On 25 May 2026, the Expert Panel of the Fair Work Commission (the Expert Panel) conducted a review hearing of the road transport contractual chain order (RTCCO). The hearing was an opportunity for interested parties to ventilate interpretation and operational issues they have encountered since the RTCCO commenced operation on 21 April 2026.
The RTCCO requires fuel cost increases to be passed through road transport contractual chains via periodic rate reviews and adjustments or another agreed mechanism to support recovery of fuel cost increases arising from the Middle East conflict.
Evidentiary difficulties
The AI Group raised concerns that it has been difficult for the industry organisation to persuade their members to give evidence before the Expert Panel in circumstances where the evidence may be commercially sensitive, have industrial implications and/or inadvertently reveal that their organisation has breached the terms of the RTCCO. This position was reflected more generally by the lack of evidence filed by opposing parties for the purposes of the hearing.
The Expert Panel rejected a request from AI Group to make a confidentiality order over the entirety of a witness statement prepared by an AI Group member, who operates a transport company and had concerns about his competitors having access to what they considered was commercially sensitive information. As a result, the AI Group withdrew the witness statement. Accordingly, there was disappointingly limited evidence before the Expert Panel regarding important issues impacting the Australian business community and little evidence to sway the Commission that it needed to provide clarity for businesses.
Primary and secondary parties
There has been some difficulty in relation to the identification of “primary” and “secondary” parties within a contractual chain for the purposes of the RTCCO. These classifications are central to the operation of the obligations in clause 4 of the RTCCO.
The Transport Workers Union of Australia (TWU) provided an example at the review hearing where a local council has a contract with a waste company, which would result in both the council and the waste company being primary parties. Primary parties are required, within each fortnight or twice per calendar month, to adjust the rate they pay to any other primary party by the amount necessary to ensure recovery of the increased cost of fuel from the commencement of the RTCCO. However, in this example, the waste company would also be a secondary party. Secondary parties have obligations to adjust the rate they pay to any other secondary party, regulated road transport contractor or road transport employee-like worker so that the increased cost of fuel is recovered from the commencement of the RTCCO. Unfortunately, this example provided by the TWU was not particularly controversial in any way and did little to assist businesses with the myriad of examples where the identification of parties is less than clear cut.
Possible exclusions?
Various parties sought exemptions from the operation of the RTCCO. In some cases, the requests related to specific contract types; in others, parties argued that entire industries or segments should be excluded. These submissions were unsupported by evidence and instead relied on numerous illustrative examples of contracts and contractual arrangements. The Commission provided no indication at the hearing that it was particularly swayed by any of those arguments.
Contracts that don’t contemplate transport delivery
One important issue that requires consideration is whether a first contract in a contractual chain that does not contemplate road transport work, or expressly mention road transport work, is captured by the RTCCO.
There remains no indication from the Expert Panel that contracts that do not expressly contemplate road transport work, or the following examples of such contracts, are actually exempt from the RTCCO:
- In the context of civil construction projects, where a government entity will engage a major construction company to build civil infrastructure. The initial contract between the government and the contractor in some circumstances sits atop a chain which is 5-10 contracts deep and unlikely to include terms that govern the delivery and supply of plant, material and goods to site.
- Maintenance services contracts where parts are delivered as part of the service.
Where there is any doubt as to where a contractual chain commences, business should obtain advice on a case-by-case basis.
Industry coverage
The Housing Industry Association argued that residential home builders should be excluded from the application of the RTCCO. Their submission contends that the RTCCO’s impact on residential builders is disproportionate and unintended, as these businesses had no prior engagement with road transport regulation, operate under fixed-price contracts with no mechanism to pass through mandated cost increases, and face genuine legal uncertainty about whether the RTCCO even applies to them.
An industry association representing concrete transport providers opposed that submission on the basis that it was not supported by evidence and that excluding the residential building industry from the operation of the RTCCO may lead to administrative burdens for organisations in the concrete industry who deliver concrete to residential building sites and other construction sites and who would have to wear the cost.
The Australian Local Government Association contended that local councils can be captured by the order and can be themselves primary parties. Several parties (and the TWU was not opposed to this) sought a clarification be expressly made to the RTCCO confirming this.
Other industries have not raised coverage issues in the traditional sense, and whilst admitting coverage under the RTCCO, ventilated uncertainty around whether their specific contracts and the transport work potentially performed under them is captured.
Fortnightly/twice monthly obligation versus contractual frequencies
It was made abundantly clear by the Expert Panel that the fortnightly or twice monthly rate adjustment obligation in the RTCCO applies irrespective of any rate adjustment frequencies (or payment terms) in commercial contracts. There are several takeaways from the discussion at the hearing on this point:
- Evidence was given that some transport companies, somewhat inconveniently, shifted to adjusting their rates on a fortnightly or twice‑monthly basis after the RTCCO commenced, despite paying (and therefore adjusting) on a monthly basis.
