Termination clauses seen as too heavily in favour of the big customer
The National Road Transport Association (NatRoad) is warning that large numbers of owner-drivers face going out of business without urgent federal government action on unfair contract terms.
NatRoad CEO Warren Clark has addressed the Senate, Rural & Regional Affairs & Transport References Committee, asking it to pressure the Federal Government to urgently re-vamp legislation for small business contracts.
The committee is examining the Importance of a Viable, Safe, Sustainable and Efficient Road Transport industry in a series of hearings interrupted by Covid-19.
Clark’s message is that while small business has had protection from unfair contract terms since 2016, the current law is inadequate in defining those terms for businesses that were required to invest capital up-front to secure work.
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“Under the current law, a large corporation can decide a contract is void after 30 days and take its business elsewhere,” he says.
“The reality is that a small owner-operator of heavy vehicles may have to spend hundreds of thousands of dollars on a truck or a trailer to secure that contract.
“Termination clauses are so heavily in favour of the big customer that they can make onerous demands on a small operator knowing that it’s easy to walk away and contract someone else.
“Penalties can’t be imposed against a customer for including or relying on an unfair contract term without a court order which involves more time and potentially a big legal bill.”
Clark notes the average NatRoad member was a small business operating on a profit margin of about three per cent.
“Many of those truckies have been slugged an estimated $100,000 in extra permits and administration charges through the Covid-19 pandemic just to operate across state borders he says.
“These small operators transport 60 percent of all road freight – they’re an essential industry that kept Australia moving at the height of the pandemic.
“Yet the system of border passes and permits in place has made it seem like we are eight different countries, and has added massively to their business costs.”
Clark hopes the inquiry will urge the federal government to introduce a mandatory code to define unfair contract terms and address harsh payment terms without resolution to court action.
“We have already had discussions with Treasury and it’s now time for the Government to act,” he says.