Proposed Changes to Chain of Responsibility in 2016

A policy document prepared by the National Transport Commission in November 2015 is due for consideration by the State Transport Ministers at the May 2016 meeting of the Transport and Infrastructure Council (TIC).

This document Primary Duties for Chain of Responsibility Parties and Executive Officer Liability is an extensive document designed to assist the State Transport Ministers to better align current agreed Chain of Responsibility ( CoR) obligations in National Heavy Vehicle Law (NHVL) with national safety law.

There will be greater focus on primary duties and that each party to CoR adopt a performance based approach to their responsibilities.

Recommendation 1 - Primary Duty of Care

Existing obligations under NHVL include a reformulated ‘primary duties’, that is each party to CoR under NHVL will now have a ‘primary duty of care’ so far as is ‘reasonably practical’ for safety of road transport operations.

This primary duty of care will extend to all parties under current CoR based on the role they perform and to the extent they:

• Manage or control road transport operations

• Engage in conduct that will result in, encourage or otherwise provide incentives in relation to the conduct of road transport operators.

Recommendations 2-8

Detail how the Primary duty of Care is to apply to each current CoR party: -

• Operators, Prime Contractors and employers

• Schedulers

• Consignors and Consignees

• Loading Managers

• Loaders

• Packers

• Unloaders

Reasonable Steps V Reasonably Practicable

Reasonable steps defence is the accepted defence, parties to CoR could undertake to mitigate risk from NHVL prosecution. It was a basic tick and flick, however what is being proposed is to align CoR with Work Health and Safety Legislation (WHS) which will now require greater effort.

The WHS Act states:

‘Reasonably practicable” in relation to a duty to ensure health and safety, means that which is, or was at a particular time, reasonably able to be done in relation to ensuring health and safety, taking into account and weigh up all relevant matters, including

1. the likelihood of the hazard or the risk concerned occurring; and

2. the degree of harm that might result from the hazard or the risk; and

3. what the person concerned knows, or ought reasonably to know, about:

• the hazard or the risk; and

• ways of eliminating or minimising the risk; and

4. the availability and suitability of ways to eliminate or minimise the risk; and

5. after assessing the extent of the risk and the available ways of eliminating or minimising the risk, the cost associated with available ways of eliminating or minimising the risk, including whether the cost is grossly disproportionate to the risk.”

This is a far more proactive approach and will require greater commitment from all parties under the umbrella of CoR.

What can be done to improve Primary Duties?

The following are recommendations made by the NTC in the submission to the TIC.

• Have clearly defined key terms

• Relate directly to road transport operations

• Use a standard of care consistent with that for other national safety laws

• Are underpinned by principles that guide their implementation

• Carry appropriate penalties

• Are supported by appropriate investigative and prosecution powers

It is also intended that with the introduction of proposed primary duties that a removal of existing CoR offense from the NHVL will occur to avoid duplication.

Changes in Penalties

Current maximum CoR penalties under NHVL for an individual is $20,000, under WHS law the penalty for an individual i.e. an employee under the highest offence category is $300,000.

Depending on the offence a body corporate could be fined from $500,000 up to $3 million in the highest offense category with up to five years in gaol.

These penalties will create an immediate need for a business to focus on its CoR obligations and to proactively identify and prevent risk.

Executive Officer Liability

The NTC has further recommended that there needs to be an extension of executive officer liability provisions to include a due diligence obligation to reconcile it with the duty already provided under the model WHS Act and not currently recognised under CoR legislation.

An ‘executive officer’ is not only a director but any person who takes part in the management of a corporation. It can also cover the ‘function’ even if they are not formally employed or paid as a manager.

In order to avoid personal liability, executive officers must ensure that their corporation:

1. implements a framework for CoR risk identification, assessment and mitigation;

2. implements a system to provide information, instruction, training and supervision to employees, customers and business partners (e.g. contractual counterparts and sub-contractors) in relation to CoR compliance; and

3. monitors the implementation of the framework and system in practice and addresses any issues of non-compliance.

It is recommended by the NTC that a due diligence obligation will hold executive officers accountable without the corporation first having to commit an offense as is the requirement under the NHVL

The consequences of such are quite substantial and executive officers need to take a hands on approach to ensuring their corporation have in place sufficient CoR compliance policies and auditing procedures, in order to be able the show that they have discharged their duties under the NHVL.

Kerry Renkema from Modal Logistics Pty Ltd is an accredited Heavy Vehicle Auditor, trainer and assessor with over 20 years of experience in Chain of Responsibility requirements. He can assist with assessing current gaps in your business and or contractors and developing policies and procedures to ensure compliance with these proposed changes to CoR and Executive Officer Liability. Give Kerry a call to discuss your compliance requirements to these proposed changes.