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Court rules TWU-negotiated contract unfair

Court finds union-negotiated contract unfair after hearing a transport company tried to force sub-contractors to work for less

By Brad Gardner | April 9, 2008

The Federal Magistrates Court has ruled a union-negotiated contract unfair after hearing a transport company tried to force sub-contractors to work for an inequitable rate.

In ruling on a case involving the TNT-owned Riteway Transport, Magistrate Robert Cameron told the court a clause in a contract negotiated by the Transport Workers Union (TWU) and TNT “had the potential to be abused”.

The case found Riteway tried to force three contractors to replace their single trailers with B-doubles. However, the contract excused Riteway from having to pay a higher freight rate to compensate the contractors for increased maintenance and running costs.

“Although it [the TWU-TNT agreement] gave Riteway the power to require the upgrading of its contractors’ vehicles, it was not similarly obligated to compensate them for expenses associated with such an upgrade,” Cameron says.

Keldote, L&D Lowe Transport and Tambo Waters, which brought the action against Riteway, wanted $1500 reimbursement for a Melbourne to Sydney trip. However, the company told the three contractors it would only pay $1412.

While saying the rate offered by Riteway may or may not have been inadequate, Cameron ruled the case illustrated the TWU-TNT agreement placed ultimate power in the hands of the prime contractor at the expense of the independent contractors.

According to Cameron, the contracts gave Riteway the power to make “a ‘take it or leave it’ offer” resulting in the agreement being unfairly weighted in the prime contractor’s favour.

“Riteway’s intransigence on price, whether justified or not, shows that the contracts permitted it to act unilaterally,” he says.

As such, the magistrate ordered the contracts to be rewritten to limit the power of Riteway’s ability to force contractors to replace their vehicles.

“In my view, the better approach would be a variation of the contract preventing Riteway from unilaterally imposing a material change in vehicle specification,” he says.

The case was heard under the Independent Contractors Act, which Minister for Small Business and Independent Contractors Craig Emerson says is the first action brought for an unfair contract under the Act.

The decision, Emerson claims, “sends a stern warning to businesses that treat independent contractors unfairly”.

The Independent Contractors of Australia says the decision shows owner-drivers have an avenue open to them to address contractual disputes with their clients.

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