Improving Health and Safety at Work: An Effective … Confidence MBIE-MAKO-146085571 Office of the Minister of Labour The Chair Cabinet Economic Growth and Innovation Committee IMPROVING

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Office of the Minister of Labour

The Chair

Cabinet Economic Growth and Innovation Committee

IMPROVING HEALTH AND SAFETY AT WORK: AN EFFECTIVE REGULATORY FRAMEWORK

Proposal

1 This paper is one of a suite of four Cabinet papers that seek agreement to changes to New Zealand’s health and safety system. This paper seeks agreement to proposals for changes to primary and secondary legislation, including agreement to the content of the Health and Safety at Work Bill.

Executive Summary

2 There are problems with our existing workplace health and safety regulatory framework and its implementation, including:

it is too complicated, not comprehensive, suffers from inconsistent implementation, is insufficiently underpinned by guidance, and its compliance and enforcement tools are not flexible enough

some provisions are perceived to be relatively weak compared to overseas jurisdictions, such as in respect to worker participation

there is a lack of tailored regulation of major hazard facilities – facilities that store and process large quantities of dangerous substances and that have the potential to cause a major accident.

3 I propose, consistent with the Taskforce’s recommendation, new workplace health and safety legislation based on the Australian Model Work Health and Safety Act, with modifications to take account of differences in the New Zealand context. The Model Law was based on a thorough modernisation process drawing on both Australian and international experience and extensive consultation.

4 These changes to the regulatory framework are an important step towards improving our health and safety system to meet the Government’s target of a 25 % reduction in workplace fatalities and serious injuries by 2020. The Model Law is a sound basis for a new approach as it is both familiar (it is based on the same regulatory approach) and new (it is more modern and reflects changes in working arrangements).

5 The likely effects on business of the package of changes are discussed in the overview paper and the regulatory impact statement. Overall, understanding the changes will mean some initial costs to businesses – as with any regulatory change businesses need to understand the changes and if necessary adapt their systems. This can particularly affect small businesses. Over time, however the regulatory and system changes should create greater certainty and reduce on-going compliance costs for small and large low-risk businesses, and even make it easier to comply for high risk businesses.

6 A key Taskforce recommendation was to strengthen the legal framework for worker participation. Consistent with the Taskforce’s recommendations, I recommend that we:

adopt from the Model Law rules that require duty-holders to consult and involve workers, that give more clarity about what effective worker participation systems look like in different workplaces, and that give worker representatives and committees (where they are present) greater powers and responsibilities

http://cabguide.cabinetoffice.govt.nz/context/definitions/cabinet-committees

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expand and strengthen protections from discrimination for workers (including non-employees) who raise health and safety issues

not adopt requirements in the Model Law that are neither necessary nor appropriate in the New Zealand context, for example the Model Law’s provisions on workplace health and safety entry permits

7 Another key Taskforce recommendation was to improve the regulation of major hazard facilities. Consistent with the Taskforce’s recommendations, I propose making regulations to prevent and mitigate the effects of major accidents at large chemical production and storage facilities; downstream petroleum facilities (e.g. oil refineries); and other facilities (e.g. fertiliser plants) that store or process very large quantities of dangerous substances.

8 In order to address uncertainty and regulatory gaps, regulations, guidance and ACOPs will need to be developed to provide duty-holders and workers with certainty about how the law and regulations will apply to them, without being unnecessarily prescriptive. This will not only promote better health and safety outcomes, but will make compliance easier for businesses.

Background

9 New Zealand’s primary workplace health and safety legislation, the Health and Safety in Employment Act 1992 (HSE Act), follows a model commonly known as the Robens approach1.

10 The Robens approach seeks to increase awareness, knowledge and competence in managing workplace health and safety, rather than rely on prescriptive requirements focusing on a narrow range of workplace hazards. Performance-based general duties ensure broad coverage of work and workplaces. Advantages of the all-encompassing nature of these general duties are that they do not quickly date, they support innovation and they provide flexibility. The duties are underpinned by industry- or hazard-specific regulations, approved codes of practice and guidance where further clarity is required.

11 The Robens approach remains the preferred method for legislating for workplace health and safety across many Commonwealth jurisdictions. Australia and the United Kingdom have both confirmed their Robens-based models as the best approach after recent reviews of their legislative systems.

Duties Framework

Problem definition

12 The HSE Act is now 20 years old. The Royal Commission on the Pike River Coal Mine Tragedy concluded that our implementation of the Robens approach has been incomplete – particularly in relation to the relative lack of regulations, Approved Codes of Practice (ACoPs) or guidance to make the HSE Act as effective as intended.

13 Other problems identified in submissions to the Independent Taskforce on Workplace Health and Safety and that have been raised by business and stakeholders include:

a. duty holders have difficulty knowing what to do in order to meet the general duties – or knowing whether they have done enough to be considered compliant. This can result in duty holders not doing enough, or being over-cautious in their interpretation - effectively increasing the compliance burden on themselves

1So named after its ‘father’, Lord Alfred Robens. His 1972 report to the British government, Safety and Health at Work,

transformed the attitudes towards and organisation of occupational health and safety.

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b. the concept of taking ‘all practicable steps’ to meet the general duties is not well understood by the wider regulated community, being considered too vague and difficult to apply

c. the duties do not effectively accommodate the changes in working arrangements since the HSE Act was passed 20 years ago, such as an increase in contracting arrangements

d. the HSE Act does not explicitly require positive action by directors and senior managers of duty holders in relation to the health and safety, and effectively rewards directors who avoid involvement in matters affecting health and safety

e. there are gaps of coverage in relation to some upstream duty holders (designers, manufacturers, installers etc.), who have a profound influence on the health and safety risks present in the workplace

f. some of the language used in the HSE Act is perceived as being relatively weak compared to overseas jurisdictions,. For example, the HSE Act seeks to ‘promote’ the prevention of harm to people, whereas the object of the Australian Model Work Health and Safety Act is to ‘secure’ the health and safety of workers

g. the compliance and enforcement tools for the regulator are in some places not sufficiently flexible to enable the regulator to promote compliance, and may lead to an overemphasis on prosecution

h. the penalties in the HSE Act, and as applied by the Courts, are not providing sufficient incentive for some to comply with the HSE Act.

Taskforce Recommendation 2: that the Government enact a new workplace health and safety Act

based on the Australian Model Law2

a. the scope of the new Act should include acute, chronic and catastrophic harm

b. the Object in the Model Law should be adopted

c. duties should extend to all relationships between those in control of workplaces and those who are affected through adopting the Australian approach of persons conducting a business or undertaking (PCBUs)

d. duties should extend to all those in governance roles through adopting the Australian approach of giving a due diligence obligation to officers of PCBUs

e. the current ‘all practicable steps’ test should be replaced with the Australian ‘reasonably practicable’ test.

Analysis

14 I have considered the problems outlined above and the manner in which they could best be addressed. In the majority of situations, the preferred solution is to adopt an integral feature of the Australian Model Work Health and Safety Act. Legislative options present in other jurisdictions (such as the United Kingdom and Canada) were also considered, as well as modifying the HSE Act, but the advantages of the more modern Australian legislation were apparent.

15 The Model Law was finalised in 2011 following a long period of national consultation. It is the most recent articulation of the Robens approach available to us. In developing the Model Law Australia has been through an extensive modernisation process, drawing on both Australian and international experience.

2The Australian Model Work Health and Safety Law was developed following an extensive national review in 2008-9 to

determine the optimal content of a workplace health and safety Act. In a bid to achieve national harmonisation of legislative provisions, each of the nine Australian jurisdictions were to use the Model Law as a template for new State legislation, making adaptations as necessary for their context. To date, seven have done so. It comprises a model Work Health and Safety Act regulations and codes of practice.

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16 As has been the case with each of the Australian States and Territories, we need to carefully consider the Model Law and areas in which it needs to be modified to either reflect the New Zealand-specific context, or where lessons have been learnt in Australia since implementation and clear improvements can be made. Having said this, I agree with the Taskforce that variations to the Model Law should be kept to a minimum, and only made for good reason.

17 The driver for adopting and adapting the Model Law in New Zealand is not harmonisation or alignment with Australia. It is simply that the Model Law is fit for purpose in the main, and it will be modified where it is not fit for purpose. Simplifying workplace health and safety for trans-Tasman businesses is, however, an important ancillary benefit of implementing a version of the Model Law here.

