Director by Name, Director by Reputation?
Sir Peter Jackson’s resignation last month from the board of Weta Workshop, reportedly in response to more onerous obligations under the incoming health and safety regime, drew attention to the role of directors. Although the new regime makes some important changes, directors shouldn’t view these changes as a signal to run for the hills.
The incoming Act imposes personal liability for directors and other officers of “persons conducting a business or undertaking” (PCBUs) should they breach obligations to exercise reasonable due diligence to ensure that the PCBU complies with its duties and obligations. Fines issued for a breach of those duties cannot be insured or indemnified against, and in fact, any attempt to do so would be an offence under the new Act. The prospect of personal liability has alarmed some directors, who may feel that they could never have sufficient oversight over their business’s day-to-day operations to sleep soundly at night.
Once the actual requirements of the new regime are laid out, it becomes more clear that a director who is doing their job properly will have little to fear and day-to-day oversight is not required. Nor does that it follow that a breach of the Act by the company means that directors are liable. In essence, the Act requires directors to ensure that they understand their business and health and safety matters generally, and can show a reasonable basis for believing that those matters are being looked after by appropriate people, supported by appropriate systems, and are appropriately resourced.
Health and safety has already been a feature for many boards, and where good governance systems exist, little if anything, will need to change. All that is required is to exercise the care, diligence and skill that a reasonable person would in that officer’s position. Although this is yet to see any judicial interpretation, the Act sets out that reasonableness will be measured against the particular circumstances of the director. So, while the obligation is new and is backed up by criminal sanctions, those following best practice in their industry should have nothing to fear.
For so-called “sleeping” directors, who remain on a board despite a lack of day-to-day (or month-to-month) knowledge of operations, the risk is undoubtedly greater and such a director might well ask whether it is proper to remain on the board. On the other hand, where a person retains direct influence on the PCBU’s affairs, formally stepping down from the board may have little substantive effect given that the definition of “officer” extends to anyone with “significant influence over the management of the business or undertaking”.
Any director who sits on the board in a purely voluntary capacity will not be liable in any event, nor will any officer of an entity that is a “volunteer association” under the Act. The only liability for volunteers is for breach of the duties owed by workers or other persons in a workplace.
Some organisations no doubt will need to improve their governance, but professional and diligent directors should not feel that their position has become unduly risky.
Drugs and Workplace Health and Safety: A High Risk?
Drug use, including alcohol and illicit substances, is a major concern for business operators in a variety of industries. To date, however, there has been no overarching framework for workplace drug testing in New Zealand despite the potential for serious harm to occur.
Under the Health and Safety in Employment Act, drug testing may be a practicable step that an employer can take to manage and identify hazards occurring in the workplace. Drug use is not only a hazard to the user, but also to those around them, particularly if their work involves operating a plant or driving a vehicle. Drug testing agencies are continuing to provide their services to a greater number of businesses in New Zealand, even in the absence of specific legal requirements for drug testing to be carried out.
MBIE has published some guidance in the recent past, although this has related to specific industries rather than as a guidance note for employers in general. Even so, the difficulty in articulating a “one-size-fits-all” policy approach to drug testing in the workplace is apparent. What is clear is that a business will need to assess what its risks are and how likely it is that its employees may be impaired, and the nature of the risks that potentially arise as a consequence.
In some industries, particular regulations dictate that drug and alcohol risks are managed, such as the Health and Safety in Employment (Adventure Activities) Regulations 2011. Similarly, the Maritime Rules under the Maritime Transport Act require commercial raft and jet boat operators to manage risks in a particular way.
There is no requirement that drug testing be included in an employment agreement, but any business looking to implement a drug testing or detection regime should follow the usual best practice guidelines for any safety measure. This includes seeking employee feedback on proposed measures and making clear the consequences of a failed test. Given the increased consultation requirements under the new Act, it will be interesting to see how this area develops as the new regime comes into force.
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This publication is intended only to provide a summary of the subject covered. It does not purport to be comprehensive or to provide legal advice. No person should act in reliance on any statement contained in this publication without first obtaining specific professional advice.