Parts of this Act came into force in February 2006 and the balance will come into force possibly in December 2006. I will assume for the purposes of this article that all of the Act is now in force. The Act will apply to quarrying companies that use “owner drivers” – in the Act called “contractors”.
The Act does not apply to company drivers (employees).
It is not possible in this short note to go into detail on all provisions of the Act. It is however clear that the Act will almost certainly require quarry companies to amend any existing contracts they have with their contractors.
Here are a few key points:
The Minister, in consultation with industry councils (to be established under the Act) must develop Schedules for contractors and revise them at periods not exceeding 12 months. It will be important for industry members of industry councils to be in position to deal with the following issues in respect to the Schedules.
The Schedule must specify the class of contractor and vehicle to which it applies, and contain:
- typical fixed and variable overheads; and
- base hourly rate and casual hourly rate that would typically apply to that class of contractor, if he were performing substantially similar work as an employee;
Fixed and variable overhead costs include, but are not limited to:
- registration, maintenance and running costs;
- business administration and insurance costs, (including Work Cover premiums);
- self-funding of superannuation;
- finance costs;
- costs of complying with applicable laws;
- costs of engaging additional relief labour;
- depreciation of vehicles or equipment.
A company must supply to a contractor a copy of the most recent schedule, at least 3 days before engaging him. Whilst the company is not obliged to pay the contractor remuneration calculated in accordance with the Schedule, the Schedule is clearly intended to arm the contractor with sufficient information to determine whether to “sign-on” at the rate offered by the company or not.
The Schedule is not yet available.
An “owner driver contract” is a regulated contract. Probably all contracts between a company and a contractor will be regulated contracts. They must:
- be in writing;
- state the guaranteed minimum number of hours of work or income level the contractor will receive;
- set out rates to be paid;
- set out minimum period of notice of termination, or payment in lieu.
(Prior to signing, the contractor will have been supplied with the relevant Schedule).
The minimum period for an owner driver of a heavy vehicle is 3 months. This does not apply in the case of termination for “cause”.
The company may, in lieu of notice, pay an amount calculated in accordance with a formula set out in the Act. Many current contracts probably contain payment in lieu provisions, based on the formula set out in the particular contract. Companies will need to determine whether the amount payable under their formula is at least the same as the amount payable under the formula set out in the Act. Even if it is, it may be necessary for companies to amend their agreements, to use the same formula as is set out in the Act.
This part of the Act is not yet in force – it will introduce a new concept. The Act allows a contractor or group of contractors, to appoint a person to be their “negotiating agent” in relation to engagement of contractors by companies. Companies must recognize a “negotiating agent”, whose appointment must be in writing. If requested by the agent, the company must deal exclusively with him, within the scope of his authority.
It is an offence for a person to coerce or attempt to coerce, a contractor or group of contractors from appointing, or not appointing, a particular person as agent, or to terminate the appointment.
Companies have the same rights. They may appoint an agent to act on their behalf.
Companies and contractors cannot engage in unconscionable conduct. Numerous examples are set out in the Act. In simplified terms, it means that parties must act with fairness. They must also however conform to any applicable code of practice.
The Minister may make regulations prescribing codes of practice in relation to engagement of contractors. Before doing so, he must consult with the Transport Industry Council. The person to whom the code applies must comply with it.
A draft code (23 pages) has already been circulated. It seems to impose obligations on companies in respect to their contracts, which go beyond the provisions of the Act itself. This means companies must familiarize themselves with the code, and then determine the extent to which their existing contracts may need amendment, to ensure compliance. The first aim of the code is to provide for certain mandatory requirements concerning engagement of contractors. The code then sets out many examples of matters which must be covered, either in negotiation, or in the terms of the contract itself.
In the case of a dispute, either the company or the contractor may refer the dispute to the Small Business Commissioner for “alternative dispute resolution” (ADR). The Commissioner must refer the matter to mediation or to another appropriate form of ADR. A mediator cannot impose obligations on the parties.
Disputes may go to the Tribunal if the Commissioner certifies that ADR has failed or is unlikely to resolve the dispute. Any party can apply to the Tribunal. The Tribunal has wide powers including the power to award damages, including exemplary damages, and to issue injunctions. It can also order that a term of a contract is void if it is “unjust”. The Act sets out a range of matters which the Tribunal may have regard to in determining whether a term is in fact unjust.
A dramatic amendment to the existing position is that the Tribunal, if it makes an order declaring void a term of a regulated contract, or inserting a term into such a contract or otherwise varying it, may extend the operation of its order to regulated contracts of a specified class. The Tribunal can only take this step if appropriate notice is given to all interested parties, who would have the right of audience before the Tribunal. These provisions will need to be watched carefully – they amount to “roping in” provisions, which could mean that companies not involved in a particular dispute, may become involved in it if a party to that original dispute seeks to extend the operation of the order that is made in it.
The above represents a very brief overview of the Act. It does not cover all issues. In my view, quarrying companies should consider taking the following action:
- Get a copy of the Act and read it.
- Get a copy of the draft Code of Practice and Model Contract both of which have been circulated by the Department and read them.
- Read your existing contracts, to see to what extent they may require amendment, to meet all the new legislative requirements. There is plenty of time to consider these points but companies would be well advised to be embarking on the process now.
For further information, please contact Levent Shevki on + 61 3 9608 2278 or l.shevki@cornwalls.com.au
or Garry Eather on + 61 3 9608 2260 or g.eather@cornwalls.com.au
