Fuel cost shock laws: a rapid shift for supply chain participants

A near 60% surge in diesel prices in a matter of weeks has triggered an equally rapid legal response.

With yesterday’s passage of the Fair Work Amendment (Fairer Fuel) Bill 2026 (Fairer Fuel Bill), the Federal Government has handed the Fair Work Commission (FWC) new emergency powers to intervene directly in how fuel costs are managed across road transport supply chains.

Supply chain participants, including businesses that commission the transport of goods (whether directly or via intermediaries), should prepare now for the likely event of the FWC making an urgent Road Transport Contractual Chain Order (RTCCO) imposing obligations on supply chain participants to vary service contracts to account for fuel cost recovery.

This significant, and arguably unprecedent, intervention by the FWC into private sector commercial arrangements could have an immediate and material impact on any business that relies on the movement of goods - well beyond the transport sector itself.

While the form of any potential emergency RTCCO is yet to be known, a recent proposal from the Transport Workers’ Union (TWU), backed by key road transport business representatives, the Australian Road Transport Industrial Organisation (ARTIO) and the National Road Freighters Association (NRFA), provides insight into the likely path forward.

In this insight, we set out the “need to knows” of the new regulatory framework, consider the likely impact on supply chain participants and provide practical guidance on what your business can do now to prepare.

Existing laws

Under the Fair Work Act 2009 (Cth) (FW Act), the FWC already has the power to make RTCCOs. These are legally binding orders that set minimum standards for contracts within road transport supply chains. RTCCOs can regulate a range of matters, including payment terms, rate reviews, fuel cost recovery mechanisms and termination provisions.

In practical terms, that means all business along the chain – those commissioning the transport of goods – can be directly affected. Construction companies engaging concrete cartage, retailers managing distribution networks, or manufacturers moving inputs or finished products may all find themselves subject to binding requirements, even where they have no direct relationship with drivers.

Once made, compliance with RTCCO’s will be monitored and enforced by the Fair Work Ombudsman. Non-compliance with an RTCCO may attract civil penalties.

While these laws have been in force since 2024, legislative handbrakes have existed requiring minimum 12-month (or in some cases 6-month) consultation periods, meaning that existing applications before the FWC are yet to result in an RTCCO being made.

Impact of the Fairer Fuel Bill

In response to the fuel crisis, the Federal Government has moved quickly to effectively remove this legislative buffer in ‘emergency situations’.

Once the legislation receives Royal Assent – expected within a matter of days – the Minister for Employment and Workplace Relations can declare the current fuel price spike an emergency and the FWC can move quickly to impose a time-sensitive order.

The key features of the legislation are as follows:

• Ministerial emergency declaration: The Minister may declare, by notifiable instrument, that an application for an RTCCO (or an application to very or revoke one) is an “emergency application”. The Minister may do so where satisfied that an event or circumstances is having, or is likely to imminently have, a significant national negative impact on the road transport industry and that it is in the public interest to make the declaration. The current fuel price crisis is the obvious trigger.

• Shortened timeframes: Under the existing legislation, an RTCCO cannot come into operation earlier than 12 months after the notice of intent is published, or six months if the FWC is satisfied that circumstances urgently require it. The Bill allows the FWC to reduce this to whatever period it considers reasonable for a “time-sensitive RTCCO” – potentially a matter of weeks.

• Narrowed scope: A time-sensitive RTCCO would be confined to terms relating to the specific emergency event and must not include terms unrelated to that event. Permitted terms may address payment time, fuel levies, rate reviews, termination (including one-way termination for convenience) and cost recovery.

• Shortened consultation: The usual consultation requirements are retained, but the FWC is permitted to shorten the consultation period significantly. A “short period” to make written submissions may constitute a reasonable opportunity.

• Automatic expiry safeguard: A time-sensitive RTCCO has a “relevant period” of only three months, after which it must be reviewed.

• Prioritisation: The FWC is not required to comply with existing prioritisation directions when dealing with an emergency application, enabling it to progress the matter ahead of other work.

These provisions will commence on Royal Assent, which is expected within a matter of days.

