Insights

In brief - Consider impact of new work safety laws on NZ operations

New Zealand's Health and Safety at Work Act 2015 (HSW Act) commenced on 4 April 2016. While the HSW Act is largely based on the Australian model work health and safety (WHS) laws, it makes some notable departures which Australian businesses with operations in New Zealand should be aware of.

Maximum fine substantially increased but insuring against fines prohibited

Consistent with Australia, the maximum fine for the most serious offence under the HSW Act is now $3 million, a huge increase of 600% from the previous maximum fine of $500,000. However, unlike Australia, businesses in New Zealand cannot insure a fine incurred for breaching the HSW Act. The HSW Act expressly prohibits a company from entering into an insurance policy that indemnifies the company's liability to pay a fine under the HSW Act.

For the vast majority of New Zealand businesses, the number one safety driver will be simple - keeping their workers safe. But for some businesses, the message may only be received if they know serious financial consequences could follow non-compliance with the HSW Act.

In Australia, the model work safety laws do not contain an express prohibition on insuring a fine. Australian companies with New Zealand operations need to be mindful of this difference.

PCBU concept adopted, as well as obligation to consult, co-ordinate and co-operate

The HSW Act adopts the Australian concept of a PCBU - a person conducting a business or undertaking. This broad concept enables modern working arrangements to be captured under the HSW Act as opposed to duties that, under the repealed laws, were imposed upon employers, principals and people managing workplaces.

Modern working arrangements are also the driver behind the new obligation to consult, co-ordinate and co-operate. Also an obligation under the Australian model WHS laws, the obligation requires businesses to consult, co-ordinate and co-operate where their duties under the HSW Act overlap. This is a fundamental obligation, particularly for New Zealand's high risk industries of forestry, agriculture and construction, where a number of contractors are working at the same site. Mining operations will also fall under the HSW Act.

While the HSW Act adopts key concepts from the Australian model WHS laws, it falls short in a couple of key areas. This is surprising given that in 2014, New Zealand's work-related fatality rate was 27% higher than Australia's and the overhaul to New Zealand's WHS laws was brought about by the Pike River Mine disaster where 29 miners were tragically killed.

HSW Act dilutes Australian definition of "officer" but due diligence obligations remain the same

Officers under the HSW Act are required to exercise the same due diligence obligations that are required under the Australian WHS model laws. However, the definition of an "officer" under the HSW Act is narrower than the definition under the Australian model WHS laws.

As one would expect, directors, partners in a partnership, board members and CEOs are "officers" under the HSW Act but most other positions that make up the senior leadership team probably fall outside the definition. This is because the HSW Act requires the officer to be someone whose position allows them to "exercise significant influence over the management of a business or undertaking". WorkSafe New Zealand guidance goes further to say in its definition of who is an officer that this person holds a "very senior leadership position".

The Australian definition of "officer" in the model WHS laws is broader because it captures someone "who makes, or participate in making, decisions that affect the whole, or a substantial part, of the business." As such, in most occasions in Australia, all positions that make up a business's senior leadership team will be deemed to be officers. Only time will tell what this departure from the Australian model WHS laws means for effective safety leadership at the helm of New Zealand businesses.

Health and safety committees for small businesses in low-risk industries may be refused

The HSW Act gives businesses a choice about whether to form a health and safety committee if requested by a worker. In the event that there are fewer than 20 workers carrying out the business's work and it is in a low risk industry, it is not even required to consider the request and it can flatly refuse to establish a health and safety committee.

No such discretion exists under the Australian model WHS laws because it is mandatory to establish a health and safety committee if requested by a health and safety representative or five or more workers. The New Zealand parliament's intention, in departing from the Australian position, was to simplify compliance for small businesses and low-risk industries. This is surprising given that 97% of enterprises in New Zealand are small businesses (under 20 employees).

Ensure compliance with new HSW Act requirements

Australian businesses with New Zealand operations should seek advice on how to ensure that WHS management systems comply with the new requirements of the HSW Act.
 

This article has been published by Colin Biggers & Paisley for information and education purposes only and is a general summary of the topic(s) presented. This article is not specific legal advice. Please seek your own legal advice for any questions you may have. All information contained in this article is subject to change. Colin Biggers & Paisley cannot be held responsible for any liability whatsoever, or for any loss howsoever arising from any reliance upon the contents of this article.​