A $6 Insurance Policy - a shocking revelation

Although the following article was written in 2013, the consequences could be the same or worse, following the introduction of the Health and Safety At Work Act 2015.

The following fatality was an actual event - details have been changed for the protection of the family. Some of the information is also hypothetical to illustrate the impact to a business if such a situation was to happen in your business.

The incident

It was 5pm. Judy was preparing dinner, and she started to get worried as her husband Max had told her the repair would only take an hour and he would be home by 3pm.

She rang him on his mobile phone, but there was no answer. Fearing the worst, she drove down to the workshop to see if he was still working on his retirement classic hobby truck. She found him dead under the truck.

As one of the many thousands of NZ baby boomers, Max had been retired for four months, after selling his successful contracting business to an existing employee.

As a condition of the sales deal, he agreed to remain working for the company for 2 days a week for 6 months to assist the new owners as an advisor. As part of this arrangement, he was allowed to use the company's engineering workshop in the weekends to restore his truck.

The MBIE (DOL) investigation

Their following investigation highlighted that the new company did not have any health and safety systems in place and had not had any electrical, machinery or leads checked for safety compliance or safe condition.

The coroner's findings

The coroner's findings stated that he had died from electrocution when using an unsafe and faulty old metal electric drill. No isolating system was used or was installed or available, to minimise the risk of electrocution. It was also established that the drill had been damaged at some stage and had exposed live wires. The hand drill had been owned and used by the old company for years and that it had never been checked, electrically tested or certified for its safety condition.

The irony of the tragedy is that I had met Max 3 years previously to discuss health and safety and the importance of it as a business risk management tool for the protection of the business and his employees.

His response was:

“Health and safety, it's nothing but common sense";
“We are only a small operation with 12 employees”;
“My staff are adults and have been with the company for years and they know what safety is all about”;
“Health and safety is nothing but bureaucratic b…s… with rules made up by some desk jockey in an office in Wellington to protect his job";
“Health and safety takes away thinking and I'm not going to wrap our staff in cotton wool - they're grown men for god's sake";
“Our business has been around for years and we have never had any serious accidents”;
“It's going to cost me and I cannot afford it”;
“Any way, I'm retiring in a couple of years' time and it won't be my worry”.

If this sounds familiar, then read on...

The potential cost to a business

If you consider the penalties that are now in place under the new 2015 Act and 2016 regulations, the business would certainly be out of business.

If a prosecution was to happen in today's H&S environment and under the new Act, what could it have cost and what would be the impact and outcome for your business?

If the prosecution/fine was $150,000 and reparation payment to the widow of $80,000, the issue really becomes serious for the business.

This is not the final cost because the company still should factor in all the other legal and other business costs, also known the peripheral costs or the iceberg effect.

If a similar situation was to occur in your business, could you withstand the cost?

To do nothing about H&S in a business is no longer be an option.

Although some of this event is hypothetical, this could result in the new or any business not being able to sustain the cost and having to close the doors.

You may say this is unfair to the business owners but what's a life worth, including grief to the widow and family and all for not spending $6.00 on a simple electrical test on the equipment?

Why test electrical equipment?

Because the Health and Safety at Work Act 2015 requires that the PCBU provides a safe work environment for all persons entering and working in the work space;
That the Act requires that all practicable steps are taken to protect all persons, and machinery and equipment should be maintained in a safe condition at all times; and
Standards AS/NZS 3760 & 3012 and the NZ electrical safety regulations, especially clause 26, require that you carry out this testing and re-certification at defined times and dependent on the industry and equipment.

Electricity (Safety) Amended Regulations 2011 extract in accordance with AS/NZS3760 26 When fittings and appliances in use deemed to be electrically safe

(1) This regulation applies to a fitting or appliance, other than an electrical medical device, that is in use, or available for use,

by an employee or contractor of the owner of the fitting or appliance; or
by a hirer or lessee under a hire or lease agreement with the owner of the fitting or appliance; or
by the occupier of premises that are rented or leased from the owner of the fitting or appliance.
A fitting or appliance described in sub clause (1)(a) is deemed to be electrically safe if it has a current tag issued in accordance with AS/NZS 3760.
A fitting or appliance described in sub clause (1)(b) or (c) is deemed to be electrically safe— if it has a current tag issued in accordance with AS/NZS 3760; or if, at the time it is first made available for use by the hirer, lessee, or occupier, it is supplied with electricity through a portable RCD, or through a circuit protected by an electrically safe RCD, that provides protection from electric shock.

Conclusion and practical options

Most business have equipment, machinery, electric tools, battery chargers and other functions like licences and re-certification registrations, that they do require to be reminded about or via an alert notification.

How does your business address this?

The answers.

HASMATE, a web based compliance management tool suitable for any sized business - join our free trial today.
Engage a company known as JIM'S TEST AND TAG, a group of highly trained professionals that only focus on providing the testing and tagging services of your electrical equipment. They are located throughout NZ and have a proven and cost effective service. Phone them on 0800 454 654.