The Federal Government has introduced into Parliament a third tranche of landmark IR reforms in the form of the Fair Work Legislation Amendment (Closing Loopholes) Bill 2023 (the Closing Loopholes Bill).
This final reform update will deal with the following changes to the Fair Work Act 2009 (Cth) (Act) introduced by the Closing Loopholes Bill:
These changes cover the road transport industry which has been defined broadly and includes the industries covered by:
ABLA has a leading industrial practice in Road Transport and has published the primary textbook in the area: Owner Driver Law in Australia. Through our unique experience and position in consulting with government and advising a range of peak and industry bodies on these legislative reforms, we are pleased to share our insight and update clients on the specific details of the changes and the impact these changes are likely to have on businesses.
The Closing Loopholes Bill will introduce new powers for the Fair Work Commission to regulate ‘Road Transport Contractors’ through ‘Minimum Standards Orders’.
Such workers, who are legally contractors, have not traditionally fallen within the jurisdiction of the Fair Work Commission.
The new jurisdiction will regulate ‘Regulated Road Transport Contractors’ and ‘Regulated Road Transport Businesses’ who engage them.
Regulated Road Transport Contractors are workers (not employees) who are either:
The individual must also perform all or a significant majority of the work to be performed under the contract, in order to be considered a Regulated Road Transport Contractor.
This will on its face capture workers who are similar to traditional ‘owner-drivers’ within the category of work regulated by Chapter Six of the Industrial Relations Act 1996 (NSW).
Constitutional corporations that receive services under a road transport contract which pertain to the road transport industry (see definition earlier in this alert) are the types of principal contractors who will be subject to these Minimum Standards Orders.
The Fair Work Commission will have three broad powers in relation to this jurisdiction:
Minimum Standards Orders
The Fair Work Commission will be empowered, on its own initiative or on application, to make ‘Minimum Standards Orders’ for ‘Regulated Road Transport Contractors’.
A Road Transport Minimum Standards Order must include:
- a term identifying who is covered by the order (which could be a class of contractor, type of road transport work or a particular road transport operator); and
- a term about settling disputes.
A Road Transport Minimum Standards Order may include terms about payment, deductions, working time, record keeping, insurance, consultation, representation, delegates rights and cost recovery.
A Road Transport Minimum Standards Order cannot include terms about overtime rates, rostering arrangements, commercial matters that are not about the engagement of workers, terms that would deem a worker an employee or WHS matters that are addressed by other state or territory laws.
The Road Transport Minimum Standards orders also cannot deal with matters otherwise dealt with by the Heavy Vehicle National Laws. This avoids significant duplication in regulatory obligations (which was one of the concerns that previously arose under the now abolished Road Safety Remuneration Tribunal).
The process for making such an order is as follows:
- The Fair Work Commission must firstly publish a ‘notice of intent’ to make a Road Transport Minimum Standards Order with a draft of the proposed order.
- Interested parties must then be provided with a reasonable opportunity to respond.
- The Commission may then hold (but is not required to hold) a hearing in relation to the draft Minimum Standards Order.
- After consultation, the Road Transport Minimum Standards Order must then be published or withdrawn.
- Road Transport Minimum Standards Orders take effect 24 months after the notice of intent is published.
A Road Transport Minimum Standards Order:
- requires genuine engagement with the parties covered by it;
- requires consultation with the Road Transport Advisory Group (discussed below);
- must have regard to the commercial realities of the road transport industry;
- must not “unduly affect” the competitiveness or viability of owner drivers.
Contravening a Road Transport Minimum Standards Order will incur a civil penalty.
Minimum Standards Guidelines
The legislation also introduces a system for the creation of ‘Minimum Standards Guidelines’ for Regulated Road Transport Contractors.
‘Minimum Standards Guidelines’ are subject to similar rules to Minimum Standards Orders however would set non-binding minimum standards.
A Minimum Standards Guideline cannot be made where a Minimum Standards Order covers the same subject matter.
Consent-based collective agreements for Regulated Road Transport Work
The Fair Work Commission will also now be able to register collective agreements made by consent between Regulated Road Transport Contractors and organisations entitled to represent such contractors.
The Fair Work Commission must register agreements lodged with it by consent. There does, however, appear to be a requirement that any collective agreement made is more beneficial to the Regulated Road Transport Contractors than any Minimum Standards Order that might otherwise apply to them.
Collective Agreements can only be terminated pursuant to an arrangement recorded in the collective agreement which enables the agreement’s termination. Such termination provisions are compulsory, but their precise operation can be negotiated by the parties.
The legislation would also expressly permit all conduct associated with the making of a collective agreement as well as all conduct incidental to or in preparation for the making of a collective agreement for Regulated Road Transport Contractors for the purposes of competition and consumer laws. This has the effect of ensuring that such conduct does not breach the Competition Code. However, boycott conduct is not permitted by the legislative reforms and may still breach the Competition Code (subject to whether its provisions are triggered in a specific case).