18 Being able to draw upon much of the significant resources and body of knowledge and jurisprudence developed in Australia, and again adapting this to our purposes, is another strong benefit. This is especially the case when it comes to the suite of regulations, codes of practice, and guidance material that has been developed in Australia to support the Model Law. Our limited ability to develop these independently in the past was a major contributing factor to our failed implementation of the Robens model for workplace health and safety. There is no point reinventing the wheel if an excellent one already exists; and our Australian colleagues have been very generous in offering their support in getting it fitted.

19 A new law would replace the HSE Act and also replace the Machinery Act 1950, which currently continues only for the purposes of allowing for the regulation of amusement devices (e.g. fairground rides). These regulations would be brought into the health and safety system.

20 The Taskforce’s recommendation identifies the core elements of the Model Law, and their report makes a compelling case for adopting them. The new object (or purpose) is expressed in more positive language, provides greater clarity about who will be protected and how, and identifies the principle that workers should receive the highest level of protection that is reasonably practicable.

Duties of PCBUs

21 The core duty is that of a person conducting a business or undertaking (PCBU):

A person conducting a business or undertaking must ensure, so far as is reasonably practicable, the health and safety of:

(a) workers engaged, or caused to be engaged by the person; and

(b) workers whose activities in carrying out work are influenced or directed by the person,

while the workers are at work in the business or undertaking.

22 The PCBU also owes a duty to other people affected by the work being done. Specific duties extend to upstream participants in the supply chain (e.g. PCBUs that are designers, manufacturers, importers and suppliers of plant, substances, and structures).

23 PCBU is a broad concept that captures all types of modern working arrangements and, like the HSE Act, is not limited to for-profit businesses. Whether a person conducts a business or undertaking is a question of fact to be determined in the circumstances of each case. The SafeWork Australia interpretive guide on the meaning of PCBU and its application to particular circumstances is attached as an appendix to this paper. It is important that guidance like this is provided on the definition in New Zealand, as it will be a new concept.

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24 If the Model Law is adopted, additional exclusions to being a PCBU will be able to be made by regulations. This safety valve ensures that the concept can be drawn widely to ensure there are no gaps, while providing a flexible method of excluding circumstances where the costs of regulation outweigh the benefits. At this stage, the Australian regulations exclude most residential unit title bodies corporate.

25 It may also prove desirable to provide additional clarification in the Health and Safety at Work Bill to limit uncertainty and reduce concerns of legislative overreach. I will be alert to this issue as the Bill develops.

Qualifier – reasonably practicable

26 The key to making the duties work in the Model Law is the qualifier of ‘so far as is reasonably practicable’. Without it, duty holders would breach their duty whenever the outcome was not achieved, regardless of the efforts they took. A qualifier limits the general duty in the interests of fairness and achievability, by introducing the concept of doing what is reasonable in the circumstances.

27 In the Model Law, reasonably practicable, in relation to a duty to ensure health and safety, means:

…that which is, or was at a particular time, reasonably able to be done in relation to ensuring health and safety, taking into account and weighing up all relevant matters including:

a. the likelihood of the hazard or the risk concerned occurring; and

b. the degree of harm that might result from the hazard or the risk; and

c. what the person concerned knows, or ought reasonably to know, about:

d. the hazard or the risk; and

e. ways of eliminating or minimising the risk; and

f. the availability and suitability of ways to eliminate or minimise the risk; and

g. after assessing the extent of the risk and the available ways of eliminating or minimising the risk, the cost associated with available ways of eliminating or minimising the risk, including whether the cost is grossly disproportionate to the risk.

28 The equivalent qualifier in the HSE Act is ‘all practicable steps’. I agree with the Taskforce that the Australian test is preferable. It is more accessible and gives a better sense of what is expected of duty-holders. It does a good job of incorporating the concept of reasonableness based on a risk assessment and cost-benefit analysis.

Duties of others, including directors

29 The Model Law creates a due diligence duty so that those in governance roles must proactively manage workplace health and safety. This is in contrast to the HSE Act, which makes directors, officers and agents liable for any failure of the body corporate (as an employer or other duty holder) to comply with the legislation, if they have participated in, contributed to, or acquiesced in that failure.

30 The approach in the Model Law is preferable because directors are only liable where they fail to perform their due diligence duty. A positive duty supports the framework, because directors and senior management set the direction and provide leadership in health and safety for their organisation, including making resource decisions. The language of due diligence is familiar and consistent with their governance role, and their other duties as a director. It clarifies that health and safety of workers is part of governance.

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31 Under the Model Law only professional directors and officers are subject to the duty. It excludes anyone acting on a voluntary basis who receives only out-of-pocket expenses. This would, for example, exclude members of a school board of trustees or officers of a sports club from the due diligence duty even if the organisation itself is a PCBU.

32 Workers and others in the workplace will also be required to take a reasonable degree of responsibility for their own health and safety and for the health and safety of those around them.

Discussion

33 This duties framework seeks to improve health and safety outcomes by:

a. allocating duties to those participants who are in the best position to control risks

b. ensuring the duties are appropriate to the participant’s role

c. making the duties clear and achievable.

34 The first question a business will need to ask itself is what it can reasonably do to ensure the health and safety of workers and others affected by its business.

35 While the advantages are substantial, adoption of the Model Law will require New Zealand businesses and workers to engage with some new concepts, including PCBUs, and the concept of identifying risks and hazards and taking steps to remove these ‘so far as is reasonably practicable’, as well as a modified compliance regime.

36 Adoption of the Model Law it is not a radical departure from the HSE Act. It is simply a better, more modern version of the Robens approach. The Model Law is, however, sufficiently different that it will be clear to New Zealand duty holders and regulators that new behaviours are required. It is predicted that increasing the profile of health and safety issues and creating a shared responsibility amongst participants in the system, together with the other aspects of the proposals such as leadership and incentives, will lead to better health and safety outcomes.

37 The likely effects on business of the package of changes are discussed in the overview paper and the regulatory impact statement. Overall, understanding the changes will mean some initial costs to businesses – as with any regulatory change businesses need to understand the changes and if necessary adapt their systems. This can particularly affect small businesses. Over time, however, the regulatory and system changes should create greater certainty and reduce on-going compliance costs for small and large low-risk businesses, and even make it easier to comply for high risk businesses.

38 I agree with the Taskforce that the Model Law should be used as the basis for a new Health and Safety at Work Act.

39 If Cabinet agrees to the proposal to use the Model Law as a basis for the drafting of new health and safety legislation, a number of other core Taskforce recommendations will be dealt with as a matter of course. Some of the key matters that were of interest to the Taskforce are discussed within this context below.

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Coverage of the NZ Defence Force (NZDF)

40 The State Services Commission undertook a review in 2012 of the HSE Act and its coverage of the military. It recommended that legislation be clarified to make clear that NZDF personnel are covered by the legislation and that Navy vessels are also covered. I propose that the new Health and Safety at Work Bill should explicitly cover the NZDF, including naval ships, while excluding NZDF personnel on operational service. Officials will provide further advice to me and the Minister of Defence on the implications of excluding operational service.

Compliance and Liability Framework

41 Improved health and safety duties are necessary but not sufficient to improve the health and safety system. There is also a need for appropriate consequences to follow from breach of those duties. Health and safety enforcement acts as a deterrent, both directly (an individual firm’s experience) and from the knowledge of others’ experience. Deterrence theory suggests that penalties need to be certain and proportionate to the benefits of non-compliance in order to be effective. There also needs to be a range of tools available to promote compliance without solely relying on prosecution.

Taskforce recommendation 11: that the government implement measures that increase the costs of

poor health and safety performance, including:

a. extending the existing manslaughter offence to corporations and revising the corporate liability framework that applies to all offences (including manslaughter)

b. stronger penalties and cost recovery

c. visible and effective compliance activity

42 The Minister of Justice is considering the recommendation to extend the existing manslaughter offence and will seek Cabinet decisions on any proposed changes in due course (likely by the end of July). The Minister of Justice has also proposed that a review of the general corporate liability framework be referred to the Law Commission.

43 Beyond the high-level recommendation outlined above, the Taskforce also made a number of recommendations about various ways to strengthen penalties and otherwise improve compliance in the body of their report. These are discussed below.

Stronger penalties

44 Adoption of the Model Law and Taskforce recommendations would result in a new tiered penalty regime and, overall, a significant increase in the maximum levels over the current law. These increases include a maximum penalty of $600,000 or 5 years imprisonment for a PCBU that commits the most serious offences involving reckless conduct that exposes people to serious risks. In my view, the penalty levels in the Model Law will be appropriate in a New Zealand context.

