Directors' Risks with Transport Operator Licences

For many organisations, holding a transport operator licence is essential to their business, so ensuring it is well managed should be a priority.

When an application for an operator’s licence is made, it is usually the company director (or sole trader, or partner in partnership) who makes and signs the application. Signing the application creates a number of legally binding undertakings which the licence holder agrees to fulfil. This is the same whether you have a full or restricted operator’s licence.

Alongside the specific undertakings, it also includes a commitment to run the transport operation in compliance with the transport legislation. It is, therefore, extremely important that company directors are aware of what legislation and undertakings they should be complying with and keeping abreast of changes in the law that may affect the operation of their licence.

Many companies with a full operator’s licence hire a qualified transport manager to manage and maintain their fleet of vehicles, which allows the directors to focus on managing the business as a whole. However, it is important to be aware that it is not possible to delegate the ultimate responsibility for compliance to a transport manager. To that end, responsibility is shared. For example, if something goes wrong, the authorities will hold both the transport manager and the director who signed the operator’s licence jointly responsible.

The most important thing to take away from the above is that as a company director or principal whose organisation requires either a full or restricted operator’s licence, ensuring that you are always up to date with the ever evolving transport legislation and best practice is key, even if you have a transport manager to implement it. At the end of the day, if something were to go wrong and your operator’s licence was revoked for whatever reason, the Traffic Commissioner does have the power to order that a director, or directors, of the company that held the operator’s licence, are disqualified from being directors of a licence holding company. This disqualification could be for a specified time or indefinitely.

What are your obligations as a director?

When applying for an operator’s licence, a declaration of understanding is signed on behalf of the applicant, who undertakes to meet various requirements upon granting the licence. Where the operator licence holder is a company, the directors must ensure these undertakings are met. Some of these include:

• Observe driver's hours rule and ensure proper records are kept
• Observe laws relating to driving and the operation of vehicles
• Ensure that vehicles and trailers are not overloaded, and are kept fit and serviceable at all times
• Report any defects that could present the safe operation of the vehicles

So, as the director of a company holding an operator’s licence, ask yourself, are the drivers of your goods vehicles exempt from EU law and, therefore, come under GB domestic rules? What are their driving hours? You may have a transport manager who ensures that the systems in place are adhered to and that the safety of your drivers is adhered to, but ultimately, you are responsible. Even if you have one director on your board of directors who has been allocated the role of managing the company’s transport compliance, the Traffic Commissioner could still find the whole board equally culpable for non-compliance.

Who checks these obligations are being met?

Traffic Commissioners hold responsibility for the licencing and regulation of those who operate heavy goods vehicles, buses and coaches. In addition to granting licences, they are able to take regulatory action against holders of operator licences and can, therefore, revoke or suspend a licence if they feel it is appropriate. There are currently 7 Traffic Commissioners within the UK, with a current vacancy for a Traffic Commissioner covering North West England.

If a company is called to a public inquiry, the Traffic Commissioner will consider their fitness to hold a licence, which also includes the fitness of the directors.

The Upper Tribunal, which is the appeal Court for transport cases, said:

‘.. it does not matter whether an operator’s licence is held by an owner operator, a partnership or a limited company because in each case the person or persons responsible for managing the business bear the ultimate responsibility for ensuring that the road transport aspect of the business operates in compliance with the regulatory regime. That means that they cannot plead ignorance or put the blame on the transport manager because they are required to have sufficient knowledge of the regulatory regime to ensure compliance in general and the proper performance of the transport manager’s duties in particular’

What happens when a Traffic Commissioner inquiry does not go to plan?

There are a number of reasons why, as a holder of an operator’s licence, you may find yourself being called before the Traffic Commissioner for an inquiry. These can include:

• Objections being received in relation to your application for a licence
• Environmental concerns surrounding your operating centre
• Failing to keep to the conditions of your licence
• Questions surrounding your conduct (for example, receiving a conviction for a driving related offence)

At the conclusion of the hearing, the Traffic Commissioner will either give their decision at that point or send it in writing within 28 days. There are several possible outcomes, but focusing solely on the impact that a negative decision could have on you as a director, the main outcome you would seek to avoid is being disqualified from being a director of a company who holds a licence.

It is important from the outset to seek independent legal advice from a solicitor who is well versed in the law surrounding transport regulations and has experience in dealing with hearings before the Traffic Commissioner.

Therefore, it is important as a director of a company who holds an operator’s licence, whether it be a Standard International Licence, a Standard National Licence, or a Restricted Licence, that throughout your time as a director of that company, you continue to keep up to date with any changes in the legislation that may impact your ability to comply with the undertakings given when applying for the operator’s licence.