This includes directors of companies, and potentially senior management positions, such as the chief executive officer.
If a PCBU has a health and safety duty, its officers must exercise due diligence to ensure that the PCBU complies with that duty. The PCBU has the primary duty to ensure the health and safety of workers. The officer must ensure the PCBU is able to discharge its obligations.
For a summary of officers’ healthy and safety duties see: Health and Safety Changes – Directors Need to Act Now!
WorkSafe’s approach to due diligence enforcement
Kimberley Tool and Design Limited: In November 2018, a metal press worker’s hand became trapped in a press at work. The tips of two of the worker’s fingers were subsequently amputated. The worker’s employer, Kimberley Tool and Design (NZ) Limited (KTD), and the company’s director, Mr Parker, were prosecuted by WorkSafe for health and safety failures. KTD and Mr Parker accepted that the press was improperly guarded, and that the worker had received “cursory training” prior to operating the press.
In October 2021, at sentencing, the District Court warned directors (or people in similar positions of responsibility) that they can no longer expect that the consequences of decisions they make or do not make will be the sole responsibility of the company. Mr Parker was convicted and fined $35,000, reduced from an earlier sentence indication of $48,000 for financial reasons for his failure to comply with his due diligence obligations (i.e. ensuring KTD had identified and controlled a hazard; ensuring KTD provided adequate training to workers).
Mr Parker is not the first officer to be prosecuted for breaches of the HSWA:
- We have previously written about the successful WorkSafe prosecution of a company director, Mr Sarginson: The High Court clarifies the liability of ‘officers’ under the Health and Safety at Work Act 2015 | Hesketh Henry
- In June 2020, the director of Nino’s Limited, Mr Basile was convicted and fined in respect of the sinking of a significantly overloaded fishing vessel. On appeal, the Court held that the officer of a commercial fishing operation should have known the loading capacity of its fishing vessels. Mr Basile was not aware of the loading limits, and as a result he had failed to gain an understanding of the hazards and risks associated with the nature of the PCBU’s operations. Mr Basile was convicted and fined $47,500 (upheld on appeal in the High Court).
- In September 2021, the director of Smoke Control NZ Limited, Mr Kennedy, was convicted and fined following the death of a worker. Mr Kennedy acknowledged that he had not met his due diligence duty by ensuring the PCBU implemented its health and safety procedures around hazard identification, training and monitoring of worker compliance. The Court fixed Mr Kennedy’s culpability at the “lower end” of the medium band ($50,000 to $120,000). The Court set a starting point for a fine of $70,000, which ultimately was reduced to $31,500. In determining Mr Kennedy’s culpability, the Court considered the case of Nino’s Limited above, and held that “this was not a case where there was deliberate avoidance for the purpose of minimising cost” (as there was in Nino’s).
A common detail across the officer prosecutions to date is that all the officers appear to have been closely involved in the management of the PCBUs’ operations. This demonstrates that familiarity with the day-to-day health and safety procedures will not necessarily be adequate to discharge the due diligence duty.
The due diligence process is a continuous cycle and at its most basic will require:
- Plan: The officer needs to have a clear understanding of what good health and safety practices and governance look like as it applies to the PCBU’s operations. As Mr Basile learned, ignorance is no excuse.
- Do: An officer needs to ensure that resources are allocated, and systems are implemented effectively, especially in respect of hazard ID and control, and the provision of resources to workers, e.g. the right equipment, PPE, training and supervision.
- Monitor and verify: An officer needs to verify that the systems, processes and other resources are in fact effective in delivering the desired health and safety performance. This part of the cycle then feeds directly back into the planning phase.
The work required in the plan, do, and monitor stages can be delegated to other persons in the PCBU, but ultimately the buck stops with the officer. An officer must be able to show that she or he was satisfied to standard of a reasonable, prudent person as to the effectiveness of business health and safety systems. Finally, do not forget to document the due diligence process – board papers and minutes are a crucial tool in documenting health and safety compliance.
All WorkSafe prosecutions are considered on a case-by-case basis. Not every breach of HSWA by a PCBU will mean that the officer has also breached her or his obligations: if an officer has acted with due diligence, the officer will not be held liable for the conduct of the PCBU.
If you have any questions about directors duties under Health and Safety Regulations, please get in touch with our Health and Safety Team or your usual contact at Hesketh Henry.
Disclaimer: The information contained in this article is current at the date of publishing and is of a general nature. It should be used as a guide only and not as a substitute for obtaining legal advice. Specific legal advice should be sought where required.