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Safeguard OSH Solutions - Thomson Reuters

Safeguard OSH Solutions - Thomson Reuters

Safeguard Magazine

Comment—An issue of governance

RALPH CHIVERS supports moves to clarify the OHS governance role of directors but cautions against a one-size-fits-all approach.

Terrible events inevitably lead to questions as to why they occurred, whether they could have been prevented, and what can be done to stop them from happening again. Most recently – and tragically – we saw this with the disaster at the Pike River mine. If there is any comfort to be taken from this tragedy at all, it is that it has spurred Government and the business community to take a long hard look at ways to improve New Zealand’s record in health and safety.

Drawing on its analysis of the root causes of the Pike River disaster, the Royal Commission made 16 recommendations – all essentially accepted by the Government in December 2012. Most focused on improving safety within mining but three related to the role of directors and boards. These were:

  • • 
    a call for a review of the statutory responsibilities of directors for health and safety in the workplace to better reflect their governance responsibilities;
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    the health and safety regulator should issue an approved code of practice to guide directors on how good governance practices can be used to manage health and safety risks; and
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    directors should rigorously review and monitor their organisation’s compliance with health and safety law and best practice

Broadly speaking, the Institute of Directors (IoD) backs these recommendations and supports efforts to improve workplace safety in this country. Directors have a pivotal role to play in this area. Boards are responsible for ensuring that all areas of risk within an organisation are appropriately assessed and prioritised, and this includes the risk to the health and safety of employees. It’s clear that in some industries and sectors, people’s lives quite literally depend on the board and management getting this right.

We wholeheartedly agree that it is part of a director’s job description to “rigorously review and monitor” their organisation. Directors have a duty to hold management to account to ensure that any measures – including safety measures – have been carried out properly.

In a note sent to IoD members after the Royal Commission’s findings were released, the IoD stressed this point, adding that it is also important that any board has at least some directors with industry experience who will know to ask tough, searching questions of management. Effective boards – and New Zealand has many of these – understand these points, recruit directors with relevant experience accordingly, and carry out these duties conscientiously.

Both the Royal Commission and the Independent Taskforce on Workplace Health and Safety recommend a statutory duty that will require directors to play their part in ensuring that the company has an effective health and safety management system in place. Currently under New Zealand law, a director is liable under the Health and Safety in Employment (HSE) Act only if he or she knowingly participates in the offence in some way – by directing, authorising, assenting to or acquiescing in an activity that he or she knew to be unsafe.

Our current HSE Act is largely unchanged since 1992, and a review is long overdue. However, there are concerns about the direction any reform should take, as outlined by the IoD in its submission to the Taskforce late last year.

One of the main concerns is that any new regime could be an unwieldy instrument that also penalises responsible and safe businesses with a new layer of compliance obligations and costs. It’s vital to recognise that every sector carries different risks – a café will have different inherent risks to a fishing boat, for instance – and any new HSE legislation should recognise that it is not really a case of one size fits all. We would hope that any new health and safety regulations will require companies to adopt best practice safety measures relevant to their workplace.

Understanding the limitations of a board’s role is also important. A board alone cannot create a safe workplace – the responsibility is shared between board, management, employees and the external regulator.

We agree that directors should be held to account in relation to health and safety but only in relation to how they fulfilled their role. A director’s responsibilities should cover ensuring that the company has a fit-for-purpose health and safety management framework that recognises the inherent level of risk in the organisation. They should also be responsible for ensuring that the framework is implemented and that the framework is effective in identifying and responding to emerging health and safety risks.

But finally, legislation is only part of the solution. The Royal Commission recognised this with its call for a health and safety code of practice for directors, which the IoD is helping to formulate. A positive approach through education, guidance and advocacy could well do more to bring about an attitudinal change to safety within the workplace than any number of strong reactive measures when things go wrong.

RALPH CHIVERS is chief executive of the Institute of directors.

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