Maximum penalties for safety breaches set to increase

Employers could face hefty fines and even imprisonment for breaching the new safety laws. HRM investigates what the Health and Safety Reform Bill could mean for New Zealand employers.

Maximum penalties for safety breaches set to increase
Coming in at 223 pages long the Health and Safety Reform Bill is a hefty document to get through, but there are several key features that HR needs to be aware of – including the significant increase in penalties for non-compliance.

Under current rules courts can impose fines up to $500,000 for a knowing breach of duty where there is a risk of serious harm and up to $250,000 for any other breach. But this new legislation will see penalties rise dramatically for corporate entities and individuals who breach of any obligations under the new Act. The Reform Bill would see fines increase to a maximum of:
  • For category  one (reckless conduct) – up to $3 million for a corporate and $600,000 for an individual and/or five years’ imprisonment;
  • Category two (conduct causing, or exposing a person to serious harm) – up to $1.5 million for a corporate and $300,000 for an individual;
  • Category 3 (breach of duty) – up to $500,000 for a corporate and $100,000 for an individual.
Corporate manslaughter has not been adopted in the current version of the Bill, however lawyers are not ruling out the possibility that it may be included in the final version.
Employers will also face significant penalties if they don’t make reasonable efforts to resolve Health and Safety disputes with their staff. Under the new rules, WorkSafe will have the ability to issue infringement notices without prior warning while judges will be able to order organisations to publicise their failures, take remedial actions against failures and pay for the regulator’s costs in bringing proceedings against them. There will also be a longer period for prosecutions to be brought forward – up to two years after the breach first comes to WorkSafe’s notice and up to one year after the coroner releases findings that an offence may have occurred.

Other important changes
  • At the centre of the new regime is the concept of a PCBU (Person conducting a business or undertaking), who will owe a duty of care to ensure the safety of workers “so far as is reasonably practicable”.
  • A definition of "reasonably practicable" will replace the current standard of "all practicable steps".
  • Directors and senior management will have new increased responsibilities with the new scheme, focused on a “due diligence” duty to ensure that the PCBU complies with its duties. Currently directors in New Zealand do not owe positive duties in relation to ensuring the health and safety of workers in their organisations.
This new duty will require directors and officers, at a minimum, to: understand the nature of the company’s operations and any associated risks and hazards, and; ensure that there are appropriate resources, systems and processes to manage these risks.
It is anticipated that in judging what constitutes an appropriate standard of care, the courts will look to the Good Governance Guidelines drawn up by the Ministry of Business, Innovation and Employment (MBIE) and the Institute of Directors. 
The Bill has been referred to the Transport and Industrial Relations Committee with submissions due by 11 April, 2014.

The Select Committee is due to report back by 13 September, 2014.  This timetable reflects the Government’s aim of having the Bill passed into law by the end of 2014 and in force from 1 April, 2015.

Information for this article was drawn from legal commentary from Chapman Tripp senior associate Marie Wisker and senior solicitor Vonda Hodgson and Russell McVeagh lawyers Richard McIlraith, Malcolm Crotty, Kylie Dunn, Adrian Olney and Gillian Service.

For further insights  view Chapmann Tripp’s commentary here or  Russell McVeagh ‘s here.

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