Major changes affecting contractor drivers in NSW

Article by Nigel Ward, CEO and Director and Rhys Kingston, Associate

Businesses that engage third parties to perform delivery/courier work in NSW should be aware of a recent NSW Industrial Relations Commission decision that:

• varies the Transport Industry – General Carriers Contract Determination 2017 (GCCD)
• varies the Transport Industry Courier and Taxi Truck Contract Determination (Courier Determination), and
• rescinds the Transport Industry Courier and Taxi Truck Contract Superannuation Determination (Superannuation Determination).

The rates that businesses must pay for certain delivery/courier services performed by contractors with light vehicles are changing as a result of the decision.

What are Contract Determinations?

Most businesses are familiar with modern awards and their role in setting minimum terms and conditions for employees. Contract determinations act in a similar manner, but for contractors who fall within the scope of Chapter 6 of the Industrial Relations Act 1996 (NSW) (the Act).

Do Contract Determinations Apply to My Business?

Contract determinations apply to ‘contracts of carriage’ between a principal contractor and a (sub) contractor or carrier. The term ‘contract of carriage’ is defined by section 309 of the Act. In essence, it is a contract to carry goods, by way of a bicycle or motor vehicle supplied by the carrier, entered into with:

• a sole trader (who performs the work themselves)
• a partnership (where the work is only performed by one or more of the partners), or
• a company (where the work is only performed by company directors or other persons with a controlling interest in the company, or their family members).

If you enter into one of these contracts, it is likely that a contract determination regulates the arrangement. Contract determinations do not apply to cartage work performed by your own employees and are unlikely to apply to your business if you engage an established transport provider operating a large fleet of vehicles.

The above is a simplification and there are some exceptions.

 

ABLA can provide assistance in determining whether contract determinations (and other provisions of Chapter 6) may apply to your business.

The Determinations

The GCCD has broad coverage (especially within Greater Sydney) and applies to all general freight work unless it is performed by certain specialised vehicles and/or covered by a different, nominated contract determination.

As its name suggests, the Couriers Determination applies to courier work.

The Act authorises the Transport Workers Union (TWU) to represent the interests of contract carriers. Business NSW is a party to both the GCCD and the Couriers Determination and represents the interests of its members in this regard. Other ‘employer’ organisations such as the Australian Road Transport Industrial Organisation also represent the interests of principal contractors.

Earlier Proceedings

In 2016, the TWU applied for significant variations to the GCCD, effectively seeking to ‘modernise’ the determination. As part of this application, the TWU sought to substantially increase the rates of remuneration. ABLA acted for Business NSW in the proceedings that followed.

After several years of conferences and two arbitrated hearings, the initial modernisation phase concluded. The rates were restructured using a detailed cost and rate model. This culminated in changes to the rates and their composition. For instance, “hourly rates” increased for some vehicle configurations while ‘running rates’ fell by up to 60%. As these new rates are vastly different to the previous rates, they are being phased in over several years.

As part of this compromise, rates for cartage work performed by vehicles with a carrying capacity of less than two tonnes (Light Vehicles) were temporarily removed from the GCCD. Vehicles falling within this category include cars, vans and utility vehicles. Business NSW argued that it was not appropriate to set rates for these with the cost and rate model as most carriers would also benefit from private use of the vehicle, distinguishing them from larger vehicles designed for cartage work.

The Couriers Determination was not varied as part of the above process, and until the Commission’s recent decision, the rates of remuneration in this determination had not been increased since 2007.

One of the historical challenges the parties confronted was similar vehicles, doing similar work but being paid differently under two contract determinations, often within the same business.

Recent Proceedings

In 2019 the TWU applied to reinsert rates for Light Vehicles into the GCCD. Various other applications and counter applications were made throughout a process that was the subject of over 20 appearances before the IRC.

These included an application by the TWU to rescind the Courier Determination which would have resulted in such work being instead covered by the GCCD without the industry specific provisions that have been negotiated over many years.

Business NSW filed a counter application to vary the Couriers Determination to cover all work performed by Light Vehicles.

Following extensive conciliations, the parties reached a consent position which was adopted by the NSW Commission in its recent decision of 18 February 2022.

The Variations

Cartage Rates

From 1 March 2022, new rates for Light Vehicles will be inserted into both the GCCD and the Couriers Determination.  There will be six separate rates, one for bicycles, one for motorbikes and four for motor vehicles of different carrying capacities - up to 750kg, 750kg to 1t, 1 to 1.5t, and 1.5 to 3t. The existing 2t – 5t in the GCCD rate will become a 3t – 5t rate.

The new rates are fixed hourly amounts and compensate the carrier for all costs associated with performing the cartage work (e.g., obtaining and maintaining a vehicle, fuel and labour costs). Unlike the minimum rates for heavier vehicles, there is no separate running rate paid on a per km basis. Principal contractors may still remunerate carriers in other ways, provided they receive no less than they would under the new rates.

The rates are substantially lower than those sought by the TWU and will be phased in between 1 March 2022 and 1 July 2025.

The following provisions have also been removed from the Courier Determination:

• the requirement to pay the fuel levy surcharge
• additional payments for carriers on ‘Exclusive Hire’, and
• provisions dealing with ‘Probationary Periods’.

Superannuation

The Superannuation Determination which required businesses to make superannuation contributions on behalf of couriers has been rescinded and a new schedule dealing with superannuation has been inserted into both the GCCD and the Couriers Determination.

While the new rates for Light Vehicles include an amount to compensate carriers for superannuation, the new provisions will allow businesses to make superannuation contributions on a contract carrier’s behalf and make a corresponding deduction from their remuneration.

The Outcome

The Decision and resulting variations were positive for businesses who engage contract carriers as:

• the new rates were significantly lower than those sought by the TWU (and are in line with what many in the market are already paying)
• it ends an extended period of uncertainty surrounding minimum rates in both determinations
• the alignment of minimum rates in the GCCD and Courier Determination also ends an inequity that had arisen in this space (leading to an uneven playing field for some businesses and disputes arising in relation to which determination applied)
• the industry specific provisions of the Courier Determination will continue to apply; and
• the new rates are to be phased in over a number of years.

What Do Businesses Need to Do?

If your business engages contract carriers, you should review your remuneration rates.

The IRC has not yet published the amended determinations. To view the variations made, email rhys.kingston@ablawyers.com.au for a copy of the GCCD and/or Courier Determination.

ABLA is a leading expert in the field of Owner Driver management and negotiation with Nigel Ward, CEO specialising in this complex field for over 30 years, having negotiated ‘owner driver’ arrangements across Australia.  Nigel conducts specialised training courses on this subject.  If this is of interest to your business, get in touch at info@ablawyers.com.au.