ORDER IN COUNCIL REVISING THE DEFINITION OF SERIOUS HARM UNDER THE HEALTH AND SAFETY IN EMPLOYMENT ACT 1992

Proposal

This paper seeks approval to instruct the Parliamentary Counsel Office to draft an Order in Council to replace Schedule 1 of the Health and Safety in Employment (HSE) Act 1992 with a new definition of “serious harm”, and draft regulations to amend the Health and Safety in Employment (Prescribed Matters) Amendment Regulations to change the approved forms for recording and reporting occurrences of serious harm in workplaces.

It also seeks approval to release the results of public consultation on a revised definition of “serious harm” under the HSE Act. 

Executive summary

The definition of serious harm under the HSE Act has been reviewed with the intention of improving the clarity of the law for businesses and others, and to improve the consistency and quality of reporting of accidents and incidents to the Department of Labour (the department), the Civil Aviation Authority (CAA) and Maritime New Zealand. 

The proposed new definition, developed by the department after public and government agency consultation, will contain three main categories of harm:

1. trauma injury, being physical harm arising from a single accident or event and defined by the degree of physical incapacity
2. acute illness or injury caused by exposure to certain workplace hazards, and requiring treatment by a medical practitioner
3. chronic or serious occupational illness or injury, being physical or mental harm requiring hospital admission, in-patient surgery, or able to be confirmed by a specialist medical diagnosis. 

The revised definition will remove gaps in coverage of certain types of harm and hazard, and will be clearer and easier to use for employers, principals and the self employed with duties to report occurrences of serious harm. Problematic phrases and incomplete lists of conditions in the current definition have been replaced, and the proposed definition will refer explicitly to occurrences of mental harm as serious harm.  

The paper also proposes amendments to regulations prescribing the manner of reporting occurrences of serious harm to the Department of Labour, CAA and Maritime NZ.     

Background

“Serious harm” is a key concept for hazard management and the notification of harm under the HSE Act. It has four main uses, by prescribing:

• what is a “significant hazard” and so must be managed by an employer (under the hierarchy of actions set out in sections 7-10)
• the occurrences of harm or accidents that must be notified and reported, and when an accident scene must be protected until investigated (sections 25 and 26)
• the degree of harm that creates the most serious offences, with the highest fines, or imprisonment, under the Act (section 49)
• the work that employees may refuse because it is likely to cause them serious harm (section 28A).

The department, together with Maritime NZ and CAA, are notified of about 6,500 occurrences of serious harm in workplaces each year.  The vast majority of reports are to the department. They form the basis of most of the accident and incident investigations by the health and safety inspectorate, many prosecutions, and inform many of the department’s interventions to improve workplace health and safety.

The term “serious harm” is defined by section 2(1) of the HSE Act as “death or harm of a kind or description declared by the Governor-General by Order in Council to be serious” for the purposes of the Act.  Section 2(4) then provides that until the commencement of the first Order in Council, serious harm is defined in Schedule 1 of the HSE Act.  When the HSE Act was passed in 1992, the intention was that the “temporary” definition in Schedule 1 of the Act was to be replaced with a more comprehensive definition developed after consultation.

Consultation was carried out in 1998 but there was a lack of agreement among stakeholders and a proposal for a new definition was not implemented.

The “temporary” definition contained in Schedule 1 has always presented difficulties for users and is considered to contain gaps in coverage of certain types of harm and hazard. Employers, health and safety inspectors, and others have particular difficulty interpreting the phrase “temporary severe loss of bodily function” in clause 1. Because the wording of the law itself is unclear, various court cases, and attempts by the department to provide guidance, have not provided clarity. 

The problem was reinforced by the 2002 amendments to the HSE Act. These extended reporting and notification duties to principals and the self-employed. The amendments also clarified that “mental harm” is included as a type of harm or hazard to be managed by employers and others. However, because the schedule does not refer specifically to mental harm, employers don’t know what cases of mental harm are deemed to be serious harm and so trigger duties or obligations.

