On 20 April 2026, the Fair Work Commission (FWC) issued a Road Transport Contractual Chain Order (RTCCO), which commenced operation the next day. The RTCCO was implemented due to disruptions in the fuel supply chain caused by the ongoing conflict in the Middle East and the related increase in the cost of fuel.

The RTCCO covers most work in the road transport industry and places obligations on primary and secondary parties to adjust rates of pay either fortnightly or twice per calendar month to ensure recovery of the increased cost of fuel, regardless of whether existing contractual arrangements provide for such adjustment. The RTCCO will affect not only transport companies and workers but will also apply to those engaging transport companies. Outlined below is a summary of the RTCCO, including what the obligations are, who is covered and how to ensure compliance.

Section 536PD of the Fair Work Act 2009 (Cth) (FW Act) gives the FWC power to issue an RTCCO that sets standards for regulated road transport contractors, road transport employee-like workers and other persons in a road transport contractual chain. A failure to comply with an RTCCO is a breach of the FW Act and you may be subject to a penalty.

What is a road transport contractual chain?

A road transport contractual chain is a chain or series of contracts or arrangements, under which work is performed for a party to the first contract or arrangement in the chain or series either by a regulated road transport contractor or a road transport employee-like worker under a services contract, or by an employee. This chain or series requires that at least one party to the first contract or arrangement is a constitutional corporation. Put simply, it is a chain of contracts involving at least one company, under which the first customer contracts for road transport services which are performed by an employee or a contractor of the transport provider.

Relevantly, a person is not in a road transport contractual chain if they have arranged for delivery or consignment that is solely for the individual's private or domestic purposes, or if they are a passenger being transported in a motor vehicle, limousine, hire car, bus or coach. An employee performing work as a result of a road transport contractual chain (i.e. an employee of a transport company) is also not part of the chain.

Who is a regulated road transport contractor or road transport employee-like worker?

A regulated road transport contractor meets all of the below criteria:

• a person (an individual, body corporate, trust, or partnership) who is a party to a services contract and performs all, or a significant majority, of the work under the contract;

• the person does not perform any work under the services contract as an employee;

• the work performed under the services contract is work in the road transport industry; and

• the person is not an employee‑like worker.

A services contract is a contract for services that relates to the performance of work under the contract by an individual, and:

• at least one party to the contract is:

  • a constitutional corporation;

  • the Commonwealth or a Commonwealth authority; or

  • a body corporate incorporated in a Territory in Australia;

• the work concerned is wholly or principally to be performed in a Territory in Australia;

• the contract was entered into in a Territory in Australia;

• at least one party to the contract is a natural person who is a resident in, or a body corporate that has its principal place of business in, a Territory in Australia;

• the work concerned is performed in the course of constitutional trade or commerce; or

• the contract was arranged or facilitated through or by means of a digital labour platform, where the operator of the digital labour platform is:

  • a constitutional corporation;

  • the Commonwealth or a Commonwealth authority;

  • a body corporate incorporated in a Territory in Australia; or

  • a natural person who is resident in, or a body corporate that has its principal place of business in, a Territory in Australia.

A road transport employee‑like worker means an employee‑like worker who performs work in the road transport industry.

The road transport industry includes the following:

• ‘the road transport and distribution industry’ as defined in the Road Transport and Distribution Award 2020;

• 'the long distance operations in the private road transport industry’ as defined in the Road Transport (Long Distance Operations) Award 2020;

• ‘the waste management industry’ as defined in the Waste Management Award 2020; and

• ‘the passenger vehicle transportation industry’ as defined in clause 4.2 of the Passenger Vehicle Transportation Award 2020 (excluding clause 4.2(c)).

A primary party must, either fortnightly or twice per calendar month, adjust the rate they pay to the other primary party, to ensure the other primary party recovers the increased cost of fuel. The primary parties must then take reasonable steps to ensure that secondary parties in the same contractual chain comply with their obligations below, the FWC having confirmed that this obligation will fall on the primary party that is also a secondary party (as outlined below).

A secondary party must, either fortnightly or twice per calendar month, adjust the rate they pay to the other secondary party, regulated road transport contractor, or road transport employee-like worker to ensure that they recover the increased cost of fuel.

The above obligations apply to both existing and new contracts.

The "increased cost of fuel" is the difference between the cost per litre for the type of fuel used to perform the relevant work in the road transport industry at any given time and the cost as it was on or before 6 March 2026.

How do you adjust the rate of pay?

Parties must do one of the following:

• adjust the rate, or a component of the rate, including;

  • adjustment of the rate in accordance with an applicable State or Territory industrial instrument which involves the application of a ‘rise and fall’ formula or cost model;

  • adjustment of the rate in accordance with the application of a ‘rise and fall’ formula, cost model, or cost benchmark in an applicable collective agreement or contract;

  • an ongoing or special arrangement which adjusts the rate in accordance with an agreed ‘rise and fall’ formula, cost model or other benchmarking methodology, such as a ‘rise and fall’ formula, cost model or benchmarking methodology that is applied in a standardised way on the basis of a reasonable averaging of the increased cost of fuel to a group of regulated road transport contractors or road transport employee-like workers engaged by a single road transport business;

• introduce a fuel increment or levy;

• provide direct reimbursement or offset of the money expended on the increased cost of fuel; or

• any combination of the above.

