Fair Work (Road Transport Industry Termination Code) Instrument 2024

Regulated road transport contractor - defined in the Fair Work Act, but the instrument cross-references that definition. Such a contractor performs work in the road transport industry under a services contract with a road transport business. To be protected from unfair termination, the contractor must have performed work for the business under one or more services contracts for at least six months (section 6 note).

Road transport business - the hirer that enters into a services contract with a regulated road transport contractor. The business bears all the procedural obligations under the Code.

Services contract - the arrangement under which work is performed. The instrument does not require a particular form; it can be written, oral, or implied. The Code applies to proposed terminations of such contracts.

Code process - the procedural sequence set out in Part 2: warning (or exception), show cause, decision, and notification. Defined in section 5.

Warning - a formal communication under section 7 that must give the contractor sufficient information to understand the reason, the risk of termination, and a reasonable period to respond. The warning is a prerequisite unless the exception under section 8 applies.

Serious misconduct - not defined in this instrument; section 6(2) notes that it has the meaning prescribed by the regulations under the Fair Work Act (see section 12 of the Act). Serious misconduct removes the termination from the scope of the Code entirely and also means the termination is not unfair per se (subsection 536LM(2) of the Act). This is a critical distinction: if a business can substantiate serious misconduct, it may bypass the entire Code process and face no unfair termination liability on that ground.

Valid reason - a concept imported from the unfair termination provisions. Section 14 lists matters that may constitute a valid reason, but subsection (9) clarifies that the list does not limit what can be a valid reason. This is intentionally open-ended, giving the Fair Work Commission latitude to assess the merits of each case, but also creating uncertainty for businesses as to whether a particular reason will be accepted.

Show cause - the process under section 9. It applies either when the warning exception is used or after a warning has been given and the business considers termination is justified. The business must provide information about the proposed termination, the reason, the opportunity to respond, and what steps the business intends to take next. The contractor may request a meeting with a business representative who has knowledge of the reason.

Mandatory considerations - the factors listed in section 10(1) that the business must have regard to before deciding to terminate. They include the contractor’s response, control over circumstances, financial investment, performance history, length of service, and any other relevant matters. These factors are not a checklist to be mechanically ticked; they require genuine evaluation.

Unfair termination - the ultimate legal consequence if the Code is not followed. The Fair Work Act, not this instrument, provides the remedies. The Code is the standard against which consistency is measured.

The Code directly imposes obligations on road transport businesses - the entities that hire regulated road transport contractors to perform work in the road transport industry. This includes transport companies, logistics firms, courier businesses, and any other enterprise that enters into services contracts with owner-drivers or other independent contractors in the road transport sector. For such businesses, the Code adds a procedural burden that did not previously exist for the termination of independent contractor arrangements. The business must allocate time and resources to manage the warning, show cause, and decision process, including making a representative available for meetings. The business also bears the risk that a failure to follow the Code will result in a finding of unfair termination, with potential reinstatement or compensation orders.

Regulated road transport contractors are the primary beneficiaries of the Code’s protections. These are individuals (often owner-drivers) who perform work under services contracts. They gain procedural rights - to receive a warning, to respond, to request a meeting, to have a support person present, and to have their financial investment and performance history considered before termination. The Code does not guarantee that they cannot be terminated, but it requires the business to follow a fair process. Contractors who have been engaged for fewer than six months are not protected and the Code does not apply to them (see section 6 note). The Code also indirectly affects contractors’ representatives, including unions and other organisations, which may be appointed to support or represent contractors during the process (section 12).

The Fair Work Commission is affected as the tribunal that will adjudicate unfair termination claims based on consistency with this Code. The Commission will need to interpret the Code’s provisions, assess whether a business had reasonable grounds for its actions, and weigh the mandatory considerations. This will generate case law that shapes the practical meaning of the Code.

State and territory regulators may be indirectly affected where the Code references compliance with licensing, accreditation, or road safety laws. A termination based on non-compliance with those laws is listed as a potential valid reason, but the business must still follow the Code process unless the non-compliance amounts to serious misconduct. This creates an interface between federal workplace law and state road transport regulation.

Suppliers of vehicles and equipment to contractors may have a tangential interest: the Code requires the business to consider the contractor’s financial investment in vehicles and other equipment necessary to perform work under the contract. A termination that ignores a substantial investment may be more vulnerable to challenge, which could affect financing arrangements.

