Note to Insolvency Practitioners – Health and Safety Reforms

The Health and Safety Reform Bill, which will create a new "Health and Safety at Work Act”, is presently charting its course through Parliament. The intention is that it will come into force on 1 April 2015. As currently drafted the proposed legislation will impose duties in respect of health and safety at work on the following persons:

• "PCBU” - a "Person Conducting a Business Undertaking”: refers to a person who conducts a business or undertaking alone or with others, but excludes "officers” and "workers”. Typically therefore companies will be PCBUs.
• "Officers”: refers to directors or other persons that are responsible for making decisions that impact the whole or most of the business of a PCBU.
• "Workers”: refers to employees, contractors, sub-contractors, apprentices and volunteers.

Different obligations will be imposed on persons falling within each of these categories.

Liquidators, receivers or administrators may well fall within the definition of "officers” to the extent that they become responsible for running the companies in respect of which they have been appointed. Under the Bill "officers” must exercise due diligence to ensure that a PCBU complies with its obligations. The exercise of due diligence must include the taking of reasonable steps to:

• acquire, and keep up-to-date, knowledge of work 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;
• ensure that the PCBU has available for use, 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;
• ensure that the PCBU has appropriate processes for receiving and considering information regarding incidents, hazards, and risks and for responding in a timely way to that information;
• ensure that the PCBU has, and implements, processes for complying with any duty or obligation of the PCBU under the legislation to verify the provision and use of the resources and processes referred to above.

Health and safety obligations of a business are often among the first to be neglected when financial pressures begin to bite, so an audit of health and safety practices may well be one of the first matters to which a liquidator, receiver or administrator should give attention following appointment.

Breaches of the proposed legislation may result in the imposition of significant fines and/or terms of imprisonment. It is unlawful to insure or obtain any other indemnity against the obligation to pay fines, though insurance may cover any associated reparations orders.