The Road Safety Remuneration Tribunal has issued its draft Contractor Driver Minimum Payments Road Safety Remuneration Order 2016.

If the draft Payments Order comes into effect, it will impact all retailers and those in the supply chain, in that retailers will have to manage compliance of their supply chain partners to ensure minimum payments to drivers are met.

A retailer will also have to conduct its own audit of compliance and it will have a positive obligation to report non-compliance. A retailer may even have obligations to audit the drivers themselves.

The additional compliance costs will be substantial.

Retailers should consider making submissions about the effect of the draft Payments Order on their business. Submissions are due by midday on Wednesday, 23 September 2015.

Further information is available from the Road Safety Remuneration Tribunal's website.

What is the draft Contractor Driver Minimum Payments Road Safety Remuneration Order 2016?

The Road Safety Remuneration Tribunal (RSRT) is an independent tribunal with functions relating to the road transport industry, one of which is to make orders in relation to payments to road transport drivers.

On 26 August 2015, the RSRT issued its draft Contractor Driver Minimum Payments Road Safety Remuneration Order 2016 (draft Payments Order). The draft Payments Order has significant compliance ramifications in the road transport industry and, in particular, to retailers.

It is intended that the draft Payments Order will commence from 1 January 2016 and be in effect for four years.

Supply Chain obligations

The draft Payments Order applies to supply chain contracts. It then imposes obligations upon what it calls “participants in the supply chain”.

In practice, the draft Payments Order intends to force a retailer to ensure its supply chain arrangements with its transport operators comply with the draft Payments Order. The retailer has an obligation to “take all reasonable" measures to ensure that any contract it has with another participant in the supply chain complies. For the purposes of this update, we will call this other participant the “transport provider”.

Under the draft Payments Order, compliance is achieved through a number of different measures that are all imposed on the retailer. This is done by requiring the retailer to have provisions in the contract with its transport provider that:

  • are consistent with the requirements of the draft Payments Order;
  • are sufficient for the transport provider to comply with the draft Payments Order;
  • require the transport provider to comply with the draft Payments Order; and
  • permit the retailer to conduct an annual audit of compliance by the transport provider, and require the transport provider to co-operate with this annual audit.

In addition to the obligations placed on the retailer in respect of the transport provider, the retailer also has an obligation directly to a road transport driver to audit the relationship between the transport provider and the road transport driver.  This is even though there may be no relationship whatsoever between the retailer and the road transport driver.

This obligation arises if the contract between the retailer and the transport provider is open ended or where the contract between the retailer and the transport provider are for periods of least 30 days in each year.

The reality for most retailers who have established relationships with transport providers is that they will be required to comply with this additional burden to audit drivers as well as their transport providers.

A further obligation is imposed on a retailer where it becomes aware, or has a reasonable belief, of non-compliance in relation to a road transport driver. The retailer will need to give its transport provider a written notice of non-compliance and set out the steps required to rectify the non-compliance.

Finally, the retailer will have a positive obligation to notify relevant regulatory bodies of this alleged non-compliance. The retailer's sanction is that it is permitted to terminate its contract with the transport provider if the non-compliance is not rectified within a reasonable period.

Breach of Order

A breach of an Order made by the RSRT carries with it the same penalty regime as a breach of the Fair Work Act 2009 (Cth).  From 31 July 2015, this is a maximum penalty of $54,000 for a corporation and $10,800 for an individual.

What are the other major ramifications of the draft Payment Order?

Apart from the significant compliance obligations imposed on retailers, the major concern with the draft Payments Order is the significant increase to minimum payments for distribution and long distance operations. The end-to-end impact on retailers will depend on many variables. However, the prevailing view is that the rates in the draft Payments Order will add significantly to supply chain costs.

What can retailers do?

The draft Payments Order is still subject to change by the RSRT before it becomes a binding law. The RSRT is encouraging written submissions and/or witness material from interested parties to be lodged by midday on Wednesday, 23 September 2015. Hearings in relation to the draft Payments Order are also to be scheduled.

Retailers should seriously consider the impact on their business of the compliance obligations in the draft Payments Order and the substantial compliance costs which they will incur in meeting obligations.