Duties on road transport businesses

• Follow the code process before terminating for conduct or capacity reasons, unless the reason is serious misconduct (section 6).
• Give a warning in accordance with section 7 before termination, unless the exception in section 8 applies. The warning must enable the contractor to understand the reason, the risk of termination, and that they may provide a response within a reasonable period.
• If the warning exception is used, or after a warning when termination is still considered justified, give the contractor an opportunity to show cause (section 9(2)). Provide sufficient information for the contractor to understand the proposed termination, the reason, the opportunity to respond, and the next steps (section 9(3)).
• If the contractor requests a meeting, make a representative available within a reasonable time and ensure the representative has knowledge of the reason for the proposed termination (section 9(5)).
• Before deciding to terminate, have regard to the mandatory considerations in section 10(1): the contractor’s show cause response, whether the circumstances were within the contractor’s control or resulted from complying with heavy vehicle or road laws, the contractor’s financial investment in vehicles and equipment, the contractor’s performance history, the length of time the contractor has worked for the business, and any other relevant matters.
• Decide to terminate only if there is a valid reason and the business considers on reasonable grounds that the reason has been established (section 10(3)).
• Notify the contractor of the decision. If not terminated, notify as soon as reasonably practicable (section 10(4)). If terminated, notify of the decision, reason, termination date, and final payment arrangements (section 10(5)).
• Use best endeavours to conduct the process within a reasonable time frame and give the contractor a reasonable time to show cause (section 11).
• Ensure all communications relating to termination are conveyed clearly (section 15(1)).
• Use best endeavours to make a written record of any oral communication about termination as soon as practicable, and provide written confirmation if requested by the contractor (section 15(2)).
• Not contravene privacy obligations under the Privacy Act 1988 when carrying out the code process (section 13).

Rights of regulated road transport contractors

• Receive a warning before termination (unless exception applies) with enough information to understand the reason, the risk of termination, and the opportunity to respond (section 7(2)).
• Provide a response to the warning within a specified reasonable period (section 7(2)(c)).
• If the warning exception is used or after warning, receive an opportunity to show cause why the contract should not be terminated (section 9(2)).
• Request a meeting with a business representative to discuss the proposed termination, and have that meeting within a reasonable time with a representative who knows the reason (section 9(4)-(5)).
• Appoint a person for support or representation during the code process, including a delegate or employee of an organisation (section 12).
• Have the business consider the contractor’s financial investment in vehicles and equipment, performance history, length of service, and other relevant matters before termination (section 10(1)).
• Be notified of the decision, and if terminated, receive details of the reason, date, and final payments (section 10(5)).
• Request written confirmation of any oral communications about termination (section 15(2)(b)).
• If the business fails to comply with the Code, the contractor may pursue an unfair termination claim under the Fair Work Act, seeking reinstatement or compensation.

This instrument does not itself create civil penalties or infringement notices. Enforcement occurs indirectly through the unfair termination provisions in Part 3-4A of the Fair Work Act. If a regulated road transport contractor who is protected from unfair termination applies to the Fair Work Commission, and the Commission finds that the termination was harsh, unjust, or unreasonable, it may grant a remedy. One of the criteria for determining whether a termination is unfair is whether it is consistent with the Road Transport Industry Termination Code (paragraph 536LK(d)). A termination that fails to follow the Code is likely to be found unfair unless other factors outweigh the procedural failure.

The Fair Work Commission can order reinstatement of the services contract, or if reinstatement is not appropriate, compensation of up to six months’ remuneration (or such higher amount as prescribed). The Commission may also make other orders it considers appropriate. There is no mechanism for the Commission to impose fines on a road transport business for breaching the Code itself; the remedy is tied to the unfair termination finding.

A business that does not comply with the Code runs the risk of adverse costs in a Commission proceeding if it unreasonably failed to participate in a conference or comply with directions. Additionally, a finding of unfair termination may have reputational consequences and may affect the business’s ability to attract and retain contractors.

The Code does not provide for any enforcement by the Fair Work Ombudsman directly. However, if a contractor is also an employee (which is a separate question under the Fair Work Act), the general protections and unfair dismissal provisions might apply instead. The Code’s scope is limited to regulated road transport contractors who are not employees.

For serious misconduct, the Code process does not apply and the termination is not unfair per se (section 6(2), subsection 536LM(2) of the Act). However, if a business incorrectly characterises conduct as serious misconduct to bypass the Code, and the Commission later finds it was not serious misconduct, the termination will be assessed against the Code. That can lead to reinstatement or compensation.

The instrument also creates no criminal offences. Its force is entirely procedural and remedial.

