First Sentence under Health and Safety at Work Act Indicates Significant Fine Increases

The first sentence imposed under the Health and Safety at Work Act 2015 (HSWA) indicates that we can expect fines to be much larger than they were under the HSE Act 1992.

Following a foreseeable and preventable work accident that amputated most of a worker's hand, Budget Plastics Ltd. has been ordered to pay reparations of $37,500 to the victim, costs of $1,000 to WorkSafe NZ and a fine of $100,000.

The judge set the starting point for the fine at $400,000 - $600,000, however the final amount was reduced by mitigating factors and the defendant's inability to pay a fine exceeding $100,000.

​THE INCIDENT

On April 6th 2015, a worker at Budget Plastics was operating an extrusion machine. At one end of the machine was a hopper, into which the operator poured plastic scraps which were then pushed by an auger along a heated tunnel for extrusion.

The worker was standing on a pellet and feeding plastics into the hopper by hand as usual. As he was tipping the last few scraps from a large plastic bag into the hopper, part of the bag became caught in the auger which pulled the bag and the worker's hand  into the machine. 

A nearby colleague witnessed the incident and pushed the emergency stop button. Unfortunately, by the time the machine was stooped the victim had already suffered a significant amputation. He was air lifted to Lower Hutt hospital and underwent surgery. The injured worker, whose name is suppressed, is left with only a thumb and part of his forefinger as a result.

​THE FINDINGS

The WorkSafe investigation found that Budget Plastics failed to ensure the health and safety of its workers, and identified a number of failings by the employer.
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Failings included that:

• The company did not have adequate hazard identification systems in place
• The company did not have adequate safe operating procedures for use of the extrusion machine
• The company did not have adequate policies or procedures in place for training workers in the safe use of the extrusion machine
• The extrusion machine was not sufficiently guarded - in fact, guards had been deliberately cut down in an attempt to facilitate the operate to push plastic into the auger
• Emergency stop controls fitted to the extrusion machine were not appropriately located - they were about 2m away, not within reach of the machine operator

Other findings of note included that:

• The sole director of the company had very little awareness of, or involvement in health and safety until six weeks before the accident
• The director did not understand the company's legal health and safety obligations, and held misconceptions about New Zealand requirements 
• Only months before the incident, the company had engaged a consultant  to complete a health and safety assessment of the factory. The consultant advised there was a significant amount to be done in order to operate in a compliant manner, and specifically identified the insufficient guarding on the extrusion machine. 
• When the incident occurred six weeks after the consultant identified the machine hazard, the company had taken no actions to mitigate the risk

Each of these points is more than a failure - every one is a missed opportunities to not only prevent harm, but also to improve work for the workers, and business outcomes for the owner.

THE FINE

Budget Plastics was sentenced to pay a $100,000 fine (after reductions), $37,500 emotional harm reparations and $1,000 costs to WorkSafe. ​

It is important to note that:

• The judge determined the company had moderate culpability. Under the HSE Act 1992, the maximum fine would have been $250,000. Under HSWA the maximum fine for this offence was $1.5M
• The judge set the starting point for the fine at $400,00 - $600,000.  This was reduced to $210,000 - $315,000 based on mitigating factors, including payment of reparation, co-operation with WorkSafe, remorse and an early guilty plea
• The judge finally settled on a fine of $100,000 based on expert evidence from a chartered accountant that a fine exceeding this amount would significantly affect the business
• Average fines for machine guarding incidents under the previous legislation were in the range of $30,000 - $40,000

CONCLUSIONS

As anticipated, this sentence indicates that we are likely to see a significant increase in the fine amounts under HSWA, over those handed down under the HSE Act 1992.

The sentence also highlights the importance of the company's ability to pay as a factor in determining the final fine amount. Legal experts predict that PCBU's are likely to take a similar approach, using accounting evidence to demonstrate an inability to pay a significant fine in order to have the final sentence reduced to as low as possible.

This case serves as a reminder of the critical importance of identifying workplace hazards and putting controls in place to protect workers from harm. Simple and effective risk management practices can prevent people being harmed or killed at work, and can avoid expensive, stressful and damaging prosecutions like this one. 

If your business needs to create health and safety management systems, or review what you have in place to ensure it's comprehensive and effective, contact us today.