45 Under the current law, penalties issued by the Courts continue to be low. Fifty-five per cent of all fines imposed are less than $30,000 (12% of the maximum) and 92% are less than $50,000 (20% of the maximum). Low fine levels undermine the general deterrent effect and send signals that offending of this type is less serious and that workplace health and safety is not important.

46 The proposal will see the level of maximum fines increased to sanction and deter duty holders from breaching their workplace health and safety duties. The use of graduated categories of offences and penalties provides better guidance to the Courts about appropriate fine levels.

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47 The Taskforce recommended that consideration be given to including a further category of serious offending with higher maximum penalties that would apply where death results. The Taskforce noted that care would need to be taken to ensure this did not detract from how seriously the courts would treat other offences.

48 I do not consider that the new health and safety law should include such an additional tier. The Crimes Act already includes offences that are available in the most serious of cases, and joint charges could potentially be laid with health and safety prosecutions. Frequently the actual harm caused by a health and safety failure is no more than a matter of luck. In this respect (and noting that reparation orders are available to compensate for harm actually caused) there seems little distinction to be drawn between failures that result in death (or indeed, harm), and those that do not.

49 There is a real risk that departure from the Australian model to add an additional tier could have the perverse effect of lower tariffs for serious contraventions of the health and safety law.

50 I recommend implementing the categories of offences and penalties in the Model Law.

Crown organisations paying penalties

51 Currently Crown organisations can be convicted of an offence under the HSE Act but are not subject to fines. They can be required to pay the costs of the prosecution under the Costs in Criminal Matters Act or to pay reparation.

52 Under the Model Law, the Crown is subject to the same penalties as a body corporate. The Taskforce recommended adoption of this approach, so that Crown organisations are subject to penalties for breaches the same way as other duty holders.

53 As a result of the Cave Creek tragedy, the Crown Organisations (Criminal Liability) Act 2002 (COCLA) removed the Crown’s exemption from prosecution for offences under the Building Act 1991 and the HSE Act. The Crown Organisations (Criminal Liability) Bill (the Bill) as introduced made Crown organisations liable, on conviction for an offence, to the same penalties that could be imposed on any body corporate convicted of the same offence. These penalties included the imposition of fines, an award of reparation to a victim and remedial orders.

54 After considering submissions questioning the appropriateness of fining government departments, the select committee recommended amending the penalty provisions as far as fines are concerned. Submitters on the Bill raised two concerns. First, if a Crown organisation is held liable under the Act, then any fine it receives is payable to the Crown. This effectively creates a merry-go-round of Crown funds. Second, a Crown organisation may have to discontinue or curtail its activities because resources allocated for those activities are likely to be used to pay the fine. This may be contrary to the public interest.

55 The Ministry of Justice administers the COCLA and has considered the above arguments. It considers the current position defensible from a constitutional perspective and has no current plans to recommend amendments to the COCLA.

56 I recommend that Crown Organisations not be subject to fines for breaches of the Health and Safety at Work Bill.

The Regulator’s compliance tools

57 The Model Law provides for a range of compliance and regulatory tools, most of which are equivalent to tools in the HSE Act, while a few (most notably enforceable undertakings) are new. The regulator’s tools under the Model Law include powers to:

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a. issue guidance, warnings and make information available

b. enter workplaces for the purpose of informing and securing compliance and gathering information, supplemented by powers to obtain search warrants

c. issue improvement notices, prohibition notices, non-disturbance notices, and to take remedial action and seek injunctions where they are not complied with

d. accept enforceable undertakings from duty holders given in connection with a contravention or alleged contravention

e. issue infringement notices

f. bring prosecutions.

58 These compliance tools are all appropriate in a New Zealand context, consistent with Taskforce recommendations, and I propose that they are all adopted. There will need to be some divergences from the Model Law to reflect New Zealand conditions and practice. For example, I expect that some powers will be expressed to be held by the regulator rather than inspectors. The regulator must have sufficient oversight over how the regime is implemented, so powers should tend to be held by the regulator and delegated to inspectors rather than being held by individual inspectors. Care will also need to be taken to ensure that the ability to obtain search warrants does not limit inspectors’ ability to enter workplaces and carry out compliance and information-gathering functions efficiently and effectively.

59 The Model Law does not set out the detail of the infringement notice regime, as this is left to individual jurisdictions. The Model law does, however, provide for the infringement fee to be prescribed in the regulations, which must not exceed 20% of the penalty for the relevant offence. I propose that the infringement notice regime in the HSE Act is brought over into the new law with the necessary amendments, subject to two changes recommended by the Taskforce to make the regime more effective:

a. Currently infringement notices can only be issued after a formal warning has been given. This has resulted in few infringement notices being issued and is an unusual limitation. I agree with the Taskforce that the requirement to give a warning should be removed, and propose this.

b. The maximum infringement fee is currently $3,000 or $4,000 (depending on the type of contravention), which is low and is unlikely to be an effective deterrent. I propose that the approach to setting infringement fees in regulations is adopted from the Model Law.

60 The Model Law also provides a comprehensive system for review of the regulator’s decisions which I propose is adopted as part of the new law, subject to changes to reflect New Zealand conditions including the availability of judicial review. This system of review has significant overlap with a Taskforce recommendation that a regulatory challenge panel be established.

61 I recommend that the regulator’s compliance tools from the Model Law are adopted with necessary amendments.

Court Powers

62 The Taskforce has recommended powers relating to duty holders found by the court to have contravened their duties:

a. enabling (but not compelling) judges to make adverse publicity orders – the Model Law allows the court to require the offender to publicise in general, to specified people or specified classes of persons, the offence, its consequence and the penalty imposed and any other related matter

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b. publishing information about enforcement actions – the Model Law allows the regulator to make information about its enforcement actions publicly available, to enable the regulator to raise awareness of the consequences of breaching health and safety obligations

c. provide for compliance or restoration orders that resolve the consequences of a failure not just the cause – the Model Law enables the court to order the offender to take such steps as are specified in the order (in a specific period) to remedy any matter caused by the commission of the offence, so that the consequences of a failure are remedied as well as the cause.

63 I support these proposals. They will provide more flexible approaches to dealing with contraventions of the new law.

Address ill-gotten financial benefits from non-compliance with H&S legislation

64 The Taskforce recommended using the Criminal Proceeds (Recovery) Act 2009 to address ill-gotten financial benefits from non-compliance with health and safety legislation. That Act will apply to offences against the new health and safety law. The threshold for recovery in that Act is, however, high, being either offending that results in proceeds of over $30,000 or offending punishable by a maximum term of imprisonment of 5 years or more. This means that recovery is likely only in the most serious and clear-cut cases, which is appropriate.

Cost recovery mechanisms

65 The Taskforce recommended a mechanism be established which allows the regulator to recover its costs that directly relate to offending that has been proven beyond reasonable doubt. There is already provision for courts to order the payment of costs in criminal cases under the Costs in Criminal Cases Act 1967. However, such awards are rarely made in health and safety cases and, even when they are, the prescribed rate of $226 per half day in court does not begin to cover the full costs of a prosecution.

66 The level of cost recovery envisaged by the Taskforce would therefore require a specific power for the court to order an additional payment reflecting the regulator’s costs of a successful prosecution. While the order would remain discretionary, I agree that it would provide an additional method of ensuring that the system does not support the poor performance of the worst offenders.

67 I recommend that the new law include a power for the court to order that the offender pays the regulator’s costs in bringing a successful prosecution.

Nature of liability and private prosecutions

68 Contraventions of health and safety laws are entirely criminal in nature.3 It is not possible to bring proceedings for compensation for contravention of a health and safety obligation, and duty-holders will not be civilly liable to third parties for failure to comply with their statutory duties. It is possible, however for the court to order the payment of reparation under the Sentencing Act.

69 Enforcement by the regulator is the norm. There are, however, circumstances where the regulator may decide that a breach of a health and safety obligation should not result in a prosecution. The HSE Act recognises this by providing a limited power for private prosecutions. The Model Law does not allow private prosecutions, and only the regulator or an inspector (or in certain cases the director of public prosecutions) may prosecute.

3 This is true to the extent that proceedings for personal injury are barred under our Accident Compensation Act 2001. However,

a number of court cases, most notably that of Gilbert v Attorney-General [2002] 2 NZLR 342 have found that an obligation on the employer to take reasonable steps to provide a safe workplace is an implied term in an employment agreement, and a breach of this obligation may give rise to a personal grievance, and therefore potentially an award of compensation.

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70 I propose that the current rules in the HSE Act relating to private prosecutions are brought into the new law. This maintains the status quo, which appears to be working.