The department’s view has always been that, because the definition presents difficulties to users and introduces a lack of clarity in the working of the HSE Act, it should be revised to improve the long-term effectiveness of the legislation.

Process of revision

My predecessor, Hon Dyson began a review in 2007. On 11 April 2007, after Cabinet approval (CAB Min (06) 27/5A), Hon Dyson released for public consultation the paper titled Defining Serious Harm: a discussion paper on the revision of the definition of serious harm.

The discussion paper was based on a draft amended definition and contained 17 questions on aspects of the draft. Submissions closed on 15 June 2007. This paper reports back to Cabinet on the results of public consultation and amendments to the definition.

The department has prepared a report summarising submissions and providing analysis and statistical tables by question, with the department’s recommendations in response. The report, as I propose to release it to submitters, is attached as appendix 4.

The basis of analysis for the report was to ensure that the policy intent of the HSE Act is implemented and administered in a manner that:

• eliminates unnecessary compliance costs and minimises necessary compliance costs for employers and others
• provides maximum clarity and consistency
• gives comprehensive coverage of workplaces and hazards
• maintains the interests of employees and others affected by work activities.

Results of consultation

There was a good level of response to the consultation document and a total of 116 submissions were received. The majority (two-thirds) were from employers and sector groups, and 11 (less than 10 percent) were from employees and individuals. The balance were from unions, professional groups, government agencies and education providers.  

Almost unanimously, submissions confirmed:

• a clear need to revise the definition of “serious harm”
• that the most critical use of the definition for dutyholders is in determining when occurrences of serious harm are reported under section 25 of the HSE Act, and
• that any revision of the definition of “serious harm” should be accompanied by revised prescribed recording and reporting forms, improved information provision, and improved ease of reporting to the department.

There was a wide range of views and opinions on other aspects of the draft definition. These are discussed in the report.

In response the department recommended five broad changes to the draft definition contained in the discussion document.  Each of these changes was in response to a significant theme arising from submissions:

1. reducing the level of coverage of soft tissue injuries from what was proposed in the draft
2. making the definition clearer by grouping it into the three main types of harm considered “serious” 
3. requiring diagnosis for all types of serious harm not resulting from a single exposure to a workplace hazard
4. reducing the need to report occurrences of harm to non-employees 
5. better defining “contact with any energy source” and “fall or physical impact”.

At Hon Dyson’s request, the department subsequently asked Business NZ and the NZ Council of Trade Unions for comment on the report on submissions, and their comments have been incorporated into the report and the revised definition I am proposing.

Comment

Public consultation and subsequent discussion with the social partners has emphasised the significance of the definition in users’ minds as a trigger for notification and reporting, and therefore involvement of the health and safety inspectorate.

Broadly, views polarise between employers wishing to raise the threshold for reporting to the department, and unions, wishing to lower the threshold in order to require increased reporting by employers and others. Health and safety professionals offer differing views.

I have therefore considered the results of consultation alongside the types of harm that the department considers “serious” for the performance of the health and safety inspectorate’s functions. 

Submissions have shown that two areas are problematic and invoke different responses from unions and employers:

• for persistent or chronic gradual process injury or illness, the agreed point where a condition becomes “serious” and warrants the department’s involvement
• for physical or “trauma” injuries, the degree of incapacity that warrants an injury being considered “serious”.            

I have considered the views of Business NZ and the NZ Council of Trade Unions, and advice from the department on different means of making the law simpler and more transparent. At the same time the department needs to receive reports of serious harm to make the interventions necessary to ensure the HSE Act is being maintained.

Although the proposed changes have been made primarily to ease reporting, they will not affect or undermine the other uses of the definition and will strengthen the working of the law generally.  

The proposed policy decisions below represent what I consider to be a workable compromise between the respective positions, while encouraging compliance by making the law easier to understand and implement.

Each of the policy decisions is discussed as proposed changes to the current definition contained in Schedule 1 of the HSE Act.

