The accident compensation scheme came into operation on 1 April 1974. It has had many reviews and redesigns, but fundamentally it has provided accident insurance cover for New Zealand residents and visitors since then.
We have all grown up with ACC cover – the “no faults” insurance that meant that regardless of whether you were at fault in an accident, and regardless of whether you received the injuries or caused them, ACC would provide income replacement and on-going medical care for the injured party. And if you caused that injury then you were not personally liable to pay for the injured parties on-going treatment or loss of income.
However, unbeknown to many the Sentencing Amendment Act 2014 (“the SAA”, effective 6 December 2014) brought in a potential liability to those at fault, where a person could be required top-up the ACC payments to an injured party.
What’s new and why now?
Up to now this Act has had little publicity because so few people were affected, but that has all changed.
As you know ACC covers 80% of a person’s lost income. But it is a crude device that really only pays 80% of their most recent earned income. If a person had a low income, say a student or a stay at home parent, their “income” may be pretty much nothing. And their on-going ACC income would be 80% of nothing. No account being taken of their income earning potential. But under the SAA, where a person can show there is a shortfall from what ACC was paying and what they could have earned, then the Court can order a defendant to pay the difference. Note, this is not the 20% difference, but the real difference between ACC and the lost or diminished on-going earning potential of the victim. This reparation sum can be significant if the injured person can place a dollar figure on their potential loss of income and enjoyment. Suddenly, there is no longer a “no fault” system, and depending on the personal circumstances of the victim the sum awarded to them could be huge. For example, A 60 year old shop assistant would receive a lower award than say a 35 year old dentist for the same injury because of the earning disparity and age.
Long story short, to be subject to such an order you have to have caused the injury through a criminal act. But under the Health and Safety at Work Act, which came into force on 4 April 2016, a person can be subject to criminal prosecution for failing to provide a safe working environment. This Act imposes a broad scope of liability on directors, chief executives, and other officers of the PCBU - "person conducting a business or undertaking". A PCBU can be held personally liable if they breach their duty.
There can be a number of people in the chain of command at any workplace, and if each separately can be identified as a PCBU, then potentially each could be liable. Similarly, if you cause injury with your vehicle and are convicted of dangerous driving, you could also be subject to a reparation order under the SAA.
What to do?
- First, and obviously, you will have put in place H & S processes and checks to reduce or eliminate the risk of personal injury.
But you cannot always eliminate or anticipate every situation, including the culpability of the injured party themselves, and H & S is not a ‘set and forget’ type of thing.
- So secondly, ensure that you regularly check that your H & S processes and policies are fit for purpose.
- Thirdly, check that your Public and Personal Liability insurance will cover you and your employees and contractors (who could fall into the PCBU definition).
- Fourth, consider increasing the level of cover you hold, including the level of cover for defending any charges. Because the best defence is to not be convicted!
- Finally, consider whether you need to place your personal assets and wealth beyond reach.
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