On the 1st April 2016, the Federal Court of Australia stayed the Contractor Driver Minimum Payment Road Safety Remuneration Order 2016 (Order) until further notice. The Road Safety Remuneration Tribunal published the Order on the 18th of December 2015 and was set to commence on the 4th of April 2016. This article will set out how the Order is likely to operate if and when the stay is lifted.
Who is Caught by the Order?
The Order applies to a contractor driver (road transport drivers who are independent contractors and includes both individuals and corporations) engaged in:
- The road transport and distribution industry regarding the contractor’s provision of a road transport service wholly or substantially related to goods, wares, merchandise, material or anything whatsoever destined for sale or hire by a supermarket chain. A supermarket chain is a business which operates 5 or more supermarkets; or
- Long distance operations in the private transport industry. A long distance operation means any interstate operation (exceeding 200 km), or any return journey (where the distance travelled exceeds 500 kilometres), and the operation involves a vehicle moving livestock or materials whether in a raw or manufactured state from a principal point of commencement to a principal point of destination.
To the extent you provide services in these industries, the Order will apply to contractor drivers you hire.
Exceptions to the Order
There are several exceptions where the Order will not apply including where a contractor driver is engaged in the following:
- Cash in transit industry;
- Waste management industry; and
- Road transport industry (oil, fuel and gas sectors and sectors relating to the wharf and port containers).
To the extent you provide services in these industries, you will not need to apply the Order to the contractor drivers you engage.
What are Your Obligations Under the Order?
Where your company hires contractor drivers whose services fall under the Order, the following obligations will apply:
1. Minimum Rates for Contractor Drivers
Part 5 of the Order covers the minimum payments for contractor drivers. Section 9 concerns distribution operations and Section 10 long distance operations. These sections require that you pay your contractor drivers both a minimum hourly rate and a per-kilometre rate.
The prescribed hourly rate must be paid for each hour (pro-rata for any part of an hour) that a contractor driver provides road transport services. Road transport services includes a service provided in the road transport industry, and will include activities associated with driving, for example, when the contractor driver is:
- Required to be at your disposal or direction;
- By law required to take a rest period (30 minor less continuous minutes), unless another person is driving the vehicle;
- Queuing or waiting while in control of the vehicle;
- Loading or unloading including tarping, installing or removing gates or the operation of on-board cranes;
- Cleaning, inspecting, servicing or repairing a vehicle or trailer that you supply;
- Inspecting or attending to a load;
- Refuelling the vehicle where the provision of the road transport services requires more fuel than the fuel tank can hold;
- Recording information or completing documents relating to the vehicle or trailer used in providing the services you require; and/or
- Waiting in a location because of a natural disaster or another emergency for up to 8 hours in any 24 hour period.
The above activities will also include where the contractor driver is supervising any of the above-listed activities. It won’t include any time lost due to the contractor drivers vehicle or trailer breaking down, or an accident involving the contractor driver.
The kilometres that the contractor drivers travel as part of their provision of services is calculated from when they leave your depot until they arrive at the location to which goods are delivered.
The rates are set out in Schedule A for distribution operations, and Schedule B for long distance operations. The rates came into effect as of the 4th April 2016, and will automatically increase by 2% per year, with the first increase to be effective on the 4th April 2017.
A number of factors will affect the rate used, and are based on:
- The driver’s transport worker grade;
- The type of trailer used, and whether Metro or the driver provides the trailer; and
- The class of the vehicle used to provide the services.
Schedule A and B include definitions of the grades, trailers and class of vehicles.
2. Alternative Method
The Order will allow you to use a method other than the hourly rate + kilometre travelled method to pay your contractor drivers. However, this provides that the contractor driver does not earn less than the prescribed hourly rate + km travelled method, over a period of 28 days. You need to be able to prove this by keeping records over each 28 day period and comparing the two methods of payment. If there is a shortfall between your method and the prescribed method, you will need to pay the contractor driver the difference.
The administrative work required may mean that using an alternative method is cost prohibitive. However, you may want to consider this depending on the size of your operation and if so, prepare a comparable plan. Please note that using an alternative method regarding contractor drivers in the distribution operations for supermarket chains is meant only as an interim solution as the option to use an alternative method expires on 3rd of October, 2016. The option to use an alternative method will continue for long distance operations indefinitely. However, we note that the compliance obligations may still make this option unfeasible.
3. Unpaid leave
The Order requires that where you regularly engage a contractor driver over a 12 month period, you must permit the contractor driver to take unpaid leave of up to 4 weeks during the following 12 month period.
4. Promoting the Order
Under section 5 of the Order, any hirer of contractor drivers must display the Order where practicable at each of their work sites or depots through which contractor drivers provide their services, as well as on their website. Hirers are also required to advise each contractor driver that the Order applies to them and that they can access the Order at their sites or depots, on their website or via www.rsrt.gov.au.
5. Supply Chain Contracts
Part 3 of the Order requires that all participants in the supply chain concerning a road transport driver take all reasonable steps to ensure that any contract concerning a contractor driver does not contain any provision intended to, or has the effect of preventing compliance with this Order. This requirement will apply to contracts made before the Order as well as those after.
Participants in the supply chain in relation to a road transport driver will include a consignor or consignee, intermediary or operator of premises for loading and unloading.
All supply chain participants will need to review all contracts and ensure the agreement complies with the Order even if they do not fire contractor drivers directly.
6. Annual Compliance Audits
Hirers of contractor drivers will also be required to submit to an annual compliance audit by a supply chain participant with which they contract for the supply of transport services. However, this requirement only comes into effect where the supply chain participant is a party to a contract (or contracts) with the hirer for the carriage of goods on 270 or more days in a financial year.
Eligible parties must request an audit by the 31st December following the end of the relevant financial year. The Order also allows the audit to cover a representative sample of your records rather than all records. Hirers are required to take all reasonable steps to facilitate the audit by complying with any reasonable request to access their records to show compliance with the Order.
If the auditing party reasonably believes that the hirer has not complied with the Order, they must provide you with a written notice:
- Stating the nature of the non-compliance;
- The action required to rectify it; and
- Requiring Metro to rectify the non-compliance within 28 days.
If the hirer then fails to rectify the issue, or the auditing party is not satisfied that they have rectified the issues, the auditing party must notify the Fair Work Ombudsman immediately.
If you have any questions about complying with the Order, or how it affects your contractor drivers, get in touch with our business and commercial lawyers on 1300 544 755.