The new Health & Safety Act: impacts for businesses in administration



Health and Safety Act 2015


The new Health and Safety Act came into effect on 4 April 2016 with the purpose of reducing the number of New Zealanders killed or hurt at work.


On average 73 people die on the job each year in New Zealand and one in ten is harmed. As a result, the new act shifts the focus from monitoring and recording health and safety incidents to proactively identifying and managing risks so everyone is safe.


So who is responsible?


According to WorkSafe, everyone in a business is responsible for health and safety.


  • The business itself – a new legal concept has been introduced: Person Conducting a Business or Undertaking (PCBU). The PCBU will have the primary duty under the new law to ensure the health and safety of its workers and others affected by the work it carries out. PCBUs will usually be a business entity, such as a company, rather than an individual.
  • Officers – includes directors and other people who make governance decisions that significantly affect a business. Officers have a duty of due diligence to ensure their PCBU complies with its H&S obligations.
  • Workers – must take reasonable care to ensure the H&S of themselves and others, and to comply with the PCBU’s reasonable instructions and policies.
  • Other people – who come to the workplace, such as visitors or customers, also have some H&S duties. It’s all about taking your share of the responsibility for what you can control.

The PCBU will also need to engage its workers in health and safety matters, including:


  • Identifying H&S hazards and risks, and take steps to prevent these from happening.
  • Making sure your H&S policies are led by management, understood by all staff and reviewed regularly.
  • Holding regular training on H&S matters.
  • Engaging workers in H&S matters that affect them.
  • Supporting all officers to get up to date with H&S issues and key risk factors.
  • Reporting and monitor H&S goals.
  • Regularly reviewing any incidents.
  • Carrying out frequent H&S audits.


As you can imagine — while health and safety is indeed important — the process to get the workplace and everyone involved caught up and on the right track can be costly.


Who has been affected already?




In response to the new act, school principals plan to put their homes into trusts to avoid losing them if they are held personally liable for playground injuries.


Principals – who are effectively the chief executives of state-owned organisations with responsibility for hundreds of staff and thousands of children – could be fined up to $600,000 if someone is hurt.


A heavy weight


The Dunedin Gymnastics Academy says it will have to write off $120,000 worth of equipment. The gym was closed last week when tests — performed to comply with the new Health and Safety at Work Act — revealed traces of asbestos on the rafters and window sills.


The tests, carried out by Southern Insulation, revealed no trace of asbestos in the air, but a sample from one of the mats returned a positive result. Insurance covered only sudden events, so the contamination of the equipment, which took place over many years, was not covered.


The Dunedin Gymnastics Academy is currently gauging options of where to proceed next.


Off the silver screen


Oscar winner Sir Peter Jackson resigned as a director of Weta Workshop.


The five-time Academy Award winning design studio and physical manufacturing facility services the world’s entertainment and creative industries. It is also a tourism destination.


Jackson, along with fellow Oscar winner Jamie Selkirk, stepped down from the company on December 31 2015 as the new act would require them to be more involved on a daily basis — Weta Workshop is a manufacturing business.


Perhaps the biggest concern was the new act making directors liable and responsible for health and safety, which begs the questions:


  • How much would it cost to reassess the business?
  • How much would it cost to get the business up to the new health and safety standard?
  • Will the cost of integrating the new H&S procedures put your business at a loss? And if so – how much? Is it worth it?

And what about companies in the midst of financial trouble, where an administrator has been appointed to act in the event of receivership or voluntary administration?


In these instances, the administrator will generally intend to allow the company continue trading in order to sell product to pay the company’s creditors. Yet, with the new Health and Safety Act in place, vulnerable businesses may default due to costs around safety audits.


Manufacturing trouble


In many manufacturing businesses the cost of shutting down the workplace — while a H&S audit is performed — is incredibly costly. The time required to evaluate facility, equipment, policies, and to go through all health and safety procedures to ensure they are adequate could take days.


Factor in paying staff while the facility is closed and the possibility of fixing up equipment or making renovations afterwards, and you’re looking at something entirely uneconomical.


Partially finished products will not be completed if the company cannot cover the costs the H&S audit. This will likely lead the company into a liquidation scenario.


What’s next?


The new Health and Safety Act is here to stay. If it appears your company is headed for default, do not hesitate to seek advice as soon as possible. Good advice at an early stage is the best way to avoid liquidation.


Questions about receivership or voluntary administration and how the Health & Safety Act may impact this situation? Please email Simon at