Australia: Executive compliance performance reporting – why, what, when?

Last Updated: 5 May 2018
Article by Nathan Cecil
Most Read Contributor in Australia, July 2018

In this article we look at some of the most critical compliance components of Chain of Responsibility (CoR) compliance performance reporting for executives.

Why?

Executive compliance performance reporting is one of our 'Big Five' key compliance measures.

Under the current Heavy Vehicle National Law (HVNL), executive officers of a corporation (directors and those concerned in the management of a corporation) can be personally charged, prosecuted and fined if a corporation commits a breach of the HVNL.

Under the mid-2018 amendments to the HVNL, executives (directors and those concerned in the management of a corporation, partners in a partnership and managers in an unincorporated body) will have a proactive duty to ensure that their business is doing everything reasonably practicable to avoid any CoR incidents. Under the new laws, executives can be personally charged, prosecuted and fined if their business is not proactively managing this risk – even though no CoR incident has occurred.

So, under both the current and new laws, executives can be held accountable if they are not properly managing business compliance.

As part of discharging that duty, executives have to be aware of the CoR risks faced by their business and what the business is doing to manage those risks. But that is only two-thirds of the pieces in the puzzle. The third piece is that executives must know whether the measures implemented are effective in avoiding or mitigating CoR risks. In order to complete the puzzle then, executives need to understand the compliance performance of the business, which is where executive compliance reporting comes in.

Without such reporting, executives will not be meeting their obligations. Under the new laws, executives could be fined up to $300,000 and jailed for up to five years for failing to meet their obligations.

What?

Executive compliance performance reporting must show the executive two things:

  1. Oversight of the general health and performance of the business' CoR compliance framework
  2. Specific insight into what non-conformance issues are arising and any relevant trends.

General health and performance

This level of reporting needs to show the executive that the business has in place an effective and complete CoR risk management framework. Reporting measures could include:

  • CoR policy distribution (internally to CoR-facing staff/externally to CoR counterparts) %
  • CoR awareness training (internally to CoR-facing staff/externally to CoR contractors (as appropriate)) %
  • CoR compliance terms in all supply chain contracts %
  • Overall CoR incident resolution close-out (e.g. from CoR incident register).

Specific insight into issues and trends

This level of reporting needs to show executives that the business is maintaining an active watch over the occurrence of CoR issues and incidents. Reporting measures could include:

  • For each CoR component (mass, dimension, load restraint, speed, fatigue, maintenance) - number of breaches and level (minor, substantial, severe, critical (details))
  • For each CoR component - number of 'incidents' (near-misses, hazard interventions) and level (minor, substantial, severe, critical (details))
  • For fatigue – fitness for duty checks and passes %
  • For maintenance – number of vehicles overdue for scheduled maintenance and non-scheduled maintenance
  • Status of incidents (open/closed).

It is important that 'incidents' are recorded, not just breaches. 'Incidents' are non-conformance issues identified and rectified before a vehicle hits the road. Although caught, they still identify a break somewhere in the Chain.

For critical breaches or incidents (e.g. involving injury), it is important that the executive have some details of the circumstances, due to their severity and impact on the business, third parties and/or public. For critical incidents, the executive must be better informed as they will be called upon to make more in-depth decisions in response.

It is also essential that some form of trend analysis is presented e.g.:

  • Time based - a rolling six month average or percentage movement in reporting figures or year on year reporting figures, so that the executive can determine whether the CoR management framework is successfully reducing the level of incidents or, if not, whether further work is needed
  • Party based – which party/function within the Chain was responsible for the breach (e.g. your business, driver, subcontractor, customer, supplier), so that the Executive can determine whether the CoR management framework amongst the parties in the Chain is functioning properly or, if not, whether attention and further steps need to be implemented with certain sectors or particular counterparts in the Chain.

When?

Given that the executive have an active duty, in fact, a pro-active duty, to manage compliance, reporting needs to be timely and current in order to be able to be acted upon.

If the business has a safety or compliance group that sits under the executive and meets to consider CoR compliance performance monthly, then they can report up to the executive on a quarterly basis. If the business does not have such a group that meets monthly, the executive should consider the CoR compliance performance figures monthly.

However, there should be some elasticity or responsiveness in this time guideline and out-of-cycle executive reporting may be required where e.g.:

  • Critical incidents occur, which should probably be reported immediately due to their severity
  • If compliance performance in any particular area or with any particular sub-group dramatically falls and the cause(s) cannot be immediately identified and reversed
  • If compliance performance overall is clearly in a death spiral and the cause(s) cannot be immediately identified and reversed.

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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