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Part 1 - Owner Drivers and Forestry Contractors Act 2005

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1.1 Why is the Act important?

The Act provides protections and a framework for the resolution of disputes to improve the position of small business forestry contractors in the forestry industry, while maintaining a healthy and competitive industry.

The Act was amended effective 1 May 2020, including to provide penalties for non-compliance with key provisions of the Act.

The Act establishes the Forestry Industry Council (FIC), which is comprised of representatives from industry and employee associations and government. The FIC has specified functions, which include advising and making recommendations to the Minister on the content of Codes of Practice, the Information Booklet, and rates and costs schedules. The FIC also advises on matters relevant to forestry contractors and the commercial practices of forestry contractors generally.

Part 1 of this Information Booklet outlines the forestry contractors' framework and provides information about key aspects of the Act and the Code of Practice for Owner Drivers and Forestry Contractors (the Code).

If you have any questions, Wage Inspectorate Victoria is available to provide information and answer queries. Please call the Information Line on 1800 287 287 or lodge an online enquiry at www.wageinspectorate.vic.gov.au(opens in a new window).

Who is covered by the Act?

The Act applies to harvesting and haulage contractors and their hirers and freight brokers.

‘Haulage contractor’ means sole traders, partnerships or corporations (but not a listed public company) that provide services transporting forest products. The Act applies to haulage contractors where the owner of the business also operates one of the vehicles. All harvesting contractors (other than listed public companies) are covered by the Act. Forestry contractors are also referred to in the Act and the Code as ‘contractors’.

The Code can be found at: wageinspectorate.vic.gov.au/odfc.

1.2 Contract requirements

Written contracts

Written contracts, even for short-term arrangements, are good business practice and help reduce disputes and uncertainty.

For ongoing engagements of no fixed duration or for a period of at least 30 days, the contract must be in writing and specify the minimum income or hours of work (this can be zero hours or dollars if the parties agree to this), the rates to be paid, and the minimum period of notice of termination of the engagement or payment in lieu of notice. Failure by the hirer to comply with this requirement is an offence under the Act.

The maximum penalty for failure to comply with requirements for regulated contracts is:

  • 25 penalty units in the case of a body corporate
  • 5 penalty units in any other case.

It is good business practice for both forestry contractors and hirers to keep a copy of the written contract.

Notice of termination

Where there is an ongoing engagement of over three months’ duration, a forestry contractor is entitled to a minimum period of notice of termination of their contract (except in the case of serious and wilful misconduct). The notice period may be worked out or paid in lieu. The minimum period required to be given by either party to terminate the contract is three months’ notice.

This minimum period does not apply where there has been a material breach of the contract by the hirer.

If this notice requirement does not suit, the requirement can be waived by the forestry contractor obtaining a certificate from the Victorian Small Business Commission (VSBC). An application form for a certificate to waive the notice period is available from the VSBC website www.vsbc.vic.gov.au.

Where a forestry contractor is engaged under a fixed-term contract, the contract will come to an end automatically on the expiry date.

Under the Act it is an offence for a hirer to end a forestry contractor’s engagement without providing the required notice of termination or payment in lieu.

The maximum penalty for ending a contractor’s engagement without providing the required notice of termination or payment in lieu is:

  • 25 penalty units in the case of a body corporate
  • 5 penalty units in any other case.

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Paying invoices within 30 days

Under the Act, a hirer must pay an amount payable to a forestry contractor within 30 days after receiving an invoice, unless there is a dispute about the amount payable or a different, fair period for payment has been agreed.

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Restrictions on payments

The Act provides that a hirer must not require a forestry contractor to pay money, or make any deductions from money payable to the forestry contractor, for services or equipment provided by the hirer unless:

  • the costs are specified in the contract (that is, they are agreed costs);
  • the costs are a direct and proper reflection of the cost of the service or equipment provided; and
  • the forestry contractor has been provided with an opportunity (if practicable) to obtain the services or equipment from an alternative supplier.

A contract also must not require forestry contactors to pay for, or allow for deductions for, insurance costs unless an insurance policy is in place and a copy of the policy has been provided to the forestry contractor.

This does not prevent a hirer from organising group discounts on services for forestry contractors (for example, for fuel, tyres or insurance), but these amounts can only be deducted where the above requirements are met.

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1.3 Giving Information to Forestry Contractors

The Act contains requirements to ensure that forestry contractors have a copy of this Information Booklet and a copy of the relevant Rates and Costs Schedule.

When must the Hirer provide the information?

