Source: BusinessNZ
BusinessNZ supports strong accountability for workplace safety and recognises the profound impact workplace deaths have on families, workers and communities.
However, Labour’s proposal to introduce a corporate homicide law raises serious questions about proportionality and the role of governance in New Zealand, said BusinessNZ Chief Executive Katherine Rich.
Under Labour’s proposed law change, a company and individuals associated with them could be found guilty, if they had a legal duty of care, and exposed anyone to a risk of death or serious injury, and if someone then died.
An individual could be sentenced to life in prison and companies could be fined up to $10 million.
“Under Labour’s proposal, company directors could face life imprisonment. That places directors in the same category as sentences for crimes like murder and terrorism. We do not believe it is reasonable or proportionate to equate a governance role with the most serious criminal offending in New Zealand,” Ms Rich said.
“Directors are responsible for governance, oversight, strategic direction and ensuring appropriate systems are in place. They are not involved in every decision made every day across an organisation. No director has complete visibility of every action taken by every employee, contractor, or manager.
“Good governance is about oversight, accountability and risk management.This proposal assumes a level of control and visibility that simply does not exist in the real world of governance.”
Ms Rich said the proposal comes at a time when the Law Commission’s Directors’ Duties and Liabilities Review is examining whether directors’ obligations have developed across New Zealand law in a piecemeal manner and whether a more consistent and principled framework is needed for assigning personal liability to directors. BusinessNZ intends to participate in that review.
“There is already growing concern among governance leaders that directors are being exposed to liabilities for matters that extend beyond what they can reasonably know, control or prevent. This proposal would dramatically accelerate that trend.
“What it will do is make experienced and capable people think twice about serving on boards, particularly in sectors where strong governance is needed most.
“New Zealand needs directors who are willing to accept responsibility, exercise judgement and lead organisations through complex challenges. Continually escalating personal liability risks creating a governance environment driven by fear rather than sound decision-making.”
A coherent review of directors’ duties and liabilities was already underway through the Law Commission’s Directors’ Duties and Liabilities Review. Parliament should allow that work to be completed and consider director liability as part of a consistent and principled framework rather than through another stand-alone addition to the statute book.
“There is already deep unease about the growing disconnect between what directors can realistically control and the liabilities they are expected to carry.A proposal that exposes directors to life imprisonment will cause many experienced governance leaders to ask whether serving on a board is worth risking their home, their reputation and potentially their freedom.”
The BusinessNZ Network including BusinessNZ, EMA, Business Central and Business South, represents and provides services to thousands of businesses, small and large, throughout New Zealand.