The Fair Work Act 2009 is the parent Act. The Code is made under section 536LN and operates within Chapter 3A, which covers minimum standards for regulated workers, including road transport contractors. The unfair termination provisions in Part 3-4A of the Act incorporate the Code as a benchmark. The definition of “serious misconduct” is prescribed by regulations under the Act, not by this instrument (section 6(2) note). The Code also uses the Act’s definitions for “regulated road transport contractor”, “road transport business”, “road transport industry”, “services contract”, and “terminated”.

The Heavy Vehicle National Law (Schedule to the Heavy Vehicle National Law Act 2012 (Qld)) is referenced in two ways. Section 10(1)(b)(ii) requires the business to consider whether the circumstances that led to the show cause process resulted from the contractor complying with that Law. Section 14(4)(b) lists a failure or refusal to comply with the Heavy Vehicle National Law as a potential valid reason for termination (as a safety breach). This creates a tension: a contractor who complies with heavy vehicle laws (such as fatigue management or mass limits) may cause a delay or refusal that the business dislikes, but the Code requires the business to consider that compliance as a factor against termination. The business cannot terminate for the contractor’s lawful compliance with safety laws.

Work health and safety laws are also referenced in section 14(4)(a) as potential valid reasons for safety breaches. The Code does not override WHS obligations; a business may need to remove a contractor who poses a serious safety risk immediately, and the warning exception in section 8(a) is designed to accommodate that. However, the business must still give a show cause opportunity promptly if it uses that exception.

State and territory road laws are referenced similarly: compliance with them is a factor in the decision (section 10(1)(b)(ii)), and non-compliance may be a valid reason (section 14(4)(c)).

The Privacy Act 1988 is explicitly preserved by section 13. Nothing in Part 2 requires a business to contravene its obligations to protect personal information. This means that when providing information to a contractor as part of the warning or show cause, the business must not disclose third-party personal information that it is not authorised to share. This could limit how much detail the business can give about complaints from customers or other contractors. A business will need to balance procedural fairness with privacy compliance.

The Code does not override contractual termination rights. Section 14(8) provides that a matter for which the services contract allows termination for breach may constitute a valid reason. However, the business must still follow the Code process unless the breach amounts to serious misconduct. The Code adds a procedural layer on top of contractual rights.

The instrument does not affect general protections under the Fair Work Act (adverse action) or competition/consumer law. Contractors may still bring claims under those laws independently.

This instrument is new. It was made by the Minister for Employment and Workplace Relations on 3 December 2024 and registered on the Federal Register of Legislation. It commences on the later of the day after registration and 25 February 2025. The commencement table shows that paragraph (b) of the commencement condition (25 February 2025) applies, so the Code comes into effect on 25 February 2025.

No amendments have been made to the instrument since its making. There is no publicly available material indicating any proposed amendments. As a legislative instrument, it may be amended by the Minister by further legislative instrument. The Fair Work Act provides the power to make, vary, or revoke a Road Transport Industry Termination Code. Any future amendment would need to be published and would take effect as specified.

Given the instrument’s recent making, it has not been the subject of any review or sunsetting process. Legislative instruments made under the Fair Work Act are subject to disallowance by either House of Parliament within 15 sitting days of tabling, but that period has likely passed given the instrument was made in December 2024 and this deep dive is being written later.

The instrument does not repeal or replace any previous code. It is the first code of its kind for the road transport industry under the Fair Work Act’s Chapter 3A framework, which was inserted by the Fair Work Legislation Amendment (Closing Loopholes) Act 2023. The Code fills a gap left by the Act, which provided for unfair termination protection but required a code to be made to define procedural fairness.

Because the Code commences on 25 February 2025, there is no litigation history involving its interpretation or application as of the date of this writing. No unfair termination applications have been decided under the Code. No Federal Court or High Court decisions have addressed the Code’s validity or meaning.

However, once the Code becomes operative, it is expected to be litigated in the Fair Work Commission as contractors challenge terminations. Key areas of dispute will likely include: what constitutes “reasonable grounds” for the warning exception under section 8, whether the business gave sufficient information to enable a reasonable person to understand the reason, whether the show cause opportunity was genuine, whether the mandatory considerations were properly taken into account, and whether the reason was a valid reason as per section 14.

The Commission may look to case law on procedural fairness in unfair dismissal for employees as a guide, but the Code has its own specific language. The note in section 6(2) about serious misconduct having the meaning prescribed by regulations will be important. If the regulations are broad, more terminations will fall outside the Code. If narrow, the Code will apply more often.