At that point, the Minister may immediately declare the fuel crisis an emergency, enabling the FWC to fast-track an RTCCO. As Minister Rishworth stated during the second reading speech, the Bill is intended to ensure that "truckies and small road transport businesses are not left to worry about managing rising costs on their own" and to allow the FWC to act "quickly, responsibly and in the public interest."

While it’s safe to assume that the FWC will make a time sensitive RTCCO triggered by the current fuel spike crisis, the exact terms are not yet clear.

What is being sought from the FWC

Relevantly, the TWU, ARTIO and the NRFA are jointly seeking:

• A universal cost recovery obligation requiring every supply chain participant, including primary parties, to account for fuel cost recovery in their service contracts. This obligation would be replicated at every level of the chain, down to individual road transport workers.
  
• Weekly rate reviews benchmarked against AIP Weekly Petrol and Diesel Prices Reports, with regard to national, state, territory, regional and metropolitan price variations.
  
• Anti-avoidance provisions preventing parties from offsetting fuel cost recovery by reducing recovery of other costs, including through purported “productivity enhancements”.
  
• A dispute resolution mechanism allowing parties to file disputes with the FWC where cost recovery obligations are not followed or where a contract is proposed to be amended to avoid obligations under the review process.

Notably, these groups do not propose a single default formula, acknowledging that contracts and arrangements differ across industries.

Potential commercial pressure points

The most immediate commercial pressure point is existing contractual arrangements, particularly fixed-price arrangements.

The proposals currently under discussion – and likely to inform any order – centre on mechanism such as frequent (potentially weekly) fuel cost reviews, mandatory cost recovery processes, or the introduction of fuel levies benchmarked to external data. If imposed, those mechanisms may sit alongside, or effectively override, current contractual settings,

For many businesses, that creates an often familiar problem: increased input costs without a clear contractual pathway to pass them on. The result may be an immediate margin squeeze, particularly on projects or supply arrangements priced on a fixed basis.

Importantly, the proposal also includes anti-avoidance concepts. Businesses are unlikely to be able to offset fuel increases by adjusting other elements of pricing or by restructuring arrangements in a way that undermines the recovery mechanism. This points to a regime that will be concerned not just with outcomes, but with how those outcomes are achieved.

For those businesses who do have clearer pathways to pass on increased costs, the speed at which a potential RTCCO could theoretically be made creates heightened compliance risks. Commercial arrangements take time to implement and adjust, if businesses don’t act now they risk falling foul of these enforceable obligations.

What is emerging is not simply a requirement to deal with fuel volatility, but a regulated model for how that must occur. Overlaying this is a compliance framework backed by civil penalties and enforcement by the Fair Work Ombudsman. These are not guidelines; they are enforceable obligations.

What happens next

All indicators suggest that the new powers will be used quickly. An emergency declaration is expected within days, and the FWC is already seized of applications broad enough to capture “general road transport” across multiple industries.

Even before any formal order is made, there is likely to be a strong expectation — if not an explicit signal from the FWC — that businesses begin adjusting their approach to fuel cost recovery. In that sense, the practical shift may begin before the legal one is finalised.

How to prepare now

The immediate challenge for businesses is that this is both likely urgent and uncertain. The exact form of any order is not yet known, but the direction of travel is clear.

Businesses should be looking closely at where and how they engage road transport across their operations, including through layered subcontracting arrangements. Many may find that their exposure sits deeper in the supply chain than expected.

Existing contracts warrant particular attention. Agreements that assume stable input costs, or that lack mechanisms for price adjustment, are the most vulnerable. Understanding where costs may become “trapped” is critical to managing financial exposure.

At the same time, there is a practical need to think about implementation. If fuel costs must be reviewed and adjusted regularly, that has operational implications — from tracking relevant pricing data through to flowing changes through multiple contractual tiers.

Perhaps most importantly, this is an area where early engagement matters. Conversations with transport providers, subcontractors and customers are likely to become more frequent and more commercially sensitive as cost pressures move through the chain.

This development represents a rapid and significant shift in the regulation of supply chains. It combines broad reach, speed of implementation and enforceability in a way that is unusual in this space.

For businesses, the risk is not simply higher fuel costs. It is being caught in contractual arrangements that cannot respond to those costs quickly enough, while being subject to a legal framework that requires them to do so.