Move H&S prosecutions to the Employment Court

71 Currently workplace health and safety matters are heard in the District Court. District Court judges do not deal with health and safety cases regularly enough to develop specialist knowledge in the area. Data from the last 20 years indicates that a judge will hear an average of 15 HSE Act cases over that period of time. Thirty judges have only ever heard one HSE case, and 100 judges have heard fewer than 10. The two judges with the most HSE experience have presided over 72 cases each.

72 The Taskforce recommended developing specific health and safety capacity in the judiciary. It identified that one approach was to provide for a smaller group of judges to hear workplace health and safety cases in the Employment Court, and for the Employment Court to have an expanded jurisdiction so that it covers workplace health and safety.

73 I agree in principle that there would be a benefit in developing specific health and safety capacity in the judiciary. The Ministry of Justice is currently working on the Courts Reform Bill (working title – subject to change) which might amend where the Employment Court sits in the New Zealand Court structure. At this stage it is premature to decide if health and safety cases should be heard in the Employment Court or by specialist Withheld District Court.

74 I recommend that the Minister of Labour and Minster of Justice report back on how greater specialist health and safety capacity in the judiciary can be best achieved once the Courts Reform Bill has been fully developed and bef Withheldend of 2013.

Time frame for initiating court action

75 Time limits for commencing prosecutions ensure the regulator has incentives to expedite investigations and enable justice to be served and all parties to move on with their lives within a reasonable period. The Model Law (and the HSE Act) prescribe periods based on the time when the offence came (or should have come) to the notice of the regulator. Basing the time on discoverability rather than the date of contravention is important in relation to occupational health in particular, because contraventions can remain undetected for long periods.

76 Under the HSE Act, a prosecution must be initiated within six months of the date on which the circumstances relating to the offence first becomes known, or ought reasonably to have become known, to an inspector. In practice this timeframe has created problems for investigators who are sometimes unable to complete an investigation and initiate court action in otherwise meritorious proceedings. A recent review by the State Services Commission suggested that the timeframe be extended at least to twelve months.

77 The Model Law requires court action to be initiated within the latest of: two years of an offence first coming to the notice of the regulator, one year of a coronial report or inquest if it appears from the report that a health and safety offence has been committed, and six months of the contravention of an enforceable undertaking.

78 While the timeframes in the Model Law are longer than the HSE Act, they are, in almost every case, significantly shorter than would apply under the general rules in the Criminal Procedure Act 2011. Under the Criminal Procedure Act, the highest tier of offence proposed for breach of a duty would have no time limit, and the lowest tier would need to be commenced within five years of the commission of the offence (or later with consent).

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79 I recommend that the proposed Health and Safety at Work Bill include an extended period for initiating court action based on the Model Law.

Worker Participation

Problem Definition

80 Worker participation in health and safety matters in the workplace has been associated with better health and safety performance.

81 Our legislative framework for worker participation is less rigorous than overseas jurisdictions (particularly Australia). The HSE Act excludes businesses with fewer than 30 employees from the requirement to have a worker participation system (unless one is requested by a worker or union), and there are gaps in protections for workers who raise health and safety issues. The legislation focuses on “employee” rather than “worker” participation which disincentivises people in multi-employer environments from establishing sensible worker participation systems that involve all the workers present in the workplace. There is a smaller role for health and safety representatives than there is in Australia.

82 In addition, enforcement of the existing provisions on employee participation has been lacking.

Taskforce recommendation 3: that the government strengthen the legal framework for worker

participation, including through providing (based on the Model Law):

a) specific obligations for employers to support worker participation

b) expanded powers and responsibilities for worker health and safety representatives

c) stronger protections for workers who raise workplace health and safety matters.

Taskforce Recommendation 4: that the government ensure that the following actions occur to

support effective worker participation:

a the new agency should include in regulations, approved codes of practice (ACoPs) and guidance material more specific requirements for how worker participation is expected to occur

b the new agency should provide increased support for worker participation, including increased support for:

i. worker health and safety representatives

ii. workers who raise workplace health and safety matters, including either confidentially or anonymously

iii. unions’ existing rights of entry.

Comment

83 I agree with the Taskforce that we can and should lift the current worker participation requirements to help drive better outcomes in the workplace. I also agree that there are aspects of detail in the Model Law that are neither necessary nor appropriate in the New Zealand context. For this reason, worker participation would be one of the main areas in which the new Health and Safety at Work Bill diverges from the Model Law. However, most of the divergence will be in relation to the level of prescription and where particular requirements sit (i.e. legislation, regulation and ACOPs). In the main, similar outcomes are still being sought.

In Confidence


84 As with the Model Law framework, the worker participation system should include a general duty to involve and consult workers on health and safety matters. All PCBUs will be required to have worker participation practices that are appropriate to the workplace. This is a change from the current requirements where only workplaces with more than 30 employees, or where a worker or union has requested it, have to have worker participation systems.

85 This will mean that for all workplaces:

a. If the workers want to have health and safety representative/s, the duty-holder must consult the representative/s, allow them time off for training within three months of being requested, pay for that training, provide time and resources to perform their role, and give them information.

b. The legislation will specify powers and functions for representatives and committees, including the powers for trained health and safety representatives to direct unsafe work to cease (balanced by safeguards against improper use) and issue a Provisional Improvement Notice to a person they believe is contravening the Act.

c. If the workers and/or PCBU want to have a health and safety committee, workers must make up at least half of the committee, the PCBU must consult the committee, the PCBU must allow the committee time to perform its role and the PCBU must give the committee information.

86 Approved Codes of Practice and regulations will be developed to provide guidance for representatives, committees and PCBUs about how the worker participation provisions apply to them. These will include materials targeted at smaller workplaces. I recognise that small firms are less likely to have representatives or committees for workplace health and safety and will need to consult and involve their workers in other more informal ways; this will be acceptable under the law. In consultation with the relevant sectors, WorkSafe will be able to work on regulations, ACoPs and guidance on worker participation in specific industries (such as high-hazard industries), if these are seen to be necessary and appropriate.

87 These proposals will result in increased expectations on PCBUs to consult and involve workers, along with more clarity about how effective worker participation systems can be developed and maintained within different workplaces. For workplaces with worker representatives and committees, those representatives and committees will have greater powers and responsibilities.

Proposed divergences from the Model Law

88 I agree with the Taskforce that we should not adopt some of the detail in the Model Law, such as provisions on establishing designated work groups. I consider these procedural details are unnecessarily prescriptive for our legislation and could impose unnecessary compliance costs on businesses. Procedural details (for example election processes) could sit in regulations or guidance rather than in the Act. Officials are reviewing whether other details such as health and safety representatives’ term of office should be omitted, or if doing so would have implications for other provisions being adopted from the Model Act.

89 The Taskforce recommended adopting the Model Law’s powers and functions for health and safety representatives, with a small change: the right of health and safety representatives to be present at interviews of workers or groups of workers should be subject to agreement from not only the worker, but also the inspector. I agree with this change, and also recommend one more. I favour maintaining the useful provision in our existing legislation that gives health and safety representatives a role in promoting the interests of workers who have been harmed at work, including in relation to arrangements for rehabilitation and return to work.

In Confidence


90 The Model Law includes strong protections against discrimination for workers who raise health and safety issues with PCBUs. I agree with the Taskforce about the importance of protecting workers in this manner to support a more robust workplace health and safety system. Workers need to feel safe to raise their concerns about workplace safety so that they can be addressed to prevent harm occurring. I propose that the new law include an offence, based on the Model Law, that applies to a person who discriminates against a worker in relation to a health and safety matter.

91 Under the Model Law, discrimination in relation to health and safety matters can also give rise to civil proceedings, such as injunctions, compensation and reinstatement.

92 In the case of employer/employee relationships, the Employment Relations Act 2000 (ERA) already provides a mechanism for resolving disputes. The ERA allows an employee to take a personal grievance under s103(1)(a) of the Employment Relations Act 2000 if he or she is disadvantaged or dismissed due to taking part in industrial action on the grounds of safety and health, raising a health and safety concern, refusing unsafe work (under s28A of the HSE Act) or representing other workers on health and safety issues.

93 The ERA remains the best vehicle for resolving disputes between employees and employers. However, workers who are not employees cannot access the ERA mechanisms and employees will have difficulty accessing them where the alleged discrimination is not by their employer.

