The Fair Work Commission wants its fuel cost recovery rules switched back on. Those rules apply to the businesses that hire transport, not just the trucking companies doing the work, and that can include builders.
Diesel is back above $2.60 a litre at the wholesale level, more than a dollar above where it sat in late June.
On 16 October, the Commission’s Expert Panel for the road transport industry rejected calls to revoke its fuel cost recovery order. It published a draft variation that would restart the order’s rate adjustment obligations, which have been dormant since early June.
The order does not stop at trucking companies. It reaches the businesses at the top of road transport contracts, and the Fair Work Ombudsman lists construction companies among them.
What did the Fair Work Commission decide on 16 October?
The order was made on 20 April 2026 and took effect the next day, after the Minister declared an application by the Transport Workers’ Union and the Australian Road Transport Industrial Organization an emergency.
It requires parties in road transport contractual chains to adjust what they pay for transport work, so the people doing the work recover the increase in fuel costs since 6 March 2026.
Built into the order was an off switch. Once the weekly national average terminal gate price for diesel, as reported by the Australian Institute of Petroleum, fell below $2.00 a litre, the obligations stopped. That happened in the week ending 5 June, when the average came in at 189.7 cents.
The order itself stayed on the books. In its latest decision, the panel proposed switching the obligations back on, rather than leaving them off or revoking the order.
Employer groups including the Australian Industry Group, the Australian Chamber of Commerce and Industry and Master Builders Australia argued for revocation. Their case was that the emergency had passed, and that the obligations were uncertain and hard to comply with.
The panel did not accept either argument. It noted that a single witness statement had been filed in support of the compliance concerns, and that only four disputes had been lodged under the order since it began.
Why is the order coming back now?
The short answer is diesel.
The national average wholesale price bottomed at 159.5 cents a litre in the week ending 29 June. It climbed back above $2.00 in the week ending 17 July, and reached 273.5 cents in the week ending 25 September. That is roughly 70 per cent above the June low, and above the level when the order was first made in April.
The latest Australian Institute of Petroleum weekly diesel report puts the national average wholesale price at 261.3 cents a litre for the week ending 18 October.
The panel found the conditions behind the original emergency are still there. On the most recent data before it, ship transits through the Strait of Hormuz were running at 1.67 per cent of normal levels. It also found that prices remain volatile and prone to sudden moves.
Evidence from owner drivers and small fleet operators carried weight. One haulage operator, and a union official relaying reports from contractors, told the panel that fuel levies were removed once the obligations switched off in June. Another operator said around 40 per cent of its work had received no fuel adjustment at all.
What changes under the draft variation?
Most of the proposed changes revive amendments first floated in May and shelved when prices fell. The draft would:
- restart the obligations on a date still to be set
- move rate adjustments from fortnightly to monthly
- make clear the obligations apply when rates are set in new contracts, not only when existing rates are adjusted
- allow an agreed fuel levy to count, if it is adjusted at least monthly, the payer takes reasonable steps to make sure it covers the increase, and the party bearing the fuel cost has a copy of the order
- require diesel to sit below $2.00 a litre for four consecutive weeks, rather than one, before the obligations switch off again
- clarify the small business exception.
That last change is worth reading closely. Under the current order, a small business employer that is a primary party and not a road transport business is excused from one duty: taking reasonable steps to make sure adjustments flow further down the chain.
The draft would clarify that test, which the panel said had caused uncertainty, so it turns on whether the business engages transport contractors or platform workers, or employs staff to do road transport work. The exception has never covered the core obligation on primary parties to adjust the rates they pay.
The panel did not propose removing the client at the very top of the chain from the definition of primary party, saying that had the potential to undermine the order. It pointed to the new fuel levy option as the answer to concerns raised by clients at the top of the chain.
Where do builders sit in a road transport contractual chain?
A road transport contractual chain is the series of contracts under which transport work gets done, from the business that first commissions it down to the driver behind the wheel. The order sorts the people in that chain into primary and secondary parties, using definitions in the Fair Work Act.
What is a primary party?
Under the fuel cost recovery order, a primary party is a business or person in the first contract or arrangement in a road transport contractual chain, at the top of the chain. Secondary parties sit further down the chain. Primary parties must adjust the rates they pay (and, under the draft, set them in new contracts) so the increased cost of fuel is recovered. Subject to a small business exception, they must also take reasonable steps to make sure secondary parties pass adjustments on to the contractors and workers they engage.
