All About Chain of Responsibility

The Chain of Responsibility (CoR) laws are set to change on 1 October2018.  Under the new CoR laws:

• All parties in the Chain will have a proactive and non-delegable duty to take all reasonably practicable steps to ensure the safety of their transport activities
• All Executives (Directors, Partners, Owners) will have a proactive and non-delegable duty to exercise due diligence to ensure that their business complies with its duty
• All businesses will be required to have in place a compliance management framework, including:
  • compliance policies
  • working procedures
  • awareness/training programs
  • compliance clauses in all supply chain contracts
  • compliance performance monitoring and response/remedy procedures
  • Executive compliance reporting
• Maximum penalties will increase to $3 million for corporations and $300,000 plus up to 5 years in jail for individuals
• An incident or accident does not need to occur in order for you to be investigated, prosecuted and fined.

With the new higher standard of obligation and massively increased potential penalties, compliance is more important than ever.  In particular for supply chain parties up and down the chain, it is more important than ever to ensure that transport contractors and subcontractors have a suitable compliance framework in place in order to ensure that they are not a compliance risk and the weak point in the Chain.

For transport operators seeking to distinguish their business from the competition and for other parties in the Chain without sufficient technical expertise or resources to assess the compliance of transport operators, accreditation can be a valuable compliance assurance tool.

A past industry study¹ has shown that heavy vehicles accredited under the two major accreditation schemes, including TruckSafe:

“…are, on average, significantly safer than vehicles that were not accredited.  The calculated difference in average crash rates was substantial with vehicles accredited to the schemes having between ½ and ¾ fewer crashes on average than non-accredited vehicles.”

That study also concluded that:

“…operators improved through the process of becoming accredited. An analysis of insurance data found that the claims rate in the 2 years after TruckSafe accreditation was 57% lower than during the 2 years before”.

The study found that, as part of going through the accreditation process, businesses adopted more proactive management structures, which lead to improved safety outcomes and a range of productivity and costs improvements.

The above benefits are equally applicable to both the transport operators who enrol their heavy vehicles in accreditation schemes and the principal contractors/customers/consignors who deal with them, so a true win-win.

Author: Nathan Cecil, Partner (Transport), Holding Redlich lawyers and TruckSafe Board member

¹ Analysis of the Safety Benefits of Heavy Vehicle Accreditation Schemes, Austroads (May 2008).