Australia: Chain of Responsibility: Important changes that will affect your business

Last Updated: 6 July 2016
Article by Nathan Cecil
Most Read Contributor in Australia, September 2017

Substantial amendments to the Chain of Responsibility (CoR) laws will change the duties owed and defences available, increase the penalties applicable and more closely align the laws with Work Health & Safety laws. As a result, compliance will need to be reviewed in advance of the new laws.

CoR is due to be extensively remodelled in 2016 to "better align with national safety laws, improve compliance and simplify enforcement". CoR is now (or should be) very firmly at the core of an organisation's safety management system - and all businesses in the supply chain will need to consider how these changes will affect your business.

What will change?

Within the safety task, greater focus is now being placed on CoR. Existing obligations will be reformulated as 'primary duties'. Each CoR party will now have a primary duty of care to ensure, so far as 'reasonably practicable', the safety of road transport operations. This will include operations outside of their direct control, but still within their broader supply chain.

The HVNL contained examples of the sorts of things that a person would need to demonstrate to prove that they had taken 'all reasonable steps' to prevent a breach of the law. This was considered to promote a 'tick-box' approach to compliance.

This 'tick-box' approach will be removed under the amended laws. Instead, business will be required to undertake a broader and more targeted risk assessment and develop and implement tailored mitigating and remedial measures in order to discharge their new primary duty.

To support the changes, penalties for breach are expected to be dramatically increased, to align with those applicable to Work Health & Safety (WHS) breaches.

In addition, proposed changes to the HVNL will see executive officers subject to a new primary duty of due diligence to ensure that corporations comply with their CoR duties under the HVNL.

This change will mean that executive officers can be held liable for failure to exercise due diligence, even if the corporation does not first commit a breach of the HVNL.

The changed standard of due diligence will also mean that executive officers must take a much more proactive, risk- based approach to HVNL compliance than the current prescribed compliance model. The new due diligence standard is intended to more closely align with current WHS and Rail Safety National Law (RSNL) standards and practices.

As a result, businesses will need to ensure greater dialogue between logistics and safety compliance functions, including in relation to areas such as contracting and subcontractor management.

It should be noted however that there are still a number of important differences between CoR and WHS, in particular the degree to which you are responsible for exercising supervision and control over the conduct of third parties off-premises and within your contracts (this responsibility is significantly greater under CoR).

Please click here to see the summary table of the expected changes.

What needs to be done?

In order to transition your business to the new regulatory environment, you should look to:

  • consider operational and subcontracting structures (decisions made on how your business is conducted may impact the compliance risk exposure of your business and executive officers)
  • conduct and update compliance risk assessments
  • ensure suitable policies and operating practices are in place - CoR and WHS compliance must now be dovetailed within the organisation's safety management system, and
  • review contracts with suppliers, transport operators, customers and other contractors to ensure that suitable compliance assurance conditions are included.

In addition to ensuring compliance with the new laws, following this approach is likely to have efficiency benefits for your business and may also place you in a more competitive position in regards to tenders.

Your business is affected

Although the new laws are not expected to be announced until mid-2016, businesses should start assessing their current CoR compliance now, in anticipation. In implementing this legislation, regulators want to ensure that businesses operating without a suitable safety management system in place will not be operating into the future.

Once released, businesses will need to undertake an awareness raising campaign internally and prepare an advance plan as to how compliance with the new laws will be implemented before they take effect.

We can help

Our leading national Transport and Workplace Relations & Safety teams are recognised for their CoR expertise. Our involvement in peak industry bodies, including sitting on several boards and regulation and safety committees, gives us a high level compliance overview and significant knowledge of the industry.

We have advised regional and national businesses throughout the supply chain in relation to CoR and WHS compliance, including the development of business and executive officer compliance policies and safety management systems.

Please feel free to contact a member of our team to organise a review or management awareness and compliance briefing.

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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Nathan Cecil
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