The Fair Work Ombudsman’s guidance names construction companies, alongside manufacturers, suppliers and large retailers, as examples of businesses the obligations apply to.
Holcim, Boral, Adbri and Metromix were among the businesses represented at the 9 October hearing.
On our reading, a residential builder’s clearest exposure sits in contracts that directly engage transport work, such as tipper hire, spoil and waste removal, or bulk haulage the builder organises.
Where transport is bundled into the delivered price of materials, the position is less clear cut. The order contains no industry exemption for builders. Under the draft, a small business builder that does not engage transport contractors or employ transport staff would be excused from the reasonable steps duty, but not from adjusting the rates it pays.
Where a builder is not a primary party, those costs still arrive. They come through supplier fuel levies, delivery surcharges and subcontractor pricing, and they land on cash flow.
The order does not stop at trucking companies.
What does the order not do for builders?
The order regulates rates within transport chains. It contains nothing that adjusts the price of a building contract.
Whether a builder can recover higher freight and delivery costs from a client depends on the terms of that building contract and its pricing clauses, not on this order. That gap is sharpest for builders on fixed price contracts signed before diesel began climbing again in July.
The benchmark also stays put. The increased cost of fuel is still measured against what fuel cost on or before 6 March 2026, and rate adjustments made before the order first commenced can count towards compliance.
Contravening a term of a road transport contractual chain order is a civil remedy provision under section 536NP of the Fair Work Act.
What happens next?
Submissions on the draft closed at 4pm AEST on Friday 23 October. The panel also asked the Road Transport Advisory Group, and its Owner Drivers Subcommittee, for views by the same deadline.
Under the draft, the variation takes effect on the day it is made, with the restart date written into the order. Reviews would continue every three months, and any interested party can apply to vary or revoke the order at any time.
Diesel at $2.60 a litre is no longer a sudden spike. It is a cost the industry is carrying month after month, and the Commission’s position is that it should move up the chain to the businesses that commission transport. For a lot of building businesses, that is closer to home than it looks.
The Good Builder Take
This order is built to push fuel costs up the chain until they reach the businesses that buy transport. In residential construction, builders are often near the top of that chain, or one step below it. The compliance question of whether a builder is a primary party matters, but the commercial question matters more: which suppliers and subcontractors are about to move to a monthly fuel levy, and what the building contracts already signed allow in return. Monthly adjustment is gentler than the fortnightly cycle that applied earlier this year. It is also more predictable, and predictable costs are easier to price into the next job.
Frequently asked questions
It is a time sensitive road transport contractual chain order made by an Expert Panel of the Fair Work Commission on 20 April 2026, which took effect on 21 April 2026. It requires parties in road transport contractual chains to adjust rates so the people performing transport work recover increases in fuel costs since 6 March 2026.
The order remains in operation, but its rate adjustment obligations stopped applying after the national average wholesale diesel price fell below $2.00 a litre in the week ending 5 June 2026. On 16 October 2026 the Commission proposed a variation to restart those obligations from a date to be set in its final determination.
It can. The order covers primary parties at the top of road transport contractual chains, and the Fair Work Ombudsman lists construction companies among the examples of businesses the obligations apply to. Whether a particular builder is covered depends on whether its contracts form part of a road transport contractual chain.
Under the draft variation, the obligations would cease only after the weekly national average terminal gate price for diesel, as reported by the Australian Institute of Petroleum, sits below $2.00 a litre for four consecutive weeks. The current order switches them off after a single week below that level.
Under the draft variation, yes, if the levy is agreed between the parties, adjusted at least each calendar month, the party paying it has taken reasonable steps to ensure it covers the increased cost of fuel, and the party incurring the fuel cost has been given a copy of the order.
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Last updated 27 October 2026. Diesel prices as reported by the Australian Institute of Petroleum for the week ending 18 October 2026.
General Information Only. This article provides general information about a regulatory process and is current at the date of publication. It is not legal, financial or professional advice and should not be relied on as such. Whether the fuel cost recovery order applies to a particular business depends on its own contracts and circumstances. Readers should seek independent professional advice before acting on any information in this article.
Author: TGB Editorial
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