Opinion: Chain of Responsibility competency

By: Nathan Cecil


COR SPECIAL: What do the law changes mean for you?

Opinion: Chain of Responsibility competency
Nathan Cecil

 

The new Chain of Responsibility (COR) laws are commencing on October 1 – but what do the changes really mean for your business? Here, we discuss the major implications for which you need to be prepared.

1. You can’t ignore COR anymore

If you are one of the businesses that continues to say that "COR is the responsibility of our transport provider, that’s what we pay them for", or that has buried its head in the sand because COR looks too difficult to tackle, you are going to have to change.

The increased COR compliance obligations put COR on par with work health and safety. The exact same legal test and the exact same penalties will apply under both regimes. The increased penalties in particular will hurt if you don’t get on top of COR.

Maximum penalties are increased to $3 million for corporations and $300,000 and up to five years in jail for individuals.

You can’t ignore work health and safety, can you? So, as of October 1, you can’t ignore COR.

2. You need to be proactive, not reactive

The old test was: "Something went wrong, did you do everything reasonable to avoid ‘that thing’ going wrong?" It was a reactive test and only focused on the particular breach(es) in question (e.g. mass), ignoring whether or not you were also failing to address other areas (e.g. fatigue).

The new test is: "Are you doing everything reasonably practicable to prevent and avoid COR breaches from occurring within your transport activities?" It is proactive and forward-looking; focusing on what you are doing to prevent breaches from occurring.

It is also not restricted only to COR issues that have arisen in your business, but considers whether you are doing all that is necessary to prevent all likely areas of risk from resulting in an incident or accident. Even though a load-restraint breach might never have occurred within your transport activities, if you are not taking all reasonably practicable steps to manage and prevent that risk from occurring, you can be in breach of the new laws.

So, you need to shift your mindset and start proactively managing risk and preventing incidents/accidents from arising, and not merely reacting to them when they do.


Nathan Cecil and Geoff Farnsworth identify the three biggest missteps businesses make in dealing with their COR obligations, here


3. You need to implement a COR compliance framework

The new laws make it mandatory that you have in place COR compliance ‘business practices’. These mandatory business practices include having COR compliance policies and procedures, training/awareness practices, compliance clauses in supply chain contracts, compliance monitoring and response/remediation, and executive compliance performance reporting. If you don’t have these practices in place, then a court might find that you are failing to "do everything reasonably practicable to prevent and avoid COR breaches from occurring within your transport activities".

Many businesses will already have these required practices in place, but often they are not documented, properly structured, or overseen by someone. This means that they are often applied ad hoc or inconsistently throughout the business, which undermines the safety and productivity intent behind these practices and exposes the business to risk of penalty. 

4. You need to more actively manage subcontractors

As part of the proactive management of risk, the new laws will require greater attention to be placed on subcontractors. Subcontracting out a relevant activity does not avoid your COR duty. So, if you are going to subcontract out a relevant activity, you want to ensure that the subcontractor is going to perform it properly and not expose them – and you – to risk of penalty.

This means that, where possible, you should screen your subcontractor’s COR compliance prior to engaging them – to ensure that they are aware of their obligations and have in place practices to meet them. If you aren’t satisfied and/or in any event, you should also consider implementing a system periodically to check on a subcontractor’s compliance – to ensure that they are doing things in the compliant manner that they said they would.

5. You need to have a clean bill of health in order to get good business

Finally, other businesses are going to be less and less inclined to engage with you if you pose a compliance risk to them. You will need to be able to present a clean COR bill of health to principals in order to be considered for their work.

Now that you know what to do, get out there and do it – and drop us a line if you need any help.

Nathan Cecil is a partner (Shipping, Transport & Logistics) at Holding Redlich.
T: 02 8083 0429
M: 0405 239 402
E: nathan.cecil@holdingredlich.com

 

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