Health and safety changes will cost employers big money

By JOHN ROONEY

For many employers, the proposed amendments to the Health and Safety in Employment Act will be viewed as heralding greater compliance costs and more union influence at a time of declining workplace accidents in New Zealand.

The amendments, contained in the Health and Safety in Employment Amendment Bill, introduced to Parliament at the end of last month, confirm many employers' beliefs that the Government is anti-business and intent on placing ever greater compliance costs on employers.

The Minister of Labour, Margaret Wilson, has stated that the new law is needed because of the unacceptable toll of illness, injury and death in New Zealand workplaces.

Ms Wilson has declared that the new law will build on "the highly successful principles of good faith underlined in the Employment Relations Act".

It is at least understandable why employers are concerned about increased compliance costs and view the proposed amendments as anti-business. The bill increases fines five-fold and doubles maximum prison terms.

For offences likely to cause serious harm, the maximum fine will jump from $100,000 to $500,000, and the maximum jail term from one year to two. For other offences, the maximum fine will be increased from $50,000 to $250,000.

It should be a source of real concern to employers that the bill proposes to make it unlawful to insure against fines issued under the act. Although insuring for the cost of defending a prosecution will remain lawful, under the changes, employers will have no way to manage the extent of the new risks to which the Act will expose them.

It is also worth noting that the prohibition on insuring against fines is unique under New Zealand law.

One of the most controversial changes is the proposal to extend the definitions of "harm" and "hazard" to include stress and fatigue.

In the employment context, employee stress and fatigue is a growth area. Employment claims related to workplace stress have been increasing at a significant rate.

The proposed widening of the definitions of harm and hazard to include stress and fatigue will likely result in increased prosecutions and may well encourage yet more stress-related personal grievances.

By including stress and fatigue into what is effectively a quasi-criminal area (as OSH prosecutions are heard in the District Court and can result in fines and/or imprisonment), the changes will impose more onerous obligations on employers.

This is particularly so, as these are "strict liability" offences, so a failure to take all practical steps may still give rise to liability, even if the employer did not intend to cause harm.

This could have serious consequences for employers, where, say, they are unaware that employees are becoming fatigued or stressed by long shifts or even as a consequence of influences outside the employer's control, such as domestic problems.

There is no plan to place an obligation on employees to tell their employer that they are suffering from fatigue or stress.

Another criticism of the changes is that there is be no definition of "physical or mental fatigue".



Employers can take a number of steps to monitor stress in the workplace, such as additional training, workplace safety audits targeted specifically at physical and mental fatigue and even employing a qualified psychologist.

Naturally, all of these steps will come at a cost to the employer.

A likely consequence of these changes will be an indirect increase in interference by employers on employees' spare time.

One would expect employers to place greater restraints on employees holding secondary employment and limiting the amount of overtime any one employee can undertake.

Employers, employees and any union acting on an employee's behalf must cooperate in good faith to develop and maintain a system setting out the ways in which employee participation will operate in the workplace.

Health and safety representatives will have a statutory entitlement to two days paid leave per annum to attend a Government-approved health and safety training course.

Trained health and safety representatives will also be able to issue hazard notices when they have identified a workplace hazard and alerted the employer, and the employer has refused either to discuss the hazard or deal with it in a reasonable time.

The Minister of Labour has talked of joint ownership of health and safety issues and suggested that one of the reasons why employers do not involve employees in workplace health and safety management is because the cost of accidents are not borne fully by employers and employees.

But the bill does not address employee culpability. It has been a source of constant frustration to employers that so little emphasis is placed on the action of employees.

Although section 19 of the Act places a duty on employees not to cause harm at work, it is very rare for an employee to be prosecuted under this section.

It could be argued that if employees and unions are to have an increased say in health and safety, then they should face greater responsibility for subsequent breaches of the legislation in the appropriate circumstances.

The proposal that the Crown monopoly on prosecutions be removed is also likely to lead to increased litigation.

Private prosecutions, by unions or individual employees, will be possible, although only after OSH has decided not to prosecute. One can expect to see a steady rise in private prosecutions.

The Government believes the proposed amendments will improve health and safety in the workplace. What is certain is that the changes will lead to higher compliance costs for employers and more litigation from employees and unions.

* John Rooney is a Senior Associate in Simpson Grierson's employment law group.