What does the Health and Safety Reform Bill mean for your business? - Part 6: What Is The Due Diligence Duty Of Officers?
WorkSafe NZ is providing a serious of updates that seek to explain different parts of the proposed Health and Safety Bill.
These updates provide an overview of the key parts of the Bill as introduced to Parliament, to help you understand some of its key concepts. This will help ensure you’re prepared for when the law comes into effect in 2015.
If you would like to know more about how this will affect your business call Health and Safety East Coast on 0272878747 or email us at firstname.lastname@example.org
6. What Is The Due Diligence Duty Of Officers?
A new duty proposed by the Bill is that an officer of a PCBU (such as a director, board member or partner) must exercise due diligence to ensure that the PCBU complies with its duties.
This places a positive duty on people at the governance level of an organisation to actively engage in health and safety matters, reinforcing that health and safety is everyone’s responsibility.
A business or undertaking is governed by individuals who, through their decision making, influence the specific activities that will in turn ensure the success or failure of health and safety initiatives and whether the PCBU is complying with its own duty.
That’s why these individuals strongly influence the culture of the business or undertaking and accountabilities within it. For instance, they make important decisions on the resources that are available for work health and safety and the policies that support the PCBU to comply.
Officers versus PCBUs – what’s the difference in the duty?
The officers’ duty is not the same as the PCBU duty. Officers do not have to ensure the health and safety of the PCBU’s workers.
Rather, the officer must exercise due diligence to ensure that the PCBU is meeting its health and safety obligations.
The due diligence duty complements and supports the primary duty of care of the PCBU – it does not replace it.
What is the definition of an “officer”?
Companies: For a PCBU that is a company, the officers are its directors.
Partnerships: For a PCBU that is a partnership, the officers are its partners (but note in limited partnerships, only general partners are officers).
Other types of undertakings: For other types of business structures or undertakings, people who hold a position comparable to a director of a company, such as board members, will be an officer.
In addition to these specified positions, an officer is any person who ‘makes decisions that affect the whole, or a substantial part, of the business of the PCBU’. Exactly who comes under this definition will depend on the individual structure and governance of the business or undertaking in question. It will almost certainly include the chief executive. The test is whether the person has sufficient authority to make governance decisions that affect a substantial part of the business.
What officers are exempt?
Certain officers are exempt from prosecution if they fail in their due diligence duty:
- community board members, whether appointed or elected under the Local Electoral Act 2001
- elected members of local authorities (councillors) under the Local Electoral Act 2001
- members of school boards of trustees, whether appointed or elected under the Local Electoral Act 2001
- elected members of local boards under the Local Electoral Act 2001.
What is “due diligence”?
Due diligence means that officers must make sure they perform certain functions to ensure the PCBU complies with its duties. These include taking reasonable steps to:
- know about work health and safety matters and keep up-to-date
- gain an understanding of the operations of the organisation and the hazards and risks generally associated with those operations
- ensure the PCBU has appropriate resources and processes to eliminate or minimise those risks
- ensure the PCBU has appropriate processes for receiving information about incidents, hazards and risks, and for responding to that information
- ensure there are processes for complying with any duty, and that these are implemented
- verify that these resources and processes are in place and being used.