94 I propose that this gap is filled by introducing anti-discrimination provisions in relation to the raising of health and safety issues that apply in the case of a dispute between workers and PCBUs based on the rules in the ERA. Officials will work with the Parliamentary Counsel Office to determine the best mechanism to achieve the policy intent. Consequential amendments to the Employment Relations Act will be necessary regardless, to refer to the new health and safety regime and to make the existing protections more explicit and visible.

95 I agree with the Taskforce’s view that our existing rights of access for unions under the ERA are adequate as long as these rights are not unreasonably withheld. I therefore recommend that we do not adopt the Model Act’s provisions on workplace health and safety entry permits.

Major Hazard Facilities

Problem definition

96 The current lack of explicit regulation of facilities that store and process large quantities of dangerous substances — having the potential to cause a major accident — does not provide the public with confidence or assurance that the risks associated with these ‘major hazard facilities’ are being adequately controlled by operators, monitored and regulated.

97 Major hazard facilities typically include chemical manufacturing sites, oil refineries, gas processing plants, liquid petroleum gas facilities, and other manufacturing and storage depots. Major accidents at such facilities are broadly described as being high consequence and low frequency events having the potential to cause multiple injuries and fatalities to members of the workforce on-site and members of the public in surrounding areas, as well as substantial economic, property, and environmental damage.

In Confidence


98 Controls that are stricter than those generally found in general workplace health and safety legislation are often used by governments to regulate major hazard facilities. The United Kingdom first introduced regulations for the control of risks associated with major accident hazards at these facilities in 1984 (based on the European ‘Seveso’ Directive), and subsequently replaced them with upgraded regulations in 1999. Australia introduced similar regulations in 1996, and upgraded those requirements in 2011 through new regulations.

99 There have been several major accidents at facilities in Europe, the United Kingdom, and Australia in recent years that have reinforced the ongoing need for effective regulatory oversight of major hazard facilities. For example:

a. In 2001 a fertiliser factory in Toulouse, France, exploded killing 30 people, critically wounding 50 people, seriously injuring 2,500 people, and lightly injuring many thousands. The explosion destroyed the factory and left a crater 200 metres wide and 30 metres deep. The explosion reportedly generated a shock wave which blew out two-thirds of the windows in Toulouse (a city larger than the greater Wellington region) and left over 4,000 citizens homeless. The explosion occurred when 500kg of sodium dichloroisocyanurate (a chemical commonly used as a disinfectant) was mistakenly added to 300 tonnes of ammonium nitrate (i.e. agricultural fertilizer). In warm, damp conditions these chemicals mixed and produced a highly-unstable by-product, nitrogen dichloride. The decomposition of the nitrogen dichloride had the requisite concussive and heat energy to ignite the remaining ammonium nitrate causing the massive explosion.

b. In 1998 an explosion at the Esso Longford gas plant in Victoria, Australia resulted in the loss of two lives and eight serious injuries, a fire that lasted for two days, and the gas supply to south-eastern Australia being cut off for almost three weeks. The cost to the Victorian economy was estimated to be more than $1 billion.

Taskforce recommendation 8: strengthening the regulatory regime for managing the risks of major

hazard facilities by:

a) mapping the risk landscape around potential catastrophic failure;

b) developing criteria and prioritising types of major hazard facility for inclusion in the major hazard facilities’ regulatory framework;

c) ensuring that robust regulatory requirements, based on international best practice, apply to all priority facilities; and

d) building the new agency’s capacity to provide rigorous regulatory oversight and ensure compliance with the new regulatory framework.

Comment

100 I support all four recommendations made by the Taskforce in relation to major hazard facilities. Under the Model Law, legal requirements for the safe operation of these facilities are imposed at regulation level, rather than by the primary Act. I therefore propose making regulations, before January 2015, based on international best practice to prevent and mitigate the effects of major accidents at large chemical production and storage facilities; downstream petroleum facilities (e.g. oil refineries, tank farms, and gas processing plants); and other facilities (e.g. fertiliser plants, pulp and paper mills) that store or process very large quantities of dangerous substances.

101 The key high-level design features of the regulation include:

In Confidence


a. A facility or proposed facility would automatically be classified as a major hazard facility and subject to the regulations, where very large quantities of particular dangerous substances are (or will be) processed, handled, or stored on site. Early estimates are that there may be up to 60 of these facilities in New Zealand (e.g. the oil refinery at Marsden Point, the methanol production plant at Motunui). The types of dangerous substances captured by the regime and the corresponding threshold quantities applied would be based on thresholds set by existing major hazard facility regulation in Europe (the ‘Seveso’ Directive), the United Kingdom, and Australia.

b. A facility or proposed facility that holds (or will hold) more than 10 per cent of the threshold quantity may be subject to an inquiry by WorkSafe to determine whether the facility should be classified as a major hazard facility and subject to the regulations.

c. WorkSafe would:

i. consider whether there is potential for a major accident to occur at the facility or proposed facility having regard to the following matters;

The quantity or combination of dangerous substances present or likely to be present at the facility. The likelihood that an inquiry will be held would be greater for those facilities where the quantity of dangerous substances is close to the threshold, or if inherently unstable or mutually incompatible substances are present in significant quantities.

The type of activities within the facility involving dangerous substances. Where the activities conducted at the facility are in some way intrinsically of higher hazard, then the likelihood of the facility being determined to be a major hazard facility will be greater. For example: if substances are stored in relatively large closely grouped tanks; if the process has the potential to generate by-products of extreme toxicity; if the process involves extremes of temperature and/or pressure; and if the process is complex, requiring advanced engineering controls to ensure safety.

The land use and other activities in the area surrounding the facility. The potential consequences of an incident at a facility in a high-density residential area would be higher than if the facility were in a remote non-residential area. Similar concerns exist where there is the potential for escalation of any major incident to neighbouring facilities.

ii. consider any submission made by the facility operator and consult with interested parties, for example health and safety representatives at the facility, local emergency services, and territorial authorities; and

iii. following the inquiry, possibly designate the facility as a major hazard facility.

d. Once a facility or proposed facility is designated as a major hazard facility, the operator of the facility would be required to:

i. prepare a safety case (containing details of the dangerous substances, the facility, the management system, the potential for major accidents, and the measures to be taken to prevent, control and mitigate the effects of major accidents) and submit it to the regulator for assessment;

ii. prepare and implement an emergency response plan, in consultation with emergency services and the relevant territorial authority;

iii. investigate any dangerous occurrence (an incident that could be regarded as a ‘near miss’ for a major accident) and report to the regulator on the outcome of the investigation; and

In Confidence


iv. involve members of the workforce in the preparation and review of the safety case, safety management system, and emergency response plan.

e. WorkSafe would have powers to prohibit the operation or bringing into operation of a major hazard facility (or any part of a major hazard facility) where the measures taken by the operator for the prevention and mitigation of major accidents are seriously deficient.

102 I consider that it is likely to be more efficient and effective if WorkSafe (rather than Ministers) make the individual designation decisions. WorkSafe will conduct the inquiry and so have access to the relevant information and have the expertise. It also ensures the process is consistent with Australia.

103 This proposed regime is very similar to that set out in the Australian Model Regulations. The major difference is that the above proposal stops short of the Australian requirement that major hazard facilities are licensed by the regulator. The Taskforce did not propose licensing. Licensing would be a significant step that I do not recommend adopting at this time.

104 The high thresholds will mean that the regime affects a small number of facilities. For example, if the Australian thresholds are used, a fertiliser facility would be a major hazard facility if it held more than 5,000 tonnes of ammonium nitrate. It would become subject to potential designation if it held more than 500 tonnes – in itself a large amount of fertiliser.

105 It is equally important, however, that WorkSafe’s designation decisions are subject to appropriate checks and balances. I believe that these checks and balances are best implemented by:

a. providing for a list of exclusions from designation to be set out in the regulations, enabling Cabinet to limit WorkSafe’s ability to make designations. This list could be changed over time, and have prospective effect even where WorkSafe had made a designation.

b. making WorkSafe’s designations deemed regulations, and so subject to oversight by the Regulations Review Committee. The Regulations Review Committee is likely to take a close look at WorkSafe’s designations if it receives a complaint from an operator, particularly about an unusual or unexpected use of powers, or WorkSafe’s compliance with consultation procedures prescribed in the regulations.

c. ensuring the process WorkSafe must follow is robust, the criteria clear, and that it is not able to take designation decisions lightly. WorkSafe will be subject to judicial review, so will need to ensure its decision-making is procedurally fair and meets legal rules.

106 I also propose that the Health and Safety at Work Bill allows for the costs associated with regulating major hazard facilities to be separated out and (more) directly recovered from the facility operators. Use of differentiated levies and/or direct charging for services, i.e. safety case assessment, are considered appropriate to recover the disproportionate cost of providing regulatory oversight of major hazard facilities.

