Proposed amendments to the Road Transport Contractual Chain Order – implications for construction and infrastructure projects

In April, the Fair Work Commission’s Expert Panel (Commission) made the Road Transport Contractual Chain Order – Fuel Cost Recovery – 2026 (RTCCO) in response to rising fuel prices driven by the conflict in the Middle East. Following the one-month RTCCO review hearing on 25 May 2026, the Commission has published its proposed variations to the RTCCO, which are now subject to consultation.

What are the proposed variations?

The proposed variations are targeted at refining and clarifying the RTCCO, rather than introducing wholesale changes to its operations. In summary, the variations would:

• clarify that parties must ‘adjust or set’ rates, addressing new contracts or arrangements entered after 6 March 2026
• clarify the interaction between the reasonable steps obligation in clause 4.2 and the alternative compliance mechanisms in clause 4.6
• refine the small business employer exception
• clarify when state or territory industrial instruments, contractual rise-and-fall mechanisms, cost models or benchmarking methodologies may satisfy the RTCCO
• require contractual rise-and-fall mechanisms to operate fortnightly or twice per calendar month
• significantly extend the period for which the relevant diesel benchmark must remain below $2.00 per litre before the RTCCO obligations cease to operate, from a single week to four consecutive weeks.

The most substantial change is the final point, which further entrenches the RTCCO’s operation and extends the period during which relevant parties need to comply.

Construction and infrastructure issues raised in the review hearing

The proposed variations do not resolve the key difficulties for construction and infrastructure supply chains. Many of these issues were raised in the review hearing on 25 May 2026. They include the forensic difficulties associated with:

• identifying where the road transport contractual chain commences and ceases
• composite construction pricing and embedded transport costs
• mixed load deliveries
• limited upstream visibility over downstream transport arrangements
• distinction between road transport fuel costs and broader construction fuel impacts.

During the review hearing, the Australian Industry Group and other interested parties submitted that the Commission should revoke the order entirely on the basis that compliance is not practical, particularly within the construction and infrastructure sectors. The Housing Industry Association also submitted that there should be an exclusion for residential building businesses. The Commission was not persuaded on the evidence available that these issues justified revocation of, or sector-specific exclusions from, the RTCCO.

The Commission was also not persuaded to accept the submission that industry participants may be reluctant to give evidence about compliance problems where doing so could reveal potential non-compliance with an active civil liability exposure. The Commission refused to grant a full confidentiality order for an anonymous industry participant to give evidence of compliance difficulties, leading to withdrawal of the proposed evidence. As a result, there was limited evidence before the Commission regarding the compliance challenges experienced across the industry.

Are principals a primary party under the RTCCO?

During the review hearing, the Commission appeared to proceed on a broad view of who may be captured as a primary party, suggesting principals may fall within scope. However, that view is not necessarily determinative.

The concept of ‘primary party’ is statutory and takes its meaning from section 15RA(2) of the Fair Work Act 2009 (Cth), rather than from the Commission’s view as to how the RTCCO should operate. Whether a principal is captured will depend on the particular procurement model and contractual chain. Principals should obtain legal advice on whether the RTCCO applies to their projects and, if so, how compliance should be managed.

How the Commission expects fuel cost adjustments to be valued

Submissions also highlighted the difficulty of identifying increased fuel costs where there is no specified rate for transport work or fuel in the contract and instead the transport component formed part of a composite price.

During the hearing, the Commission indicated a broad and practical approach to compliance. A precise forensic reconstruction of the amount of fuel used may not always be required, provided the parties adopt a reasonable methodology that ensures increased fuel costs are recovered. In practice, this gives the parties flexibility to agree an appropriate adjustment methodology, supported by reasonable substantiation. Importantly, this may require parties to take a more commercial, less forensic approach than is typically adopted in construction and infrastructure contract administration, particularly where precise calculation is difficult.

Takeaways

Assuming the proposed variations are adopted, the RTCCO appears more durable for parties in the project contract chain. It should therefore be treated as a live project risk and a legal compliance issue.

While forensic challenges remain, the key lesson from the review is that compliance is expected even where calculations and evidence are imperfect. A pragmatic commercial approach will be important not only to manage compliance risk, but also to avoid disputes and protect supply chain relationships and project delivery.

If you have questions about the RTCCO or need assistance with reviewing your construction contracts, please contact us here.

Disclaimer
The information in this article is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this article is accurate at the date it is received or that it will continue to be accurate in the future.

Published by:

Helena Golovanoff

Jordan Russell

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