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Sleeping directors... Are you ready to take on extra responsibility?

Last week we saw the shock resignation of Sir Peter Jackson from Weta Workshop.

The media mogul and ‘sleeping director’ of Weta has acknowledged that his lack of involvement in the day-to-day running of the business may place him and the company in breach of the imminent new health and safety law.

His tight work schedule and extensive commitments both in New Zealand and overseas make it difficult for him to dedicate the time necessary to oversee the operations of the business on a daily basis.

We are pleased to see a heightened awareness among clients of the potential implications that this new law (coming into force on 4 April 2016) will have on not just directors, but all management and workers. The need to show good governance and the implementation of a zero-harm strategy will only succeed when all parties are actively invested in the outcome.

Whilst, the NZ Institute of Directors agrees that he has made an “excellent considered choice”, others think his conduct is simply an “unnecessary overreaction” and a missed opportunity to reassure the business that the welfare of its staff is of paramount concern.

What is clear, however, is that the new health and safety law will require “officers” including all directors, chief executives and some senior managers to accept additional responsibilities compared with the current legislation. These extra responsibilities include having knowledge of health and safety matters within that business, an understanding of the nature of those risks and ensure that appropriate resources and processes are in place to minimise the risk of health and safety issues arising. There is a strong argument that if it is acceptable for directors (sleeping or not) to take responsibility for a company’s finances, then they should also take as much responsibility for the safety of its workers.

Some experts have even gone so far as to suggest that the era of the sleeping director has now long since gone; even they need to show an increased awareness of the business and their role, with health and safety issues being a key consideration. Health and safety will soon be everyone’s affliction; it is a collective responsibility.

Without active implementation and an increasing awareness of the need for sufficient documentation and processes, more tragedies may be likely to occur with a genuine exposure to liability. There will be no defence in saying “but we intended to do it”.

Commercial lawyer Victoria Palfrey agrees that when it comes to directors’ duties, it pays to be cautious. In addition to the duties under existing legislation (including the Companies Act and Health and Safety in Employment Act) directors, and other officers, now need to take a proactive role and have more involvement in health and safety from an operational and management perspective. With personal liability now arising from a breach of these duties, it may also a good time to think about protecting your assets.

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