Proposal for change       

I propose that new definition of serious harm include three categories of harm:

1. trauma injury, being physical harm arising from a single accident or event and defined by the degree of physical incapacity
2. acute illness or injury caused by exposure to certain workplace hazards, and requiring treatment by a medical practitioner
3. chronic or serious occupational illness or injury, being physical or mental harm requiring hospital admission, in-patient surgery, or able to be confirmed by a specialist medical diagnosis. 

This approach will improve clarity by grouping an otherwise diverse range of conditions into three readily understood, and remembered, categories of harm.

Each broad classification of harm will have its own threshold of incapacity or treatment, but these will be simple enough to be readily understood by duty holders.

The categories are not intended to be mutually exclusive, and any occurrence of harm may fall into more than one category. For example, a serious fracture resulting from a fall from height is likely to fall into all three categories by requiring an initial visit to a medical practitioner, hospital admission, surgery and more than seven days off work for the injured person. The approach is not problematic and will only improve coverage and avoid anomalies.

Category a) trauma injury

I propose that the category of “trauma injury” should cover physical injuries arising from a single accident or event. 

Whether or not a trauma injury is considered to be “serious harm” will depend on the degree of physical incapacity experienced by the person.  It is proposed the degree of physical incapacity required to be considered “serious harm” be defined by reference to two factors:

1. permanent loss of bodily function
2. inability to perform normal duties for a period of 7 or more calendar days.

The current definition refers to permanent, or temporary severe loss of bodily function resulting from a list of occupational illnesses and injuries. The list has proven with use to be incomplete and difficult to interpret. The proposed amendment will remove the list of conditions and therefore include all cases of illness and injury.

All cases of harm leading to permanent loss of bodily function will be covered by the definition, as is the case now.

The proposed amendment will remove the problematic phrase “temporary severe loss of bodily function” and replace it with the threshold of incapacity of a person being unable to perform their normal duties for more than 7 calendar days.

The current definition contains a clause that specifically refers to any case of amputation of body part. The reference is no longer necessary, as such injuries will be included as cases of permanent loss of bodily function. The change will supplement the case law, which has been unclear in cases such as the loss of a finger tip where there has, technically, been an amputation, but without loss of bodily function.   

Use of the phrase “unable to perform their normal duties” will not exclude coverage of visitors and bystanders who are harmed by work activities but suffer the effects beyond the workplace.

Gradual process injuries

Gradual process injuries will be excluded from the coverage of the “trauma injury” category because it will only refer to injuries caused by a single accident or event. Instead, only gradual process injuries confirmed by a medical specialist’s diagnosis will be caught by the third category – serious or chronic occupational injury or illness. This approach is consistent with return to work and the management and rehabilitation of gradual process injuries as advocated by the Accident Compensation Corporation (ACC) and treatment providers.

The department advises that there is an increased awareness of gradual process injuries and that overall they are better managed in workplaces. This is being achieved through a range of injury prevention initiatives, and better management of injuries, with earlier return to work.

The health and safety inspectorate do not need to be made aware of all cases of gradual process injuries if they are being managed according to accepted practice. However, it is appropriate for the inspectorate to be advised of more serious cases.

Chronic and persistent conditions will instead be covered by the third category of the proposed definition. I propose that where practical there has been diagnosis made at the level of specialist medical practitioner.

A lower standard of diagnosis than this would only add to uncertainty and inconsistency of reporting. On the other hand, the higher threshold will not restrict employees’ access to treatment, weekly compensation, or rehabilitation under the Injury Prevention, Rehabilitation and Compensation (IPRC) Act 2001.

“Normal duties”

Public consultation was based on the suggestion that the threshold of physical incapacity should be the person’s inability to perform their “normal duties”.  

Consultation was inconclusive on whether or not this was an acceptable threshold.  Subsequent discussions with the social partners expressed a shared preference for retaining normal duties as a threshold. However, the social partners offered differing views on an appropriate period of incapacity.

“7 or more calendar days”

Consultation produced suggestions for a range of different periods of incapacity. These ranged from as little as two days to two weeks or more.

I have chosen “7 or more calendar days” as a continuous period that will include a break in the shift cycle of most employees, meaning the recovery period exceeds a full shift cycle in most cases. It will also give approximate consistency with the period of incapacity qualifying an injury or illness for weekly compensation paid by ACC under the IPRC Act.

