Legislation is showing its teeth
The hefty sentencing in the recent Budget Plastics workplace health and safety case confirms the strict attitude now taken by WorkSafe and the courts. With the Health and Safety at Work Act 2015 having been in place 18 months or so, this case reinforces the need for all businesses to ensure they comply with their obligations under the new regime.
Worksafe New Zealand v Budget Plastics (New Zealand) Ltd involved a worker who had his hand amputated after it was caught in the auger of a plastic extrusion machine. His employer, Budget Plastics, pleaded guilty for failing to ensure the safety of its employee while at work, so far as was reasonably practicable, which led to serious injury. The maximum penalty was a fine of up to $1.5 million.
Budget Plastics was found to have failed to comply with a number of industry standards and WorkSafe guidelines. It had also not implemented all the recommendations which arose from a health and safety audit six weeks before the accident.
The court confirmed its robust approach based on the old Health and Safety in Employment Act 1992, albeit with more severe penalties. Previously there were three ‘bands’ for sentences depending on the culpability of the employer. For ‘medium’ culpability cases, the band was $50,000–$100,000. Under the previous regime, the Pike River disaster (involving 29 fatalities) resulted in a range of $200,000–$230,000 per offence; this was in the high end of the ‘high’ culpability band.
WorkSafe argued that under the new regime the appropriate band for medium culpability cases (such as Budget Plastics) would be a fine of $500,000–$1 million. It suggested that cases of low culpability could attract fines of up to $500,000.
Medium culpability for Budget Plastics
The court considered the Budget Plastics case reflected medium culpability, but decided that under the new regime the appropriate starting point (before allowing for any discounts) was $400,000–$600,000. That is, six to eight times the level under the previous regime.
Ultimately, the court decided the appropriate ‘end’ sentence (after discounts for reparation, remorse, a guilty plea and so on) was $210,000–$315,000. In this case, however, the court accepted that the company could not afford to pay any more than $100,000 (in addition to reparation). The case was not considered so serious that the company should be put out of business by the imposition of a fine although, in some cases, that might be appropriate. The court imposed a fine of $100,000, together with reparation of $37,500 and costs of $1,000.
Make sure your business complies
The Budget Plastics case clearly shows that the courts will impose significant penalties for serious breaches of the ‘new’ health and safety legislation. Directors and managers can also potentially be personally liable in some cases.
If you have not yet reviewed your health and safety compliance since the new regime was enacted last year, you should do so now. We have people who can assist.