The Fair Work Commission (Commission) has the power to regulate supply chains in the transport industry. These can override existing commercial arrangements and contracts.
On 20 April 2026, a Road Transport Contractual Chain Order dealing with fuel price increases was made by the Commission. The Order regulates the conduct of parties in supply chains in the transport industry.
Critically, the Order impacts more than transport companies.
This is a legally enforceable instrument, just like a modern award or an enterprise agreement. Non-compliance can also attract steep penalties.
The balance of this article answers key questions about the Order:
We also set out two example scenarios to illustrate how the Order might impact a business in a supply chain.
If the changes discussed in this article raise concerns or you have questions specific to your business, our team at Australian Business Lawyers & Advisors (ABLA) are ready to assist.
You should not delay getting in touch if you:
The Order takes effect from Tuesday, 21 April 2026. The obligations are effective from that date – they are not retrospective.
The Order will be the subject of review by the Commission over the coming months and this will likely focus on issues such as how the Order is working, issues with fuel price increase recovery, or issues with fuel price increase gouging. ABLA will appear in these reviews and will keep you informed of any amendments.
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 (AIP), falls below $2.00 per litre.
It creates obligations on all parties in the road transport supply chain from top to bottom, including:
The only part of the transport industry excluded is cash in transit industry.
In general terms, the primary obligation is to pay rates that cover changes in fuel costs (i.e. the increased cost of fuel) since on or about 6 March 2026 and any ongoing changes in the price of fuel.
This impacts all persons in the supply chain:
We include examples at the end of this article to show how this works in practice, and in turn the impact for businesses that engage “owner drivers” and “fleet owners”.
Both “rate” and “increased cost of fuel” are defined terms in the Order:
Owner Drivers
If you engage owner drivers your obligation is to pay rates to them that cover changes in fuel costs since on or before 6 March 2026 and any ongoing changes in the price of fuel.
On an ongoing basis you must review these rates within each fortnight or twice per calendar month and adjust the rate you pay by the amount necessary to ensure you cover the increased cost of fuel.
This review is of the rate and does not change your existing pay periods or payment terms.
We use the term “owner driver” as it is the common term, but legally the term is “regulated road transport contractor” (and the legal term is what will appear in the Order).
| Regulated Road Transport Contractors are workers (not employees) who are either: Individual | The individual performing work under the contract |
|---|---|
| Body corporate | An individual who is either a director of the body corporate, or a member of the family of a director of a body corporate, and who performs work under the contract. |
| Trustee of a Trust | An individual who is a trustee of the same trust, and performs work under the contract, whether or not the individual is a party to the contract. |
| Partnership | An individual who is a partner in the same partnership and performs work under the contract, whether or not the individual is a party to the contract. |
Fleet Owners
If you engage a transport fleet owner (any size of transport company) your obligation is to pay rates to them that cover changes in fuel costs since on or before 6 March 2026 and any ongoing changes in the price of fuel.
On an ongoing basis you must review these rates within each fortnight or twice per calendar month and adjust the rate you pay by the amount necessary to ensure you cover the increased cost of fuel.
This review is of the rate and does not change your existing pay periods or payment terms.
You can adjust rates in a variety of ways:
The fuel adjustment obligations can be satisfied by any of the following:
In relation to the third option listed, the Order providers 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.
Yes.
Some people have operated with fuel levies or fuel rate reviews for the last month and in some cases, years. If you have already started doing this, you can continue – as long as it complies with these obligations.
Yes.
If you are a transport company contracted to another transport company up the chain, they must also meet the fuel increase obligations for you.
If you are a transport company contracted to the party at the apex of the supply chain – which could be a retailer, a manufacturing company, a building company or even a government agency – the party at the apex must also meet the fuel increase obligations for you. See the illustrated examples below.
Yes.
Primary parties in a road transport supply chain (the apex party and the party they contract to) must take reasonable steps to ensure that transport companies (in the same supply chain), who engage owner drivers in the same supply chain, adjust the rate they pay to such owner drivers to ensure recovery of the increased cost of fuel.
Important: This additional obligation does not apply if the primary party:
They are:
In practice, what form is this taking?
Some people are adjusting cartage rates for owner drivers and fleet owners.
Some have introduced a fuel levy or surcharge for owner drivers and fleet owners.
They are:
In practice, what form is this taking?
Some people are adjusting cartage rates, but most have implemented or agreed to a temporary fuel levy or surcharge.
Roughly, this is likely based on 25% to 30% of total costs adjusted by the AIP index changes.
On 2 April 2026, the Transport Workers’ Union of Australia (TWU) and the Australian Road Transport Industrial Organisation (ARTIO) jointly made an application for what is known as a contractual chain order to address rising fuel prices that affect owner drivers, gig workers and transport companies throughout the transport industry in Australia.
The Commission convened a Full Bench (Expert Panel) and undertook a uniquely fast hearing process starting on 8 April.
Almost all parts of the Australian business community were involved in the case.
ABLA appeared in the matter for leading transport companies, the construction materials sector and Australian Business Industrial and the NSW Business Chamber.
ABLA played the lead role in the case, undertaking most of the cross-examination of TWU and ARTIO witnesses and in leading the ‘employer’ evidence.
Last week, the Federal Government varied the Fair Work Act to allow the Commission to deal with the matter quickly and not be constrained by usual time requirements for supply chain matters.
On 10 April the Minister for Workplace Relations issued a determination declaring that the TWU/ARTIO application is an “emergency application”, which authorised the Commission to deal with the application quickly.
Given this, it was understood that the Commission was likely to issue some form of order and ABLA focused its efforts on ensuring that the order was as workable as possible for all parties in the supply chain.
ABLA was able to secure material changes through the hearing process.
Most employer parties either took a rather benign approach or simply opposed an order being made while not advancing any evidence in support.
A Decision was published on 20 April 2026, together with the Order.
We have prepared two example scenarios to illustrate how businesses in a supply chain could be impacted by the Order.
Example 1
Cummins Liquor buys soft drinks in bulk from McFills Soft Drink Co on a delivered basis.
McFills Soft Drink Co subcontracts the delivery to Big Transport Co, who in turn subcontracts the delivery to Little Transport Co.
Little Transport Co use owner drivers engaged by them to undertake the delivery.
Under the Order:
Who has to do what in the example?
In addition:
If Cummins Liquor was a small business, this additional obligation would not apply. This is because the additional obligation does not apply to a primary party that is a small business employer and which is not a road transport business.
Example 2
Cummins Liquor buys soft drinks in bulk from McFills Soft Drink Co on a delivered basis.
McFills Soft Drink Co subcontracts the delivery to Big Transport Co, who in turn subcontracts the delivery to Little Transport Co.
Little Transport Co uses its company fleet to undertake the delivery.
Under the Order:
Who has to do what in the example?
There are no additional obligations as neither Big Transport Co nor Little Transport Co are engaging owner drivers to perform the cartage work.
If you have any questions, please get in touch with us at info@ablawyers.com.au.
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