Resolving disputes about ‘unfair terminations’
The Fair Work Commission will also receive a new jurisdiction to deal with ‘unfair terminations’, in essence, an unfair dismissal jurisdiction for Regulated Road Transport Contractors.
A Regulated Road Transport Contractor is protected from unfair termination if they have been party to a service contract in the road transport industry and have been performing work on under the contract for a period of at least 12 months.
An unfair termination is where:
- the Road Transport Contractor’s contract has been terminated;
- the termination was unfair; and
- the termination was not consistent with the Road Transport Industry Termination Code.
Like the current unfair dismissal regime for employees, the new jurisdiction is subject to a high-income threshold (yet to be published) and includes a 21-day filing limit.
In order to determine whether a termination is unfair - the Fair Work Commission must take into account whether there was a valid reason for the termination related to the person’s capacity or conduct; and whether any relevant processes specified in the Road Transport Industry Termination Code (to be drafted by the Minister) were followed.
Remedies for unfair termination include:
- reinstatement to a new contract;
- restoration of lost pay, where an employee has been reinstated; and
- where reinstatement to a new services contract would be inappropriate, compensation.
Reinstatement is plainly the primary remedy, as is the case with existing employee-based unfair dismissal laws.
Compensation is limited to six months earnings or half the high-income threshold (whichever is the higher).
Compensation must not include a component for shock and distress, much like the current employee-based unfair dismissal remedy regime.
Independent Contractors Act 2006 amended
The legislation also varies the operation of the Independent Contractors Act 2006 (Cth), so that it now only applies to contractors earning above the high-income threshold specified in the Fair Work Act.
The Minister’s Regulation making Powers for the Road Transport Industry Contract Chain
The Minister has been granted power to make regulations regulating the ‘road transport industry contract chain’.
While these regulations are yet to be made, the Closing Loopholes Bill allows the Minister to make regulations:
- empowering the Fair Work Commission to make orders known as Road Transport Industry Contract Chain Orders that confer rights and impose obligations on road transport industry contracted chain participants;
- empowering the Fair Work Commission to vary, suspend or revoke Road Transport Industry Contract Chain Orders;
- empowering the Fair Work Commission to deal with disputes between Road Transport Industry Contract Chain participants covered by Road Transport Industry Contract Chain Orders;
- providing for the interaction between the Road Transport Industry Contract Chain Orders, Fair Work instruments and other instruments under the Act or the Regulations.
While it is not clear what regulations the Minister intends on making, in making any regulations the Minister must be satisfied that the regulations are for the purposes of promoting:
(a) equitable workplace relations outcomes
(b) a safe, sustainable, and viable road transport industry
(c) sustainable competition between road transport industry participants; and
(d) fairness between road transport industry contracted chain participants.
New Panels and Groups
The Closing Loopholes Bill also introduces new bodies responsible for regulating Road Transport.
The Road Transport Expert Panel
There is to be a new Road Transport Expert Panel.
The Expert Panel must include Fair Work Commission President, a Vice-President or Deputy President as a Chair, a member with knowledge of the Road Transport Industry and other Fair Work Commission members as appropriate.
The Expert Panel may:
- make or revoke modern awards in the Road Transport Industry; and
- make Road Transport Minimum Standards Orders and Guidelines.
The Road Transport Advisory Group
Road Transport Advisory Group are to advise the Fair Work Commission in relation to matters that relate to the road transport industry including but not limited to:
- the making and varying of modern awards that relate to the road transport industry;
- the making and varying of Road Transport Minimum Standards Orders and Road Transport Guidelines;
- the prioritisation by the Fair Work Commission of matters relating to the road transport industry; and
- such other matters as are prescribed by the regulations.
Membership of Road Transport Advisory Group is made up of persons nominated by the TWU and by employer groups representing road transport businesses.
Members are to be appointed for three years.
NSW and Victorian regimes unaffected
The legislation expressly confirms that the existing regulation under Chapter 6 of the Industrial Relations Act 1996 (NSW) and the Owner Driver and Forestry Contractors Act 2005 (VIC) are not excluded by the new laws and will continue to operate.
The same exemption has not yet been afforded to the Owner-Drivers (Contracts and Disputes) Act 2007 (WA). This might be done by regulation in the coming weeks. We will seek to confirm with clients in due course whether the Western Australian jurisdiction for owner-drivers will be overridden by the new laws.
The proposed changes represent a fundamental shift in regulation for a critical industry.
Given the integration of road transport into so many other industries and the precise commercial balance that the industry must achieve between its many and varied participants, the creation of new minimum standards in the road transport industry has the potential to give rise to far reaching consequences.
As always, ABLA’s team of experts are available to help with these matters. Feel free to reach out at