Understanding the Fuel Cost Recovery Order

26/06/26 5 min read

The Fair Work Commission has introduced a temporary rule called the Fuel Cost Recovery Order for the road transport industry. It came into effect on 21 April 2026 and is designed to ensure that sudden increases in fuel costs are shared fairly across the road transport supply chain rather than falling entirely on smaller operators, such as owner-drivers, who are least able to absorb them.

The order can apply to many different businesses involved in road transport, including:

manufacturers and suppliers
small fleet operators
owner-drivers
transport businesses
construction companies
businesses that hire transport services
other parties involved in the transport supply chain

This does not include ordinary passengers being transported in a car, bus, coach, limousine or hire car.

Why was it introduced?

Fuel prices increased sharply due to global supply disruptions and international conflict affecting fuel markets. Without this order, smaller operators would likely bear the full weight of those cost increases with limited ability to recover them through their existing contracts.

The order is intended to reduce that risk.

How does it work?

Road transport typically involves a chain of parties. A large retailer, for example, may contract a logistics company, which in turn engages an owner-driver to carry out the actual deliveries.

When fuel costs rise, the order requires all parties in that chain to ensure their pricing arrangements reflect those increases. In practice, this means:

Transport rates must be reviewed and updated regularly in line with current fuel prices.
Adjustments can be made through fuel levies, rate increases, direct payments, or existing contract clauses that account for price movements.
Existing contractual mechanisms may already satisfy the requirements — but they should be reviewed to confirm this.

The relevant reference point is the fuel price on or before 6 March 2026. The order is concerned with any increase above that level.

Common misunderstandings

This only affects transport companies
The order can apply across the whole transport supply chain. This means it may also affect manufacturers, retailers, construction companies and other businesses that use road transport services.

Existing contracts override the order
Existing fixed-price arrangements may not be sufficient. The order can require adjustments even where contracts do not currently provide for them.

It’s optional or guidance only
The order is legally enforceable. Businesses that do not follow it may face penalties.
It’s permanent
The order is a temporary measure, linked to fuel price thresholds, and is subject to ongoing review.

Example case

A supermarket contracts a logistics company to deliver goods, and that logistics company engages an owner-driver.

If fuel prices rise, the owner-driver’s operating costs increase.

Under the order, the logistics company must adjust rates paid to the driver.

The supermarket (as a “primary party”) may need to increase what it pays the logistics company to ensure those costs can flow through or otherwise take reasonable steps to ensure the logistics company adjusts the rates it pays to owner-drivers.

This demonstrates how the order ensures fuel cost increases are passed up the chain, rather than absorbed at the bottom.

What the extended fuel relief means for operators

Between 1 April and 30 June 2026, the government reduced fuel costs by halving fuel excise and setting the heavy vehicle Road User Charge at zero. This relief has now been extended until 2 August 2026, but it will begin to taper from 1 July.

From 1 July to 2 August 2026, the fuel excise discount will reduce from 32 cents per litre to 16 cents per litre. The heavy vehicle Road User Charge, which has been set at zero since April, will also increase to 16 cents per litre during this period. While operators will still receive some relief compared with standard settings, fuel costs may rise from 1 July. If relief ends after 2 August, operators will need to keep a close eye on fuel costs and pricing arrangements.

What transport operators can do now

Review contracts for fuel adjustment clauses.
Check fuel levy and rise-and-fall mechanisms to confirm they are up to date and being applied consistently.
Establish a regular review process. Under the order, rate adjustments may be required as frequently as twice per calendar month.
Maintain clear records of fuel costs, rate changes, and any communications with customers regarding adjustments.
Speak with customers or parties in the chain early, especially where existing contracts are fixed or unclear.

Disputes may be referred to the Fair Work Commission.

Considerations for brokers

This order may be a useful point of discussion with transport clients and customers who rely on road transport services:

The order can apply across the contractual chain, not only to direct transport providers.
Customers may see transport costs change as fuel cost increases are passed through contracts.
Existing contracts may need to be reviewed, especially where pricing is fixed or fuel adjustments are not clearly documented.
Operators may need support understanding how fuel cost volatility can affect cash flow, contract discussions and risk management.

Where to find more information

For more information, refer to the Fair Work Ombudsman’s fuel cost recovery guidance and the Fair Work Commission’s road transport contractual chain order materials.

Fair Work Ombudsman: Fuel cost recovery: Road transport order issued

Fair Work Commission: TWU & ARTIO fuel cost major case

Australian Government: Fuel excise halved for three months

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