Health & Safety - Directors and Managers Beware

POSTED BY Ben Morrison

22 July 2014

posted in Business | Legislation | Health and Safety | director liability

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The Health and Safety Reform Bill 2014 (Bill) will place significant obligations on company directors and managers to manage risks and keep workers safe. Such obligations are to be backed with high fines and even prison for individuals who fail to comply.

In its present form the Bill imposes a positive “due diligence duty” on “officers” of a “PCBU” (being a “person conducting a business or undertaking”) which will include any individual:

  • occupying the position of a director of the company (by whatever name called); and
  • who makes decisions that affect the whole, or a substantial part, of the business of a PCBU.

The positive due diligence duty
The Bill will require “officers” to take a more proactive approach to health and safety matters by taking positive steps to:

  • acquire and keep up to date knowledge of health and safety matters
  • gain an understanding of the nature of the operations of the PCBU and the risks and hazards associated with the conduct of the business
  • ensure the PCBU has, and uses, appropriate resources and processes to eliminate or minimise risks to health and safety
  • ensure the PCBU has appropriate resources and processes for responding to information regarding incidents, hazards and risks in a timely manner
  • ensure the PCBU has, and implements, processes for complying with duties under the legislation
  • verify the provision and use of the health and safety resources

Practically speaking, at a minimum this will require individual directors to have access to, and read, information about the company’s health and safety systems and processes, health and safety committees and audit reports, to ensure health and safety systems, processes and resources remain appropriate and relevant.

Failure to comply with the due diligence duty could result in prosecution and a fine, or even a term of imprisonment if an officer has foreseen dangerous consequences with a reasonable chance of occurring, and has continued the relevant course of conduct regardless.

Preparing for the changes
Now is a good time for company officers to prepare themselves for the reforms and ensure as far as possible they have taken steps to mitigate their personal risk. We recommend that such steps should include:

  • undertaking an audit of the company’s current health and safety systems and processes to identify deficiencies and areas of risk;
  • identifying and understanding the risks and hazards of the business; and
  • making Health and Safety a permanent agenda item at every board meeting.

As is presently the case under section 56I of the Health and Safety in Employment Act 1992, under section 178 of the Bill, it will be unlawful for a director to avoid the consequences of breaching the Bill by entering into an insurance policy or contract that indemnifies or purports to indemnify that director for the cost of fines or infringement fees under the Bill. To the extent that a policy or contract does so, it will be of no effect and a court or tribunal will be unable to grant relief in respect of it.

For more information contact Ben Morrison or Amy Tiatia.

POSTED BY Ben Morrison

22 July 2014

posted in BusinessLegislationHealth and Safetydirector liability

VIEWED 5090 TIMES

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