A discussion paper on the revision of the definition of serious harm

E: Resource and compliance implications

The effects of the proposed changes to the definition are discussed here with reference to each of its four uses. (A compliance cost statement and a regulatory impact statement will be prepared in the course of developing any Order in Council.)

There will be new "significant hazards"

The new definition will not increase the hazard management requirements of employers and others under the Act - but it will make clearer the hazards that they are expected to manage as "significant".

As discussed above, the new definition will also clarify the reporting requirements for a range of occurrences of harm not caught by the existing definition.

Employer groups have indicated that the increase in the number of potential "significant hazards" is not of particular concern, and that effective hazard management would already involve consideration of any such hazards. The comment was made that, when employers identify and manage hazards to meet the requirements of sections 7-10 of the Act, the step of considering whether or not a hazard is "significant" is not always made.

Instead, in practice, employers using formal hazard management processes tend to identify all hazards in a workplace and then rank them according to the need to eliminate, isolate or minimise as the Act requires.

More accidents will be reported

The extension of coverage will increase the number of accidents and occurrences of serious harm that are required to be reported to the Department of Labour, Civil Aviation Authority and Maritime New Zealand.

The extent of this will depend, among other things, on the time period chosen to define "temporary severe loss" of bodily function. However, as drafted, the new definition will include significant numbers of strains, sprains and other soft tissue injuries. This is in addition to cases of electric shock, loss of consciousness and other causes proposed for inclusion.

As discussed above, harm caused by stress and fatigue are caught by clause 4 of the draft. The option chosen for the draft relies on the existence of a diagnosis and treatment by a medical specialist. This would have the effect of bringing such cases to the attention of employers as pointers to "significant hazards" in the place of work, which they are, in turn, obligated to manage. Only pronounced cases would come to the notice of the Department of Labour.

This approach, while not encouraging early involvement by the health and safety inspectorate in stress and fatigue cases, will complement the Act's employee participation requirements. It will encourage the discussion and resolution of stress and fatigue issues within the workplace, while avoiding potential breaches of privacy or unnecessary escalation of any given situation through early reporting or premature involvement by the health and safety inspectorate.

Reporting rates for serious harm injuries have always been low. For example, in the year ended 30 June 2006 a total of 5,925 cases of serious harm were notified to the Department of Labour. By comparison, new work-related entitlement claims lodged with ACC in the same year numbered over 28,500 (approximately two-thirds of which were cases of soft tissue injury, many of which are not currently reportable under section 25). The figures are not directly comparable, but are indicative of a low level of reporting.

This is consistent with overseas jurisdictions, although, in part this can be attributed to the uncertainty surrounding the definition of "serious harm" under the New Zealand legislation.

The numbers of serious harm accidents and incidents reported to the Department of Labour for the last five years ended June were:

2002 - 5,731
2003 - 5,640
2004 - 6,572
2005 - 6,603
2006 - 5,925

For comparison, summary data on the occurrence of work-related injury and disease were published in The Burden of Occupational Disease and Injury in New Zealand: Report from the National Occupational Health and Safety Advisory Committee to the Associate Minister of Labour, Wellington 2004 (www.nohsac.govt.nz).

That report concluded, in summary, that each year in New Zealand:

• between 700 and 1000 workers die prematurely as a result of work-related disease;
• there are between 17 and 20,000 new cases of occupational disease (between 2,500 and 5,500 of which are severe);
• there are about 100 work-related fatal injuries; and
• there are over 200,000 occupational injuries resulting in ACC claims (an estimated 50% of which result in disability, and 6% in permanent disability).

There will be little impact on enforcement and penalties

Before the 2002 amendment, penalties under section 50, which is the basis for most prosecutions under the HSE Act, were stepped according to whether or not serious harm had occurred. The amendment removed this distinction, meaning that it is not a direct determinant of penalty. However, the occurrence of serious harm remains a necessary element of the more serious, but rarely prosecuted, section 49 offences.

The revised definition also provides scope for the definition to be oriented more towards its use for the purposes of the Act's hazard management and reporting requirements, without the change impacting unduly on enforcement processes.

Consistent with this, the Act's new infringement notice regime requires infringement fees to be set after consideration of the extent of any harm that occurred as a result of the breach. The term "serious harm" is not used in the regime.

Employees will be better able to refuse unsafe work

Clarifying the definition will assist employees and their representatives to exercise the right to refuse work likely to cause serious harm (s28A).

Section 28A (8) describes any question about the application of the right to a particular situation as an employee relationship problem. Dispute resolution is conducted under the processes of the Employment Relations Act 2000. Any clarification will therefore allow and encourage the use of the right, and avoid unnecessary dispute after the fact in any particular case. This is particularly the case with stress and fatigue issues, and which are often more effectively resolved through mediation or, in some cases, by the Employment Relations Authority.

QUESTION 16: What are the resource and compliance implications of the new definition, and are these reasonable for your business or organisation?

QUESTION 17: Will the revised definition help employees to exercise the right to refuse work likely to cause serious harm?