On 20 April 2026, the Fair Work Commission made the Road Transport Contractual Chain Order – Fuel Cost Recovery Order 2026 (RTCCO), which commenced on 21 April 2026. The RTCCO is an emergency order designed to ensure increased fuel costs are recovered through relevant road transport contractual chains, rather than being absorbed by transport providers, contractors or employee-like workers. It was made against the backdrop of the ongoing Middle East conflict, which continues to have a significant impact on global supply chains.
How does the RTCCO apply?
The RTCCO is broad in its potential reach. It applies not only to road transport businesses and operators, but also to primary and secondary parties within a road transport contractual chain. For consumer and retail businesses, this means the obligations may be relevant even where the business is not itself a transport operator but procures or controls transport services as part of its supply chain.
There remains uncertainty about how the RTCCO operates in practice, including where a contractual chain begins and ends, who is a primary or secondary party, and how existing pricing mechanisms interact with the new obligations.
However, in practice, the RTCCO requires that:
- Transport rates must be reviewed every fortnight (or twice per month) to reflect current fuel prices.
- Existing contracts may need to be updated or applied differently to ensure they comply with the RTCCO’s requirements.
- Businesses in the chain must adjust rates so that higher fuel costs are not absorbed by transport providers, drivers or contractors.
- Adjustments may be made through rate variations, a fuel surcharge or levy, reimbursement or offsetting arrangements, or existing rise-and-fall mechanisms where those mechanisms achieve the required recovery of increased fuel costs.
The practical effect is a more responsive pricing model for fuel-related transport costs, with potential flow-on impacts for retail supply chains.
What does this mean for retail and consumer businesses?
For retail and consumer businesses, the impacts are both commercial and operational. Even where a retailer is not a transport operator, it may be affected through freight, logistics, distribution or supplier arrangements.
Retailers should expect:
- more regular increases in transport charges as fuel prices fluctuate;
- suppliers passing on fuel-related adjustments; and
- a greater need to review and update freight and supply contracts.
In a low-margin grocery environment, these changes may affect pricing, margins, budgeting and supplier negotiations.
The key issue for retailers is to understand how fuel-related increases are calculated and passed through, particularly where transport costs are embedded in broader supply or distribution arrangements.
Practical Steps
Retail and consumer businesses should review whether their freight, logistics and supplier arrangements can comply with the RTCCO and any proposed variations.
Practical steps include:
- Review existing transport, logistics and supplier agreements for fuel cost adjustment mechanisms.
- Identify arrangements that may form part of a road transport contractual chain, including embedded freight or distribution costs.
- For new contracts entered after 6 March 2026, check that rates are set by reference to the relevant fuel cost baseline and allow for later fuel cost recovery.
- Engage with suppliers and logistics providers about how fuel-related increases will be calculated and passed through.
- Take reasonable steps to confirm downstream pass-through to transport providers, contractors and employee-like workers where required.
- Check whether rise-and-fall, fuel surcharge or price variation clauses are clear and operate frequently enough, including fortnightly or twice-monthly adjustments where required.
- Document the basis for any fuel-related adjustment, including calculations, communications and timing.
- Assign responsibility across legal, procurement, finance and operations for monitoring developments and applying a consistent approach.
What’s Next?
The Fair Work Commission reviewed the RTCCO on 25 May 2026 and published a revised draft RTCCO. Consultation on the revised draft ended on 9 June 2026. While no final decision has been made, and the Fair Work Commission has not reached a concluded view on the proposed amendments, the draft amendments are relevant for retail and consumer businesses because they seek to address new contracts entered into after 6 March 2026 and reinforce that reasonable steps to ensure downstream pass-through may be a separate obligation from adjusting a party’s own rates.
The RTCCO is temporary and is expected to end once diesel prices fall below $2.00 per litre for four consecutive weeks, although it is unclear what happens if fuel prices fluctuate above and below $2.00 per litre during that period.
Businesses that take a practical, documented approach will be better placed to manage cost impacts and compliance risk as the RTCCO develops.
If you have any questions, please contact Brigid Clark or a member of the Addisons Employment & Workplace Relations team.