Have your say: influence the review of health and safety legislation to improve governance

Health and Safety at Work Act
2015 review

IoD proposals for change

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Purpose

This document seeks feedback from members about proposed changes to enhance the contribution by directors and boards to improved health and safety outcomes under the Health and Safety at Work Act 2015 (HASWA) and the wider New Zealand health and safety system. These proposals aim to clarify directors’ responsibilities, increase collective accountability at the board level, and improve incentives for directors to take a more proactive and engaged approach to health and safety oversight.

Your input will help shape the IoD’s final submission on these issues ahead of its presentation to the Ministry of Business, Innovation and Employment (MBIE) at the end of October. Below, you will find a breakdown of each issue and the proposed changes, followed by questions designed to guide your feedback.

Improved health and safety legislation, implementation and governance are needed

Most boards have health and safety on their agendas and have done so to meet their individual duties under HASWA. Despite this, New Zealand’s health and safety performance against some key measures has stalled, including:

• • 71 workers being killed at work each year over the past five years. Proportionately, this is at least twice as many workplace deaths as in Australia.
  • Injuries resulting in more than a week away from work have risen every year over the past 10 years, except in 2020
  • There are an estimated 5,000 to 6,000 hospitalisations each year because of work-related ill health. (from ‘Health and safety governance advisors, advice and influence’ – Business Leaders Health and Safety Forum)

This has actual costs for individual companies and other organisations, and for the country as a whole. Work by Sense Partners for the Business Leaders Health and Safety Forum suggests the annual cost of these poor health and safety outcomes are a staggering $4.9 billion.

Directors and boards are not the whole answer to improving these health and safety outcomes, with the significantly reduced costs that would accrue.  

As part of the puzzle, however, directors and boards as organisational leaders can influence health and safety outcomes through good governance practice, as well as through supply chains for larger companies and other organisations.  

The legislation and institutional environment, designed well, can support directors and boards to do this well and improve performance. This is in addition to the guidance the IoD and WorkSafe have published on Health and Safety Governance: A Good Practice Guide. 

Key propositions and proposals for feedback

1. There should be limited change to the Health and Safety at Work Act 2015

Background

The Health and Safety at Work Act 2015 (HASWA) is a decade old and has not been reviewed. The case law is limited and there is a concern among some directors that if the law is substantially amended this will create more uncertainty about directors’ duties under HASWA and associated liability. This doesn’t mean there shouldn’t be some change.  Some of this is necessary as outlined later in this paper.

Proposed Change

Changes to the Health and Safety at Work Act 2015 (HASWA) should be limited and the focus for changes made through the review should focus on  implementation, regulatory approaches, capability and guidance.

Questions for Feedback
Do you agree with the proposal that there should be the least possible change to HASWA? If not, what major changes would you like to see?

2. The ‘officer’ definition in the law creates confusion between the roles of management and governance

Background

Under HASWA, ‘officers’ (including directors) are legally required to exercise due diligence in ensuring their organisation complies with its health and safety duties. While this framework holds individual officers accountable for health and safety failures, it does not always clearly distinguish between the governance responsibilities of directors and the operational duties of senior managers, such as CEOs or health and safety officers. Directors are primarily responsible for setting strategic health and safety goals, overseeing the implementation of systems, and ensuring management provides accurate information on health and safety risks and compliance.

The ambiguity in defining the scope of directors’ responsibilities versus the operational role of management can cause confusion. Directors may inadvertently overstep into operational areas or misunderstand the extent of their legal liabilities, leading to inefficient governance practices. This lack of clarity can also create friction between governance and management roles, complicating the oversight process and reducing overall effectiveness.  In essence, the value of governance could be enhanced by more clearly outlining the director and board responsibilities as distinct from those of management.

Proposed Change

The IoD proposes advocating for clearer legislation and associated guidance in HASWA that explicitly separates the governance duties of directors from the operational responsibilities of senior management. This would help define what is expected of directors in terms of oversight, enabling them to focus on strategic governance without becoming involved in day-to-day management tasks. Such clarity will ensure directors can better fulfil their due diligence obligations while respecting the distinct role of senior managers.

Questions for Feedback
Do you agree that clearer legislative distinctions between governance and operational responsibilities are needed? How would this improve your ability to meet health and safety obligations as a director?

3. Individual duties for officers rather than boards does not accord with board collective responsibility and accountability

Background

Under the current HASWA framework, each director as an officer (along with management) is individually accountable for their due diligence obligations. This personal liability means directors are responsible for ensuring the organisation meets its health and safety requirements, regardless of how well the board collectively performs. While this approach is intended to ensure personal accountability, it can lead to directors feeling isolated or overly exposed to legal risks, especially in situations where the overall board performance is strong but individual directors may fall short.