This description will include some strains and sprains not covered by the current definition. However, the department advises that these cases can be “filtered out” with minimal disruption to employers or the department. The alternative of excluding all sprains and strains would create too wide a gap in coverage and be prone to abuse.

Category b) acute illness or injury

I propose that the category of “acute illness and injury” be drafted to catch a range of situations where exposure to a particular category of hazard leads to either a loss of consciousness or an acute illness requiring treatment by a medical practitioner, i.e. general practitioner or other clinician.

The intention of this category is to bring the employer’s or other dutyholder’s, and where appropriate, the department’s attention to a particular workplace hazard that needs to be addressed. The four categories of harm that I propose are:

1. lack of oxygen
2. absorption, inhalation or ingestion of a hazardous substance
3. contact with any electrical, combustible or mechanical energy source
4. a fall from one height to another (i.e. not a trip, slip, or fall on the same level).

The proposed category will improve the reporting of cases of electrocution, where there are currently gaps in coverage. This approach is consistent with work underway to bring electrical hazards under the coverage of the HSE Act.

The more comprehensive coverage of all cases of electrocution will help shared reporting by agencies.

The same threshold will apply to acute illness caused by exposure to substances, falls from one level to another, and contact with any mechanical energy source. This lowers the threshold for reporting in relation to those hazards.

The intention of lowering the threshold in these cases is to focus the person making the report on the need to take action in relation to the hazard the occurrence of harm has highlighted. I expect this to have the effect of emphasising the need for hazard management with respect to each of the four broad hazard types contained in the category.

Category c) chronic or serious occupational illness or injury

I propose that a third category of harm include any chronic or long-latency conditions resulting from exposure to workplace hazards. This will strengthen the department’s information on occupational illness and encourage employers and others to give more consideration to occupational health issues.

It will include all cases of physical or mental harm involving hospital admission for more than 24 hours, in-patient surgery, or a specialist diagnosis.

Hospital admission

The current definition includes any case of a person being hospitalised for more than 48 hours within seven days of the harm’s occurrence.

Medical practice has changed since 1992, and hospital admissions tend to be shorter and for more serious injuries.  In recognition of this, the proposed new definition will include all cases of hospital admission for more than 24 hours. As such it will exclude cases where there is admission for observation or outpatient treatment (other than those covered by the “acute illness or injury” category).

Including all cases of physical or mental harm arising from a workplace and diagnosed by a specialist medical practitioner

This category will set a threshold of “diagnosis” by the appropriate medical specialist, rather than “treatment”.  It will include cases such as chronic respiratory illness, or chronic poisoning, where there is no doubt of the symptoms but treatment options are limited.

I propose that the category require diagnosis at the level above that of general practitioner, and not to include professions beyond the practice of medicine. This is because for acute conditions, including psychological, general practitioners often prescribe rest as a matter of course, and without confirming a diagnosis. For chronic conditions general practitioners will usually confirm the diagnosis and treatment with a specialist, and this is appropriate for the purpose of determining serious harm.

The issue of diagnosis was discussed fully in the discussion document. Submitters provided considerable comment and support for the definition setting a diagnostic threshold. Employers and health and safety practitioners generally favoured a confirmed specialist diagnosis for chronic illnesses, including gradual process injuries.

This is consistent with the approach taken under the IPRC Act and with current practice in managing pain and discomfort for workers, where the emphasis is on adjusting work patterns to manage discomfort and improve the work situation. General practitioners, in suggesting rest and remedial changes to work patterns for occupational illness and gradual process injuries, are often not in a position to be able to provide a definitive diagnosis.

Employee groups had submitted that there should be a lower threshold for involvement by ACC or the health and safety inspectorate than I am proposing.

These concerns are best addressed by means other than amending the definition of serious harm. This could include changes in workplace practices, by workers raising issues with their health and safety representatives and/or making a complaint to the department. The definition of serious harm is not immediately relevant to these processes.