- Employer associations initially advocated for monthly rate adjustments but were unsuccessful; the TWU supported weekly adjustments, and the Expert Panel ultimately settled on a fortnightly or twice‑monthly schedule (such as on the first and last day of the month - effectively amounting to a monthly adjustment).
- The TWU and Australian Business Lawyers & Advisors have reached an agreement, which is likely to be endorsed by the Commission, to amend clause 4.6(a) of the RTCCO to clarify that the, typically monthly, rate adjustment frequency under state industrial instruments, such as the Transport Industry - General Carriers Contract Determination, can apply instead of the fortnightly/twice-monthly obligation. Which is as good as saying that is not the case for other alternative mechanisms.
Clause 4.6 – does not satisfy all obligations
Clause 4.6 of the RTCCO recognises that other arrangements, whether implemented before or after the RTCCO came into effect, can satisfy some of the obligations under the RTCCO. Those existing arrangements can include an adjustment in accordance with an applicable State or Territory industrial instrument, a ‘rise and fall’ formula, cost model or cost benchmark in a contract or an ongoing or special arrangement between parties in a chain.
It was clarified at the hearing that clause 4.6 of the RTCCO - providing that where a rise‑and‑fall mechanism or the like is in place, the obligations in clauses 4.1 (rate adjustment between primary parties), 4.2 (reasonable steps), and 4.4 (fortnightly adjustment for secondary parties) are satisfied - was not intended to be read this way. The Expert Panel were sympathetic to the view that the reference to clause 4.2 (reasonable steps) should not have been included in clause 4.6.
As a result, it appears that the exclusion in clause 4.6 is only intended to satisfy the requirement for a rate adjustment mechanism, with the applicable frequency still determined by clauses 4.1 (for primary parties) and 4.4 (for secondary parties). There was no intention for the obligation in clause 4.2 to be encompassed within it.
The draft order is likely to be amended to reflect this, with further refinements expected.
Rise and fall clauses: The 6 March 2026 issue and contracts made after 6 March 2026
Concerns were raised at the hearing about:
- New contracts made after 6 March 2026 with rise and fall clauses, involving sophisticated transport companies which are aware of the increase in the price of fuel and have already considered that rising cost when setting the price/rate and how the RTCCO operates in those circumstances.
- Whether the RTCCO should be interpreted so strictly that rise‑and‑fall mechanisms not directly pegged to the fuel price on or before 6 March 2026 - yet calculated by reference to a frequently updated fuel price index - would nonetheless still qualify as mechanisms capable of satisfying the RTCCO’s rate adjustment obligations.
The Expert Panel suggested both of these could be remedied by updating the language in the RTCCO. Whether this occurs remains to be seen.
Determining the percentage of transport work in the contract price
Concerns were raised, and repeated, by several parties about the difficulty businesses face in determining the appropriate percentage increase to account for rising fuel costs where:
- The entity at the end of the chain does not pay drivers a conventional hourly “rate” (which would ordinarily include a fuel component, wage, administrative costs etc), for example a courier business paying per delivery or ride‑share models such as Uber.
- The contract price does not explicitly allocate a proportion to transport delivery costs (and the parties may have to take steps to work this out).
- Drivers undertaking deliveries for multiple clients, such as couriers or concrete suppliers servicing both residential and commercial customers on the same day.
While some evidence has been provided on how businesses may calculate the transport cost component within a contract price, these methodologies vary significantly and are highly business‑specific. Where the percentage attributable to transport costs is not readily apparent, we recommend seeking legal advice.
Amend the RTCCO to require downstream parties to provide information
Several parties suggested imposing an obligation on downstream parties to comply with information requests from those parties upstream in a contractual chain. Those requests could include outlining the rate or the percentage of the price that is in consideration for transport costs. It was noted that the absence of such information was hindering upstream parties’ ability to fulfil their rate‑adjustment obligations.
The Expert Panel indicated that these concerns could instead be addressed through the dispute resolution mechanism under the RTCCO, signalling it is unlikely to make any change to the RTCCO to address these concerns. This response is troubling, given the Commission’s already significant workload across matters beyond this jurisdiction. The TWU expressed concern about imposing obligations on smaller operators, suggesting that larger businesses were advocating for these measures as a way to shift or avoid their own responsibilities.
Submissions made on behalf of Master Builders Australia detailed the experience of their members and how some downstream contractors are relying on the RTCCO to justify price increases with little to no evidence being provided to support the proposed price increase. Master Builders proposed that the RTCCO be amended so that a request for a price increase is accompanied by evidence of the increased cost incurred due to the increase in the price of fuel. The organisation was concerned the RTCCO is being used as a tool to increase price even though the cost of fuel has dropped since the RTCCO was made.
