Recent Fair Work reforms are introducing new obligations across road transport contractual chains, creating broader compliance considerations for businesses engaging freight and logistics services.
While new Fair Work Fuel Cost Recovery Order is directed at road transport contractual chains, many businesses may be impacted without realising it, particularly where they:
- engage freight or logistics providers;
- receive delivered goods;
- subcontract transport services;
- operate within broader supply chain; or
- influence pricing and delivery arrangements.
What is the New Fair Work Fuel Cost Recovery Order?
The Order was introduced under recent Fair Work legislative reforms relating to road transport contractual chains.
It aims to ensure that increased fuel costs are not absorbed solely by transport operators at the bottom of a supply chain. Instead, fuel cost increases may need to be passed through contractual chains via pricing adjustments or other recovery mechanisms.
Importantly, the Order is not limited to direct transport businesses alone. Depending on how
arrangements are structured, obligations may extend across multiple parties within a supply chain.
Why Businesses Should Review Supply Chain and Transport Arrangements
This Order represents a significant shift in how responsibility may be allocated across supply chains. Historically, fuel price increases were often managed through fixed-rate commercial arrangements. The Order now introduces expectations around ongoing review and adjustment of rates where fuel costs increase.
For businesses, this may raise considerations around:
- Existing transport and logistics arrangements.
- Procurement and supplier relationships.
- Contract structures and pricing models.
- Supply chain oversight.
Could Your Business Sit Within a Contractual Chain?
The Order may potentially impact:
- Manufacturers.
- Retailers.
- Agribusinesses.
- Construction businesses.
- Logistics providers.
- Transport operators.
- Businesses engaging contractors or subcontractors within a transport chain.
Understanding Primary and Secondary Party Obligations
One of the more significant aspects of the Order is the introduction of obligations for both “primary” and “secondary” parties within a contractual chain.
A primary party is generally a business at the top of the chain procuring or arranging the transport service. This may include manufacturers, suppliers, retailers or other businesses engaging transport arrangements as part of their operations.
Secondary parties are generally businesses or operators further down the chain involved in arranging, subcontracting or carrying out the transport work.
Obligations under the Order may extend across the chain, not just to the party physically performing the transport work. This means businesses that do not consider themselves part of the transport industry may still need to assess whether they sit within a contractual chain and what obligations may apply to them.
Understanding whether your business may be considered a primary or secondary party will be an important part of reviewing risk, contractual arrangements and compliance obligations moving forward.
What Should Businesses Be Reviewing?
Businesses should consider whether they:
- Rely on freight or logistics services
- Have fixed-price transport arrangements
- Subcontract delivery or cartage work
- Have visibility over supply chain arrangements
- May influence pricing within a contractual chain.
How ProcessWorx Can Support You
If you’re unsure whether these developments affect your business or want to proactively review your pay structures and employment contracts, our team can help. Contact us on (08) 9316 9896 or get in touch.
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