their business is in compliance with all of its statutory requirements in relation to HSE. 
The Taskforce asks whether New Zealand should do the same.  The Royal Commission does not go quite this far but does recommend that the issue should be reviewed, saying: “What is needed, as experience in the UK and Australia indicates, is a statutory duty requiring directors to play their part at the governance level in ensuring that the company has an effective health and safety management system”. 
At present, a director is liable only if she or he knowingly participated in the offence in some way – by directing, authorising, assenting to or acquiescing in an activity or situation which he or she knew to be unsafe or in breach.
This test is hard to prove beyond reasonable doubt with the result that there have been very few prosecutions under this section.

Stronger criminal sanctions

The Taskforce asks whether the current Act provides enough levers and powers to encourage a safety-first culture.  It notes that an increasing number of overseas jurisdictions are applying broader criminal and civil sanctions for HSE offences– including manslaughter and corporate manslaughter where the negligence results in workplace deaths.
The idea was also raised by some of the Pike River families with Ministers Chris Finlayson and Gerry Brownlee when they met with them last month on the release of the Royal Commission’s report.  Finlayson, in his capacity as Attorney General, has undertaken to get advice on the matter but has made no further commitment at this stage.
Marie Wisker is a senior associate at Chapman Tripp specialising in employment law.        

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