Australia: RSRT decision finds no need for delay in commencement but Federal Court stays the Contractor Driver Minimum Payments Order

On Friday evening 1 April 2016, the Federal Court in Brisbane (on the application of NatRoad) granted a stay of the Contractor Driver Minimum Payments Order (2016 RSRO) until further order of the Court. Cooper Grace Ward acted for NatRoad in the application.

This came after a day of major developments, with the Road Safety Remuneration Tribunal handing down a decision not to vary commencement date and not to include a transitional provision regarding the minimum payments clauses in the 2016 RSRO. Friday 1 April 2016 also saw the Department of Employment release two independent reviews of the Tribunal and announce that a review of the Tribunal's functions will take place in April 2016.

Since Friday evening, the Transport Workers Union and other parties have also brought proceedings in the Federal Court. The Transport Workers Union seeks to challenge the stay obtained by NatRoad.

Further details of the developments are outlined below.

The Contractor Driver Minimum Payments Road Safety Remuneration Order 2016

On 18 December 2015, the Road Safety Remuneration Tribunal (Tribunal) published its Contractor Driver Minimum Payments Order (2016 RSRO). The 2016 RSRO was to commence on 4 April 2016 for a term of four years. It requires the payment of minimum hourly and kilometre payments for contractor drivers involved in the provision of distribution or long distance transport services. The term 'contractor driver' includes individual owner drivers and small companies where all vehicles are driven by family members of directors or shareholders. The 2016 RSRO also imposes compliance and audit obligations on parties in the supply chain. Full details of the 2016 RSRO are discussed in Cooper Grace Ward's legal alert dated 4 February 2016.

Applications to vary the Order

In March 2016, the Tribunal received 38 applications to vary the 2016 RSRO on various grounds including that:

  • parts of the 2016 RSRO are ambiguous and not adequately defined;
  • businesses would be unable to comply with the 2016 RSRO by 4 April 2016; and
  • a delay in the commencement of the 2016 RSRO and the inclusion of transitional minimum rates would give the transport industry time to interpret, understand and comply with the Order.

On 15 March 2016, the Tribunal heard the applications to the extent that they sought to vary the commencement date or to include transitional provisions in respect of its minimum payments. Consistent with the Road Safety Remuneration Act 2012 (RSR Act), the Tribunal prepared a draft variation of the 2016 RSRO for consultation. The draft variation included provisions:

  • delaying the commencement date until 1 January 2017; and
  • allowing hirers to pay owner drivers 'transitional amounts' that periodically increase 12 months, 24 months and 36 months after the commencement date of the 2016 RSRO.

The Tribunal gave interested parties until 21 March 2016 to make written submissions on the draft variation of the 2016 RSRO.

Altogether the Tribunal received approximately 800 submissions from owner drivers, hirers and industry associations, the majority of which supported delaying the commencement date of the 2016 RSRO until 1 January 2017. The Tribunal scheduled three days of hearings over the Easter long-weekend.

Just days before the hearing, the Tribunal issued orders to more than 30 people requiring them to produce documents and attend the hearing in order to respond to questions arising from their submissions. The Transport Workers' Union also required various witnesses to be available for cross-examination.

Over three days of the Easter weekend, various applicants participated in the hearing and those who received summons were cross-examined in relation to those submissions. Cooper Grace Ward represented the National Road Transport Association (NatRoad), which was one of the applicants.

At the conclusion of the hearing, the Tribunal sought final submissions on a compromise position proposed by some of the applicants and reserved its decision in respect of the draft variation to the 2016 RSRO.

The decision

On 1 April 2016, the Tribunal handed down its decision not to vary the 2016 RSRO. The 2016 RSRO will commence on 4 April 2016, as originally planned.

The Tribunal asserted that there was 'significant support' for the making of the 2016 RSRO and suggested that there are a number of myths surrounding its application and operation. The Tribunal acknowledged that this confusion and uncertainty was in part due to the Fair Work Ombudsman inadequately performing its duties, but suggested that certain bodies and individuals had sought to 'create and perpetuate myths' about the 2016 RSRO.

In deciding not to vary the commencement date, the Tribunal emphasised that the road transport industry has already benefitted from the three and a half month period between the making of the 2016 RSRO and its commencement date. This period provided affected parties with an opportunity to obtain sound advice and education about the 2016 RSRO.

The Tribunal also decided against adding transitional provisions to phase in its minimum payments clauses, arguing that this would only increase the compliance burden and complexity, making the 2016 RSRO less simple and easy to understand.

Stay

On Friday evening 1 April 2016, following an application by NatRoad, the Federal Court in Brisbane handed down an Order in the following terms:

  1. Pursuant to section 39B of the Judiciary Act 1993 (Cth):
    1. the order of the Road Safety Remuneration Tribunal of 18 December 2015 entitled 'Contractor Driver Minimum Road Safety Remuneration Order 2016'; and
    2. the order of the Road Safety Remuneration Tribunal of 1 April 2016, being the refusal to vary the order of 18 December 2015,
      be stayed until further order of the Court.
  1. All affected parties have liberty to apply to the Court on two days' notice in writing.
  2. Costs be reserved.
  3. The matter be reviewed by the Court on a date to be fixed.

Other developments

On1 April 2016, the Department of Employment released two independent reviews of the Road Safety Remuneration System, as well as its own discussion paper with options for reform.

The first review report, completed by Rex Deighton-Smith of Jaguar Consulting in April 2014, concludes that the Tribunal should 'not continue in its current form'.

The second review report, prepared by PricewaterhouseCoopers in January 2016, estimates that the two orders made by the Tribunal to date will have a net cost to the economy of $2.3 billion by 2027, even with safety gains factored in. The report concludes that there would be a significant net benefit to the economy and community if the Tribunal were abolished.

Both reviews found there is substantial regulatory overlap with work health and safety laws and other road safety regulation, and that the level of regulation is not justified based on the limited evidence as to the link between remuneration and road safety in the road transport industry.

The Department's discussion paper presents four options for reform:

  • Option 1 proposes no change to the current Road Safety Remuneration System.
  • Option 2 proposes strengthening the Tribunal's consideration of the evidence linking remuneration to safety, and the regulatory and economic impacts of any proposed orders.
  • Option 3 involves narrowing the scope of the Tribunal in order to reduce regulatory burden and duplication with other regulations governing road transport, safety and industrial relations.
  • Option 4 proposes repealing (abolishing) the Road Safety Remuneration System, including the Tribunal.

During April 2016, the Department of Employment will be undertaking consultations on these options with industry stakeholders in locations around Australia, including regional centres.

Industry stakeholders can provide written comments on these options by emailing rsrreview@employment.gov.au or visiting the Department of Employment website for further information.

What does this mean for you?

The stay granted by the Federal Court will continue until the Federal Court has had an opportunity to properly hear the matter and the submissions of all of the parties that seek to stay the 2016 RSRO and those of parties who seek to oppose any stay, or until further order of the Court. You should continue to monitor news reports and updates from your industry associations. We will also attempt to issue updates as matters progress.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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