Australia: Controversial 'Safe Rates' Laws commence on 1 July 2012 - what will be the impact of these industrial reforms?

Last Updated: 16 June 2012

By Elizabeth Guerra Stolfa and Paul O'Halloran

On 20 March 2012, the Government passed what is likely to be the most controversial industrial relations reforms since WorkChoices. The Road Safety Remuneration Bill 2012, dubbed 'Safe Rates' (Safe Rates Laws) sets up a new industrial relations and safety regime with the power to inquire into all segments of the road transport industry and issue binding industry-wide orders.

What are the Safe Rates Laws?

Safe Rates Laws will allow a new Federal tribunal, called the Road Safety Remuneration Tribunal, to make orders relating to minimum rates of pay and other entitlements for road transport drivers (both employees and contractor owner-drivers). These laws are intended to address underlying economic factors that the Government believes are creating incentives for, or encouraging, unsafe on-road practices in the transport industry, such as speeding, excessive working hours and unpaid queuing time.

Who is covered?

The Safe Rates Laws will apply to employee drivers and their employers, hirers and independent contractors, and 'participants in the supply chain' in the 'road transport industry', being those sectors of the industry defined in the Road Transport and Distribution Award 2010, the Road Transport (Long Distance Operations) Award 2010, the Transport (Cash in Transit) Award 2010 and the Waste Management Award 2010.

What could the Safe Rates Laws mean for your business?

Commencing from 1 July 2012, the Road Safety Remuneration Tribunal could make any of the following binding orders against transport companies on the tribunal's own initiative or on application by a driver or a union:

  • Conditions about minimum remuneration and other entitlements for road transport drivers additional to those in modern awards;
  • Conditions about minimum rates of remuneration and conditions of engagement for road transport drivers who are independent contractors;
  • Conditions for loadings and unloading vehicles, waiting times, working hours, load limits, payment methods and payment periods;
  • Orders that reduce or remove remuneration-related incentives, pressures and practices that contribute to unsafe work practices;
  • The power to approve collective agreements between a company and its road transport drivers who are independent contractors setting remuneration and related conditions; and
  • Dispute resolution between drivers or contractors and a company about remuneration-related conditions or dismissals (although this will be delayed until 1 January 2013 except in 'exceptional circumstances').

What are the implications of the Safe Rates Laws?

The Safe Rates Laws will have major implications:

  • It will not be possible to 'contract out' of the Safe Rates Laws, even if your company has an enterprise agreement in place. A term of a modern award or an enterprise agreement (or collective agreement still in operation made prior to the Fair Work Act) will have no effect in relation to a road transport driver to the extent that it is 'less beneficial' to the driver than terms created by the Safe Rates Laws.
  • Employers could be bound by collective agreements approved by the Road Safety Remuneration Tribunal which sets remuneration and related conditions for road transport drivers who are independent contractors and engaged by the company.
  • Unions will have a right of entry into workplaces to investigate suspected breaches of the Safe Rates Laws.
  • The Fair Work Ombudsman will regulate and investigate compliance with the Safe Rates Laws. Civil penalties for breaches will apply.
  • Employers will need to think carefully about decisions that are likely to have adverse consequences for transport drivers (e.g. dismissal) if those decisions can be linked to rights under the Safe Rates Laws. This is because the Safe Rates Laws are considered a 'workplace law' for the purposes of the 'general protections' provisions in the Fair Work Act for which employees or contractors may allege certain 'workplace rights'.
  • As an alternative to claims in Fair Work Australia, the Road Safety Remuneration Tribunal is able to deal with disputes between drivers, employers/hirers, and supply chain participants about remuneration and related conditions that influence whether the driver works in an unsafe manner, as well as disputes arising from the dismissal/termination of the contract of an employee/owner driver because the driver refused to work in an unsafe manner.

Significantly, if the Tribunal arbitrates a dispute, the Tribunal may make any order it considers appropriate to ensure that a driver does not have 'remuneration-related incentives to work in an unsafe manner'. Last minute amendments made by the Government have the effect that dispute resolution will not occur under the Safe Rates Laws until 1 January 2013 onwards, unless 'exceptional circumstances' exist before that date.

The Safe Rates Laws have substantial scope and wide ranging implications. It is essential that employers, hirers and supply chain participants in the transport industry understand these laws in the lead up to 1 July 2012 implementation, including the processes in the Safe Rates Laws that may be used to the benefit of employers.

Rigby Cooke's Transport & Logistics Industry Group have closely examined the laws and are currently providing advice to employers in the transport industry about how to prepare for the impact of the new laws, and how and when employers might dispute applications made under the Safe Rates Laws on commercial grounds, for example by preparing written submissions in advance of draft Tribunal orders.

For specific advice about the Safe Rates Laws relevant to your business, contact Elizabeth Guerra-Stolfa, Partner, Commercial Litigation or Paul O'Halloran, Associate, Employment Law & Workplace Relations.

to the subject matter. Specialist advice should be sought about your specific circumstances.

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