Underpaid owner-drivers to be protected by Vic legislation

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Underpaid owner-drivers to be protected by Vic legislation

The Victorian Government has introduced legislation to regulate the owner-drivers industry, setting a minimum rates comparison, introducing a dispute resolution process and driving shonky businesses out of the industry for good.

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The Victorian Government has introduced legislation to regulate the owner-drivers industry, setting a minimum rates comparison, introducing a dispute resolution process and driving shonky businesses out of the industry for good. 

Onus on principal company

Under the Owner Drivers and Forestry Contractors Bill employers/principals will have to spell out to owner-drivers what they would earn if they were employees, so they can compare it with their contract rate. 

It also says all ongoing contracts between owner-drivers or forestry contractors and those who engage them must be in writing, and also specify the minimum income or hours of work under the contract 

The Minister for Industrial Relations, Rob Hulls, said in the Second Reading speech that the purpose of the legislation was to provide some basic protections for owner-drivers in the transport industry and harvesting and haulage contractors in the forestry industry.  

Nature of industry

Hulls said the road transport industry was characterised by small family-run businesses, and over 85% of transport businesses have less than five employees. 

‘There is significant evidence to show the very low levels of earnings for owner-driver forestry contractors lead to high rates of business failure and working conditions and hours of work that do not meet a fair community standard,’ he said. 

‘Owner-drivers are working longer hours for less money. There is evidence (from both Australia and internationally) linking low rates with very long hours of work and increased levels of fatigue, and increased poor health outcomes and levels of wellbeing; and higher rates of chronic injuries.

‘Owner-drivers are an important component of a competitive and efficient industry.  

‘However, the low and declining level of earnings of this group are not only unjust and well below an acceptable community standard, but are simply not sustainable, and have serious ramifications for the safety of the drivers themselves and for other road users.’  

Hulls said many owner-drivers have working arrangements very similar to employees in that they work for the one hirer, are subject to direction and control and cannot accept work from other clients.  

Transport and Forestry Industry Councils 

The Bill sets up a central role for industry councils for each of the forestry and transport industries. 

These councils will be appointed by the minister, consist of a balance of representatives of hirers and contractors, and have a high level of industry expertise.  

Hulls said the industry councils will be responsible for: 

  • making recommendations to the minister on the content of codes of practice, information booklet, and developing and updating the rates and costs schedules;
  • developing model agreements for different industry sectors;
  • advising the minister on any matters relevant to commercial practices relating to the contractors in the industries, such as small business training programs.

Codes of practice

Hulls said that under the legislation codes of practice can be established as regulations and may apply across the whole of an industry, or deal with particular sectors, and may be mandatory or guidelines.  

‘The codes are to be taken into account by the Victorian Civil and Administrative Tribunal in determining whether unconscionable conduct has occurred,’ Hulls said.  

He said the codes may provide prohibitions or guidelines on matters such as:

  • absence due to illness or family reasons,
  • paid and unpaid waiting time (demurrage),
  • the purchase of vehicles at the request of a hirer,
  • excessive hours of work, shift and night work,
  • job advertising practices,
  • and the charging of goodwill or entry payments.

Dispute resolution jurisdiction

Under the Bill, the existing role of the small business commissioner will be extended to owner-drivers and forestry contractors.  

There will be broad powers to resolve disputes, including awarding damages and varying contracts where necessary to avoid injustice.  

Hull said parties will pay their own costs of the proceeding, but a party may be made to pay part or all of the other party’s costs if that party refused to take part in or withdrew from mediation.

‘This provision will act as an incentive for parties to participate in mediation in a proper way,’ Hulls said. 

Claims involving unlawful termination of agreements must be brought within 12 months, and other disputes, within six years. 

The legislation is also aimed at driving out of business shonky operators who run up debts and the ‘reinvent’ themselves under another name. 

