Australia: Linking road safety and remuneration: the 2016 RSRO

Last Updated: 26 February 2016
Article by Geoff Farnsworth and Dilip Ramaswamy

Late last year, the Road Safety Remuneration Tribunal (The RSRT) issued the Contractor Driver Minimum Payments Road Safety Remuneration Order 2016 (The 2016 RSRO), which will apply from 4 April 2016 onwards. The 2016 RSRO will, in a landmark move, set national minimum payments for a number of contractor drivers in the road transport industry and is set to affect many retailers' compliance obligations in meeting these new requirements.

Background to Road Safety Remuneration Tribunal

As a general objective, the Road Safety Remuneration System aims to improve road safety for truck drivers and all road users. Under this system, the RSRT in consultation with relevant stakeholders, determines the pay and related conditions for road transport drivers in the road transport industry.

Why has it come about?

The 2016 RSRO has been published after numerous consultations with interested parties regarding minimum payments for contractor drivers and the publication of a draft orders in August 2015. A focus of the RSRO was on the relationship between remuneration and safety in the road transport industry and material presented from government-initiated and other inquiries into the road transport industry, as well as the evidence before the RSRT concerning the relationship between remuneration and safety.

Who is affected by the 2016 RSRO?

The 2016 RSRO imposes requirements on a hirer of a contractor driver, and on a participant in the supply chain in relation to a contractor if they are a constitutional corporation, based in a Territory; are part of a body corporate in a Territory; or are a Commonwealth / Territory authority. It does not apply to any employer - employee relationship otherwise covered by Modern Awards or Enterprise agreements.

The RSRO applies to contractor drivers engaged in:

  1. the road transport and distribution industry within the meaning of the Road Transport and Distribution Award 2010 as in force on 1 July 2012, in respect of the provision by the contractor driver of a road transport service wholly or substantially in relation to goods, wares, merchandise, material or anything whatsoever destined for sale or hire by a supermarket chain; or
  2. long distance operations in the private transport industry within the meaning of the Road Transport (Long Distance Operations) Award 2010 as in force on 1 July 2012.

Does it just apply to individual contractors?

The 2016 RSRO applies both to individual contractors and corporations given the definition of a "road transport driver".

The definition of a "road transport driver" is as follows:

  1. an individual, other than a related individual of a corporation who drives one or more of the corporation's vehicles, who engages in the road transport industry by driving a vehicle to transport things by road; and a
  2. a corporation that engages in the road transport industry by transporting things by road using one or more vehicles supplied by the corporation or a related individual.

Key components of the 2016 RSRO

In short, the 2016 RSRO is broadly focused on targeting the following key areas:

Minimum payments for a distribution operation and long distance operation

Contractor drivers referred to above will now be paid minimum hourly rates, including pro-rata payments for any part of an hour spent providing services as well as the running costs per kilometre for any vehicle they supply.

The order has also specifies that all rates are increased by 2% per yearcommencing 4th April 2017.

Unpaid leave

Where a hirer regularly engages a contractor driver to provide a road transport service over a 12 month period, the hirer must permit a contractor driver to take unpaid leave of up to four weeks during the 12 months which follow the date of each anniversary of the date of the first engagement by the hirer.

Supply chain contracts – Increased responsibilities for retailers

The 2016 RSRO specifies that a participant in the supply chain in relation to a road transport driver must take all reasonable steps to ensure that any contract that the participant has with another participant in the supply chain does not contain any provision that is intended to have the effect, or that has the effect, of preventing or impeding compliance by a hirer, who engages a contractor driver. In this regard, a participant in the supply chain in relation to a road transport driver means a consignor or consignee, intermediary or operator of premises for loading and unloading.

From a practical standpoint, the 2016 RSRO places an increased burden on major retailers to ensure their transport providers and road transport drivers are complying with the new obligations. Major retailers would have an obligation directly to a road transport driver to audit the relationship between the transport provider and the road transport driver; despite there perhaps being no relationship whatsoever between the retailer and the road transport driver. This may place a strain on these existing relationships as retailers will have to comply with this additional burden to audit drivers as well as their transport providers.

Facilitative provisions

The Facilitative Provisions of the Order require that Contractors are paid for each hour or part thereof of time spent at the disposal of the hirer, resting pursuant to legal requirements and assisting or supervising other people in connecting with the driving or maintenance of a road transport vehicle.

Promotion of Orders

All hirers of contractor drivers must display the 2016 RSRO, the Road Transport and Distribution and Long Distance Operations Road Safety Remuneration Order 2014 and any variations to either of them where practicable, at each of the hirer's work sites or depots and on each of the hirer's websites. Hirers must also advise contractors that these various orders apply to them.

End of fixed fee arrangements

Relevant contracts with contractors will now need to be amended to reflect the time spent on a journey rather than just agreeing to a fixed fee arrangement. Under a fixed-fee arrangement, there were incentives for contracts to speed above the permissible limits. However the new orders provide more incentive for road transport drivers to remain within safe driving limits as they are being paid for time spent on the road and all other related activities.

What happens if hirers don't comply with the Orders?

Hirers are required to submit to annual compliance audits by a supply chain participant with which they contract in most circumstances. If the auditing party believes that the Order has not been complied with, they must provide a written notice of non-compliance to the hirer. If this is not rectified, they must notify the Fair Work Ombudsman of the suspected non-compliance. The Fair Work Ombudsman can then make inquiries into or investigate any practice that may not comply with the Road Safety Remuneration Act 2012 (the RSR Act) or an enforceable instrument. To enforce compliance, they can also take matters to court.

Implications

Although the 2016 RSRO is scheduled to commence from 4 April 2016 onwards, it is important for all parties concerned to consider how these new obligations will impact upon their operations to ensure that changes can be implemented before the commencement date. Only time will tell in assessing whether the 2016 RSRO will curtail the number of incidents involving road transport drivers.

* To read the Contractor Driver Minimum Payments Road Safety Remuneration Order 2016, please click here. To read the Road Safety Remuneration Tribunal Decision [2015] RSRTFB 15, please click here.

This publication does not deal with every important topic or change in law and is not intended to be relied upon as a substitute for legal or other advice that may be relevant to the reader's specific circumstances. If you have found this publication of interest and would like to know more or wish to obtain legal advice relevant to your circumstances please contact one of the named individuals listed.

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Authors
Geoff Farnsworth
 
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