Hirers must provide forestry contractors with a copy of this Information Booklet and a copy of the relevant Rates and Costs Schedules:

  • at least three business days before the Forestry Contractor is engaged, if the forestry contractor will be engaged for a period of at least 30 days; or
  • on the 30th day, if the Owner Driver is engaged for a total period of at least 30 days in any three-month period.

These requirements also apply to tender situations.

Under the Act, “business day” is a day other than a Saturday, Sunday or public holiday.

A Hirer must also provide any revised relevant Rates and Costs Schedule to current forestry contractors as soon as practicable after publication.

If the forestry contractor is engaged through a freight broker, then the freight broker must provide this information instead.

Failure by a hirer or freight broker to provide a copy of this Information Booklet and the relevant rates and costs schedule to a forestry contractor when required is an offence under the Act.

The maximum penalty for failure to provide an information booklet to a contractor before entering into a contract is:

  • 25 penalty units in the case of a body corporate
  • 5 penalty units in any other case.

The maximum penalty for failure to provide the relevant rates and costs schedule to a contractor before entering into a contract is:

  • 25 penalty units in the case of a body corporate
  • 5 penalty units in any other case.

How can the Hirer provide this information?

A Hirer or Freight Broker, who is required under the Act to provide the applicable Rates and Costs Schedule and Information Booklet to a forestry contractor, may do so in hard copy or electronic form. Examples of ways of providing copies of the Information Booklet and the Rates and Costs Schedule are via a link to an Internet site on which this information is available or in hard copy by mail or in person.

In order to demonstrate compliance with the requirements of the Act, it is important to keep good records.

From late 2020, Hirers and Freight Broker are required under the Code to keep certain records about the engagement of contractors. This includes the date/s that the Information Booklet and the Rates and Costs Schedule are given to a forestry contractor and any records of them being given. If this information is provided by hand, the Hirer or Freight Broker must also retain a signed acknowledgement of receipt by the forestry contractor.

Rates and costs schedules have been developed by the Minister, in consultation with FIC, to provide forestry contractors with information about the typical operating costs applying to their business depending on the type of vehicle or forestry equipment being operated. The rates and costs schedules do not set minimum rates that must be paid to forestry contractors.

1.4 Rates and costs schedules

Rates and costs schedules have been developed by the Minister, in consultation with FIC, to provide forestry contractors with information about the typical operating costs applying to their business depending on the type of vehicle or forestry equipment being operated. The rates and costs schedules do not set minimum rates that must be paid to forestry contractors.

The Minister, in consultation with FIC, has developed rates and costs schedules for the following categories:

  • Harvesting
  • Haulage – Prime Mover and B-double trailer, Slow speed 45km/h
  • Haulage – Prime Mover and B-double trailer, Medium speed 55 km/h
  • Haulage – Prime Mover and B-double trailer, Fast speed 55km/h
  • Haulage – Prime Mover and Jinker trailer, Slow speed 45 km/h
  • Haulage – Prime Mover and Jinker trailer, Medium speed 55km/h
  • Haulage – Prime Mover and Jinker trailer, Fast speed 55km/h

The rates and costs schedules set out both variable operating costs and fixed operating costs.

Variable costs are incurred when your vehicle/ equipment is running, and include fuel, oil, tyres, road tolls, repairs and maintenance.

Fixed costs are expenses that stay the same whether your vehicle stays in your driveway or travels 100 or 100,000 kilometres. Fixed costs include loan repayments, insurance, administration costs and registration.

The rates and costs schedules also provide information on rates that would typically apply for a forestry contractor’s own labour if he or she did the work as an employee. Having this information before entering into a contract assists forestry contractors to assess whether they should accept an offer and facilitates better-informed contract negotiations.

Every vehicle and piece of equipment is different, and every business depends upon many factors, so your own costs may be different from the rates and costs schedule. If you have a different vehicle or equipment type or additional features, you can use the rates and costs schedule for the vehicle or piece of equipment that is most like your own vehicle / equipment as a guide and add in any additional costs accordingly.

The current rates and costs schedules are available from: wageinspectorate.vic.gov.au/odfc.

The Minister, in consultation with FIC, is required to revise each rates and costs schedule at periods not exceeding 12 months.

Failure by a hirer or freight broker to provide the relevant rates and costs schedule to a forestry contractor may be an offence under the Act. The maximum penalty for failure to provide the relevant rates and costs schedule to a contractor before entering into a contract is:

  • 25 penalty units in the case of a body corporate
  • 5 penalty units in any other case.

1.5 Joint negotiations

Forestry contractors or hirers may appoint negotiating agents to act on their behalf. The Act requires the other party to recognise and deal with that agent. The agent could be an accountant, consultant, a trade union or industry association, a forestry contractor colleague or a committee of colleagues.

