Segments of the road haulage industry have been up in arms in recent weeks over the Contractor Driver Minimal Payments Road Safety Remuneration Order 2016 (RSRO) which is now in operation nationally despite a recent short term stay ordered by the Federal Court of Australia. The RSRO has become politically divisive. On the one side are sections of the road haulage industry especially those representing small and often family owned drivers and contractors supported by industry associations such as Natroads and the Australian Trucking Association, who have been actively pressing the Federal Government for at least deferment of the RSRO or even to repeal the RSRO and the Road Safety Remuneration Tribunal (Tribunal), which made the RSRO. On the other side is the Tribunal, the powerful Transport Workers Union (TWU) essentially representing employed truck drivers rather than owner drivers (no surprise there given the history of truck owning and driving in Australia) and some commentators.
The stouch came to light in March when the Tribunal gave parties seeking a stay of the planned coming into effect of the RSRO on 4 April a very short period to submit responses especially with the Easter holiday coming up. The Tribunal sat over the holiday and adhered to its view that there was no good reason to defer the RSRO coming into effect on 4 April. That refusal together with criticism of the seemingly haughty way in which the Tribunal conducted its hearings upset many truck drivers and road industry associations. This upset spilled out onto street protests and then into the media and the Federal Government.
The authority of the Tribunal and the RSRO was not enhanced by two recent separate proposals put forward by the Department of Employment which found there was a substantial regulatory overlap between work, health and safety laws and other road safety regulations and that this level of regulation was not justified, and recommending various options including abolishing the entirety of the national Road Safety Remuneration System including the Tribunal.
What is all the fuss about? Put simply the RSRO will require higher levels of remuneration, rest periods and other benefits for contractor (that is non-employee) drivers in two areas:
- Distribution operations involving the transport of retail goods destined for sale or hire by a supermarket chain (a business operating five or more supermarkets); and
- Long distance operations within the meaning of the Road Transport (Long Distance Operations) Award 2010 which broadly covers interstate journeys exceeding 200 kilometres or return journeys exceeding 500 kilometres.
Paid hours of work will increase and if a hirer regularly engages a contractor driver over a 12 month period the hirer must pay the contractor driver to take four weeks of unpaid leave during each or one periods that follow.
Supply chain participants (consignors, consignees, intermediaries and operators of premises for loading and unloading) must take all reasonable steps to ensure that any contract they have with another party in this relationship complies with the RSRO.
Hirers are also required to submit to annual compliance audit by supply chain participants with which they contract unless the contract provides the carriage of goods on fewer than 270 days in a financial year.
There are hefty penalties for failure to comply with the minimum payment and other remuneration provisions. It is not simply owner drivers who are affected as all transport operators will need to establish which subcontractors currently engaged are “contract drivers” who fall within the scope of the RSRO, and in the case of supply chain participants, they must determine whether any of their transport service providers engage “contractor drivers” who fall under the scope of the RSRO.
Contractor drivers provide a large number of the truck drivers on long distance trips with both full loads and partial or empty backloads. Some of these drivers are only part-time drivers who are often farmers or who have other jobs. However for many of them truck driving is their livelihood. Long distance and road haulage in Australia is a price taker not a price maker. In recent years the impact of tough market conditions has been especially tough on rural Australia due to the seasonal nature of agricultural freight and the effects of long-term drought. There is no doubt that in recent years the supermarkets and other parties in the supply chain including large haulage companies employing their own drivers have put the squeeze on the freight rates which contractor drivers are able to obtain thereby forcing down prices and causing many small and family owned businesses to collapse as well as well documented cases of not just financial hardship but also mental health and other issues associated with the loss of business and jobs.
The representatives of the contractor drivers and many others, including to some extent the large road haulers who are sometimes part of large logistics operators, argue that the significant increase in conditions for contractor drivers under the RSRO will make it uneconomic for the supply chain to engage those contractor drivers and this will likely force them out of business. They say that in reality the RSRO will impose minimum freight rates under the guise of employment remuneration.
The debate has become emotionally charged with the supporters of the RSRO saying it will improve road safety both for contractor drivers and for all users of the road. The opponents of the RSRO hotly dispute the statistical basis of the safety argument. The opponents say the RSRO will simply send drivers out of business, which in rural areas in particular could have catastrophic consequences for their businesses, their families and local communities. They say imposing minimum freight rates will have no impact on road safety. They see the RSRO as a TWU and Tribunal attack on owner drivers and small business.
Initially the opponents of the RSRO sought a stay of its coming into effect until January 2017 but the Tribunal in its decision on 1 April declined to stay the coming into effect of the RSRO at all and this led to the escalation of opposition to it. Even the TWU agreed at that stage to some extension of time for the RSRO to come into effect although it argued that the opponents of the RSRO had ample opportunity in the previous six months to express their concerns about it. That might be correct for large well-resourced organisations, but as most contractor drivers are small or family businesses that was not necessarily the case particularly as the terms of the RSRO were in the views of many commentators unnecessarily convoluted.
The critics of the large operators (including the TWU) say that if had they not driven down prices for road freight then the lot of the small operators would not be so dire. Many of the large (and small) road haulers in return say that they have no choice in the matter as the large supermarkets in particular control the price of road freight in the marketplace. This raises competition issues as well as the viability of the RSRO in achieving its stated safety objectives.
The good news for the contractor drivers is that Federal Parliament voted to repeal the RSRO and abolish the Tribunal in a late night session on 18 April with several independent Senators supporting the Government’s bill. The Road Safety Remuneration Repeal Act 2016 received the Royal Assent on 19 April and takes effect on 21 April.
Post by Derek Luxford