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Update for directors - health and safety issues

Carolyn Cameron - Wednesday, February 12, 2014

There are four new Bills before the New Zealand Parliament which will be passed in the next 24 months.  All of them have the effect of increasing exposure of directors to legal risk. The Health and Safety Employment Regime (HSE), with a likely commencement date in 2015, has particular importance for organisations which have a number of hazards and risks in the work place.

The HSE Bill will, when passed into law, establish a duty on directors to ensure that those with management responsibility for workplace safety are discharging their duties appropriately. A set of Good Governance Guidelines, prepared by the Ministry of Business Innovation and Enterprise and the Institute of Directors, will assist in helping judge what is appropriate. These require that the Directors:
  • be aware of the organisation’s hazards and risks
  • understand hazard control methods and systems; and
  • understand how to measure health and safety performance so as to measure effectiveness.
At an absolute minimum, directors will be required to understand the nature of the company’s operation and any associated risks and hazards, as well as ensuring that there are appropriate resources, systems and processes to manage these risks. 

Currently, directors can only be held liable for a breach of health and safety where they have “authorised, assented to, acquiesced in, or participated in the failure”. Under the new Bill, directors may be held liable without intentional wrongdoing. A three tier penalty structure will also be introduced with the most serious breaches punishable by individual fines of up to $600,000 and/or five years in prison. 

Boards are being urged by the Ministry and by the Institute of Directors to develop charters in which directors' individual roles in relation to health and safety are made clear. Functions in implementing a new strategy may be delegated within the organisation and external advice sought, however should a failure occur the buck ultimately lies with the directors. 

This is something that all directors will need to be aware of and engaged in.

Jeremy Carr (Partner)
Nick Lovegrove (Senior Solicitor)