21.2.2024 | Compliance

Periods of grace – Goods and passenger licencing

Tim Ridyard, Ahstons Legals’ Transport Lawyer, shares what this means in practice. 

Many goods or passenger vehicle operators with operator’s licences stumble over “Periods of Grace”. Some lose their licences by not navigating them correctly. No licence may mean no business.

So, what are they, why are they needed, and what should operators do to ensure they manage them correctly?

Standard licence holders will need to apply for Periods of Grace if they cannot meet one or more of the mandatory elements of their licence.

These are:

  • professional competence: there has to be at least one person qualified with a Transport Manager’s Certificate of Professional Competence (TMCPC)
  • financial standing: access to £8,000 for the first vehicle and £4,500 for additional vehicles – £1,600/£800 for light go0ds vehicles
  • a stable and effective establishment: where business documentation is kept and there is access to vehicles.

In reality, the main problem areas for which Periods of Grace are required relate to Transport Managers and Financial Standing.

If an operator cannot meet what is required, the Traffic Commissioner (the regulator who issues the licences) has to be informed – and if the Traffic Commissioner is not notified, then that is a failure on the part of the operator to declare this and is a licence breach.

Periods of Grace cater for things that will happen to businesses from time to time. If a Period of Grace is granted, then this is a ‘bridge’ until such time as the operator can meet the requirement.

Transport Managers

There are a number of reasons why a Transport Manager may no longer be engaged as either an internal Transport Manager or an external one. They may die, be ill, be dismissed, retire, be unhappy with the operator or wish to move on to a new job.

It would be nonsensical if the operator’s licence had to dissolve simply because of such a normal event as that might occur. The period of grace provides a solution. However, it must be managed properly by the operator.

When a Transport Manager leaves a business, the operator will remove the Transport Manager from the licence (using the VOL online system), and the Transport Manager will/should likely also notify the Traffic Commissioner of their departure. Either event will automatically trigger a letter being sent to the operator (via the VOL system), setting out what information is required by the Traffic Commissioner. (This assumes there is no remaining Transport Manager on the licence – but even then, there might be a letter asking how the fleet will be managed with one Transport manager less; however, in that situation, it is not a ‘bare’ licence with simply no Transport Manager at all, of course).

It will not suffice simply to ask for a Period of Grace for a bridging period – this must be requested, of course, but there needs to be substance: a clear path forward that (a) states what arrangements there are for a new Transport Manager and (b) sets out how transport is to be managed without a Transport Manager – or, as the Senior Traffic Commissioner has put it: “that the continued operation of vehicles won’t compromise road safety.”

The operator must go through this procedure – if it is simply left undone, the requirements of a Transport Manager will be unfulfilled – and the licence will be revoked if detected.

It is not a given that the Period of Grace will definitely be granted – however, if a proper plan of action is in place, this should not present a problem. It is incumbent on the operator to sort out the recruitment of a new internal and external Transport Manager, and we advise this being evidenced, e.g. copy advertisement, selection criteria, details of a number of applications, interview timetable and dates, etc. The more information provided, the clearer the picture of a responsible approach being taken.

Operators must keep an eye on the duration of the period of grace and not let it expire. The total cannot exceed six months, save in the event of the death/incapacity of the Transport Manager. Ordinarily, it will be a (hopefully) one or (possibly) a two-stage process with an initial period granted by the Traffic Commissioner, with the leeway of a further extension up to six months.

If the operator lets the period of grace expire, then revocation of the operator’s licence may take place due to there simply being no ‘professional competence’, as happened in a recent case involving a local council that failed to address the requirement to have a nominated Transport Manager, much to the disgruntlement of local residents whose dustbins could not be collected!

Recent guidance issued by the Senior Traffic Commissioner states that even if there is evidence that the Transport Manager requirements can now be met or if there is an application to extend the existing period of grace, the Traffic Commissioner has to be given sufficient time to consider it.

The Senior Traffic Commissioner has also made the following position clear: ‘… because it is accepted at the outset of granting a Period of Grace that a mandatory licence requires it is no longer met, there is no right to a request of Public Inquiry after that time limit has expired.’

Therefore, it can be seen that not managing a period of grace can be fatal.

Financial standing

We have referred primarily to Transport Managers so far. However, the same applies in relation to financial standing. If an operator cannot fulfil the finance requirements, the Period of Grace has to be applied for in order for the operator to then provide evidence of its ability to demonstrate the financial wherewithal. Then, evidence has to be actually supplied within the period stipulated by the Traffic Commissioner, following the normal finance evidence rules (e.g. three months’ bank statements, etc).

If you require advice and assistance concerning any investigation carried out by DVSA and/or advice concerning operator licensing (including Traffic Commissioner Public Inquiry and preliminary hearing matters), please contact Ashtons.

Tim Ridyard, Ashtons Legal