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

The changes to New Zealand’s Health & Safety legislation come into effect from April 4th 2016 and we have already seen some of the impact.

At the end of January Peter Jackson resigned 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 could place him and the company in breach of the 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.

An 'excellent considered choice'?

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 the business; understanding the nature of those risks; and ensuring that the appropriate resources and processes are in place to minimise the risk of health and safety issues occurring. 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 take equal 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 passed; even they need to show an increased awareness of the business and their role within in - with health and safety issues being a key consideration. As a collective responsibility, Health and safety will soon be everyone’s concern.

Health and safety - a collective responsibility

We are pleased to see a heightened awareness of the potential implications of the new law on directors, management and workers. The need to implement a zero-harm strategy and demonstrate good governance will only succeed when all parties are actively invested in the outcome. 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 is a need to take positive action because saying ‘we intended to do it’ will be no defence.

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.