1. Hans Buwalda
22 February 2016
Due Diligence Requirements in the Health and Safety at Work Act 2015

2. Introduction
Section 44(4) of the Act is very similar to Section 27(5) of the
Model Work Health and Safety Act (2011) in Australia.
Even before these provisions were included in the Australian Act,
its courts had frequently ruled that a proactive duty was required
of directors and executives. Rulings have included statements to
the effect that a Managing Director is in a position by virtue of
the fact that s/he is a director to influence safety. There is no
mitigation just because s/he is running a large organisation or is
physically remote from its operations. Safety cannot be left to
middle management to deal with it on its own.
The need for top-level leadership of health and safety has been
increasingly recognised in New Zealand. (For example, the
Government and private industry worked together in 2010 to
establish the Business Leaders Health and Safety Forum).
However, the absence of positive due diligence requirements in
the Health and Safety in Employment Act, has limited the extent
and quality of director and senior executive participation.
.
Section 44 of the Health and Safety at Work Act:
Duty of officers
(1) If a PCBU has a duty or an obligation under this Act, an
officer of the PCBU must exercise due diligence to ensure
that the PCBU complies with that duty or obligation.
(4) In this section, due diligence includes taking reasonable
steps—
(a) to acquire, and keep up to date, knowledge of work health
and safety matters; and
(b) to gain an understanding of the nature of the operations
of the business or undertaking of the PCBU and generally
of the hazards and risks associated with those
operations; and
(c) to ensure that the PCBU has available for use, and uses,
appropriate resources and processes to eliminate or
minimise risks to health and safety from work carried out
as part of the conduct of the business or undertaking; and
(d) to ensure that the PCBU has appropriate processes for
receiving and considering information regarding
incidents, hazards, and risks and for responding in a
timely way to that information; and
(e) to ensure that the PCBU has, and implements, processes
for complying with any duty or obligation of the PCBU
under this Act; and
(f) to verify the provision and use of the resources and
processes referred to in paragraphs (c) to (e).
http://www.legislation.govt.nz/act/public/2015/0070/latest/DL
M5976911.html
The NZ Government introduced the Health and Safety Reform Bill
into Parliament in 2014. It was passed in October 2015, to come
into effect on 4 April 2016.
The Act follows the report of the Pike River Royal Commission
(2012) and the Independent Task Force on Workplace Health and
Safety (2013). It is based on current Australian law. Key changes
include a more stringent duty on directors and officers, who will
be required to exercise due diligence.
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Due Diligence Requirements in the Health and Safety at Work Act 2015

3. Pike River Royal Commission
The Pike River Royal Commission made a significant
contribution to raising understanding of the role of
governance in health and safety management. It found:
• A failure of safety governance contributed to the
tragedy. The report sets out the commission’s views on
the responsibilities of directors and officers, with
reference to legislation in Australia, and to guidance
from the Institute of Directors in the United Kingdom.
• Even though Pike River was operating in a known high-
hazard industry, the board did not ensure that health
and safety was being properly managed and the
executive managers did not properly assess the health
and safety risks that the workers were facing.
• Pike River prioritised production over safety, because it
allowed operational mining to proceed before the safety
management system, (including emergency controls like
a second egress), was completed.
• Data and information that could have provided warnings
about the extent of operational risk, were not analysed
or reported.
The Commission also commented on the safety information
that should be provided to the board. It concluded that data
on personal injury rates was of little value to a board in
assessing the risks of a catastrophic event.
45. The board’s focus on meeting production targets set the
tone for executive managers and their subordinates. The
board needed to satisfy itself that executive managers were
ensuring that its workers were being protected. After all, the
organisation was operating in a high-hazard industry. The
board needed to have a organisation-wide risk framework
and keep its eye firmly on health and safety risks. It should
have ensured that good risk assessment processes were
operating throughout the organisation. An alert board would
have ensured that these things had been done and done
properly. It would have familiarised itself with good health
and safety management systems. It would have regularly
commissioned independent audits and advice. It would have
held management strictly and continuously to account.
46. Mr Dow’s general attitude was that things were under
control, unless told otherwise. This was not in accordance
with the good governance responsibilities. Coupled with the
approach taken by executive managers, this attitude exposed
the workers at Pike River to health and safety risks.
47. Focused on production targets, the executive
management pressed ahead when health and safety
systems and risk assessment processes were inadequate.
Because it did not follow good management principles and
industry best practice, Pike’s workers were exposed to health
and safety risks.
http://pikeriver.royalcommission.govt.nz/vwluResources/Final
-Report-Volume-Two/$file/ReportVol2-whole.pdf
Paras 45-47, page 56
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Due Diligence Requirements in the Health and Safety at Work Act 2015

