The primary aim of the new Health and Safety at Work Act 2015 (HSW Act) is to ensure that a person conducting a business or undertaking (PCBU) is properly managing health and safety in the workplace. In most cases, the PCBU will be a company. However, the HSW Act also places duties on workers, on other people who are in the workplace, and on a PCBU's officers.
This last aspect, the due diligence duty for directors and officers, is new, and has put the legislative changes in the spotlight. An example is Sir Peter Jackson, who recently announced that he has resigned as a director of Weta Workshop because of the changes. Is the concern justified?
Who is an officer?
Officers of a PCBU include the directors of a company and partners of a partnership, and for other types of business, people in a similar role. A liquidator or receiver of a company will also be an officer, after they have been appointed to that role.
An officer also includes any other person occupying a position that allows them to exercise significant influence over the management of the business, such as a chief executive, but does not include a person who merely advises or makes recommendations to the management team.
Whether or not someone will be considered to be an officer is therefore not completely clear cut. A recent case in Australia1 under a similar provision decided that a person will not be an officer if they only have operational responsibilities and do not have any corporate obligations such as the capacity to engage contractors or commit corporate funds. It is not sufficient to have full control over a project or contract; rather there must be control or responsibility for the business or undertaking as a whole.
An officer's obligations
An officer must personally exercise due diligence to ensure that the PCBU complies with its duties and obligations under the HSW Act.
This is to be done by exercising the care, diligence and skill of a reasonable officer in the same circumstances, taking into account the nature of the business or undertaking, the position of the officer, and the nature of the responsibilities undertaken by the officer.
The due diligence that must be undertaken includes taking reasonable steps to:
- acquire, and keep up to date, knowledge of workplace health and safety matters;
- gain an understanding of the nature of the operations of the business or undertaking of the PCBU and generally of the hazards and risks associated with those operations; and
- ensure that the PCBU has, and uses:
-
- appropriate resources and processes to eliminate or minimise risks to health and safety from work carried out as part of the conduct of the business or undertaking;
- appropriate processes for receiving and considering information regarding incidents, hazards, and risks and for responding in a timely way to that information; and
- processes for complying with any duty or obligation of the PCBU under this Act.
The act of monitoring the use of the procedures and processes is vital. In Australia,2 they have confirmed that due diligence:
In practical terms, the officer's duty is aimed at achieving and sustaining compliance by the PCBU. What needs to be done by an officer exercising due diligence will vary from industry to industry, and business to business. Many businesses will need a culture shift, to ensure that health and safety is a key component to running a successful business, rather than something that can get in the way.
Consequences for an officer of breaching the obligations
If WorkSafe decides that an officer has breached their obligations, charges can be laid against the officer personally. These can either be on their own or in conjunction with other charges being laid against the PCBU or a worker.
As a starting point, an officer who has failed to comply with their duty is liable for a fine of up to $100,000. This increases to a fine of up to $300,000 if the failure has exposed any individual to a risk of death or serious injury or serious illness. If the officer has engaged in conduct that has exposed any individual to a risk of death or serious injury or serious illness, and is reckless as to whether one of those risks eventuates, then that officer is liable for a fine of up to $600,000, and up to five years imprisonment.
Should you resign your directorships?
Many people will have seen the announcement about Sir Peter Jackson resigning from his directorship of Weta Workshop as a result of these health and safety changes. However, such an action is generally unnecessary.
The concept of a "silent director" has not applied in New Zealand for decades. The Companies Act 1993 sets out duties that all directors must comply with, whether or not they are involved in the day-to-day operation of a business. Similarly, directors have obligations to the Inland Revenue Department in relation to the business's taxes. The provisions in the HSW Act are no different.
As long as a director understands the hazards created by the business and ensures that health and safety is managed through proper systems, then the director is likely to be complying with his or her due diligence obligations. A director can place reasonable reliance on the information and advice received from management. There is certainly no need for a director to be present at the business premises each day; the new requirements of directors are less about day-to-day involvement and more about ensuring health and safety is properly managed.
Footnotes
1 Mckie v Al-Hasani and Kenoss Contractors Pty Ltd (in liq) [2015] ACTIC 1
2 WorkCover Authority of New South Wales (Inspector Mansell) v Daly Smith Corporation (Aust) Pty Limited and Thomas Edwin Curtis Smith [2004] NSWIRComm 349 at [134]
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