Cessation of the RTCCO
A major contention between parties before the Expert Panel concerned the operation and interpretation of clause 5.3. Clause 5.3 states that the ‘obligations in clause 4… will cease to apply if the weekly average national termination gate price for diesel, as measured by the weekly diesel price report of the Australian Institute of Petroleum, falls below $2.00 per litre’. For example, the following parties put forward differing interpretations and recommendations to assist in the implementation of clause 5.3:
- Whilst on the plain reading of the terms of the RTCCO means that once the weekly price of diesel falls below $2.00, the obligations cease but the RTCCO remains in force, AI Group argued that this is plainly inconsistent with the Expert Panel’s stated intent in its decision at paragraph [79] of the Decision. In this regard the Expert Panel made clear that the “RTCCO is intended to be an emergency measure only and its obligations are not intended to continue to operate, or operate again, after the price of fuel has returned to a measure of normality”. AI Group submitted that the RTCCO should operate in accordance with the Expert Panel’s stated intention.
- Australian Chamber of Commerce and Industry argued that the current drafting is not sufficient to provide the level of certainty required for businesses and suggested that the Expert Panel adopt a fixed cessation date, a clearly specified maximum duration or an alternative mechanism that “provides an objectively ascertainable end point”.
- On the other hand, the TWU argued that clause 5.3 should be amended so that “the obligations under clause 4 do not cease to operate on a single week’s average and will only cease to operate if at least four consecutive weeks of TGP national averages are less than $2.00”. The TWU argued that this amendment will avoid the obligations under clause 4 ceasing to have effect where “a decrease in the [terminal gate price] for diesel is an aberration”.
- Australian Business Lawyers & Advisors originally suggested that four weeks was too long, and a fortnightly was more appropriate, and then orally suggested that aligning cessation to the rate adjustment period would be administratively simpler for businesses.
We expect that any amended RTCCO may introduce a change to clause 5.3 or may raise a number of points for consideration and may well prompt further debate.
What are ‘reasonable steps’?
What constitutes ‘reasonable steps’ in the context of primary parties discharging their obligation under clause 4.2 of the RTCCO was once again raised.
The Expert Panel stressed that the concept of ‘reasonable steps’ is a standard which is well known and will depend heavily on the circumstances.
In this regard, the updated guidance published by the Fair Work Ombudsman (discussed in our previous RTCCO client alert) was raised as providing some examples of what steps can be taken by businesses to ensure they are discharging their obligation under clause 4.2. The TWU made submissions arguing that clause 4.2 should not be overly prescriptive in terms of what is ‘reasonable steps’ for an organisation to undertake in case the prescriptive steps have the effect of diluting the force of the obligation.
The “chicken shop” & small businesses
Both the TWU and Australian Business Lawyers & Advisors proposed an amendment to the RTCCO which, they argued, would resolve the current ambiguity or uncertainty surrounding the operation of clause 4.3 of the RTCCO. Clause 4.3 of the RTCCO excludes the ‘reasonable steps’ obligation from applying to “a primary party which is a small business employer and which is not a road transport business”. The ambiguity arises when one considers the meaning of ‘road transport business’ pursuant to s 15R of the Fair Work Act 2009 (Cth), which provides that a ‘road transport business’ includes ‘constitutional corporations’. If a small business is a constitutional corporation, then, by virtue of the current drafting of the RTCCO, they remain obliged to take reasonable steps.
The drafting proposed would amend clause 4.3 to include the clarification that “clause 4.2 of this Order shall not apply to a primary party which is a small business employer and which does not engage road transport contractors or road transport employee-like workers under services contracts, or employ employees to perform work in the road transport industry”.
The proposed amendment is designed to better reflect the intention of the parties to exclude small business from having to comply with the obligation under clause 4.2. However, if the proposed amendment is adopted by the Expert Panel, small businesses will still need to comply with clause 4.2 in circumstances where that business engages an owner driver to perform cartage work and/or an employee to perform delivery services.
Next steps
The Expert Panel reserved their decision and did not provide an indicative timeframe for when a revised RTCCO will be published. Given the significant issues in interpretation and compliance ventilated in the hearing, it is hoped that any revised RTCCO, statement or guidance provided by the Expert Panel will be issued expeditiously to provide some much-needed clarity to Australian businesses.
In accordance with its terms, the operation of the RTCCO will now be subject to a review every three months until the RTCCO ceases to operate.
In the meantime, if you have any interpretation or implementation issues with the RTCCO, please reach out to one of your key contacts.
Read our latest thinking and key resources on the Fair Work Commission's Fuel Cost Recovery Order.