I propose instead that a confirmed diagnosis by the appropriate medical specialist is the default threshold for chronic occupational injuries, illnesses or disease to be considered “serious harm”. In the case of chronic conditions or disease, any delay in obtaining a diagnosis is unlikely to affect the response to the injury in the workplace, or the department’s response to it.

In consultation some agencies commented that there could be difficulties and delays in obtaining access to medical specialists, particularly in less populated areas. This could reduce the onus on employers to report and respond to such occurrences and so potentially disadvantage the workers concerned.

I therefore propose that in drafting the Order in Council further consideration is given to the best means of requiring an accurate diagnosis, while recognising that a medical specialist may not always be available.  Drafting will also be in a manner that is consistent with the terminology of the Health Practitioners Competence Assurance Act 2003.

Other changes in support of the new definition

I propose that the revision of the definition itself is accompanied by revised prescribed recording and reporting forms for use by employers and others. 

The department will be undertaking related work to improve the level of reporting of occurrences of serious harm and the quality of the information gained. This work will lead to improvements in recordkeeping on the health and safety performance of individual businesses and better targeting of interventions. 

Consistent with this, the department will be improving the information it provides to employers and others on how and what to report. In support of this work I propose that the prescribed reporting and recording processes should allow on-line reporting of occurrences of serious harm, in addition to the current means available, i.e. by phone, fax, mail or email.

I therefore propose that the Parliamentary Counsel Office is instructed to prepare draft amending Health and Safety in Employment (Prescribed Matters) Regulations consistent with the draft Order in Council replacing schedule 1, and that will facilitate online reporting.

Benefits of changes proposed

The proposed new definition will:

• provide a more coherent and transparent definition that will increase understanding and therefore improve the level and quality of reporting and compliance with the HSE Act generally
• set an appropriate and effective threshold for reporting of serious harm for the purposes of the Act, including the role of the health and safety inspectorate
• balance employer and employee concerns regarding the involvement of the inspectorate, and the compliance burden of reporting, while improving the effectiveness of the legislation.

In response to submissions that the threshold for reporting should be substantially lowered, the department advises that targeted injury prevention initiatives, and providing better supporting information for dutyholders will be more effective. These means will encourage workplaces to address hazards better than bringing more accidents or incidents to the attention of the health and safety inspectorate.

Financial implications

The proposal can be developed and implemented by the department and designated agencies within existing baseline funding.

Human rights implications

The proposals in this paper do not appear to give rise to any inconsistencies with the rights and freedoms affirmed by the New Zealand Bill of Rights Act 1990, or the Human Rights Act 1993.

Legislative implications

There are no consequential amendments to other legislation required beyond those discussed in this paper. 

Regulatory impact analysis

The department confirms that the principles of the Code of Good Regulatory Practice and the regulatory impact analysis requirements, including the consultation Regulatory Impact Statement requirements, have been complied with.

A Regulatory Impact Statement is attached as appendix 3. It was based on a draft statement that was included in the discussion document for public consultation and was circulated with the Cabinet paper for departmental consultation.

The department considers the Regulatory Impact Statement adequate.

Gender implications

There are no gender implications from this proposal.

Disability perspective

There are no disability implications from this proposal. 

Publicity

Subject to Cabinet approval, the report on the results of consultation will be made available on the department’s website and sent to submitters on request.

After promulgation, information on the Orders in Council will be published on the Department of Labour’s website. Specific information will be sent to professional and sector groups, unions and other agencies on the department’s consultation list.

New information products will be developed to assist employers integrate the change into their health and safety management and accident reporting and recording systems.  

Consultation

Section 21 of the HSE Act requires the Minister of Labour to consult with all persons and organisations as appropriate, having regard to the regulations’ content. The Department of Labour has completed this on my behalf. It consulted directly with stakeholders and agencies, and posted explanatory material on its website. In response to the public discussion document mentioned above, 116 submissions were received, and the department has reported to my predecessor Hon Dyson and myself on those and prepared this proposal on the basis of submissions. 

This proposal includes the release of the summary of submissions document prepared by the department.