107 Concurrent to the process to develop the proposed regulations MBIE’s Health and Safety Group will map the risk landscape and define the jurisdictional responsibilities of different regulators (e.g. the interface of the health and safety regulator with territorial authorities responsible for land use planning processes) in relation to New Zealand’s existing stock of major hazard facilities by December 2013.

108 I propose that WorkSafe would then:

In Confidence


a. promote existing obligations, including the Approved Code of Practice for Managing Hazards to Prevent Major Industrial Accidents, and carry out compliance monitoring against those obligations until the proposed regulations are implemented;

b. engage with territorial authorities on the land use planning implications associated with proposed major hazard facilities, and existing or proposed developments in the vicinity of existing major hazard facilities;

c. develop guidance material and codes of practice, in the period June 2014 to June 2016, to clarify its expectations and support duty holders to comply with the proposed regulations; and

d. build capacity and capability within the High Hazards Unit to execute a comprehensive compliance strategy, informed by the risk landscape mapping and new regulatory requirements. Initial inspection and standard setting resources should be in place from June 2014, building up to full capacity by June 2017.

109 The proposals will result in stronger management of hazards at major hazard facilities throughout New Zealand and improved regulatory oversight, with the objective of reducing the likelihood of a major accident occurring. If successful, this will provide benefits to Government and facility operators in terms of avoided costs associated with a major accident. For example, costs associated with fatalities and serious injuries, costs incurred by emergency services, costs associated with any resulting Commission of Inquiry, costs needed to repair or rebuild the facility and recommence operations, costs needed to repair and/or rebuild property and infrastructure surrounding the facility, costs associated with remediating any damage to the environment, and costs associated with lost production. This will also provide benefits from prevention of disruption to economic activity.

110 Operators of major hazard facilities (proposed and existing) are likely to incur additional costs associated with the preparation of safety cases. For proposed facilities, the safety case process will enable risks to be eliminated at source during the design stage and prevent costly retrospective or mitigating action to minimise the risks once the facility is built.

111 Operators of existing major hazard facilities who already have effective controls (plant, equipment, safety management systems, procedures, and people) in place to prevent the occurrence of a major accident are expected to incur marginal compliance costs as a result of this proposal. Operators of existing major hazard facilities that need to carry out significant remedial work to improve the effectiveness of their controls are expected to incur more significant costs.

Provision for data sharing among agencies

112 There are constraints on the ability of Government agencies involved in workplace health and safety to share data and information, particularly if that information is to be used for intelligence gathering and enforcement. MBIE is considering the mechanisms which might be available to make effective use of data sharing arrangements, including consideration of appropriate checks and balances in the use of any information. To progress this issue, further work will need to be undertaken in consultation with the office of the Privacy Commissioner. Experience in other areas across government indicates that there may need to be specific legislative mandate provided for data sharing in law enforcement activities, in particular.

In Confidence


113 MBIE will report to me further on the issues and options for information sharing provisions, in October 2013. Its work will be undertaken in conjunction with ACC, the Ministry of Health and the relevant transport agencies. If legislative amendments are required as part of the proposed Health and Safety at Work Bill, I will report to Cabinet with proposals for consideration.

Regulations, ACOPs and guidance

Problem definition

114 The Taskforce identified the lack of general awareness of health and safety issues by business owners, directors, managers and workers as a fundamental problem with the way that the current health and safety system operates. System participants need to be able to recognise poor health and safety practices when they encounter them and business owners, directors and managers need to know what their responsibilities are and how they can comply with them. Workers need to know how they can ensure their own safety, health and wellbeing. The Robens model contemplates that regulations and guidance from the regulator will provide this clarity and certainty, however this aspect of the system was never effectively implemented in New Zealand – there are a limited number of ACoPs and guidance has been inconsistently developed.

115 There are also particular problems with ACoPs and guidance relating to the Hazardous Substances and New Organisms Act – current controls are complex and not integrated into workplace health and safety requirements and there is insufficient guidance for businesses about how what they need to do to comply with requirements (see companion paper: Improving Health and Safety at work: Occupational health and management of hazardous substances).

Taskforce recommendation 12 ensure the new agency implements a comprehensive set of

regulations, ACoPs and guidance material that clarifies expectations of PCBUs, workers and other

participants in the system.

Comment

116 In order to address the uncertainty and regulatory gaps that exist as a result of the incomplete implementation of the Robens model to date in New Zealand, it is critical that we take steps to ensure the regulation is effectively implemented. This means that regulations, guidance and ACOPs will need to be developed to provide PCBUs and workers with certainty about how the law and regulations will apply to them, without being unnecessarily prescriptive. This will not only promote better health and safety outcomes, but will make compliance easier for businesses.

117 I recommend that regulation-setting should be led by MBIE, with involvement of WorkSafe. It is anticipated that 15 sets of regulations will need to be developed, of which three can be adapted from existing Regulations under the HSE Act, 10 can be substantially adapted from the Model Law and some will need to be developed from scratch (such as regulations for geothermal operations).

In Confidence


118 The setting of ACOPS and development of guidance material will be a core function of WorkSafe. Based on the Australian experience, I anticipate that up to 20 ACOPs (outlining preferred practices in core sectors or to manage hazards) and a range of associated guidance material will need to be developed before the new Act comes into effect (or very soon after). Guidance material will be particularly important in helping duty holders to come to grips with key concepts contained within the new law, such as PCBU, and reasonable practicability. The ACOPs and guidance developed to support the Model Law can be used as a basis for this work, with adaptations for New Zealand conditions as necessary. In a minority of cases, New Zealand-specific publications will need to be developed. WorkSafe will need to dedicate significant resource to the development and maintenance of ACOPs and guidance on an on-going basis. Other agencies are likely also to need to review and maintain guidance material.

119 It will be important for stakeholder buy-in and technical accuracy that WorkSafe has the mechanisms and resource to contribute to stakeholder participation in the development of the ACOPs and guidance and regulations. Recommendations for resourcing stakeholder participation in the development of ACoPs, regulations and guidance are included in the companion paper Improving Health and Safety at Work: Overview.

Consultation

120 Consultation on the package of proposals is discussed more fully in the Cabinet paper Improving Health and Safety at Work: Overview.

121 The Treasury, State Services Commission, Civil Aviation Authority, Maritime New Zealand, New Zealand Police, New Zealand Transport Agency, the Transport Accident Investigation Commission, the Tertiary Education Commission, New Zealand Qualifications Authority, Te Puni Kōkiri, Environmental Protection Authority, and the Ministries of Health, Justice, Transport, Education, Women’s Affairs, Pacific Island Affairs, Defence, Internal Affairs, Foreign Affairs, Primary Industries, and Environment have been consulted on proposals in this paper. The Department of Prime Minister and Cabinet was informed.

Financial implications

122 Financial implications arising from the package of proposals are discussed in the Cabinet paper Improving Health and Safety at Work: Overview.

Human Rights

123 Legislation resulting from this paper's proposals may engage the rights and freedoms of the New Zealand Bill of Rights Act 1990 ('the Bill of Rights Act') but are likely to be consistent with the Bill of Rights Act because they are justified under section 5 of that Act. A final view as to whether the proposals comply with the Bill of Rights Act will be made once the Health and Safety at Work Bill is drafted.

Legislative implications

124 This paper proposes enactment of a Health and Safety at Work Bill and the making of associated regulations regulating major hazard facilities. The new law will replace the HSE Act and Machinery Act and make amendments to a number of other Acts to give effect to the decisions in this paper and the companion papers making up the suite of Cabinet papers.

125 The Health and Safety at Work Bill has a legislative priority of Category 4 (to be referred to select committee in the year) in the 2013 legislation programme.

In Confidence


126 Based on the Australian experience, I anticipate that up to 15 sets of regulations will need to be in place before the new Act comes into effect. Of these, it is likely that three should be brought over from the existing HSE framework, essentially as is. A further 10 can be adopted from Australian Model Regulations and adapted for New Zealand conditions through consultation. Some regulations are likely to need to be developed from scratch (e.g. geothermal).

Regulatory Impact Analysis

127 The regulatory impact analysis undertaken for the package of proposals is discussed in the Cabinet paper Improving Health and Safety at Work: Overview.

