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Fuel Cost Recovery Order: What It Means for Your Business
A recent decision by the Fair Work Commission (FWC) introduces new obligations that may affect any business relying on road transport—whether directly or as part of a broader supply chain.
The Road Transport Contractual Chain Order – Fuel Cost Recovery (RTCCO) came into effect on 21 April 2026. It is designed to address sharp increases in fuel costs by ensuring those costs are fairly passed through all levels of the transport chain, from end clients through to transport operators and contractors.
A broader reach than expected
One of the most important aspects of this order is its scope. It does not apply only to transport companies. Instead, it extends across the entire contractual chain, meaning businesses that engage logistics providers, distributors, or subcontracted transport services may also be captured.
This significantly broadens the number of businesses that need to consider compliance.
Key requirements
Under the RTCCO, affected businesses may be required to:
- Regularly adjust transport rates (at least fortnightly) to reflect changes in fuel prices
- Pass through increased payments to ensure downstream transport providers are compensated
- Ensure contracts support cost variation, such as including fuel adjustment or indexation clauses
- Keep appropriate records of how fuel-related adjustments are calculated and applied
There is also an expectation that businesses at the top of the chain take reasonable steps to ensure these obligations are met throughout the network.
Commercial and financial implications
Beyond compliance, the order has practical financial consequences.
Businesses with fixed-price transport arrangements may find margins under pressure if they are unable to pass on rising fuel costs. At the same time, more frequent price adjustments may introduce:
- Cash flow timing challenges
- Increased administrative workload
- System and invoicing complexities
For some, this may require changes to pricing models, internal processes, and financial controls.
Contract review is critical
Many existing agreements were not designed to accommodate frequent fuel price fluctuations. As a result, contracts should be reviewed to ensure they allow for:
- Timely price adjustments
- Transparent fuel cost calculation methods
- Clear obligations between parties
Without these mechanisms, businesses may face disputes or unintended financial exposure.
What businesses should do now
Given the immediate effect of the order, it is important to take a proactive approach. Key steps include:
- Reviewing whether your business sits within a covered contractual chain
- Assessing exposure to transport cost increases
- Updating pricing and quoting practices where needed
- Ensuring systems can handle regular rate adjustments
- Seeking advice where contractual changes are required
Looking ahead
The RTCCO is intended as a temporary, emergency measure in response to fuel price volatility. However, it signals a broader shift toward regulatory involvement in supply chain cost allocation.
Businesses that adapt early—by strengthening contracts, improving pricing flexibility, and enhancing financial processes—will be better positioned to manage both compliance and ongoing cost pressures.
Fuel tax credit rates have decreased from 1 April 2026 following the temporary reduction in fuel excise. As fuel tax credits are directly linked to the excise paid on fuel, businesses need to ensure they are applying the correct rates when preparing their Business Activity Statements (BAS).
If you have any questions regarding these changes please contact our office. Further information about the order can be found on the Fair Work website.