NSW Government proposes material extension to Chapter 6 – Contract Driver Regulation

On 6 February 2025 the NSW Government made public a draft Bill to change Chapter 6 of the NSW IR Act seemingly to respond to new powers given to the Fair Work Commission (FWC) to regulate gig workers, contract drivers and supply chains.

The Bill:

• is designed to maintain the relevance of Chapter 6 against the new powers the Albanese Government recently gave the FWC to regulate gig workers, contract drivers and supply chains;
• allows the Industrial Relations Commission (IRC) to regulate supply chains; 
• introduces changes to streamline dispute procedures while not materially altering their practical operation;
• changes who Chapter 6 covers, making it cover food and other sectors previously excluded – the only statutory exemptions maintained are for “common carriers” and the rural sector;
• covers gig platforms including ride share and food and beverage delivery workers;
• enhances previously unused powers to declare a party a contract carrier and covered by Chapter 6 by creating a relatively easy test;
• expands the definition of a contract of carriage to include where the carrier operates up to five vehicles;
• obliges tolls to be paid and also prohibits principal contractor directing the route to take in performing cartage work;
• limits the ability to unilaterally terminate a contract agreement;
• imposes contract agreements on any legal successor to the principal contractor party;
• introduces transition rules for certain provisions providing a six-month phase-in, as well as restricting current contract determinations from applying to work arising from changing the coverage of the Act and allowing for this to be the subject of a proper conciliation and arbitration process.

Implications for your business

Some parts of the Bill are not particularly controversial while others are. The likely areas that are most controversial include:

• the regulation of gig platforms overlapping with new Federal laws and navigating conflict between similar State and Federal instruments;
• the broad powers to declare a contract to be a contract of carriage which are based on a relatively open test with no obvious requirement for the party to be akin to a contract carrier – indeed, parties could be reasonably sized fleet owners;
• the extension of the definition of a contract carrier to a carrier operating five vehicles. This would fundamentally alter existing arrangements with legitimate small fleet operators and impact supply chain economics for many parties;
• limiting the termination of contract agreements to “exceptional circumstances” which could leave many principal contractors locked into unsatisfactory arrangements without resorting to an arbitrated alternative;
• the ability to make sweeping orders against supply chain participants which invade normal commercial arrangements and pricing;
• the restriction of principal contractors directing which route must be taken which has safety, service delivery, and payment implications. 

Nigel Ward from Australian Business Lawyers & Advisors attended a consultation briefing with the NSW Minister’s team and Departmental officials on 10 February 2025 and some clarification was provided on the draft Bill (not necessarily reflected in the current drafting).

NSW Minister’s team and Departmental officials indicated that:

• The five-vehicle extension was only intended to apply where the contract carrier personally drives one of the vehicles already.
• The extension of declaration powers was only intended to capture parties akin to contract carriers.
• The supply chain powers were not intended to invade non-cartage related commercial arrangements.
• They were not aware that many existing contract determinations and contract carrier arrangements which set out what route contract carriers were to take as a foundation for calculating kilometres travelled and payments etc.

Process

There is now a consultation period through to the end of February 2025 and Australian Business Lawyers & Advisors will be preparing a response to the Government on the Bill highlighting areas of concern, suggested changes and in particular, unintended consequences of their drafting.

Your Input

If you are a road transport business or distribute or receive products, goods or materials through a road transport business in NSW, your views will be valuable as we navigate the consultation process with the Government. 

If you would like to contribute your thoughts on this issue and potential impacts to your business, please send your comments or questions to info@ablawyers.com.au to review.

The Bill

Access a copy of the Industrial Relations Amendment (Transport Sector Gig Workers and Others) Bill 2025.

ABLA will continue to keep you updated on developments in this matter as it progresses.