Article:

Safety First

02 March 2015

WHAT YOU NEED TO KNOW ABOUT THE CHANGES TO WORKPLACE HEALTH & SAFETY

Health and safety in the workplace is always a serious business – and it’s about to get a lot more serious.

New health and safety legislation, which is set to be passed into law later this year, will introduce significant changes – and far more significant penalties for getting it wrong. Directors, chief executives and those whose decisions affect the whole or a substantial part of their organisations

will have new requirements to exercise due diligence in terms of health & safety in their organisations. Penalties of up to $600,000 or 5 years imprisonment – or both – may apply to individuals who fail to carry out those responsibilities.

That makes it well worth taking the time to understand these wide- ranging changes to the legislative and compliance environment. This article provides an overview of the background to the changes, when they are likely to take effect, and what they may mean for you and your business.

Why is the law changing?

The changes to the legislation are driven predominantly by New Zealand’s poor record in workplace health and safety. According to the Ministry of Business, Innovation and Employment (MBIE):

▶ On average, between 1-2 people die at work every week in New Zealand

▶ There are an estimated 600 – 900 deaths each year from work-related diseases such as asbestosis and various cancers

    ▶ 1 in 10 workers are harmed each year

Our lamentable health and safety record comes at a high cost. MBIE estimate the cost to New Zealand of occupational illness and injury in 2010 at around $3.5 billion. The impact on businesses includes the loss of key staff while they’re off work, increased ACC levies, reduced productivity, and more.

The Pike River Coalmine explosion was another catalyst for change.

The Royal Commision which was set up following Pike River, and the subsequent Independent Taskforce on Workplace Health and Safety, made several recommendations to improve existing practices and legislation.

The new legislation (the Health and Safety Reform Bill to be enacted as the Health and Safety at Work Act) will replace the existing Health and Safety in Employment Act 1992. It is one part of the Governments specific (and ambitious) goal to reduce workplace injuries and deaths by at least 25%

by 2020. It also sets to provide ‘the highest level of protection’ – which signals that the safety of workers should be paramount when it comes to interpreting the legislation.

What are the key points?

Explicit Duties

The new Bill sets out specific duties with regard to workplace health and safety. It’s worth understanding these, and the definitions (and jargon!) used in the new legislation, to ensure you’re up to speed with your obligations. There are essentially three levels:

Persons Conducting a Business or Undertaking (PCBUs). PCBUs have a primary duty with regard to workplace health and safety – so what are they? PCBUs will usually be a business entity (e.g. a company), rather than an individual (though a sole trader or self- employed person might be a PCBU.) As they’re carrying out the business or undertaking, PCBUs are seen as being in the best position to manage health and safety risks. One of the important implications of this is that responsibility for workplace health and safety can’t be contracted out. It’s also important to note that there may be several PCBUs in a single workplace (e.g. on a building site or a shopping mall). In that case, each PCBU has to manage and monitor the health and safety performance of the parties beneath them in the chain of work, and they’re required to consult with each other to ensure the health and safety of workers. There’s also a duty to other people who may be affected by the work being carried out, which has particular relevance to businesses who are ‘upstream’ in the supply chain, like commercial landlords, manufacturers and suppliers of plant or structures that will be used in workplaces.

Officers. Officers include Directors, and people who make decisions that affect all or a substantial part of the business of a PCBU (owners, chief executives and potentially some senior managers).  The new legislation imposes a personal duty of due diligence on them to ensure the PCBU complies with its health & safety obligations – and as we’ve seen, there are stiff penalties for failing to adequately perform that duty.

Workers. Workers have an obligation to take reasonable care to ensure the health and safety of themselves and others in the workplace, and to comply with the PCBU’s instructions and processes. The Bill also provides for greater involvement and participation of workers and a greater requirement for PCBUs to consult and engage on health and safety matters. For example, workers and/or PCBUs can elect to appoint health and safety representatives or committees. If they do, the Bill requires that they have the time, resources and authority to carry out their role properly.

Principles-based

The new legislation is principles-based rather than prescriptive. It takes a broad, risk-based approach that shifts the focus from monitoring and recording incidents to proactively identifying and managing risks.

The onus is on PCBU’s to ensure, as far as is reasonably practicable, the health and safety of workers and other people (e.g. customers and visitors). That means they’ll need to think widely about who may be affected by their business or undertaking – not just staff and contractors. It also requires them to monitor and manage the risks associated with remote or isolated work and determine treatment plans for how these risks can be eliminated or more effectively managed.

When will the new legislation take effect?

The new Bill was expected to come into force from 1 April this year. However, the general election has delayed the process. It is now expected to become law from late 2015. The delay gives you more time to prepare but it would pay to start preparing now to avoid costly mistakes later.

What does it mean for you?

The new legislation makes managing your health & safety risk equally as important as managing your financial or reputational risk. Businesses will need to ensure they have a sound health & safety risk management framework in place. They’ll also need to invest time in ensuring that everyone understands and applies their health & safety systems and processes.

For businesses that don’t have a structured health and safety framework already, getting up to speed may be challenging. Here are some steps you can take to help ensure you meet your obligations under the new legislation.

▶ As in other areas, the direction is set from the top. Make sure you have a Health and Safety vision and strategy, communicate it throughout your organisation, and review it regularly

▶ If you are an Officer, make sure you build and maintain your knowledge of health and safety issues; including the key risks faced by your sector and your business in particular – it will be necessary to

carry out your obligations effectively

▶ Set up regular reporting to monitor progress towards your health and safety goals, review incidents and risks and record actions taken

▶ Put a system in place to identify hazards and risks, assess the likelihood and consequence if they were to happen and put in place

measures to control and mitigate them (e.g. equipment maintenance plans)

▶ Review your health and safety processes and systems (and compliance with them) regularly

▶ Ensure regular training, communication and consultation with your staff on health and safety matters

    ▶ Undertake periodic health and safety audits

How BDO can help?

At BDO, we have considerable experience in developing and auditing workplace health and safety policies, processes and systems. We can help you review your business’s current processes and identify any gaps with the new legislation. We can also help you develop appropriate structures to ensure you meet your workplace health and safety obligations. If you’d like to find out more, contact our BDO Risk Advisory Services team or Tim Gacsal directly on (09) 366 8057.