4. Independent Task Force on Workplace
Health and Safety
The conclusions of the Pike River Royal Commission were
reinforced by the Independent Task Force on Workplace
Health and Safety, when it delivered its report in 2013.
The Task Force was established by the Minister of Labour in
June 2012 to research and critically evaluate the workplace
health and safety system in New Zealand, and to recommend
practical strategies for reducing the high rate of workplace
fatalities and serious injuries by 2020.
The Task Force obtained information from a wide range of
sources. These included phone interviews with about
30 members of the Institute of Directors to explore health
and safety leadership in larger organisations, including the
strategic direction and extent of prioritisation being set by
boards of directors for their organisations.
The Task Force concluded that little leadership is currently
being shown for workplace health and safety. For
New Zealand to have good workplace health and safety
outcomes, all key influencers need to take greater
responsibility. While the regulatory system has not provided
the right incentives and enforcement measures to drive high
standards of leadership, all influential stakeholders need to
step up and be accountable for workplace health and safety.
A common although not universal sentiment was of board members,
directors and senior managers not providing effective health and
safety leadership or active governance. At best, the quality of
leadership is variable.
A number of reasons were offered in explanation.
a. Inadequate levels of accountability for leaders. Directors and
managers are not sufficiently held to account for health and safety
failings on their watch.
b. Marginalisation of health and safety responsibilities. Directors and
senior managers commonly delegate health and safety
responsibilities to a single or small number of low-level manager/s
or administrator/s.
c. Commercial pressures and productivity taking priority. Health and
safety expenditure is too often seen as a short-term compliance
cost. A number of common workplace patterns underline the clear
precedence that bottom-line concerns take over health and
safety: unrealistic targets and deadlines set, placing time
pressures on workers to perform; low levels of supervision for
new staff; staff working in dangerous environments; and long
hours.
d. Low awareness of health and safety issues and how to manage
them. Managers and directors commonly lack health and safety
expertise and competence.
e. An information gap exists between operations and the
boardroom. Directors and senior managers are sometimes out of
touch with the workplace. It was reported that lower-level
managers sometimes discourage workers from reporting near
misses, hazards and injuries, and do not pass this information up
the hierarchy.
http://hstaskforce.govt.nz/documents/report-of-the-independent-
taskforce-on-workplace-health-safety.pdf
Para 112, pages 26-27.
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Due Diligence Requirements in the Health and Safety at Work Act 2015

5. In limited liability companies, there will be two categories of
officers:
• The directors
• Other executives or senior managers who make decisions
that affect the whole, or a substantial part, of the
organisation.
For example, in a decentralised organisation in which regional
managers have a high-level of budget autonomy, these
managers can be considered to be officers. In a organisation
that has overseas owners, the senior managers and the
international executives to whom they report, will be officers.
Although it is important to understand which executives and
managers will be considered to be officers, it is also important to
appreciate that every individual within an organisation has
health and safety duties under the new legislation. Those who
are not officers will be workers. Workers are required to take
reasonable care of their own health and safety, and ensure that
their acts or omissions do not adversely affect the health and
safety of others.
Organisations need to carefully set out the health and safety
responsibilities of all individuals, irrespective of whether they
have governance, management or operational roles.
Who Are Officers?
What is meant by ‘participate in making decisions’?
A person may be an officer even though they do not make the
relevant decisions or have the authority to do so, if they
participate in the making of those decisions. What this means is
that the person is actively involved in the process through which
the decisions are made and occupies a role that may directly
contribute to, promote or affect the decisions.
For example, courts have found that corporate counsel, chief
financial officers and other senior ‘advisors’ within a corporation
may be officers if they are present and involved in discussions
when the decisions are made, but are not officers if they simply
provide advice for the consideration of the decision makers or are
only involved in administration of a process.
A person may be considered to participate in the making of
decisions where they have an ongoing or repeated involvement in
the process through which decisions are made.
The decisions need not be directly related to work health and
safety. Decisions may affect work health and safety indirectly.
How an organisation is structured, what areas of organisation it is
involved in, and what resources are allocated to particular parts
of a organisation may all affect how work health and safety is
managed.
http://www.safeworkaustralia.gov.au/sites/SWA/about/Publicati
ons/Documents/605/Interpretive%20guideline%20-%20Officer.pdf
Page 3
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Due Diligence Requirements in the Health and Safety at Work Act 2015

