Employment / Workplace

Implications for Franchisors under The new Health and Safety at Work Act

The new Health and Safety at Work Act 2015 comes into force on 4 April 2016 and carries with it maximum fines of $3,000,000 for non-individuals and up to $600,000 or a term of imprisonment of up to 5 years for individuals for the most serious offences.  

The new Act has a much wider reach than the existing Health and Safety in Employment Act 1992 and has the potential to impose duties on franchisors not just in respect of their own workers or work place.  If a Franchisor directs or influences its franchisee's workers, if it subleases or licences premises to its franchisees or supplies goods or plant or equipment which are used in the work place, then it will have additional duties and obligations under the new Act.

PCBU

The Act introduces the concept of "Persons Conducting a Business or Undertaking" ("PCBU"). Both a franchisor and a franchisee will be considered to be a PCBU.

The primary duty

The primary duty of a PCBU is to "ensure so far as reasonably practicable the health and safety of workers" and those workers who are influenced or directed by them. 

What is "reasonably practicable" is defined as what is or was reasonably able to be done at a particular time to ensure health and safety in the workplace; taking into account and weighing up all relevant matters. The costs of taking steps to prevent the risk are only relevant if such costs are grossly disproportionate to the risk.

Other duties

If a franchisor or franchisee controls or manages a work place or the fixtures fittings or plant at a work place (for example; if the franchisor subleases or licences premises to its franchisees) then they must ensure so far as reasonably practicable, that the means of entry and exit to the work place and anything arising from the work place is without risks to the health and safety of any person.

If the franchisor or franchisee's business involves the design, manufacture, importation, supply or installation of plant, substances or structures which are used in a work place then they will have duties to ensure so far as reasonably practicable that these items are without risk to the health and safety of any person using, handling, storing or constructing them.  This has the potential to catch franchisors who arrange the supply of goods (which are used in the work place) to their franchisees.

Other duties of a PCBU include:

  • A requirement to engage with workers in relation to health and safety matters (for example when identifying heath and safety hazards, making decisions about eliminating those hazards and proposing any changes which affect health and safety).
  • The provision of a worker participation process which provides workers with a reasonable opportunity to participate in improving health and safety in the work place on an ongoing basis.

Officers

The concept of an "Officer" is also introduced. "Officers" include directors, partners, any person occupying a position comparable to a director or any person who holds a governance role in the business who exercise significant influence over the management of the business or undertaking. Under previous legislation, directors could only be held liable for a breach by their business where they had "directed, authorised, consented to, acquiesced in, or participated in" such a breach.  The obvious benefits of being a director was that their liabilities were limited and that they could distance themselves from the involvement in the management of the work place and the subsequent health and safety regulations.

Officers now have a positive duty to exercise due diligence to ensure that the PCBU complies with its health and safety duties.  

What about Workers?

Workers also have duties to:

  1. take reasonable care for their own health and safety;

  2. take reasonable care that their acts do not adversely affect the health and safety of other persons;

  3. comply with any reasonable instruction from a PCBU to allow the PCBU to comply with the Act;

  4. cooperate with any reasonable policy or procedure of the PCBU relating to the health and safety at the work place.

Anyone else at the work place must also comply with the duties set out at 1 to 3 above.

Workers can cease to carry out work (and a health and safety office can direct them to do so) if they believe that the work would expose the worker or any other person to a serious risk to the workers or other persons health and safety arising from an immediate or imminent exposure to health and safety. 

Health and Safety Representatives and Committees

A PCBU must have a health and safety representative if a worker notifies it that it wishes to have one elected.  But this is not required if a PCBU has less than 20 workers and is not in a high risk sector or industry as prescribed by the regulations.

The representative's role is to attend health and safety meetings (if there is a committee) and it can issue Provisional Improvement Notices if it believes a person is contravening or likely to contravene the Act. It is an offence to fail to comply with such a notice.

A health and safety representative can also direct a worker to cease carrying out work if they believe that in carrying out the work the worker or any other person could be exposed to a serious risk to their health and safety arising from an immediate or imminent exposure to a hazard.

A PCBU must also establish a Health and Safety Committee if requested by a health and safety representative or more than 5 workers. However, it is not required to do so if there are less than 20 workers in the business and the business is not decreed a high risk sector or industry by the regulations.

WorkSafe

Worksafe has the role of regulator under the Act and its objective is to monitor and enforce compliance with the Act, and also providing guidance about health and safety and codes of practice.

Regulations

The Ministry of Business, Innovation and Employment is currently finalising regulations which will accompany the Act.  These regulations cover general risk and workplace management (and will have requirements regarding identification of hazards, training, facilities at the work place and specific obligations relating to particular risks), major hazard facilities, work involving asbestos and infringement offences.

What should franchisors do?

Franchisors should immediately start familiarising themselves with the new Act and review their own health and safety practices in light of the new requirements.  Franchisors should think carefully about the following questions:

  1. What training will the franchisor and its workers undergo to understand and comply with their obligations under the new Act?

  2. Who will be considered to be Officers?  Are all of the Officers of the franchisor aware of and understand their obligations under the new Act?  What steps will they take to make sure they are complying?

  3. Does the franchisor lease, sublease or licence premises to franchisees?  If it does then it will need to consider what steps it will need to take to comply with its duty to ensure that the premises are without risk to the health and safety of any person.  The same will apply to franchisees who have premises which are used as a work place.  The franchisor may wish to consider adding obligations in its franchise agreement and manual.

  4. Does the franchisor supply or arrange the supply of plant, substances or goods which are used in the workplace?  Again if the answer is yes then the franchisor will need to take steps to ensure the health and safety of any person using, handling or storing the plant, goods or substances.  The same obligations will apply to franchisees who on sell such goods.

  5. What special policies or procedures need to be developed to ensure compliance by the franchisor and franchisee?

  6. What training should it offer franchisees about their duties under the new Act?

  7. Does the franchisor have any role in influencing or directing the workers of its franchisees?  If so, what actions should the franchisor be taking to ensure that its duty in respect of these workers are complied with?

  8. What changes are required to the franchise agreement and the franchise manuals to address the new Act and the franchisor's increased liability?

While franchisors must ensure they understand their obligations as a PCBU under the new Act and will be in a position to comply by April, they should also be thinking about how they can support their franchisees in understanding and complying with their obligations under the new legislation.

For more information about the new Health and Safety at Work Act 2015, please contact Lizandra Bailey, Stephen Corlett  and Eru Davies.

The contents of this publication are general in nature and are not intended to serve as a substitute for legal advice on a specific matter. In the absence of such advice no responsibility is accepted by Brookfields for reliance on any of the information provided in this publication.

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The contents of this publication are general in nature and are not intended to serve as a substitute for legal advice on a specific matter. In the absence of such advice no responsibility is accepted by Brookfields for reliance on any of the information provided in this publication.

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