The Department of Prime Minister and Cabinet; the Ministries of Social Development, Economic Development, Health, Pacific Island Affairs, Womens’ Affairs, and Transport; the Ministry for the Environment; the New Zealand Police; Te Puni Kokiri; the Office for Disability Issues; the Environmental Risk Management Authority New Zealand; Civil Aviation Authority; Maritime New Zealand, Accident Compensation Corporation, and the Treasury have all been consulted on the content of this paper. 

Recommendations

I recommend that the Cabinet Policy Committee:

1. Note that public consultation confirmed that the definition of “serious harm” in Schedule 1 of the Health and Safety in Employment Act 1992 is difficult for businesses to interpret and apply and should be revised by Order in Council.
2. Agree that the definition of “serious harm” in Schedule 1 of the Health and Safety in Employment Act 1992 be replaced with a new definition of “serious harm” giving effect to the following policy decisions:
   1. Creating a new three-part definition:
      1. trauma injury, being physical harm arising from a single accident or event and defined by the degree of physical incapacity
      2. acute illness or injury caused by exposure to certain workplace hazards and requiring treatment by a medical practitioner
      3. chronic or serious occupational illness or injury, being physical or mental harm requiring hospital admission, in-patient surgery, or able to be confirmed by specialist medical diagnosis
   2. Setting the degree of physical incapacity from trauma injury as permanent loss of bodily function or being “unable to perform their normal duties for a period of 7 or more calendar days”.
   3. Clarifying and extending the coverage of acute illnesses and injuries covered to be any loss of consciousness or physical harm resulting from:
      1. lack of oxygen
      2. absorption, inhalation or ingestion of any hazardous substance
      3. contact with any electrical, combustible or mechanical energy source
      4. a fall from one height to another.
   4. Including all cases of physical or mental harm involving hospital admission for more than 24 hours, or in-patient surgery.
   5. Including all cases of physical or mental harm arising from a workplace and  diagnosed by a specialist medical practitioner.
3. Agree that the Health and Safety in Employment (Prescribed Matters) Regulations 2003 be amended to be consistent with the definition of “serious harm” to be prescribed in the Order in Council and giving effect to the following policy decisions:
   1. that the revision should be accompanied by revised prescribed recording and reporting forms, improved information provision and improved ease of reporting to the department.
   2. that the prescribed reporting and recording processes should allow on-line reporting of occurrences of serious harm, in addition to the current means.  
4. Instruct Parliamentary Counsel Office to draft Orders in Council consistent with recommendations 1 and 2 above.
5. Direct the Department of Labour to release a document summarising the results of public consultation.

Appendix 1: Proposed matters for inclusion in definition of serious harm

Serious harm, for the purposes of the Health and Safety in Employment Act 1992, means death, or:

1. Trauma injury

Physical incapacity caused by an accident or event and leading to:

(a) permanent loss of bodily function (including from any amputation of body part); or

(b) a person being unable to perform their normal duties for a period of 7 or more calendar days.

2. Acute illness or injury

Acute illness or injury requiring treatment by a medical practitioner, or any loss of consciousness, caused by:

(a) lack of oxygen; or

(b) absorption, inhalation, or ingestion of any hazardous substance; or

(c) contact with any electrical, combustible, or mechanical energy source; or

(d) a fall from one height to another.

3. Chronic or serious occupational illness or injury

Physical or mental harm:

(a) resulting in hospital admission for more than 24 hours; or

(b) requiring in-patient surgery; or

 (c) diagnosed and confirmed as caused by exposure to a workplace hazard, by a medical practitioner who is a registered specialist operating within the appropriate scope of practice.

Appendix 2: Existing definition in Schedule 1

Any of the following conditions that amounts to or results in permanent loss of bodily function, or temporary severe loss of bodily function: respiratory disease, noise-induced hearing loss, neurological disease, cancer, dermatalogical disease, communicable disease, musculoskeletal disease, illness caused by exposure to infected material, decompression sickness, poisoning, vision impairment, chemical or hot-metal burn of eye, penetrating wound of eye, bone fracture, laceration, crushing.