This individual focus can sometimes discourage boards from working collectively to address health and safety issues because the risks are seen as personal rather than shared. Furthermore, directors may be deterred from taking necessary strategic risks in health and safety governance because of the fear of personal liability. The introduction of a collective accountability model with duties for boards as well as individual directors could foster a greater sense of shared responsibility among board members, encouraging collaboration and mutual support in addressing health and safety risks.

Proposed Change

The IoD suggests advocating for amendments to HASWA that introduce an element of collective accountability for health and safety governance at the board level. While individual accountability would remain important for personal due diligence, collective accountability would emphasise the board’s shared responsibility for overseeing health and safety governance. This change could create a more supportive and collaborative environment, with the board as a whole working to ensure health and safety systems are effective.

Questions for Feedback
Should the IoD advocate for collective accountability of boards in health and safety governance? How could this change impact the culture of safety governance on your board?

4. Punitive penalties and significant director liability are getting in the way of improved health and safety outcomes

Background

The Health and Safety at Work Act 2015 (HASWA) imposes significant penalties on directors, who, as ‘officers’, are legally accountable for ensuring the organisation meets its health and safety obligations. These penalties, which include up to five years’ imprisonment and fines of up to $600,000 for breaches, are intended to enforce accountability​. However, this punitive approach can often foster a culture of fear, where directors become overly focused on avoiding personal liability rather than driving meaningful improvements in health and safety practices. The fear of public reputational damage from adverse performance disclosures can further contribute to a compliance-driven mindset, where directors prioritise, minimising legal risks over fostering a proactive safety culture. The latter resulted in some initial improvements in New Zealand’s health and safety performance in 2016 which has levelled off since then.

Proposed Change

To promote more effective engagement from directors, the IoD New Zealand advocates for a shift in focus from punitive measures to a framework that encourages transparency and collaboration. This could include a level of reporting transparency and risk-based approaches being used to highlight organisational health and safety performance (including recognising boards that take leadership roles in safety governance), and adopt proportional and less punitive regulatory and enforcement approaches than current exist. Rather than solely focusing on penalties, highlighting the board’s positive contributions to workplace safety would foster an environment where directors are motivated to drive continuous improvement and to demonstrate this within their organisations and publicly. This approach would also build public trust because stakeholders can see how actively engaged the board is in ensuring safety outcomes​.

Better data gathering, and distribution of health and safety data by industry and type of organisation, would also assist this, including data collated between the different agencies involved with health and safety across government.

Questions for Feedback
Would you favour reducing the emphasis on punitive penalties while ensuring health and safety-related duties (individual and collective) are maintained?  Do you think transparent public disclosure of the board’s contributions to health and safety would encourage more proactive safety leadership within your organisation?

5. Regulators need to adopt an educational and enforcement approach that better understands directors, boards and the governance role in health and safety

Background

A recent review of WorkSafe’s approach to prosecution for Crown Law (August 2024) observes that:

• • “57.1 There was a sense among panel prosecutors and defence counsel that, when it comes to who to investigate, SI tends to play it safe and stick to what is familiar (PCBUs), perhaps because of a lack of understanding of what is required if they branch out (Officers)”
  • “79.1 WorkSafe is generally on the money in terms of what went wrong and how serious it was, but could diversify its charging portfolio to take more near miss cases and more cases against officers”

Worksafe is likely not alone in this observation.

The new guide by the IoD and WorkSafe, Health and Safety Governance: A Good Practice Guide, includes an assessment tool for boards and individual directors. This has been extensively discussed with directors, less so with the full range of health and safety regulators.

Proposed Change

Significant effort should be put into upskilling regulators around the role directors and boards can and should play in improving health and safety outcomes. This can be supported by the guidance that WorkSafe has published with the IoD, and the level of knowledge of governance deepened across all the health and safety regulators. The SageBush baseline review reinforced this by noting that an upstream regulatory focus was part of a modern approach to regulatory agency operations.

Questions for Feedback
Do you think WorkSafe and the other health and safety regulators (including Maritime New Zealand and the Civil Aviation Authority) should develop a better understand of the role that directors, boards and governance generally can play in improving health and safety outcomes, and use this knowledge in their regulatory operations?

6. The legislation and regulators don’t sufficiently differentiate between those entities with governance boards and those without – it is 'one size fits all'

Background

Under HASWA, all organisations, regardless of size or structure, are treated similarly in terms of their obligations to manage health and safety. While this approach ensures a consistent regulatory framework, it fails to account for the governance differences between organisations with formal governance boards and those without. For entities with boards, there is a greater capacity for strategic oversight, structured risk management, and clearly defined governance roles. In contrast, smaller organisations or those without governance boards typically operate with less formal oversight and may rely more on direct management involvement in health and safety practices. The current ‘one size fits all’ regulatory approach overlooks these distinctions, placing unnecessary burdens on some and inadequate oversight on others.

