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Chinese Business in New Zealand: Big changes coming in Health & Safety

Trade Advice

By John Hannan, Partner, DLA Phillips Fox

If you are a Chinese business operator setting up or running a business in New Zealand, beware of tough new changes in workplace health and safety law. It is also important you already provide for all current obligations in health and safety you have.

Your obligations apply whether you employ a team of painters, or whether you operate a mill.

Your Obligations in Health and Safety

Currently, New Zealand's workplace health and safety is enshrined in the Health and Safety in Employment Act 1992. This requires all employers and persons in charge to take all practicable steps ensuring safety of employees at work.

So you must:

  • ensure equipment and systems are safe to use
  • identify hazards systematically through a formal process
  • eliminate hazards if possible or isolate the hazards. If isolation is not possible, it should be minimised as far as possible.
  • give all employees training, protective equipment and clothing, to minimise hazards
  • provide health monitoring if the hazard cannot be eliminated or isolated.

If you employ more than 30 people, or at a union’s request, you must put in place 'health and safety employee participation' systems: you must instigate health and safety committees, meetings, and paid leave for worker health and safety representatives' training.

Failure to comply with these duties is a criminal offence. Fines of up to $500,000 can be imposed. If the offender is a person imprisonment for up to two years is possible. Even if the employer is a company, directors and senior managers can be found guilty of criminal offences.

You must also comply with special codes of practice for many hazardous activities: for example, forklifts, cranes, and forest operations. There is also a general Code: 'Managing Hazards to prevent Major Industrial Accidents'.

Big changes coming – Criminal Prosecutions More Likely

Big changes are coming to these laws to make them more stringent, following a series of disasters. The Pike River Coal mine disaster is the most recent and notorious.

A new agency, WorkSafe New Zealand, has been set up to operate. It is better organised and resourced than the previous agency. It has a highly active, mission statement.

A new Health and Safety in Employment Act will be in place by the end of 2014, if not, early 2015.

The most important changes will be new responsibilities, and liabilities, for company directors and senior management. They will have to manage health and safety in the workplace much more actively.

An “Exposure Draft” was released in October 2013 by the New Zealand Government. This sets out components of the new regime for public comment. The components within the paper include the following key concepts:

1.    Key concept: Person Conducting Business or Undertaking

The central duties in the Bill fall on a 'person conducting a business or undertaking' – PCBU.

This person must ensure, so far as is reasonably practicable, the health and safety of workers engaged - whether by the PCBU or others - in the business or undertaking. This duty also applies to workers whose activities are influenced or directed by the PCBU – not just employees or contractors.

2.    Key concept: Officer

'Officer' is a key concept because there are positive 'due diligence' duties imposed on 'officers' of a PCBU.

Failure to discharge those duties can result in imprisonment for up to five years for individuals or fines of up to $600,000. For companies and organisations, fines of up to $3 million apply.

'Officer' means: company directors; for partnerships - partners; for other organisations, any person comparable with a company director.

'Officer' also includes senior managers in the PCBU e.g. Chief Executive, Chief Financial Officer. A range of people within senior management of an organisation will have 'due diligence' duties.

An 'Officer' of a PCBU can be convicted of offences, including failure to exercise due diligence.

There will be some specific exclusions of some specialist bodies from being PCBUs: for example, Australian regulations exclude strata title Bodies Corporate.

3.    Duties extend beyond employees

A PCBU must ensure, so far as is reasonably practicable, the health and safety of not just employees, but also contractors engaged or caused to be engaged by the PCBU, as well as workers or contractors whose activities are influenced or directed by the PCBU.

'Workers' is defined to include employees, contractors and subcontractors and their employees, employees of labour hire companies, people on work experience, volunteers and others.

There can be multiple PCBUs for a particular site or activity e.g.designers, manufacturers or suppliers of plant, substances or structures.

A property developer, the construction firm engaged by the developer, principal contractor, subcontractors, designers and suppliers of plant and materials put onto a site will all be PCBUs with regard to workers engaged on the site.

4.    Punishing workers who raise safety concerns will be illegal

Workers, contractors and others who raise safety concerns must not be dismissed or punished. They will get greater protection.

It will be a criminal offence, and basis for a damages claim, to disadvantage any employee or contractor because of concerns they express over health and safety.

Criminal fines of $500,000 on corporates can be imposed; $100,000 on individuals.

Contractors may use claims they have been punished for raising safety concerns as leverage in civil disputes about contract performance.

5.    Due diligence duties of 'officers'

An officer of a PCBU must exercise 'due diligence' (or risk criminal prosecution) to ensure that the PCBU complies with its duties. Due diligence requires requires ensuring the PCBU has or uses:

  • up-to-date knowledge of work health and safety
  • understanding of the operations of the organisation and its hazards and risks;
  • appropriate risk resources and processes
  • appropriate information gathering processes about risks;
  • processes to comply with its duties under the legislation;
  • verification processes for resources and procedures.

Our Role

DLA Phillips Fox has a dedicated team of lawyers working on the new health and safety law – including Cantonese and Mandarin speakers. We can help you become compliant, avoid criminal prosecutions, and fines.