On 5 December 2024, the Minister for Employment and Workplace Relations introduced the Fair Work (Road Transport Industry Termination Code) Instrument 2024 (Cth). These changes mark a significant shift in how contractor relationships are regulated and terminated in the road transport sector.
What is Regulated Road Transport Contractor (‘RRTC’)?
According to the Fair Work Commission (‘FWC’), an RRTC is a contractor who:
- works in the road transport industry
- is a party to a services contract as an individual or:
- a director (or family member of a director) of a body corporate that is a party to a services contract
- a trustee of a trust in which one trustee is a party (in that capacity) to a services contract
- a partner in a partnership in which one partner is a party (in that capacity) to a services contract
- performs all or most of the work under the services contract
- doesn’t perform work under the services contract as an employee
- isn’t an employee-like worker.
What’s Changed?
Previously, RRTC’s particularly those operating through incorporated structures, had little to no statutory protection against unfair termination. Their rights were limited to the terms of their contracts and general legal principles like misrepresentation or unconscionable conduct.
Under the Termination Code, a RRTC now has the right to challenge terminations through the FWC if:
- the procedural requirements of the Code are not followed; or
- if the termination lacks a valid reason.
As part of the Closing Loopholes package, this reform aims to ensure accountability, procedural fairness, and greater clarity in the termination process.
Who Does the Termination Code Apply To?
The Code applies to the road transport businesses who terminate the services of RRTCs. This extends to individuals, directors, trustees or partners who personally perform most of the contracted work. The code applies regardless of the contractor’s business structure.
It captures a wide range of services across the transport industry, including:
- Freight and distribution
- Long-distance operations
- Waste management
- Cash in transit
- Passenger vehicle transport
Importantly, for the Termination Code process to apply, the contractor must have performed work under a services contract (or series of contracts) for at least 6 months after 26 August 2024.
What Does the Termination Code Require?
Before a business can lawfully terminate a regulated contractor, it must follow a mandatory three-stage process:
- Warning
The contractor must be given a warning that clearly communicates the risk of termination, except in certain urgent or serious cases.
- Show Cause
The contractor must be given an opportunity to respond and show why their contract should not be terminated.
- Decision-Making
When deciding to terminate, the business must consider:
- The contractor’s response
- Whether the circumstances were within the contractor’s control
- If obligations under transport laws (e.g. fatigue management under HVNL) contributed to the issue
- The contractor’s financial investment, performance history, and length of service
Post-Termination Requirements
If termination proceeds, the notice must include:
- The reason for termination
- The termination date
- How and when final payments will be made
Exceptions to the Code Process
The Code allows businesses to bypass parts of the process in specific circumstances:
- If there is a reasonable belief that conduct justifies immediate termination, the warning step may be skipped; or
- If there is serious misconduct (e.g. fraud or conduct creating health and safety risks), the Code process does not apply at all.
Valid Termination
Valid reasons for termination include:
- Breaches of safety obligations (e.g. under HVNL or WHS laws)
- Fraudulent or dishonest conduct
- Failure to maintain required licences or accreditations
- Contractually agreed termination triggers
Disputes and Unfair Termination Claims
Contractors earning less than $175,000 per year can lodge a claim with the FWC within 21 days of termination.
A termination will be considered unfair if:
- It lacked a valid reason; or
- The Termination Code was not properly followed.
The FWC may grant remedies including re-engagement, lost pay restoration, or compensation.
What This Means for Businesses
For businesses that engage regulated road transport contractors, the Termination Code now serves as a compliance playbook. Terminations will only be lawful if they meet the Code’s procedural and substantive requirements. To minimise legal exposure, businesses should:
- Review and update service contracts to clearly define valid termination grounds
- Implement internal procedures to follow the Code
- Train decision-makers in the new process
Need assistance navigating these changes?
Contact Daniel (daniel@morganenglish.com.au) and the Workplace + Conduct team at M+E for tailored advice and support.
