Fuel cost recovery mechanisms in road transport contractual chains: what you need to know

Organisations should immediately identify whether they are party to any contracts or arrangements within an affected road transport contractual chain and assess whether they are subject to rate adjustment obligations, following today's order from the Fair Work Commission (FWC) requiring parties in road transport contractual chains to adjust payment rates to recover increased fuel costs.

The "road transport contractual chain order" (RTCCO) has been fast-tracked as an emergency measure in response to the conflict in the Middle East and including hearings and public consultation on the draft RTCCO.

Following four days of hearings and public consultation, the RTCCO has been made by the FWC today (20 April 2026), and will come into force from 21 April 2026.

What is an RTCCO?

An RTCCO is an order made by an Expert Panel of the FWC that sets standards for regulated road transport contractors, road transport employee-like workers and other persons in a road transport contractual chain. The FWC may make an RTCCO on its own initiative or on application by an organisation entitled to represent the industrial interests of persons in a road transport contractual chain, a regulated business, a primary party, or the Minister.

Who can an RTCCO cover?

An RTCCO applies to a person in 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 primary party, being a party to the first contract or arrangement in the road transport contractual chain;

• by a regulated road transport contractor or road transport employee-like worker under a services contract, or by an employee; and

• at least one of the primary parties is a constitutional corporation.

A person is in an RTCCO if they are a primary party, a party to a subsequent contract or arrangement in the contractual chain (referred to in the FW Act as a "secondary party"), or they are a regulated road transport contractor or a road transport employee‑like worker who performs work under a services contract.

Practically, an RTCCO covers a person or business that requires the delivery of freight by road, the driver who makes the delivery and any sub-contracting or other arrangements that sit between them. However, an RTCCO would not cover entities in the broader supply chain who may come into possession of goods via road transport but are not party to a contract for the supply of road transport.

An RTCCO is legally binding where the order applies to the person, and contravention of a term of an RTCCO is a civil remedy provision.

The Fairer Fuel Act and the TWU/ARTIO's joint application to the FWC

The Fair Work Amendment (Fairer Fuel) Act 2026 (Cth) amended the Fair Work Act to enable the FWC to make an RTCCO in a more expedited manner than would otherwise be possible in response to an application that the Minister determines to be an ‘emergency application’. A determination may be made if the Minister is satisfied there are events or circumstances that have occurred or are occurring which are ‘currently having, or likely to imminently have, a significant national negative impact on the road transport industry’, and it is in the public interest to make the determination.

On 2 April 2026, the Transport Workers' Union of Australia and the Australian Road Transport Industrial Organisation jointly filed an urgent application for an RTCCO in response to unprecedented increases in fuel prices arising from the significant disruptions to shipping through the Strait of Hormuz and the conflict in the Middle East (Joint Application).

On 10 April 2026, the Minister determined that the Joint Application constituted an 'emergency application'. This determination permitted the FWC to fast-track the process, providing only a short period for submissions from affected entities rather than the usual 12-month consultation period. On 14 April 2026, the FWC released a notice of intent and a draft RTCCO. On 17 April 2026, the FWC closed submissions.

The FWC made the final RTCCO on 20 April 2026, with some non-substantial changes to the draft RTCCO (see below).

Coverage

The RTCCO covers all work in the road transport industry (except for cash in transit). It applies to the following persons in road transport contractual chains:

• primary parties;

• secondary parties;

• road transport businesses;

• digital labour platform operators in the road transport industry;

• road transport employee-like workers performing work in the road transport industry; and

• regulated road transport contractors performing work in the road transport industry.

Obligations

Parties in a road transport contractual chain must, within each fortnight or twice per calendar month, adjust the rate paid to their relevant counterparty for the performance of work in the road transport industry by an amount necessary to ensure that their counterparty recovers the increased cost of fuel from the date of commencement of the RTCCO.

Primary parties are also obliged to take reasonable steps to ensure that secondary parties adjust the rate in their contracts with counterparties to ensure the recovery of the increased cost of fuel.

These adjustments may be made by one or a combination of:

• an adjustment to the rate or a component of the rate payable under the relevant contract or arrangement;

• the introduction of a fuel increment or levy under the relevant contract or arrangement; or

• the introduction of a direct reimbursement or offset of money expended upon the increased cost of fuel.

The above requirements will be satisfied to the extent that:

• there is a "rise and fall" formula, cost model or cost benchmark in an applicable State or Territory industrial instrument, collective agreement or contract to account for and address recovery of the increased cost of fuel; or

• an ongoing or special arrangement between persons in a road transport contractual chain applies which adjusts the rate in accordance with an agreed "rise and fall" formula, cost model or other benchmarking methodology to account for or address recovery of the increased cost of fuel.

Disputes relating to the RTCCO can be referred to the FWC.

In making the final RTCCO, the FWC made some non-substantial amendments to the draft RTCCO, such as to exempt primary parties which are ‘small business employers’ and insert clarification that the ‘rise and fall’ formula, cost model or benchmarking methodology may be 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.

Cessation

The obligations will cease to apply if 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.