Rate adjustments already implemented by parties before the RTCCO commenced may continue to be used, provided they satisfy the requirements of the RTCCO.

Effected parties should also update their internal approvals and payment cycles so recalculations can be processed on the same fortnightly or twice-monthly cycle. This reduces payment lag and cashflow strain for subcontractors and reduces non-compliance and dispute risk.

What if parties disagree about the application of or compliance with the RTCCO?

The parties must first try to resolve the dispute between themselves. If unsuccessful, a party may refer the dispute to the FWC and they may use any method of dispute resolution to attempt to resolve the dispute (mediation, conciliation, making a recommendation, and/or expressing an opinion). If unable to resolve the dispute, the parties can agree for the FWC to arbitrate. Alternatively, a party may apply to a Court alleging contravention of the RTCCO and seeking penalties (see s 536NP of the FW Act).

We anticipate disagreements between parties as to the actual increased cost of the fuel, including calculation of consumption, and the relevant method of adjustment, noting that different methods may be more or less beneficial for each party.

When will the obligations cease?

The RTCCO will continue to apply until it is varied or revoked by the FWC, or the weekly average national terminal gate price for diesel, as measured in the weekly diesel price report of the Australian Institute of Petroleum, falls below $2.00 per litre. The price for diesel under this measure was $1.654 per litre on 27 February 2026 and had increased to $3.160 per litre by 27 March 2026.

The FWC will review the application of the RTCCO in one month[CBP1.1][CBP1.2], and then every three months thereafter.

Who is a primary party?

A primary party is a party to the first contract or arrangement in the road transport contractual chain.

Who is a secondary party?

A secondary party is a party to any subsequent contract or arrangement in the road transport contractual chain, being a contract or arrangement under which work is performed for the secondary party by a regulated road transport contractor or a road transport employee‑like worker under a services contract, or by an employee. One of the parties to the first contract in the chain (i.e. a primary party) will also be a secondary party to the second contract in the chain.

Are there any exclusions?

A company that is not a road transport business is excluded by the application of the RTCCO if they are a small business employer (i.e. employs less than 15 employees - see s 23 of the FW Act). A road transport business is a person who receives services under a services contract, where the services contract provides for the performance of work in the road transport industry.

The intention of the RTCCO is to allow the increased cost of fuel to be recovered by vulnerable participants in road transport contractual chains and passed up the chain, with the cost burden ultimately being borne by the end users of road transport services and consequently shared widely across the community. There is no means test in the RTCCO, so large, well-resourced road transport operators can obtain rate adjustments, as well as those more vulnerable small operators and owner-drivers.

However, in some circumstances, the primary party responsible for paying the increased cost of fuel may have existing contractual arrangements with customers, under which they are unable to adjust the price as a result of an RTCCO rate adjustment (for example a subcontractor on a construction project). Road transport businesses will also bear the cost of fuel increases where the party engaging them is a small business and therefore excluded from the application of the RTCCO (as outline above).

If either of these situations applies to your business, you should seek urgent advice to confirm whether there are any other options for you to vary or terminate the contract, such as force majeure and change in law clauses. For a deeper dive into the law of force majeure, refer to Colin Bigger & Paisley's article here.

On 26 August 2024, amendments were made to the FW Act enabling the FWC to make RTCCOs. Under the legislation, an RTCCO could not come into effect until at least 12 months after the FWC had published a notice of intent to make an RTCCO, or at least 6 months if urgently required. However, on 30 March 2026, further legislation was passed allowing the FWC to order that an RTCCO commence in any time they consider reasonable, if it was the subject of an 'emergency application'.

On 2 April 2026, the Transport Workers’ Union of Australia and the Australian Road Transport Industrial Organization filed an application in the FWC for an RTCCO to deal with the issue of rising fuel costs. On 10 April 2026, the FWC confirmed that the application was an 'emergency application' and on 14 April 2026 published a notice of an intent to make an RTCCO. On the afternoon of 20 April 2026, the FWC issued its decision, which was accompanied by the RTCCO.

While it is known that many transport service providers will find this decision and confirmation of the RTCCO belated, bearing in mind the discomfort experienced as prices soared, it is pleasing to see the speed with which this has been implemented. While there will doubtless be flow on effects throughout the economy, there is no doubt the decision will be welcomed by those transport providers who were being crippled by fuel price rises and with contractual terms that made changes to their compensation slow or impossible to achieve.

Our team is advising multiple parties across the road transport contractual chain and can assist with managing the contractual, compliance and cost‑recovery issues arising from these changes. For more information on the RTCCO and its implications, please contact our Transport & Logistics and Employment & Safety teams.