Amputation of body part.

Burns requiring referral to a specialist medical practitioner or specialist outpatient clinic.

Loss of consciousness from lack of oxygen.

Loss of consciousness, or acute illness requiring treatment by a medical practitioner, from absorption, inhalation, or ingestion, of any substance.

Any harm that causes the person harmed to be hospitalised for a period of 48 hours or more commencing within 7 days of the harm's occurrence.

Appendix 3: Regulatory Impact Statement

EXECUTIVE SUMMARY

Public consultation confirmed that the definition of “serious harm” in Schedule 1 of the Health and Safety in Employment (HSE) Act 1992 is difficult for businesses to interpret and apply and should be revised by Order in Council.

It is proposed that the existing definition of “serious harm” is replaced a new three-part definition, comprising three broad categories of harm:

1. trauma injury, being physical harm arising from a single accident or event and defined by the degree of physical incapacity
2. acute illness or injury caused by exposure to certain workplace hazards and requiring treatment by a medical practitioner
3. chronic or serious occupational illness or injury, being physical or mental harm requiring hospital admission, in-patient surgery, or able to be confirmed by specialist medical diagnosis.

ADEQUACY STATEMENT

The proposal is not likely to have a significant impact on economic growth.

The Department of Labour has consulted government agencies on the content of this Regulatory Impact Statement while developing the proposal and considers it adequate.

STATUS QUO AND PROBLEM

The existing definition is an important component of the HSE Act framework. While it currently allows the operation of the Act in most respects, it is deficient in the ways listed below, and as such undermines the effective working of the legislation. This view has been confirmed by consultation with stakeholders.
The current definition is inconsistent with the  Act’s purpose  in that it:

1. does not include the types of harm caused by stress and fatigue which have been explicitly included in the Act’s coverage since the HSE Amendment Act 2002
2. excludes some serious acute illnesses and injuries
3. is ambiguous and hard for businesses to interpret in key areas-particularly “temporary severe loss of bodily function”
4. is inconsistent with the needs of the Hazardous Substances and New Organisms Act 1996, Electricity Act 1992 and Gas Act 1992 which now refer to the HSE Act definition of serious harm
5. sets thresholds based on treatment that are out of step with current medical practice. 

 
This has the effect of:

1. creating uncertainty for those with duties to manage the workplace hazards concerned
2. reducing serious harm notification and investigation rates
3. leading to regular litigation on matters of interpretation which have not provided sufficient clarification
4. impeding the flow of information between workplaces and the inspectorate  
5. undermining confidence in the completeness of coverage, and effectiveness of the legislation.

OBJECTIVES

The public policy objective is to ensure that the policy intent of the HSE Act is implemented and administered in a manner that:

1. eliminates unnecessary compliance costs and minimises necessary compliance costs for employers and others
2. provides maximum clarity and consistency
3. gives comprehensive coverage of workplaces and hazards
4. maintains the interests of employees and others affected by work activities. 

 
ALTERNATIVE  OPTION

The only alternative option considered was the provision to businesses of more guidance on interpretation of the existing definition.

This option was not pursued because guidance cannot exceed the law, and any interpretation can be challenged in court. This is only likely in circumstances where a person is being prosecuted, and before convicting the courts will always take a narrow interpretation and have reference only to the words of the statute.

The department has previously published additional guidance - particularly on the interpretation of “temporary severe loss of bodily function” - but with limited effect. The standing of any additional guidance was therefore questionable and was unlikely to remove uncertainty for those using the definition to determine compliance.

PREFERRED OPTION

Public consultation indicated nearly unanimous support of the need for a revision.The Order-in-Council would address each of the problems with the current definition:

1. including, and defining, the types of harm caused by stress and fatigue
2. clarifying the description of “temporary severe loss of bodily function”
3. explicitly including the acute illnesses and injuries -- including some cases of unconsciousness, burns, injuries from falls, and electrocutions – where there is currently uncertainty.

It would also better align the definition with the requirements of the Hazardous Substances and New Organisms Act 1996, Electricity Act 1992, Gas Act 1992, and provide more consistency with the Injury Prevention, Rehabilitation, and Compensation Act 2001.

