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High Court delivers ominous warning to employers on health and safety

This article was written by Mikayla Hughes.

The Health and Safety at Work Act 2015 (“the Act”) significantly increases the maximum penalties for failing to comply with a workplace duty. The High Court has just, on 9 August 2018, released its decision on a joint appeal case (Stumpmaster and The Tasman Tanning Company and Niagara Sawmilling Company Limited v Worksafe New Zealand). This judgment has provided some useful (but for employers, potentially concerning) guidelines on sentencing, in particular the guideline bands which are to be used when fixing the amount of the fine. Any future District Court case will be bound to follow this decision. 

The guideline bands are as follows: 

  • Low culpability – up to $250,000
  • Medium culpability - $250,000 to $600,000
  • High culpability - $600,000 to $1,000,000
  • Very high culpability - $1,000,00 plus 

The High Court recognised that, although the top figure of $600,000 for medium culpability may be onerous- especially for small to medium enterprises - the intention of the Act in this regard was to send a message that failures by employers to ensure a safe environment will be dealt with severely. Having acted on many of these cases we comment that it is not uncommon for a case to be categorised as being of medium culpability and will now attract significant fines. Once the level of culpability has been decided, the court will then consider any aggravating and mitigating factors before making an overall assessment of the proportionality and appropriateness of the proposed penalty. The ability of the defendant to pay the fine will be relevant.  

Liability under the Act can be imposed on a wide variety of people including any person conducting a business or undertaking (“PCBU”). A PCBU has a duty to ensure, as far as reasonably practicable, the health and safety of their workers. This primary duty of care is not transferable or able to be contracted out of. It is therefore critical for business owners and company officers to be aware of their duties. 

It is also important to note that these fines cannot be insured against. 

In the particular cases under appeal, none of which involved a death, two companies were fined $323,000 and $363,000 respectively and the other, due to its small size and inability to pay, fined $90,000 which the High Court commented was, even so, still on the light side. The defendants in each cases also had reparation orders made in favour of the victims – which is almost invariable.  

If you require any advice in relation to the Act or would like to discuss the above case in more detail, we are happy to assist.

© Copyright Harmans Lawyers 2018