An agent can enter into a binding legal contract on behalf of the forestry contractor or hirer. A forestry contractor or hirer can ask to be provided with a copy of the agent’s instrument of appointment before dealing with the agent.

The Act allows joint negotiations between forestry contractors engaged by a single business and their common hirer, but not industry-wide negotiations. The Act does not authorise breaches of contract, strikes or boycotts.

Forestry contractors may be offered a regulated contract on the same terms as an existing jointly negotiated contract, while at the same time retaining the opportunity to negotiate their own contractual arrangements.

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1.6 No victimisation for exercising rights under the Act

Section 61 of the Act provides protection for forestry contractors who seek to exercise their rights under the Act, including bringing a proceeding, informing someone of a contravention of the Act or participating in joint negotiations. It is also a breach of the Act for a hirer to punish a forestry contractor for raising issues of health and safety with any person, or for seeking improvements to their rates and conditions, or proposing to do so.

1.7 The Owner Drivers and Forestry Contractors Code of Practice

The Owner Drivers and Forestry Contractors Code of Practice (the Code) promotes fair and equitable business relationships between forestry contractors and their hirers.

The Code describes conduct that is likely to be found by VCAT to be unconscionable, and contract terms that are likely to be found by VCAT to be unjust contract terms. The Code provides examples within the context of the forestry industry to assist contractors and hirers to avoid such conduct. The Code also contains some mandatory requirements with which hirers and contractors must comply. The Code sets out requirements and guidance for the industry and is arranged as follows:

Part 1 – Introductory: This part sets out the objectives of the Code, defines some terms used in the Code and describes who it applies to.

Part 2 – Conduct during negotiations: This part deals with a range of matters concerning the fair conduct of negotiations, including:

  • unconscionable conduct during negotiations (Section 4).
  • best practice in negotiations (Section 5).
  • parties must not claim to exclude the Act or other laws or the Code (Section 6).
  • disclosure of information (Section 7).
  • best practice for dispute resolution (Section 8).
  • misleading advertising (Section 9).
  • new vehicles or motorised equipment (Section 10).
  • principles for setting and reviewing rates (Sections 11, 12 and 13).
  • period for payment of invoices (Section 14).

Part 3 – Deductions and statements: This deals with deductions from remuneration, deductions for the use of the hirer’s equipment and technology, and deductions in the nature of penalties.

Part 4 – Allocation of work, working arrangements and absences: This deals with the fair allocation of work, working arrangements and absences due to illness or family responsibility.

Part 5 – Additional Provisions for forestry contractors and hirers: This sets out some alternative and additional provisions for the forestry industry and some additional examples in the context of the forestry industry.

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1.8 The Code and unconscionable conduct

Part 4 of the Act prohibits ‘unconscionable conduct’ by hirers towards forestry contractors and by forestry contractors towards hirers. The Act sets out the factors that the VCAT may examine when deciding if conduct is unconscionable.

The Code established under Part 3 of the Act provides further guidance on appropriate standards of conduct to be maintained when engaging forestry contractors.

The Code does not prevent hirers or forestry contractors from acting vigorously in their commercial interests. However, each party should deal with the other party, or parties, fairly and in good faith when negotiating a new contract or a variation to a contract.

The Code provides guidance on what VCAT might find to constitute unconscionable conduct during negotiations. It states that in the absence of any special circumstances, where a hirer or a forestry contractor engages in the type of conduct described below, it is likely to be found by VCAT to be unconscionable within the meaning of the Act:

  • where a party, by themselves or through an agent:

- does not provide a reasonable opportunity to discuss an offer, or makes offers on a "take it or leave it" basis, suggesting a party must accept an offer and refuses to consider any alternative offer; or

- does not genuinely consider offers made to them; or

- does not provide a reasonable opportunity for another party to properly examine and consider offers; or

- does not provide a reasonable opportunity for another party to obtain legal, financial or other advice, including in the party’s preferred language; or

- disguises the terms of a contract by using fine print, unnecessarily difficult language, or deceptive layout or headings; or

- summarises the meaning of a document to another party, but omits to mention important terms in a way that is misleading; or

- fails to correct another party’s misunderstanding, where they knew, or reasonably ought to have known, that the other party was under a serious misapprehension about the terms of the agreement or any other relevant matter; or

  • where a party builds up reasonable commercial expectations in another party for the renewal of an agreement, and then exploits those expectations to extract a harsh or one-sided deal from the other party; or
  • where a party attempts to pressure another party into accepting an offer by acting in breach of contract, or otherwise acting unlawfully or threatening to do so.

