Take health and safety seriously

Employers need to identify hazards in the workplace and implement sound health and safety management programmes or hefty penalties are likely if there is an accident.

Most businesses are well aware of their health and safety obligations in the workplace, governed by the Health and Safety in Employment Act 1992. Ultimate responsibility for workplace safety rests with the employer. However, recent prosecutions for breaches of those obligations have come with significantly greater fines and orders for reparation, which should deter employers from taking health and safety responsibilities lightly.

Health and Safety in Employment Act 1992

The purpose of health and safety legislation is to ensure employees do not suffer harm in the workplace. The Health and Safety in Employment Act (“the Act”) works alongside the Employment Relations Act 2000 to require good faith cooperation between employers and employees in managing health and safety as well as imposing a duty to involve employees in health and safety matters.

Employers must take all practicable steps to provide and maintain a safe working environment. This involves identifying, eliminating, isolating or minimizing hazards in the workplace. Employers need to ensure employees are educated about workplace hazards and hazard management. This is usually reinforced by safe workplace procedures and disciplinary policies for breaching them. Ongoing monitoring of workplace safety is as important as an initial induction addressing the issue.

In assessing all practicable steps to address harm, an employer needs to consider what can reasonably be done, taking into account:

• the nature and severity of the harm that may be suffered;
• the likelihood of that harm being suffered;
• the kind of harm that might occur;
• ways in which the harm may be prevented; and
• effectiveness of those measures and the availability and cost of preventing the harm.

Harm does not relate solely to physical hazards. It includes hazards that could cause workplace stress or fatigue.

Implications of breaching health and safety requirements

Employers may face prosecution for breaching health and safety requirements, with maximum penalties for offences causing serious harm including fines of up to $500,000 and imprisonment for a term of up to two years. Even first offences by an employer are likely to attract significant penalties.

Until recently, the fines imposed by the Courts for health and safety breaches were not particularly noteworthy, despite an amendment to the Act in 2003 which increased the maximum fines that can be imposed. One of the highest fines imposed was $225,000 against Fletcher Concrete (Stresscrete) following the death of a worker when a load fell from a faulty crane. That remains an exceptional penalty.

Since 2003, although the increase in fines has not been particularly significant, the amounts of reparation (compensation) awarded to accident victims and their families has steadily risen. For example in late 2007, the Court ordered Downer MBL Ltd to pay reparation of $130,000 to a widow, although no fine was imposed in that case.

There has been criticism over the low penalties. The Sentencing Act 2002 requires judges to take into account the need for consistency between penalties imposed in different cases. Therefore in practice, the outcomes of other cases become relevant in deciding an appropriate sentence and a trend of relatively low penalties has influenced subsequent decisions.

Penalties on the increase

A significant shift has now been indicated by the Courts in its approach to penalties. In December 2008, the High Court in Department of Labour v Hanhan & Ors (High Court, 18 December 2008), considered the sentences for health and safety breaches by three separate companies. In its decision, the Court stated that “a substantial uplift in existing levels of fines is needed” to reflect the seriousness of workplace accidents, the increase in maximum fines in 2003, the effects of inflation and the need for greater deterrence.

In the Hanham decision, the High Court imposed a $50,000 fine on commercial construction company Hanham & Philp Contractors, following an accident in which an employee of a contractor was injured by falling off wooden scaffolding on a building site. The fine imposed was a significant increase from the $5,000 ordered against the company in the initial decision.

Several mitigating factors in reducing the potential fine were accepted by the Court in sentencing including the existence of safe systems, an excellent safety record, remorse, cooperation with authorities and reparation of $12,000.

In setting fines in the Hanham decision, the Court stated that the appropriate starting points should generally be fixed at:

Low culpability – a fine of up to $50,000
Medium culpability – a fine of between $50,000 and $100,000 and
High culpability – a fine of between $100,000 and $175,000.

The Court also noted that higher levels of fines may be required in cases of extremely high culpability.

Health and safety important for the construction industry

Given the nature of the work and regularly changing work environments for construction industry workers, health and safety will always be an ongoing issue for employers to manage. Recent cases indicate that the sound safety record of an employer will be relevant to any penalty in the event of a health and safety incident. Accordingly, employers in the industry are wise to be aware of, and comply with, codes of conduct, review their procedures on a regular basis, involve employees, contractors and sub-contractors in this process and record the outcome of such reviews for reference and to ensure all people on a construction site have a common understanding of their health and safety responsibilities.

Conclusion

If an employer fails to act after recognizing a hazard, and the safety of employees is at risk, the employer risks prosecution under the Health and Safety in Employment Act. Prosecution is now likely to be accompanied by significant penalties and orders for reparation. It is therefore important that all employers identify hazards in the workplace and implement a sound workplace health and safety management programme.

(Article first published in "BUILD" BRANZ Magazine June/July 2009.)