Australia: ‘Safe Rates’ set to shake up road transport – are you prepared?

In brief

• The Full Bench of the Road Safety Remuneration Tribunal has made its first road safety remuneration order (RSRO).
• The RSRO imposes a range of enforceable obligations on all participants in the supermarket retail and long distance supply chains (including drivers, employers and hirers, consignors, consignees and intermediaries). These obligations prevail over existing awards, enterprise agreements and contracts.
• A rates conference has been convened during February 2014 to establish minimum rates for contractor drivers in those supply chains. Supply chain participants can expect their road transport expenditure to increase as a result.
• All supply chain participants (and consignors and consignees in particular) should carefully review the RSRO to understand how it will impact their operations.
• In addition, new Heavy Vehicle National Laws are due to progressively come into effect in Australian jurisdictions from 10 February 2014. Herbert Smith Freehills will provide a further update on the Heavy Vehicle National Laws shortly.

The Full Bench of the Road Safety Remuneration Tribunal has made its first RSRO, following an extensive consultation and hearing process conducted throughout 2013. We have previously provided an overview of the Tribunal and its functions.1

The RSRO,2 which will operate for 4 years commencing on 1 May 2014, applies to road transport drivers in the supermarket retail and long distance sectors, their employers/hirers and other supply chain participants (including consignors, consignees and intermediaries). It operates as a minimum ‘safety net’, prevailing over existing awards, enterprise agreements and contracts.

The RSRO sets out requirements regarding:

• payment time within 30 days of a received invoice for contractor drivers,
• written contracts for road transport drivers (which may be in an electronic format),
• contracts between supply chain participants (including obligations on consignors and consignees to ensure that their contracts with other supply chain participants require compliance with the RSRO),
• safe driving plans for drivers undertaking long distance operations using a motor vehicle with a gross vehicle mass of more than 4.5 tonnes (including obligations on consignors and consignees to witness safe driving plans where reasonably practicable),
• training in work health and safety,
• drug and alcohol policies, and
• dispute resolution and adverse conduct protection.

The RSRO departs significantly from both the draft RSRO which the Tribunal published in July, and the proposed RSRO sought by the Transport Workers’ Union. Several contentious provisions dealing with (amongst other things) the extent of compliance obligations beyond direct contractual relationships were either abandoned or substantially confined.

In its current form, the RSRO does not deal with the issue of rates of payment for road transport drivers and associated issues. The Tribunal has convened a conference during February 2014 to address the rates issue, with a view to varying the RSRO to include minimum rates.

Implications for supply chain participants

All participants in the supermarket retail supply chain, or in any long distance supply chain, will be subject to a range of new obligations enforceable by way of a dispute mechanism under the Road Safety Remuneration Act 2012 (Cth) (RSR Act).

Whilst transport providers and their employees and contractors are subject to the broadest range of obligations, other supply chain participants (and consignors and consignees in particular) should carefully review the RSRO to understand how it will impact their operations. At a minimum, these new obligations will require consignors and consignees to:

• vary existing agreements concerning both the supply and transport of goods to ensure compliance with the RSRO,
• review their standard form terms and conditions in supply and transport agreements to ensure that future agreements similarly comply with the RSRO, and
• review receiving and despatch processes at distribution centres to ensure that obligations to witness safe driving plans can be met where reasonably practicable.

Further, the upcoming rates conference will likely result in the RSRO being varied to include minimum hourly and per-kilometre rates for contractor drivers3 in the retail and long distance sectors, placing upward pressure on transport costs throughout these sectors. Consignors and consignees with significant road transport expenditure may wish to consider engaging with the rates conference process in order to ensure that their perspectives are considered by the Tribunal and to better understand their exposure moving forward.

The Tribunal’s future under the Coalition Government

Aside from the rates conference described above, the Tribunal will shortly commence its Second Annual Work Program, which aims to both conclude the matters dealt with in its First Annual Work Program and inquire into the cash-in-transit sector (with a view to making a second RSRO in relation to that sector).

The Second Annual Work Program is set against the background of the Federal Government’s independent review of the Tribunal and the RSR Act generally, which is due to report back during March 2014. The review was foreshadowed in the Coalition’s industrial relations policy prior to the last Federal election, based on concerns around duplication of existing laws and the appropriateness of the current Tribunal model. What this means for the future of the Tribunal (and the RSRO taking effect on 1 May 2014) given the as-yet uncertain composition of the Senate after 1 July 2014 remains to be seen.

Heavy Vehicle National Laws to commence 10 February 2014

In addition to managing the issues arising from the RSRO, supply chain participants in the road transport industry will also be subject to reformed road safety laws when the Heavy Vehicle National Laws progressively commence operation in Australian States and Territories (with the exception of WA) from 10 February 2014. These national laws will further harmonise obligations relating to vehicle loads, speed and fatigue, and the way in which these obligations are imposed on all participants in the road transport ‘chain of responsibility’.

As these obligations intersect with many of those imposed under the RSRO, supply chain participants will need to carefully review their operations to ensure that they discharge their obligations under the both the RSRO and the national laws.

Herbert Smith Freehills will provide a further update on the Heavy Vehicle National Laws shortly.

This article was written by Paul Burns, Partner and Andrew Pollock, Solicitor, Melbourne.

Herbert Smith Freehills continues to act for Coles Supermarkets Australia Pty Ltd in the Tribunal’s road safety remuneration order proceedings.

Endnotes

1.New Road Safety Remuneration Tribunal to make remuneration orders

2.Road Safety Remuneration Tribunal decision.

3.The Full Bench has indicated that it will not exercise its powers to set minimum rates of pay for employee drivers in light of the existing safety net provided by the Fair Work Act award system in relation to rates of pay.