Due diligence – what the law says
Under the Health and Safety at Work Act 2015 (HSWA), due diligence is a legal duty placed on “officers” in an organisation – in essence, directors, CEOs, some senior managers. It is thus critical that officers understand how to get due diligence right
It means proactively maintaining knowledge and taking reasonable steps to ensure the organisation is complying with its health and safety duties.
Specifically what officers must understand to get due diligence right
Section 44 of the HSWA sets out specific due diligence requirements. Officers must take reasonable steps to:
(1) Keep up-to-date knowledge
- Understand current health and safety risks and legal obligations
- Stay informed about industry hazards and the organisation’s risk profile
- Understand the organisation’s operations and critical risks
(2) Ensure resources and processes are in place to operate safely and without compromising health.
- people
- training
- equipment & facilities
- systems of work
(3) Receiving and respond to information
- Incident reporting systems
- Hazard identification processes
- Mechanisms to act on safety concerns
(4) Ensure compliance processes exist
- Ensure systems exist for getting due diligence right:
- duties under HSWA – in particular for monitoring controls and addressing hazards
- regulations and standards
(5) Verify systems actually work as intended
- Check you are getting due diligence right
Practical examples:
- Regular site visits
- Reviewing safety reports and KPIs
- Asking critical questions (not just accepting assurances)
- Ensuring serious incidents are investigated
- Following up on corrective actions
- Commissioning independent audits
Case law: how courts interpret due diligence
Courts look at whether the officer actively engaged and verified safety systems, not just whether systems existed.
WorkSafe New Zealand v Peter Whittall
- CEO of Pike River Mine charged after the Pike River Mine disaster
- Case highlighted expectations on senior officers
- Although charges were ultimately withdrawn, it clarified:
- officers must understand operational risks
- cannot rely solely on others’ assurances
General principles from case law
Across NZ and comparable jurisdictions:
- Delegation is allowed — abdication is not
- Paper systems alone are insufficient
- Courts examine:
- what the officer actually did
- whether they verified effectiveness
- whether they responded to known risks
Ports of Auckland
The case of Maritime NZ v Anthony Michael Gibson, 2024, which resulted in a $130,000 fine and $60,000 in costs against the CEO of the Ports of Auckland, gained attention for the size of the fine. The judgement also contained some timely advice serving as lessons for those with “officer” responsibilities under the HSWA.
Have a regime of monitoring or auditing – including independent audit – to ensure that
those systems and processes are achieving their purposes.
Quote from Judgement: Due diligence also requires the officer to engage upon, or arrange, an effective process of monitoring, review and/or auditing of the PCBU’s systems, processes and work practices to ensure that those systems and processes are achieving their purposes and that relevant safety standards and policies are, in fact, being adhered to. S8 (k)
There are changes about to become law, but , as a leading health and safety consultancy in NZ, we are advising clients these do not change the fundamentals.
You need to be personally involved and proactive in relation to health and safety issues and not just rely on others – get out of your seat and talk with people and understand how things actually work – i.e. work as done v work as imagined. In smaller organisations where the “officer” is directly involved in the work this will be relatively easy. But it is also easy to become complacent and not see issues as a consequence. Periodically standing back and assessing risks is an antidote for this issue. Better still, consider an independent review of your workplace.
Quote from Judgement: The officer must also acquire and maintain sufficient knowledge of the operations of the PCBU and the work actually carried out “on the shop floor” to
adequately identify and address actual workplace hazards and risks. S80 (g)
You can’t rely on those with health and safety duties within the organisation. Assume the
person reporting is massaging the picture – ask questions, verify and interrogate the
information you receive. And monitor the right things in the first place.
Quote from Judgement: An officer cannot … simply assume that the information they
receive from their subordinates as to the adequacy or effectiveness of the PCBU’s health
and safety system and hazard controls is accurate and sufficient. An officer must be
proactive in relation to health and safety issues and in a position to properly monitor, verify and interrogate the information they receive. S 80 (j)
Do not assume no news is good news. More than likely, it isn’t.
Quote from Judgement: An officer cannot assume that the PCBU is compliant with its duties under the HSWA in the absence of being told otherwise. S 80 (j)
Common due diligence failures
- Relying entirely on managers or consultants
- Not understanding high-risk activities
- Ignoring warning signs or near misses
- Lack of follow-up on known issues
- Treating safety as a paperwork exercise