Do you engage owner-drivers in your business?  If so, you should be aware of the Victorian Government’s owner-driver legislative scheme, which comprises:

  • Owner Drivers and Forestry Contractors Act 2005 (the Act)
  • Owner Drivers and Forestry Regulations 2006 (Regulations)
  • Owner Drivers and Forestry Contractors Code of Practice (Code of Practice)


The Act was enacted in an effort to better protect small businesses, usually owner drivers, which are prominent in the road-transport industry.  Evidence was put before the Victorian Parliament that owner drivers were working longer hours for less money, which was linked to long hours of work, increased fatigue, increased propensity to speed and breaches of other road rules.

The Act seeks to arm owner-drivers with useful information to assist them in their business. It imposes minimum requirements on person’s engaging owner-drivers, alternative dispute resolution pathways, including the use of the Small Business Commissioner and the conferral of jurisdiction on the Victorian Civil and Administrative Tribunal (the Tribunal) to deal with disputes.

Who is an owner-driver?

Generally, an owner-driver can be a person, company or partnership who provides services in transporting goods in a vehicle (up to 3) owned by them.

If you contract with an owner-driver to transport your goods, this is generally considered to be a ‘regulated contract’ under the Act.  You should be aware that a contract is not always in writing.  It can be partly oral, partly in writing or a combination of both.  Generally, the engagement of an owner-driver to provide transport services for payment, and their acceptance of that offer, constitutes a contract.  Regulated contracts are required to be in writing and therefore any oral agreement should be reduced to writing.

What to do before entering into a ‘regulated contract’

If you intend to engage an owner-driver for a period of more than 30 days, at least 3 business days before you engage that person, you are required to give the owner-driver:

  • an information booklet a copy of the most recently published rates and costs schedule applicable to the owner-driver and the class of vehicle:  Note: you are also required to give the owner-driver a copy of the revised schedule if it changes throughout their engagement.
  • As a matter of best practice, you should also provide the owner-driver with a copy of the proposed contract.  Given that this would be a ‘regulated contract’ under the Act, you should ensure that it complies with the following:
    • Is in writing
    • States the guaranteed minimum number of hours of work or income level that the owner-drive will receive
    • Sets out the rates to be paid to the owner-driver
    • Sets out the minimum period of notice of termination or payment in lieu of notice, which is regulated by the Act

Negotiating an owner-driver contract

In conducting any negotiations with an owner-driver, you should be aware of the Code of Practice.  A failure to comply with the Code, particularly in negotiations with a contractor in bargaining the terms and conditions of the contract, can be tantamount to unconscionable conduct.

Unconscionable conduct is prohibited under the Act and if found by the Tribunal to be in contravention of that provision, damages may be awarded in favour of the owner-driver.

The Code of Practice identifies best practice techniques to ensure that negotiations for a contract are conduct fairly and that both parties to the contract fully understand its terms and conditions.

Other matters to be aware of

If you are hiring an owner-driver or if you already engage owner-drivers you should also be aware of the following:

  • A hirer cannot require the owner-driver or deduct from the owner-driver’s pay:
    • insurance amounts, unless a contract of insurance is in force and you have provided a copy of the relevant insurance policy to the owner-driver
    • any other amounts (e.g. for fuel and toll charges) unless those amounts are specified in the contract, they are a direct and proper reflection of the actual cost and if practicable, you have given the owner-driver an opportunity to obtain the service/equipment elsewhere.
  • There are minimum notice requirements for termination depending upon the classification of the vehicle or if a person is a forestry contractor.  Unless you have obtained a certificate from the Small Business Commissioner (SBC) or the owner-driver has ‘materially’ breached the contract or if the period of engagement of the owner-driver is less than 3 months.
  • If you are using a broker to engage owner-drivers or a tender process, there are additional requirements.

Resolving a dispute

Generally, parties are required to attend the SBC for alternative dispute resolution before they are able to issue proceedings at the Tribunal.  Alternative dispute resolution in this case usually means mediation, where an independent mediator is present and both parties can speak openly about the dispute in an effort to seek a resolution before matters proceed to a litigious stage.  The costs for mediation are not burdensome and the parties can choose to have legal representation present.

If the dispute cannot be resolved at mediation, it can then proceed to the Tribunal upon application.  It is important to note that there are time limitations to bring an application to the Tribunal.

The legislative scheme for using owner-drivers is complex and quite onerous on hirers.  This article does not intend to be a comprehensive outline of the owner-drivers legislation. If you use owner-drivers we recommend that an audit of your compliance with the Act Regulations & Code of Practice be undertaken so as to avoid costly disputes and disruption to your business.

In relation to compliance or general advice concerning the Act or any matters raised in this article, please contact Nicholas Brand or Michael Bishop.