On 20 April 2026, the Fair Work Commission (FWC) made the Road Transport Contractual Chain Order – Fuel Cost Recovery Order 2026 (Order), which commenced on 21 April 2026. The Order was introduced in response to fuel supply disruptions caused by the significant reduction in shipping through the Strait of Hormuz and the ongoing conflict in the Middle East.

The FWC made the Order pursuant to the 2024 amendments to the Fair Work Act 2009 (Cth) (FW Act), which empowers it to issue road transport contractual chain orders (RTCCOs). RTCCOs are binding orders that establish minimum standards for all work performed in the "road transport industry".

The "road transport industry" is defined by reference to s15S of the FW Act, which in turn is defined by reference to certain specified modern awards.

The Order covers primary and secondary parties, road transport businesses, digital platform operators, regulated road transport contractors and employee-like workers in a road transport contractual chain.

Under the Order, primary and secondary parties must adjust rates at least fortnightly or twice per calendar month to ensure the recovery of increased fuel costs, relative to prices as at 6 March 2026. They must also take reasonable steps to ensure those increases are passed through the contractual chain so that downstream transport providers also recover the higher fuel costs.

The Fair Work Ombudsman provided initial guidance that rate adjustments may be implemented by:

• varying the rate or a component of the rate;
• introducing a fuel surcharge or levy;
• reimbursing or offsetting increased fuel costs; or
• adopting a combination of these measures.

Additionally, existing “rise and fall” or price variation mechanisms in industrial instruments, contracts or other agreements may also satisfy the adjustment obligations under the Order.

The Order will remain in force unless the weekly average national terminal gate price for diesel (as reported by the Australian Institute of Petroleum) falls below $2.00 per litre.

If a dispute arises, parties must first genuinely try to resolve it themselves. If the dispute cannot be resolved, it can be referred to the FWC. The FWC may use any method to resolve the dispute, including arbitration with the consent of the parties.

Non compliance with the Order constitutes a contravention of a civil remedy provision under the FW Act and may expose businesses and individuals to significant civil penalties.

Engagement conference

There has been widespread confusion and uncertainty across industry about how the Order operates.

The FWC convened an engagement conference on 1 May 2026 to hear interested parties' concerns ahead of the Order's first formal review. The key issues raised included:

• Scope of the RTCCO: Widespread concern that the scope of the Order is too broadly framed to be workable. It is difficult to identify where a road transport contractual chain begins and ends, especially in complex supply arrangements.
• Uncertainty regarding “primary” and “secondary” parties: There are potential differing interpretations, and a lack of clear guidance on how to distinguish between primary and secondary parties. This creates difficulties in determining where obligations sit within a given contractual chain.
• Application to broader commercial arrangements: Issues were raised regarding the treatment of agreements where road transport services constitute only a minor component of a broader commercial arrangement.
• Administrative burden and implementation challenges: Interested parties expressed concern about the complexity of complying with the Order. In particular, the need to obtain and verify information from parties further down the chain was seen as burdensome, especially for those ultimately responsible for absorbing or passing on increased costs. There were also concerns that the calculation methodology could result in overpayments, underpayments and 'double dipping'.

First review hearing

On 25 May 2026, an expert panel of the FWC (Expert Panel) held a formal review hearing in relation to the Order. Affected parties advanced more detailed submissions and proposed amendments to the Order. Whilst the panel engaged in discussions with those making submissions, it ultimately reserved making any decisions on substantive matters.

Uncertainty regarding who constitutes a “primary” or “secondary” party, and what amounts to taking “reasonable steps” remained central themes. Building on these broader concerns, the hearing focused on a number of specific implementation issues including:

• Frequency and method of rate adjustments: Interested parties raised concerns regarding the prescribed frequency of adjustments, with many proposing that a monthly adjustment mechanism would better reflect commercial practice. It was submitted that the current requirement for fortnightly or twice monthly adjustments may not align with contractual payment cycles. Similarly, these requirements may not align with arrangements where services are intermittent or performed on an “as required” or one-off basis.
• Contracts entered into after 6 March 2026: It was submitted that contracts entered into after 6 March 2026, particularly with established transport operators, should already incorporate fuel price increases in agreed rates. In those circumstances, it was argued that further adjustments under the Order may not be necessary. To address this, it was proposed that the Order be amended to require parties to “set or adjust” rates to account for increased fuel costs, recognising that compliant pricing may already have been built into post-6 March contractual arrangements.
• Duration and cessation of the Order: Submissions were made in relation to the operation of the Order’s cessation mechanism. Interested parties highlighted ambiguity around how the Order is intended to operate where fuel prices fluctuate around the $2.00 threshold, including scenarios where prices fall below the threshold before increasing again.

Proposed amendments

On 29 May 2026 the Expert Panel released a statement and notice of intent to vary the Order, proposing amendments informed by submissions made from interested parties following the first review hearing.

Key proposed amendments include:

• amending clauses 4.1 and 4.4 to require parties to “set or adjust” rates; and
• revising clause 5.3 so that the obligations under the Order cease where the price of diesel remains below $2.00 per litre for four consecutive weeks.

Interested parties were invited to lodge written submissions in response to these proposed amendments.

Current status of the Order

On 19 June 2026, the Expert Panel issued a further statement noting that since diesel prices had fallen below $2.00 per litre for a second consecutive week, the threshold in clause 5.3 was thereby engaged. As a result, the obligations on primary and secondary parties to adjust rates for fuel cost increases have ceased to apply. While the Order remains in force, those obligations are presently dormant.

In light of this development, the Expert Panel has not yet determined whether to proceed with the proposed variations, observing that there may be limited utility in doing so while the key obligations are inoperative. However, the Panel is considering whether amendments should be made to enable those obligations to be re‑enlivened if the threshold is met again.

The Expert Panel has invited further submissions from interested parties on the appropriate course forward, including the scope of the FWC's power to vary clause 5.3 in a way that would revive the Order's obligations, and whether such a step should be taken.

Submissions are due by 4:00pm AEST on 3 July 2026 and may be lodged via email to [email protected].

Your next steps

The FWC is expected to consider submissions from interested parties in determining the appropriate way forward. In the meantime, although the Order’s key obligations are currently dormant, businesses should remain prepared by maintaining processes and systems that can be implemented promptly if those obligations are re-enlivened.

We will continue to monitor developments of the Order on your behalf.

If you have any questions about the implications of the Order for your organisation, please contact our team for tailored advice and support.