Businesses relying on road transport – receiving stock, sending goods, couriers or freight providers – are soon to be hit with the impact of a new ‘fuel cost recovery’ order.
The order takes effect on April 21, 2026 and applies despite any inconsistent term in a contract.
It is enforceable across road transport contractual chains and requires fuel cost increases to be passed through the transport supply chain at least twice a month. This applies until weekly average national terminal gate price for diesel falls below $2 per litre (as measured by the Australian Institute of Petroleum).
It is expected to affect retailers, wholesalers, manufacturers, food suppliers, e‑commerce operators, construction businesses and any business that relies on road freight.
This is one of the most significant interventions in the road transport sector in recent years. The FWC has made clear that the purpose is to prevent transport operators, including small contractors, from being pushed to the brink by unprecedented fuel costs.
Small businesses should prepare for higher transport‑related expenses in the coming months.
Who will be affected (most businesses)
The order covers all work in the road transport industry and applies to:
- primary parties (eg. businesses engaging transport providers)
- secondary parties (eg. subcontractors in the chain)
- road transport businesses
- digital labour platform operators in transport
- road transport employee‑like workers
- regulated road transport contractors
Who is NOT covered
A business is excluded if:
- it is a small business employer (fewer than 15 employees) and
- it is not a road transport business.
What the order requires
1. Mandatory fuel cost adjustments (twice monthly)
Primary and secondary parties must adjust the rates they pay at least once per fortnight or twice per calendar month to ensure the next party in the chain recovers the increased cost of fuel.
The “increased cost of fuel” is defined as the difference between:
- the current cost per litre and
- the cost per litre on March 6, 2026.
2. How adjustments can be made
Adjustments may be made through:
- increases to existing rates
- fuel levies or increments
- direct reimbursement
- offsets, or
- any combination of these
Existing ‘rise and fall’ formulas or cost models in contracts or industrial instruments that account for or address recovery of the increased cost of fuel will meet the requirement, but existing contracts or fuel clauses (including fixed-price or long-term contracts) may need to be reviewed or amended to comply.
3. When the order ends
The obligations will stop when:
- the weekly average national terminal gate price for diesel falls below $2 per litre (as measured by the Australian Institute of Petroleum).
The FWC will review the order after one month, and every three months thereafter.
What this means for small businesses
Expect:
- Fuel surcharges on transport invoices
- More frequent price adjustments from freight providers
- Higher logistics and delivery costs
- Flow‑on price increases from suppliers who rely on road transport
For example, a small greengrocer receiving regular deliveries may now be required to pay additional fuel‑related charges to their transport provider.
What business should do now
Next steps – preparing to comply
Businesses covered by the order will be required to have made their first rate adjustment by May 5, 2026. Recommended actions to prepare include:
- Identify coverage and exposure: Map where the business sits within road transport contractual chains. Identify whether fuel costs are currently being borne downstream.
- Audit contracts and pricing models: Identify fixed‑price or long‑term contracts without fuel adjustment mechanisms. Flag arrangements that may now be non‑compliant.
- Prepare compliant recovery mechanisms: Develop fuel cost recovery clauses or pricing adjustments suited to your arrangements.Ensure mechanisms operate regularly and in real time.
- Engage with counterparties early: Proactive engagement will reduce the risk of disputes or enforcement action.
- Seek advice before renegotiation or resisting claims: Interaction between the order, existing contracts and the Fair Work Act is complex.
Business Law WA’s lawyers can review your commercial contracts and advise you on how to meet your obligations, how the order may impact your business and assist with preparing new contracts or renegotiating existing terms. Contact [email protected] or call 08 9365 7560.
This article is authorised by Business Law WA, an incorporated legal practice and wholly owned subsidiary of CCIWA. The content of this article is general in nature and is not legal or professional advice and should not be relied upon as such.
