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May 3, 2012

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Transport & logistics – Textbook manoeuvres

Many health and safety managers are keen to keep the transport function of their organisation firmly in the ‘Fleet’ department. But, as Paul Verrico and Phil Crosbie explain, they can’t shut themselves off and ignore the risks associated with poorly-managed commercial vehicles.

“Systems have to be judged by results” is a remark that is made time and time again during public inquiries into the conduct of vehicle operators. First voiced by Traffic Commissioner Myles Dorrington when reviewing an operator’s compliance with its Operator’s Licence,1 it illustrates the depth of obligation imposed on organisations when managing licensed vehicles.

In recent months, we have acted as lawyers for all kinds of organisations that have struggled to deal with vehicle issues. Indeed, the variety of enterprises subject to the licensing regime is enormous and includes limited companies, universities, local authorities and charities. In most of the cases we referred to above, the local safety manager or safety director did not understand their organisation’s licensing obligations with regard to their fleets, and this created problems further down the line. Some of the individuals we encountered were completely unaware that traffic commissioners – who have responsibility for the licensing of operators of heavy-goods vehicles (HGVs) and buses and coaches (public service vehicles) – even existed.

Of course, if a faulty vehicle, or a fatigued driver is involved in a fatal incident, then the way in which an organisation manages its vehicle safety and drivers’ hours may be considered as part of a corporate-manslaughter investigation. Previous manslaughter convictions under the old common-law offence have included failures in the management of drivers’ hours and poor vehicle maintenance. In fact, under the old offence, more organisations were prosecuted for vehicle issues than for any other single type of failure.2

Apart from the interest that vehicle-safety issues have for the HSE and Police, these and related matters are also monitored closely by the Vehicle and Operator Services Agency (VOSA), which may conduct roadside inspections, as well as make unannounced visits to vehicle depots. VOSA inspectors can review a number of matters, including past MOT results, drivers’ hours records, maintenance providers and the competency of transport managers. If the agency is concerned about an operator and whether it is still complying with the terms of its licence, then those concerns can be passed on for review to the relevant traffic commissioner, who may decide to hold a public inquiry (see below).

Operator Licences and public inquiries

An Operator’s Licence (Licence) is the legal authority required by an organisation to operate certain goods and passenger vehicles. A Licence must be held by the party that uses those vehicles, whether that be a corporate entity or an individual.

In order to be awarded, and then retain, a Licence, operators are required to satisfy certain criteria, including appointing competent individuals to act as transport managers, conducting their operations from suitable locations, and having in place adequate finance arrangements. Poorly informed companies sometimes treat the holding of a Licence as little more than the regulatory equivalent of holding a TV licence (i.e. pay the money and forget about it). However, if vehicles subject to a Licence are involved in an incident, or are seriously in breach of the traffic laws, then the operator may be called before a public inquiry.

In 2010/11, more than 1100 public inquiries were held to review goods-vehicle operators and the Licences under which they operated. A public inquiry is similar to an inquest; generally, the Licence-holder, directors of the Licence-holder, and transport managers will be asked to attend and explain their failures to the court.

Around a third of the inquiries (360) in 2010/11 led to the revocation of Licences (i.e. the operator was prohibited from operating its fleet). Less than 10 per cent of inquiries ended with no formal action.3 For bus and coach operators, the figures were slightly higher but still, less than 20 per cent of inquiries resulted in no action being taken.

New regulations and what they mean

The Road Transport Operator Regulations 2011 came into force on 4 December last year, implementing European Regulation 1071/2009, which “requires road-transport undertakings to have an effective and stable establishment in Member States, be of good repute, and have appropriate financial standing and the requisite professional competence”.4 The conditions by which these requirements can be met are also specified.

The arrangement between operator and transport manager must therefore be formalised, with core responsibilities set out. These are defined in a statutory document, issued by the senior traffic commissioner in December last year: “A transport manager should be able to show that, however infrequently vehicles return to the operating centre, he or she is able to and does exercise continuous and effective management of the vehicles on a day-to-day basis… A transport manager risks their repute if they are merely a transport manager in name only.”5

The new EU regulations also introduce the scope for transport managers to be declared “unfit”, and, as such, be disqualified from acting in the capacity of this role anywhere within the EU, until they are ‘rehabilitated’.

Whether an operator is ‘fit to operate’ under its licence, and of ‘good repute’, are also two of the key questions that a traffic commissioner will consider (see below). Along with the introduction of the 2011 Regulations themselves, new guidance was issued on how a ‘good repute’ judgement is reached,6 so operators and transport managers should become familiar with the advice and case-law examples it contains.

When holding a public inquiry, traffic commissioners hold discretionary powers to take into account any matter when deciding whether a party is of good repute. This means that the commissioner will scratch under the surface of an organisation to determine if proper management is in place, or if the business is hiding any failings.

Keeping directors informed

A key weakness seen in much of the related case law is that systems and procedures existing at one level are not communicated throughout a business and implemented accordingly. In order to manage successfully the responsibilities that a Licence brings, an entire organisation must have responsibility to comply with its terms. We have acted on several investigations recently when boards were completely unaware of poor fleet performance, or did not know the right questions to ask. When directors are then called to give evidence, this has been very difficult for the companies involved.

The first meeting between directors and transport managers should not be on the steps of the transport tribunal. At board level, there must be:

  • a thorough understanding of Licence requirements;
  • designated responsibility to at least one director for Licence compliance; and
  • sound reporting on Licence issues at board meetings.

Board directors can be individually punished and disqualified from holding a Licence. This ban can extend to other companies in which the director holds the same position, or a controlling interest, with the risk of revocation, suspension, or curtailment of those Licences on top.

Procedures must be in place to ensure that the board is wholly aware of what is going on, and these should be evidenced by board action both when things go wrong and when things go right. Traffic commissioners will not tolerate board complacency, no matter how large an organisation. 

Managing and reporting on the ground

Procedures for reporting to the board will only be effective if those working closer to the operation are able to identify what needs to be reported, and how. Transport managers must therefore be continually competent and have access to the resources necessary to conduct their role effectively. Vehicle safety is paramount – for example, issues such as maintenance (see panel, above) and drivers’ hours must come before operational needs. Moreover, this prioritisation should not only be obvious internally but also be visible to any outside observer.

Transport managers need to be acutely aware of those matters that need to be escalated, and the importance of escalating them promptly. These will include issues that affect the ‘good repute’ or ‘fitness of the operator’, including Prohibition Notices served against vehicles, MOT failures, and issues with maintenance providers.

An operator’s licensing system will not work if there is a culture of ‘getting on with it’ at ground level and a lack of reporting to the board, whether this be a result of reluctance, ignorance, or misdeed. Open reporting and proper management at ground level needs to be supported by all levels of management above, with a direct reporting line to the board.

The new guidance6 has set a higher standard for everyone – no one can rest on their laurels and be comforted by myriad policies, paperwork and records. What matters most is what is happening in practice and, to come full circle: systems have to be judged by results.

1     Noted in Appeal 1999 No: L56 – Appeal by: Alison Jones t/a Jones Motors, Shamrock Coaches and Thomas Motor Services
2      See, for example:
3     Traffic Commissioners’ Annual Report, 2010-11 –
4     Explanatory Note – The Road Transport Operator Regulations 2011
5    Senior Traffic Commissioner Statutory Document No. 3 – Transport Managers,
6     Senior Traffic Commissioner Statutory Document No. 1 – Good repute and Fitness,

Paul Verrico is an associate and Phil Crosbie a solicitor in the Eversheds Business Compliance and Enforcement Team.

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