The preferred option will provide the following benefits for businesses:

1. Employers and others are clearer on their obligations and rights under the HSE Act and related legislation, and so hazards are better managed
2. Easier compliance with reporting and notification requirements for employers and others
3. Less uncertainty around the management of stress and fatigue, and the role of the health and safety inspectorate in “stress cases” in particular
4. Improved statistics on the nature and causes of workplace injuries and illness
5. The health and safety inspectorate will be better informed of workplace injuries and illness, meaning better surveillance, individual case/client management and more responsive inspection and enforcement. 

The proposal will involve the following costs for businesses:

1. Minor increased reporting from employers, the self-employed and principals, but the HSE Act already requires a record of all, i.e non-serious harm, accidents and occurrences of harm in the same format, so minimal time and costs will be involved
2. Some costs in redesign of hazard management and information systems by private providers
3. More processing of increased number of notifications by agencies (within existing baselines)
4. Some redesign of information products and administrative processes by agencies, which will be included in ongoing revision and maintenance.

The incidence of serious harm occurrences is spread relatively evenly across NZ’s 346,000 enterprises and 1.7 million employees, also the self-employed and principals. This means that if the reporting rate were to double, 1.7 percent of workplaces will be additionally affected in any given year.
For individual workplaces affected by the serious harm injuries or illnesses concerned, the reporting requirement is likely to be of small concern compared with other issues they will be dealing with.

Costs of retraining and changing procedures to meet the new requirements. These will be relatively minor for businesses, as the bulk of the knowledge required by businesses to comply is the same as currently. Where clarification is required, reference will need to be made to the new definition instead of the old. The Department of Labour will update published information, and provide advice to businesses through its call centre.  

Costs in amending hazard management and accident and incident recording and reporting systems by private providers or firms who maintain their own systems.

Proprietary systems are usually packaged and sold as “regularly updated” to reflect ongoing changes in regulations, approved codes and standards. The changes required are minor and not expected to be a significant issue. The proportionate cost may be higher for some smaller businesses who maintain their own hazard management systems, but there will be corresponding benefits from the review process.

The net benefits from the preferred option are:

1. Reduced compliance costs through clarity of standards and requirements across workplaces and industries
2. Clarification of legislative requirements for the management and resolution of stress and fatigue in workplaces 
3. Potential to better align employer hazard management processes across different legislative regimes
4. Improved employee equity through fully coverage of injuries and illness   
5. Consistent application of health and safety legislation improves economic efficiency.
   

IMPLEMENTATION AND REVIEW

There will be changes to related regulations that prescribe the forms and means of reporting occurrences of serious harm. These will support the introduction of on-line reporting as an option for businesses.

After promulgation, information on the Order in Council will be published on the Department of Labour’s website. Specific information will be sent to professional and sector groups, unions and other agencies on the department’s consultation list.

New information products will be developed to assist employers integrate the change into their health and safety management and accident reporting and recording systems.

CONSULTATION

An initial draft proposal was developed after consultation with key stakeholder groups, selected individual employers, and affected government agencies.

Public consultation was held from April until mid-June 2007. It was based on a discussion document containing a draft revised definition and questions to encourage a structured response.

The department received 116 submissions on the discussion document and draft. Many were extensive. The majority were from employers and employer groups, who are most affected, but there was also a good level of interest from unions and professional groups. Support of the need for a revision was almost unanimous. A report on submissions will be released with Cabinet’s approval. 

In developing the proposal for an Order in Council the Department has consulted with the Department of Prime Minister and Cabinet; the Ministries of Social Development, Economic Development, Health, Pacific Island Affairs, Womens’ Affairs, and Transport; the Ministry for the Environment; the New Zealand Police; Te Puni Kokiri; the Office for Disability Issues; the Environmental Risk Management Authority New Zealand; Civil Aviation Authority; Maritime New Zealand, Accident Compensation Corporation, and the Treasury.

Appendix 4: Submissions analysis document

See Summary Report