Hulls said the Bill provides that where the Civil and Administrative Tribunal determines to exercise its powers in relation to a dispute, the tribunal may order a party to the proceeding, or any person associated with a party (such as an officer of a company) to refrain from entering or being associated with the offering of contracts of a particular kind.  

‘This will prevent directors of companies found to have infringed the act from winding up one company and starting a new one to avoid the order of the tribunal,’ he said. 

The Bill also allows associations that represent contractors or hirers to apply to the tribunal to have an order that varies a particular contract extended to apply to all like contracts in an industry or defined section of an industry by way of an order of general application. 

‘This procedure will allow for issues that are occurring across an industry to be dealt with in a common way, without unfairly singling out a particular business,’ Hulls said. 

Information imbalance

The Bill provides that all ongoing contracts between owner-drivers or forestry contractors and those who engage them must be in writing, and also specify the minimum income or hours of work under the contract.  

‘An enforceable figure must be stated so that parties have a clear understanding of their bargain,’ Hulls said.

‘If the minimum to be paid is low, the contractor may rethink a decision to incur debts or invest in heavy equipment, and may seek to negotiate a greater level of security.’ 

The bill provides that each new driver must be given a rates and costs schedule three working days prior to a contract being entered.  

‘These schedules will be developed by the industry councils and made available to hirers at no cost,’ Hulls said. 

‘The schedules will set out the typical overhead costs of the relevant class of small business, based on the kind of vehicle or equipment supplied.  

‘Also the schedules will set out the base hourly rate and casual hourly rate that the contractor would typically earn as an employee, as a reference for the contractor to assess the rate offered.’ 

Information booklets covering the schedule system must also be given to the owner-drivers. 

‘If contractors have not been provided with either the information booklet or the rates and running costs schedules in the prescribed manner, they will be entitled to make a claim to be paid at an appropriate and fair rate, as determined by the tribunal,’ Hulls said.  

Excluded from legislation

Hulls said these requirements do not apply to contractors who work on ‘one-off’ jobs for different hirers, or in short-term engagements.

Notice of termination 

The Bill requires that contracts for engagements continuing longer than three months must include a minimum period of notice of termination, or payment in lieu of notice. 

For forestry contractors and for owner-drivers supplying a heavy vehicle, the period of notice will be three months, and for others, one month.  

Deduction of expenses from contractors’ incomes 

The Bill prohibits deduction of monies from contractors’ incomes and compulsory payments unless the costs are specified in the contract, the costs are a direct and proper reflection of the cost of the actual service provided; and the contractor has been provided with an opportunity to obtain equivalent services or product from an alternative supplier.  

‘In particular, a hirer must not make deductions for insurance costs unless a policy is in place and a copy of the policy has been provided to the driver or forestry contractor,’ Hulls said.

Unconscionable conduct 

The Bill says that a contract that locks up a contractor’s rates for long periods of time without regard to increases in overheads (particularly petrol prices) will be susceptible to a claim of unconscionable conduct.  

The Bill also allows for a comparison to be made to the earnings of employees performing substantially similar work. 

Joint negotiations 

The Bill allows for groups of contractors to appoint an agent to negotiate contracts on their behalf with a single business hirer.  

Actions such as breaching existing contractual obligations or picketing or secondary boycotts aimed at placing unlawful pressure on a party to agree to terms are not authorised under the legislation. 

Contractors hired by a single business will however be able to jointly determine the terms and conditions they seek.  

The Bill prohibits a person from coercing or attempting to coerce a person to appoint, or not to appoint, a particular person as a negotiating agent. 

Preventing particular unfair practices  

The Bill provides protections for persons seeking to exercise rights under the Act by prohibiting the imposition of detriment for certain reasons, including:  

  • support joint negotiations,
  • seek to improve their rates or conditions, raise health and safety issues,
  • or pursue any rights under the act or a code, or otherwise participate in a proceeding under the Act.

Details of the legislation

The Parliament of Victoria website carries details of the legislation.

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