Latest court ruling on “dumb” owner-driver pay rates a massive blow to small business

The latest court ruling on the Road Safety Remuneration Tribunal’s minimum pay rates has come as a blow to self-employed truck drivers across the country.

Yesterday the full court of the Federal Court ruled in favour of discontinuing the stay on minimum rates for contractor-drivers.

The order will see compulsory hourly and kilometre payments come into effect this month for owner-operator truck drivers.

The new rates do not apply to big businesses, and small business operators fear they will be priced out of the market as a result.

Peter Strong, chief executive of the Council of Small Business of Australia, told SmartCompany the ruling is bad news for owner-drivers.

“They’re trying to make the roads safer but what they’re doing is making it more confusing and complexity is the enemy of safety,” Strong says.

Because the rates won’t apply to larger operators that dominate the freight sector, Strong believes small business owners will be significantly disadvantaged.

“Big businesses can undercut small businesses, you’ll end up off the road not being able to do the job,” he says.

Australia’s road freight transport sector generates more than $50 billion in annual revenue and comprises more than 40,000 businesses, according to IBISWorld.

The IBISWorld report states the industry is dominated by larger players, making it difficult for smaller businesses to pass on costs like rate increases and fuel surcharges without being priced out of the market.

“The strength of these players has forced smaller operators to accept lower freight service prices as the fuel price declined,” the IBISWorld report says.

The Australian Industry Group’s chief executive, Innes Willox, is also  concerned with the court’s decision.

“The Tribunal’s order will increase costs for industry and consumers,” Willox said in a statement.

“The order also threatens jobs and work for contractor drivers, and harm to regional and rural areas which are heavily reliant on road transport.”

Willox now wants parliament to push forward with legislation that will prevent the minimum pay rates for contractor drivers coming into effect before January 2017.

“The legislation would allow breathing space for everyone to calmly consider the changes that are needed to existing arrangements,” he says.

However minimum pay rates for contractor drivers have been brewing since 2012 when the Road Safety Remuneration Tribunal was first established.

The National Transport Commission concluded there was a positive correlation between safety outcomes and driver pay rates following a 2008 investigation of the underlying causes of unsafe practices in the road transport industry.

More than 1800 workers in the mobile plant and transport industry died on the road from 2003 to 2014, a Safe Work Australia study has found.

Trucks, semi-trailers and lorries accounted for more than 20% of all deaths over this 11-year period.

But Strong believes the order just makes business for independent contractors unviable.

He points to the example of owner-operator contract driver completing an interstate trip on minimum rates and then deciding to pick up an ad hoc job on the way home.

“Say you find someone who wants their car moved to Sydney and since you’re going back there you decide to take it back for $300, now that’s illegal, now you have to charge $1800,” he says.

“It’s dumb, dumb, dumb.”

Workplace Minister Michaela Cash has said she is “disappointed” by the ruling, and wants the Senate to pass the government’s legislation that would delay the minimum pay rates until 2017 to be passed as quickly as possible.