Publicity

128 Publicity is discussed in the Cabinet paper Improving Health and Safety at Work: Overview.

RECOMMENDATIONS

The Minister of Labour recommends that the Committee:

Content of Health and Safety at Work Bill

1. Agree that the Health and Safety and Employment Act 1992 (HSE Act) and Machinery Act 1950 be replaced through the enactment of a new Health and Safety at Work Bill

2. Agree that the Health and Safety at Work Bill should adopt the Australian Model Work Health and Safety Act, with such adaptations as are necessary or desirable to:

2.1. give effect to Cabinet’s policy decisions, such as in respect of worker participation

2.2. take account of differences in the New Zealand context, including the Bill of Rights Act, Accident Compensation Act, Employment Relations Act, search and surveillance regimes, different criminal regimes, and other matters including differences in drafting style

2.3. take account of lessons learnt in Australia, including in implementing the Model Law in individual States and Territories in Australia

3. Agree that the key features of Australian Model Work Health and Safety Law (Model Law) that should be adopted include:

3.1. a primary health and safety duty on a person conducting a business or undertaking (PCBU), supplemented by specific duties for designers, manufacturers and suppliers etc, and a due diligence duty for officers

3.2. requiring the PCBU to ensure, so far as is reasonably practicable, the health and safety of workers while at work in the business or undertaking

3.3. new categories of offences and higher penalties

3.4. new compliance and enforcement tools such as enforceable undertakings and adverse publicity orders

4. Agree that the Health and Safety at Work Bill explicitly cover the NZDF, including naval ships, while excluding personnel on operational service

In Confidence


5. Note that officials will provide further advice to the Minister of Labour and Minister of Defence on the implications of excluding operational service

6. Agree that Crown organisations should continue not to be subject to fines for contraventions of health and safety law

7. Agree that the Health and Safety at Work Bill include a power for the court to order the offender to pay the regulator’s costs in bringing a successful prosecution

8. Agree that the infringement notice regime in the current HSE Act should be included in the Health and Safety at Work Bill, with changes to omit the requirement to first give a warning and to adopt the process for setting the infringement fee from the Model Law

9. Agree that the new law should carry over rules that provide for private prosecution from the HSE Act

10. Invite the Minister of Labour and Minister of Justice to report back by December 2013 on how greater specialist health and safety capacity in the judiciary can be best achieved and implemented through the Health and Safety at Work Bill

11. Agree that the limitation period for commencing prosecutions should follow the Model Law, so that proceedings must be initiated within the latest of two years of an offence first coming to the notice of the regulator, one year of a coronial report or inquest if it appears from the report that a health and safety offence had been committed, and six months of the contravention of an undertaking

12. Agree that, in relation to worker participation, the new Health and Safety at Work Bill should:

12.1. place an obligation on all PCBUs to consult with workers on health and safety matters that affect them, so far as is reasonably practicable, and require all PCBUs to have worker participation practices appropriate to their workplace

12.2. require that if the workers want to have health and safety representative/s, the PCBU must consult the representative/s, allow them time off for training within three months of being requested, pay for that training, provide time and resources to perform their role, and give them information

12.3. require that if the workers and/or PCBU want to have a health and safety committee, workers must make up at least half of the committee, the PCBU must consult the committee, the PCBU must allow the committee time to perform its role and the PCBU must give the committee information

12.4. provide health and safety representatives and committees with the powers based on those provided under the Model Law, including the right for trained health and safety representatives to direct unsafe work to cease (with safeguards against improper use) and to issue a Provisional Improvement Notice to a person they believe is contravening the Act

13. Agree that, in relation to worker participation, the Health and Safety at Work Bill should not:

13.1. provide for a system of workplace entry permit holders

13.2. require PCBUs to develop an issue resolution procedure

13.3. include procedural details that would be better placed in regulations or guidance, such as details about establishing designated work groups

In Confidence


14. Note that, under the Employment Relations Act 2000 (ERA), employees may take a personal grievance against an employer who discriminates against them for health and safety reasons, but non-employees cannot access these protections

15. Agree that the ERA should continue to provide the basis for resolving disputes between employers and employees relating to discrimination in relation to health and safety issues

16. Note that consequential amendments to the ERA will be necessary to make the protections more explicit and visible and to refer to the new health and safety regime

17. Agree that new anti-discrimination provisions be implemented through the Health and Safety at Work Bill that cover disputes between workers and PCBUs outside the employer/employee relationship in relation to discrimination relating to health and safety matters

Major hazard facilities

18. Note that major hazard facilities store and process large quantities of dangerous substances that have the potential to cause a major accident

19. Note that the current regime for regulating major hazard facilities under the HSE Act does not provide the public with a high level of assurance that the risks are adequately controlled by operators, or monitored and regulated by the regulator

20. Agree that regulations for major hazard facilities be made under the Health and Safety at Work Bill with the following features:

20.1. a facility or proposed facility will automatically be a major hazard facility if quantities of particular dangerous substances are (or will be) processed, handled, or stored on site that exceed (high) thresholds prescribed in the regulations

20.2. WorkSafe may designate a facility or proposed facility which holds (or will hold) more than 10 percent of the threshold quantity as a major hazard facility, following an inquiry that considers the potential for a major accident to occur at the facility or proposed facility (having regard to quantity or combination of dangerous substances, the type of activities at the facility and the surrounding land use) and submissions from the operator and interested persons

20.3. Major hazard facilities must:

20.3.1. prepare a safety case for assessment by the regulator

20.3.2. prepare and implement an emergency response plan, in consultation with emergency services and the relevant territorial authority

20.3.3. investigate any dangerous occurrence and report to the regulator on the outcome of the investigation

20.3.4. involve members of the workforce in the preparation and review of the safety case, safety management system, and emergency response plan

20.4. WorkSafe will be able to prohibit the operation (or bringing into operation) of a major hazard facility (or any part) where the measures taken by the operator for the prevention and mitigation of major accidents are seriously deficient

21. Agree that WorkSafe’s decisions to designate major hazard facilities agreed above will be subject to the following checks and balances:

In Confidence


21.1. the regulations will provide for a list of exclusions from designation to be set out in the regulations

21.2. designations will be deemed regulations, and subject to oversight by the Regulations Review Committee

21.3. WorkSafe will be required to follow a robust process and consult the affected persons, and will be subject to judicial review.

22. Note that the MBIE is currently working on mapping the risk landscape and jurisdictional responsibilities of different regulators, in relation to New Zealand’s existing stock of major hazard facilities, and expects that work to be completed by December 2013

23. Agree that MBIE and subsequently WorkSafe should promote compliance with obligations (including the Approved Code of Practice for Managing Hazards to Prevent Major Industrial Accidents) and carry out monitoring against those obligations until the proposed regulations are implemented

24. Agree that the Health and Safety at Work Bill include provisions for the costs associated with regulating major hazard facilities to be recovered from the facility operators

Data sharing among agencies

25. Agree in principle that data sharing among agencies with roles in the workplace health and safety system should be facilitated through the Health and Safety at Work Bill, subject to appropriate privacy protections

26. Invite the Minister of Labour to report back to Cabinet seeking approval of specific mechanisms for information sharing that may be required to be implemented through the Health and Safety at Work Bill

Drafting of Health and Safety at Work Bill and associated regulations

27. Note that the Health and Safety at Work Bill has a legislative priority of Category 4 (to be referred to select committee in the year) in the 2013 legislation programme

28. Invite the Minister of Labour to instruct the Parliamentary Counsel Office to draft a Health and Safety at Work Bill and regulations regulating the operation of major hazard facilities to be made under the Bill

29. Authorise the Minister of Labour to make decisions on detail and to make changes, consistent with the policy framework in this suite of papers, on any issues that arise during the drafting process

30. Authorise the Minister of Labour to release an exposure draft of the Health and Safety at Work Bill and major hazard regulations for public comment if the timeframe permits

31. Agree that MBIE will administer the Health and Safety at Work Act, and as the administering agency, will lead advice to Ministers on statutory regulations to be made under the new Act

32. Note that MBIE and WorkSafe will need to work closely in the development of regulations

In Confidence


33. Agree that WorkSafe will lead the development of Approved Codes of Practice under the new Act, and have responsibility for issuing guidance relating to the new Act

Hon Simon Bridges Minister of Labour

_____/_______/______

In Confidence


APPENDIX

INTERPRETIVE GUIDELINE – MODEL WORK HEALTH AND SAFETY ACT

THE MEANING OF ‘PERSON CONDUCTING A BUSINESS OR UNDERTAKING’

INTERPRETIVE GUIDELINE—MODEL WORK HEALTH AND SAFETY ACT

THE MEANING OF ‘PERSON CONDUCTING A BUSINESS OR UNDERTAKING’

This document provides guidance on the interpretation and application of the concept of a ‘person conducting a business or undertaking’ used in the Work Health and Safety (WHS) Act and Regulations.