Claims of unconscionable conduct by a hirer or a forestry contractor may be dealt with by the Dispute Resolution Process set out in the Act and explained in section 1.9 of this Information Booklet.

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1.9 Dispute resolution process

Where a dispute is unable to be resolved between the parties, the Act provides a two-stage process for the resolution of disputes:

Stage 1 – A referral to the VSBC

Stage 2 – An application to Victorian Civil and Administrative Appeals Tribunal (VCAT)

1.10 Victorian Small Business Commission

The VSBC is an independent office established by the Victorian Government to assist small businesses. The VSBC provides an independent, fast and low-cost ADR service for forestry contractors and their hirers. The VSBC offers preliminary assistance and advice to ensure forestry contractors and hirers are fully aware of their rights and obligations. The VSBC also provides a confidential mediation service.

In general, a dispute must be referred to the VSBC (and the VSBC must first certify that ADR has failed, or is unlikely, to resolve the dispute) before it may be the subject of an application to VCAT for a hearing and a binding decision. However, where a party seeks an injunction (which is an order to stop another party from doing something), that party may apply directly to VCAT.

If a party refuses to take part in, or withdraws from, the VSBC process, VCAT may make an order for costs against that party.

Referring a dispute to the VSBC

A forestry contractor or their hirer may refer a dispute to the VSBC for ADR. Before lodging a dispute, you should consider discussing the matter with your solicitor or association or contact the VSBC by telephoning 13 8722.

If you would like to refer a dispute to the VSBC, you should complete the online application form or download a hardcopy form at www.vsbc.vic.gov.au. There is no application fee.

Preliminary assistance

Upon receiving an application, the VSBC will attempt to resolve the dispute by working through the issues with the parties by email or letter. This preliminary assistance is free of charge for the parties and is the step before mediation.

In the event that preliminary assistance does not resolve the dispute, the VSBC may invite the parties to attend mediation.

The mediation process

Mediation is a process of negotiation that assists the parties involved in a dispute to identify and explore options to resolve the dispute. It aims to resolve all the issues between the parties to keep the relationship going and allow everyone to ‘get on with business’.

The role of a mediator is to help the parties communicate openly and evaluate their options to reach their own agreement. Mediators are not judges; they do not determine binding outcomes and they do not give either party advice.

As part of the VSBC’s mediation process, you will be brought together at an agreed time and location with an experienced and independent mediator appointed by the VSBC to discuss your dispute.

In the event the dispute proceeds to mediation, there is a fee payable by each party (rates are published on the VSBC website). The VSBC pays the remainder of the mediator’s fees.

With the consent of both parties, the VSBC can arrange for disputes to be referred to be arbitration. Parties to a dispute under the Act may agree to apply for arbitration under the Act regardless of whether mediation has occurred.

After receiving written submissions and relevant documents from the parties and possibly holding a hearing, an independent arbitrator will issue a final decision that is binding upon the parties.

In the event the dispute proceeds to arbitration, there is a fee payable by each party (rates are published on the VSBC website). The VSBC pays the remainder of the arbitrator’s fees.

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1.11 The Victorian Civil and Administrative Tribunal

VCAT is an independent tribunal that seeks to provide a low-cost, accessible and efficient dispute resolution service. Where there is an allegation of unlawful termination of the engagement of a forestry contractor, the application must be made within 12 months of the date on which the termination is alleged to have occurred. In all other disputes, the time limit is six years after the date on which the dispute arose. After hearing and deciding a dispute, VCAT may make a range of orders, including:

  • an order for a party to do, or refrain from doing, something;
  • an order for a refund, compensation or damages; and
  • any other order it considers fair, including varying or voiding a contract term to avoid injustice.

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1.12 Wage Inspectorate Victoria

As well as forestry contractors and hirers being able to follow the disputes resolution process under the Act, there are now also penalties for non-compliance with certain provisions of the Act.

Wage Inspectorate Victoria monitors compliance with the Act and Regulations and can take enforcement action, including:

  • issuing warnings
  • issuing penalty infringement notices
  • taking legal action.

Under the Act, significant financial penalties can apply for offences relating to:

  • failure to provide an information booklet to a contractor before entering into a contract
  • failure to provide the relevant rates and costs schedule to a contractor before entering into a contract
  • ending a contractor’s engagement without providing the required notice of termination or payment in lieu
  • failure to comply with requirements for regulated contracts
  • failure to produce documents or giving false or misleading documents.

Authorised Officers are given powers under the Act that they may exercise for certain purposes. These powers include requiring information or documents. Failure without reasonable excuse to provide the documents or information is an offence. It is also an offence to provide false or misleading documents.

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