Proposed Change

The IoD New Zealand proposes a more nuanced approach that differentiates between entities based on their governance structures. For organisations with governance boards, the regulatory framework should recognise the role boards play in strategic oversight and hold them accountable for ensuring robust health and safety governance. Conversely, for organisations without formal boards, regulations could focus more on direct operational management. Additionally, public disclosure of health and safety performance could reflect the governance context, showcasing how boards actively contribute to safety outcomes, thereby improving accountability and transparency​​.

Questions for Feedback
Do you believe the legislation should differentiate between organisations based on their governance structures, with tailored responsibilities for boards? How would this change impact your organisation’s approach to health and safety governance?

7. The legislation and enforcement of it is not sufficiently differentiating based on the health and safety risks (i.e. sector and industry) boards are overseeing, and the outcomes delivered

Background

HASWA takes a broad, standardised approach to health and safety obligations, applying the same rules across all sectors and industries. However, the health and safety risks faced by organisations can vary significantly depending on the nature of their industry. For example, boards in high-risk sectors such as construction, mining or aged care manage very different safety concerns compared to those in lower-risk industries, such as finance or technology. The current framework does not take these differences into account when enforcing compliance or assessing the adequacy of health and safety outcomes. This ‘one size fits all’ enforcement mechanism can place unnecessary burdens on some industries, while potentially under-regulating others with higher inherent risks​.

Proposed Change

The IoD New Zealand recommends a more tailored approach to health and safety regulation and enforcement, based on the specific risks of the sector or industry a board oversees. High-risk industries should be subject to more stringent oversight and enforcement, while lower-risk sectors could benefit from more flexible compliance requirements. Additionally, boards should be evaluated not just on their compliance with generic regulations, but also on the outcomes they deliver in managing the specific risks of their industry. Public disclosure of these industry-specific health and safety outcomes would further enhance transparency and allow stakeholders to assess the board’s effectiveness in mitigating sector-relevant risk.

Questions for Feedback
Would a more differentiated approach to health and safety regulation, tailored to the specific risks of your industry, improve your board’s ability to manage those risks? How would public reporting of health and safety outcomes by sector improve accountability and performance in your organisation?

8. Other changes with an impact on governance

Outlined above are changes that could improve health and safety outcomes in our companies and other organisations. These are focused on changes that would help directors and boards better oversee and govern health and safety practice.

It is possible there are others you would like to see. We are keen to hear from you, including any changes you would like to see made, how it improves health and safety governance, and how they will make a positive difference to health and safety outcomes.

Summary of proposed changes

Proposed change	Question for feedback
Limit amendments to HASWA and focus on implementation, regulatory approaches, capability and guidance, rather than major legislative changes.	Do you agree with minimal changes to HASWA? If not, what major changes would you propose?
Advocate for clearer legislation that distinguishes governance duties of directors from the operational responsibilities of senior management.	Do you agree that clearer distinctions between governance and operational responsibilities are needed? How would this improve your ability to meet health and safety obligations?
Introduce collective accountability for health and safety governance at the board level, while maintaining individual accountability for due diligence.	Should the IoD advocate for collective accountability of boards in health and safety governance? How could this change impact your board's safety governance culture?
Shift focus from punitive measures to promoting transparency and collaboration, with public disclosure of health and safety performance, and better data sharing.	Would reducing emphasis on punitive penalties and increasing public disclosure of board contributions to health and safety foster proactive safety leadership in your organisation?
Upskill regulators on the governance role of directors and boards in health and safety and encourage a more comprehensive understanding across regulatory bodies.	Should regulators, such as WorkSafe, develop a better understanding of the role of directors and boards in improving health and safety outcomes?
Tailor regulations to differentiate between entities with governance boards and those without, recognising the greater capacity for strategic oversight in board-led organisations.	Should legislation differentiate between organisations based on their governance structures? How would this impact your approach to health and safety governance?
Implement a tailored regulatory approach that reflects the specific health and safety risks of different sectors, with more stringent oversight for high-risk industries.	Would a differentiated approach to health and safety regulation, based on industry risks, improve your board’s ability to manage these risks?
Open to feedback on additional changes that could improve directors’ and boards’ ability to govern health and safety more effectively.	Are there other changes you would like to see that could improve health and safety governance and outcomes?

Providing feedback

We’re keen to get your feedback on the proposals outlined in this document as soon as possible and by 18 October 2024.

Please send your feedback to the IoD Governance Leadership Centre: glc@iod.org.nz