6. 1. Acquire and keep up-to-date knowledge of work
health and safety matters
Officers need to receive training on both their health and
safety responsibilities and also the organisation’s safety
management systems. Officers need to be provided with
reports showing health and safety performance. Officers
need to be briefed on emerging health and safety issues
and their implications for the organisation.
Officers must have access to objective evidence and
independent expertise, so that they can be confident
about the decisions they will be required to make. This
will require that they are regularly briefed. Officers need
to ensure that they understand and respond appropriately
to these briefings.
The Six Requirements for Due Diligence
2. Understand the hazards and risks associated with the
nature of the operations
Officers must have an understanding of how their
organisation operates and its most significant hazards.
Officers must understand which hazards could result in
serious or fatal injury incidents, and, in general terms, the
types of controls used to reduce these risks.
This will be challenging for diverse organisations. The
depth of this knowledge will need to be determined on a
case-by-case basis.
3. Ensure the organisation has appropriate resources and
processes to eliminate or minimise risks
Resources include people with the right experience and
skills, operating within an appropriate organisational
structure, and with clearly set out responsibilities.
Resources also include the financial expenditure needed
for eliminating and minimising risks so far as 'reasonably
practicable'.
Officers need to be aware of how to weigh up the costs of
hazard controls, including the likelihood of the hazard
leading to an incident causing injury, the degree of
potential harm, and the availability of ways to eliminate or
minimise the risk.
Processes include an appropriate governance structure
with the right people in place who are authorised and
accountable for effective health and safety risk
management. This should start at the very top with a
Board Charter outlining the responsibilities of the board
with respect to safety. The organisation’s health and
safety management system must include governance
policies and standards, and operational controls. These
should include the health and safety responsibilities of all
officers and workers. They should include health and
safety training and capability requirements for all,
ensuring that appropriate expertise is available at all
levels of the organisation.
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Due Diligence Requirements in the Health and Safety at Work Act 2015

7. 4. Ensure the organisation has appropriate processes for
receiving and considering information about incidents,
hazards and risks and responding in a timely fashion
After understanding the hazards in the organisation's
operations and the risks associated with these, officers
then need to understand and monitor how these are
managed. Processes need to be put in place for officers to
receive health and safety information, and a forum in
which they can respond as required.
Organisations need to determine what information needs
to be reported to executive managers and to Boards.
(Note that the Pike River Royal Commission concluded
that injury rate data does not provide any indication of
how significant safety risks are being managed).
There also needs to be a process for reviewing reports
and follow-up to significant incidents (both injury and
non-injury incidents).
5. Ensure the organisation implements processes for
complying with its duties
Officers need to ensure that the organisation’s health and
safety management systems are operating effectively,
ensuring continual focus on the effectiveness of hazard
controls. There are several ways to achieve this:
• Receiving regular reports of performance and
management reviews, including trends.
• Reviewing these reports with senior managers.
• Direct observation of hazard controls, and discussions
with lower-level managers and front-line workers
during site visits.
It is impossible for an officer to ensure all duties are
complied with at all times, but it is possible for an officer
to ensure that the processes for compliance are in place.
6. Verify the provision and use of resources and
processes
Officers need to independently verify that the health and
safety management systems have been implemented and
are actually being used. They cannot rely on senior line
managers as their only source of information. There are
two methods that officers can use:
• Direct access to health and safety experts within the
organisation.
• Requiring independent audits.
The Six Requirements for Due Diligence (cont’d)
22 February 2016
Due Diligence Requirements in the Health and Safety at Work Act 2015

8. Organisations need a structured approach to developing
processes that enable their officers to comply. One
approach is to simply use the six requirements of Section
44(4) of the Act as a checklist, and carry out a gap analysis
against these.
However, the due diligence requirements should not
viewed in isolation of the other changes that will be
required by the Act. Organisations need to carefully
develop plans to meet their full PCBU duties; in particular
ensuring that their systems for hazard management
adequately address new requirements. This should form
the basis of an action plan that also includes additional
processes to enable officers to meet their due diligence
responsibilities.
In response to the Pike River Royal Commission and in
anticipation of the new legislation, the NZ Institute of
Directors and the Ministry of Business, Innovation and
Employment prepared guidelines that provide a proactive
tool for officers to use in meeting their due diligence
responsibilities. This is based on a typical management
systems structure. It enables an organisation to approach
these responsibilities from the perspective of improving
its health and safety leadership and management, rather
than just complying with the new legislation.
The Guidelines can be used for a gap analysis. As part of
this process, organisations can consider the separate
activities of non-executive directors and senior executives
and managers.
New Zealand Institute of Directors and the Ministry of Innovation, Business and
Employment, May 2013.
https://www.iod.org.nz/Portals/0/Publications/Good%20Governance%20Practices
%20Guideline.pdf
What Organisations Should Do To Prepare
The Guidelines are based on four elements (see over):
• Policy and Planning: Determining the high level strategy
and holding management accountable for achieving this.
• Deliver: To be informed about health and safety
requirements and setting a clear expectation for fit-for-
purpose management systems.
• Monitor: To set clear expectations about reporting to
the Board and to monitor performance.
• Review: To regularly review health and safety, including
considering the need for independent opinions.
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Due Diligence Requirements in the Health and Safety at Work Act 2015