The WHS Act places the primary duty of care and various other duties and obligations on a ‘person conducting a business or undertaking’ (PCBU). The meaning of a PCBU is set out in section 5 of the WHS Act.

This is a broad concept used to capture all types of modern working arrangements. A ‘person’ may be an organisation or an individual

A ‘person’ is defined in laws dealing with interpretation of legislation to include a body corporate (company), unincorporated body or association and a partnership.

An individual is also a ‘person’, but will only be a PCBU where that individual is conducting the business in their own right (as a sole trader or self-employed person). Individuals who are in a partnership that is conducting a business will individually and collectively be a PCBU.

Section 5 (4) of the WHS Act makes it clear that an individual is not a PCBU if they are involved in the business or undertaking only as a worker or officer of the business or undertaking.

The Crown is also a person for the purposes of the WHS Act. The Crown may conduct a business or undertaking through its departments and statutory agencies.

What is a ‘business’ or ‘undertaking’?

The WHS Act does not define a ‘business’ or ‘undertaking’.

Whether a person conducts a business or undertaking is a question of fact to be determined in the circumstances of each case. The following table identifies the usual meaning of these terms:

Businesses

enterprises usually conducted with a view to making a profit and have a degree of organisation, system and continuity

Undertakings may have elements of organisation, systems, and possibly continuity, but are usually not profit-making or commercial in nature

The WHS Act states that a person conducts a business or undertaking whether it is conducted alone or together with others, and whether or not it is conducted for profit or gain.

The concept of ‘work’ is relevant to identifying what is a business or undertaking

The duties of a PCBU are all associated with the carrying out of work. The definition of a ‘workplace’ is a place where work is carried out for a business or undertaking and includes any place where a worker goes, or is likely to be, while at work. The definition of a ‘worker’ is a person who carries out work in any capacity for a person conducting a business or undertaking.

The WHS Act also places duties on PCBUs who carry out the following activities associated with work or workplaces:

Section 20 – management or control of a workplace

Section 21 – management or control of fixtures, fittings or plant at a workplace

Sections 22-25 – design, manufacture, import or supply of plant, structures or substances that are, or could be used at a workplace

Section 26 – install, construct or commission plant or structures that are, or could be used at a workplace

What is work for the purposes of the model WHS Act?

What is ‘work’ is not defined in the WHS Act and must be given its ordinary meaning. The following criteria may assist in determining if an activity is work for the purposes of the WHS Act:

1. the activity involves physical or mental effort by a person or the application of particular skills for the benefit of another person or for themselves (if self-employed), whether or not for profit or payment;

2. activities for which the person or other people will ordinarily be paid by someone is likely to be considered to be work;

3. activities that are part of an ongoing process or project may all be work if some of the activities are for remuneration;

4. an activity may be more likely to be work where control is exercised over the person carrying out the activity by another person; and

5. formal, structured or complex arrangements may be more likely to be considered to be work than ad hoc or unorganised activities.

The activity may be work even though one or more of the criteria are absent or minor.

Work does not include activities of a purely domestic, recreational or social nature. Organisations who also do things other than of a social, domestic or recreational nature would be PCBUs but would only owe duties in relation to ‘work’ and only so far as is reasonably practicable.

Examples of a business or undertaking

A retailer

A wholesale business

A manufacturing business

An importer that is on-selling the imported goods

An owner-driver of their own transport or courier business

A fast food franchisor and the operator of the fast food outlet (the franchisee)

A self employed person operating their own business

A government department or government agency

A local council

A school

Partnerships and unincorporated joint ventures. Where the partnership or joint venture is unincorporated, each partner is a person conducting the business or undertaking of the partnership or joint venture.

A builder (including principal contractors and sub-contractors)

A not-for-profit organisation that engages and pays administrative staff

A clothing manufacturer employing outworkers

There may be multiple businesses or undertakings and therefore multiple PCBUs involved in work at the same location. For example:

The owner of a multi-tenanted shopping centre, the manager of the shopping centre, each of the businesses operating from shops in the shopping centre and those carrying out ancillary activities such as cleaning, security and shopping trolley collection.

The principal contractor on a construction site, sub-contractors engaged by the principal contractor, sub-contractors engaged by the sub-contractors (including self-employed contractors), along with the client engaging the principal contractor.

A service station owner, the service station operator (if different from the owner), the mechanic (if running a separate business), the PCBU carrying out the supply of gas cylinders to the public at the service station and the operator of an attached fast-food outlet.

A single business or undertaking may also operate at multiple locations.

Where work requires approval from the relevant building regulator an owner-builder may be a PCBU and owe duties to any workers or other persons at the workplace. In some circumstances where a landlord is carrying out work on an investment property that creates a risk to health and safety to other persons at the property they could also be a PCBU.

What is not a ‘business’ or ‘undertaking’

The WHS Act and Regulations identify specific organisations that are not considered to be a PCBU for the purposes of the WHS Act. For example, the model Act provides that a volunteer association does not conduct a business or undertaking. (For further information in relation to volunteer organisations, refer to the Safe Work Australia volunteer fact sheets and frequently asked questions).

Section 5(4) of the WHS Act excludes a worker (such as an employee) and an officer (such as an executive manager) from being a PCBU in that capacity alone.

Also, elected members of local authorities, who are acting in that capacity, do not conduct businesses or undertakings.

The WHS Act allows further exclusions to be made by regulation. At this stage, the WHS Regulations exclude ‘strata title bodies corporate that are responsible for common areas used only for residential purposes’, unless the strata title body corporate engages one or more workers as an employee.

Private or domestic purposes

The regulators consider that the intent of the legislation is that the following kinds of persons should not to be taken to be PCBUs:

Individuals who carry out domestic work in and around their own home (e.g. domestic chores etc).

Individuals such as home-based foster carers who care for foster children.

Individual householders who organise one-off events such as dinner parties, garage sales, lemonade stalls etc.

Individual householders who engage persons to carry out ad hoc home maintenance and repairs or other domestic work, e.g. casual babysitters; tradespeople to undertake repairs. It is important to note that a tradesperson will either be a worker for a business or undertaking, or a business or undertaking in their own right if the tradesperson is self-employed.

An individual householder may have the duties of a PCBU if they engage a worker, for example, employing a nanny to care for children in the householder’s home. While the householder is not employing the worker as part of a business, employing the worker to carry out certain duties at the home is regarded as an ‘undertaking’. Consequently, the householder has a duty of care as a PCBU and the person employed by the householder has the worker’s duty of care under the WHS Act.

A householder may also be a PCBU if ‘work’ is carried out by or for them that is not purely domestic, but is part of a business or undertaking conducted by them (e.g. a business is operated from home). The householder may then be a PCBU involving the management or control of the workplace, and have duties as such. If the person is undertaking ‘work’ for the householder, as part of the conduct of a business or undertaking by the householder, then the householder will have the primary duty in relation to that person.

A householder who is a foster parent is not a PCBU or worker. This is because the activities of a home-based foster parent in caring for a foster child are not regarded as work. The organisation or agency that arranges and monitors the foster care, would however be doing so as a PCBU, and its activities would be regarded as work. This means that organisations will have obligations to volunteer foster parents in so far as they can be affected by the PCBU's business or undertaking.

All of the facts will determine if in the particular circumstances there is a business or undertaking being conducted (in which ‘work’ is being carried out) or if the activities are of a private or domestic nature.

Application to the Crown The WHS Act applies to businesses or undertakings conducted by the Crown in each jurisdiction. The Crown operates through government departments and agencies which differ in size and complexity. In some jurisdictions the Crown may have responsibility for separate businesses or undertakings. In determining whether a department or agency conducts a business or undertaking on behalf of the Crown, matters such any legislation establishing or administered by the organisation, as well as organisational structure, governance and decision making will be considered. Where a department operates through various agencies, the Crown will be the PCBU but the department or agency may be named in any proceedings or notices as the ‘responsible agency’. Note: this document is a general guideline only and should not be used as a substitute for seeking professional legal advice for your specific circumstances The contents of this document are correct and based on available information at the time of writing. However, there may be subsequent decisions of courts or tribunals on the matter covered by this guide which mean that the contents are no longer accurate.

Documents

Improving Health and Safety at Work: An Effective … Confidence MBIE-MAKO-146085571 Office of the Minister of Labour The Chair Cabinet Economic Growth and Innovation Committee IMPROVING