Periods of Grace – The Unintended Consequences

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Periods of Grace – The Unintended Consequences

All businesses operating commercial vehicles for hire or reward must be able to satisfy five mandatory criteria (good repute, professional competence, financial standing, operating centre and stable establishment) on an ongoing basis throughout the lifetime of the Operator’s Licence.  If you find yourself unable to meet one or more of these requirements, the starting point is that your Operator’s Licence must be revoked.  There is, however, a ‘period of grace’ available in respect of three of these requirements – financial standing, professional competence and stable establishment.  But what does this mean in practice?

A ‘period of grace’ is a period of time available to an operator, which allows the Operator’s Licence to continue without all of the mandatory requirements for holding it being met.  It is expected that, during the period of grace, the operator will address the issue and, by no later than the expiry of that period, demonstrate that they once again meet the relevant requirement. 

So, for example, if your transport manager resigns, you no longer meet ‘professional competence’.  You are, however, entitled to apply to the Traffic Commissioner for a period of grace. This allows the Operator’s Licence to continue whilst giving you the breathing space you might need to recruit a suitable replacement and nominate them on the Operator’s Licence.  Before the end of the period of grace, the new Transport Manager must be named on the Operator’s Licence, at which point you again meet the requirement for professional competence.  Similarly, if you no longer meet ‘financial standing’, a period of grace allows you time to identify additional capital and reserves and submit evidence of funds – which demonstrate access to the required sum - to the Office of the Traffic Commissioner before the end of the period of grace.

It is important to note that a period of grace is something that the operator must ask the Traffic Commissioner for (the Traffic Commissioner is not required to offer it) and it is granted entirely at the discretion of the Traffic Commissioner.  When considering any request for a period of grace, the Traffic Commissioner must be satisfied that it will be worthwhile granting some time to allow the operator to re-establish the relevant criteria – they will not simply kick the can of revocation down the road in the hope that you might re-meet the requirement at some point down the line. 

Returning to the example of a transport manager resigning, the Traffic Commissioner will need sufficient information in support of any request for a period of grace to demonstrate how the transport activities will be managed in the absence of a transport manager to satisfy them that road safety will not be compromised by the continued operation of vehicles without a transport manager in post.  They will also need sufficient details of your plans for recruiting a new transport manager to be persuaded that it is realistic that a new transport manager will be in post before the period of grace ends. 

In the context of financial standing, they will want to understand why you are unable to meet the requirement at the present time and will need sufficient details of your plans for securing additional funds during the period of grace to be persuaded that it is realistic that, before the end of that period, you will have access to the required sum.

When requesting a period of grace, the more information you can provide to the Traffic Commissioner, the better!

In addition, for a period of grace to be granted, the Traffic Commissioner must first make a formal finding that the relevant criteria (be that financial standing, professional competence or stable establishment) is no longer met.  This is often done through ‘propose to revoke’ correspondence from the Office of the Traffic Commissioner, which tells the operator that the Traffic Commissioner is aware that they no longer meet one or more of the mandatory criteria for holding an Operator’s Licence and puts you on notice that the Operator’s Licence will therefore be revoked.  The correspondence invites you to apply for a period of grace. Any period of grace granted then effectively ‘suspends’ the guillotine of revocation until the expiry of that period.

What then happens if you cannot re-establish the relevant criteria by the end of the period of grace?  The short answer is that the Operator’s Licence is revoked – often without any further notice to you (other than the letter confirming the revocation) and with immediate effect - and, in practice, this is what we are currently seeing happen all too often!  This leaves the operator concerned with no authority to operate vehicles and a fleet that must be parked up until a new Operator’s Licence has been applied for and granted (a process that can take several weeks!). 

So why are operators experiencing these unintended consequences of a period of grace?

Firstly, a period of grace can only be granted for a maximum period of 6 months (unless an operator loses ‘professional competence’ due to the death or physical incapacitation of their transport manager).  Typically, in practice, the Traffic Commissioner will grant an initial 3-month period, which can be extended (up to the maximum period available) if required.  It is, however, for the operator to apply for such an extension before the initial period granted ends.  Failure to do so will result in revocation if the operator has not demonstrated the requirement is re-met.

Secondly, once the maximum period of grace permitted by the legislation has been granted, the Traffic Commissioner simply cannot extend this any further.  The Traffic Commissioner has no alternative but to revoke the Operator’s Licence.

Thirdly, there appears to be a fundamental lack of knowledge and understanding of the process where ‘propose to revoke’ correspondence has been issued and a period of grace requested.  If, at the expiry of the period of grace, the requirement is not re-met, the Operator’s Licence will be revoked without any further reference to the operator – the Office of the Traffic Commissioner will not write to you to request additional information or evidence, or offer an extension of the period of grace (if one might be available); the onus lies on you!  There is therefore a technique to responding to any ‘propose to revoke’ correspondence to, firstly, secure a period of grace and, secondly, protect the Operator’s Licence. 

Talk to us

JMW’s Commercial Road Transport team are currently dealing with numerous cases involving ‘propose to revoke’ correspondence and periods of grace.  They are intimately familiar with the process and expectations of the Traffic Commissioner and draw on decades of experience in this niche area to assist operators in avoiding the unintended consequences that can flow from a period of grace. If you would like further advice, contact Laura Hadzik by calling 0345 872 6666, or fill in our online enquiry form.

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