9. Policy and Planning Deliver Monitor Review
• To develop a charter and
structure for leading health and
safety (H&S).
• To determine high level H&S
strategy and policy, including a
vision and values statement.
• To hold management to account
for implementing strategy.
• To specify targets that will
enable them to track the
organisation’s performance in
implementing board strategy and
policy.
• To manage the health and safety
performance of the CEO,
including specifying expectations
and providing feedback.
• To lay down a clear expectation
for a fit-for-purpose health and
safety management system.
• To exercise due diligence to
ensure that the H&S system is fit
for purpose, effectively
implemented, regularly reviewed
and continuously improved.
• To be sufficiently informed about
the generic requirements for a
modern, ‘best practice’ H&S
management system and about
their organisation and its
hazards to know whether its
system is fit-for-purpose, and
being effectively implemented.
• To ensure sufficient resources
are available for the
development, implementation
and maintenance of the system.
• To monitor health and safety
performance.
• To outline clear expectations on
what should be reported to the
Board and in what timeframes.
• To review reports to determine
whether intervention is required
to achieve, or support
organisational improvements.
• To be familiar with processes
such as audit, risk assessment,
incident investigation, sufficient
to enable proper evaluation of
information reported by
management.
• To seek independent expert
advice when required to gain the
required degree of assurance.
• To conduct a periodic (eg
annual) formal reviews of health
and safety to determine the
effectiveness of the system and
whether any changes are
required.
• To consider whether an external
review is required for an
independent opinion.
Good Governance Practices Guideline for
Managing Health and Safety Risks
22 February 2016
Due Diligence Requirements in the Health and Safety at Work Act 2015

10. Good processes and resources for health and safety
governance will include all of the following:
• Charter There should be a Charter for the Board or its
health and safety sub-committee, clearly describing its
role, responsibilities and activities.
• Training There should be regular training provided to
officers. (There are many on-line options that provide
a suitable introduction, for example
https://www.iod.org.nz/Director-
Development/Courses-and-workshops/Health-and-
Safety-Governance).
• Policies and Plans Clear statements of commitment
and actions / investments over the forthcoming period
should be prepared by senior managers and presented
to the Board for approval.
• Continuing Development of Knowledge Processes
such as senior management presentations and site
visits can be used to continually increase the health
and safety knowledge of officers.
• Regular (Monthly) Reports These will describe
performance, progress against plans and the results
and follow-up to significant incidents and issues.
• In-depth Reviews In addition to these regular
(monthly) health and safety reports, officers should
also get the opportunity to engage in in-depth reviews
2-3 times per year.
• Independent Assurance Officers must have access to
independent expert advice, as well as the conclusions
of an independent audit programme.
What Organisations Should Do To Prepare
Preparation Pathway
Senior managers should carry out the following, and then
report to their Board or executive managers:
• Review their health and safety management systems
against the requirements contained in the current
Health and Safety at Work Act, and identify changes
that will be required. In particular, review the new
PCBU duties and the “reasonably practicable” standard
for hazard controls.
• Carry out a gap analysis for both senior managers and
directors against the IOD / MBIE Guidelines for the
Managing Health and Safety Risks.
• Prepare an action plan for both the governance and
management changes required for effective health and
safety management, and compliance with the Act.
• Review and obtain approval for the action plan from
senior managers and directors. Ensure this includes
monitoring, reporting and accountability for progress.
• Obtain independent verification of the plan, and the
processes for monitoring, reporting and accountability.
• Communicate the action plan throughout the
organisation as part of the annual planning process.
• Ensure training of officers is an early action item.
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Due Diligence Requirements in the Health and Safety at Work Act 2015