Litigation may also arise over the interaction with state laws - for example, whether a contractor’s compliance with a state road law that harms the business’s operational needs must still be treated as a factor against termination under section 10(1)(b)(ii). The phrase “resulted from the contractor meeting its obligations” may be interpreted broadly or narrowly.

Further, the non-exhaustive list of valid reasons in section 14 may be tested. Businesses may argue that a reason not listed is still valid, while contractors may argue that only reasons analogous to those listed should qualify. The Commission will have discretion.

At this stage, there is no case law. Practitioners should monitor Commission decisions in the first year of operation.

Serious misconduct definition is not in this instrument. The Code does not apply if the termination is for serious misconduct (section 6(2)). But serious misconduct is defined by regulations under the Fair Work Act, not by this Code. A business that assumes a particular conduct is serious misconduct may be wrong. If the Commission finds it was not serious misconduct, the Code should have been followed, and the termination may be unfair. Businesses should err on the side of following the Code even when they think the conduct is serious, unless they are certain the regulatory definition is met.

Warning exception does not eliminate show cause. Even if a business has reasonable grounds to skip the warning under section 8, it must still give the contractor a show cause opportunity under section 9(2). The show cause must be before termination, not after. A business that immediately terminates after using the warning exception without a show cause process will have breached the Code.

Reasonable time frames are not specified. The Code requires warnings and show cause periods to be “reasonable” and the business to use best endeavours to keep the process within a reasonable time frame (sections 7(2)(c), 11). There are no minimum or maximum days. This creates uncertainty. A business that rushes the process may be found to have denied procedural fairness. A business that drags it out may also be criticised. The Commission will assess reasonableness based on the circumstances.

The mandatory considerations can be a trap. Section 10(1) lists six factors the business must have regard to. It is not enough to have them in mind; the business should document that it considered each factor. A contractor’s financial investment in vehicles and equipment is particularly open-ended. A contractor who has a $300,000 truck may argue that termination without compensation for that investment is unfair, even if the reason for termination is valid. The Code does not preclude termination, but the factor must be weighed.

Privacy constraints may limit information disclosure. Section 13 says nothing in Part 2 requires a business to contravene privacy obligations. If a contractor wants to see the evidence against them (e.g., a customer complaint), the business may argue it cannot share that due to privacy. The Commission may need to balance this. A business that hides behind privacy to deny a fair show cause may still be found in breach of the Code.

Contractual termination rights are not automatically a valid reason. Section 14(8) says a matter for which the contract allows termination for breach may constitute a valid reason. It does not say it does constitute a valid reason. The business still needs the termination to be for a valid reason in the substantive sense. A technical breach that causes no harm may not be a valid reason, even if the contract says it can be terminated.

The Code does not apply to terminations for operational reasons. The Code only applies where the reason relates to the contractor’s conduct or capacity (section 6(1)(b)). If a business terminates because it no longer needs the contractor’s services (e.g., loss of a major client), the Code process does not apply. However, the contractor may still argue the real reason was conduct or capacity, so businesses need to be careful about characterising the reason.

Communication records are mandatory. Section 15 requires the business to use best endeavours to make a written record of any oral communication about termination and provide written confirmation if requested. Failure to keep records may make it difficult for the business to prove it complied with the Code.

Compliance requires a systematic procedural approach. The following steps should be tailored to each case, but the Code’s structure is clear.

Step 1: Determine if the Code applies. Check whether the contractor is a regulated road transport contractor and has performed work for the business under one or more services contracts for at least six months. If not, the Code does not apply. Also check whether the proposed termination is for a reason related to the contractor’s conduct or capacity. If the reason is purely operational or economic, the Code does not require the warning/show cause process (though other laws may apply). If the reason is serious misconduct as defined by the Fair Work Regulations, the Code does not apply at all; the business should still document the serious misconduct thoroughly because the contractor may challenge that characterisation later.

Step 2: If the Code applies, give a warning (or determine that the warning exception applies). The warning must be in a form that enables a reasonable person to understand: the specific reason (conduct or capacity), that the contract is at risk, and a reasonable period to respond. The period should be specified in the warning. If the business believes immediate termination is warranted (e.g., safety breach) or that it is not reasonable to let the contractor continue, it must have reasonable grounds for that belief. Document those grounds. In either case, proceed to show cause.

Step 3: Provide a show cause opportunity. Whether after a warning or using the exception, the business must give the contractor a notice that states: the business proposes to terminate, the reason, that the contractor has a specified period to show cause why termination should not occur, and what steps the business intends to take next. The period must be reasonable. Ensure the contractor understands that they can request a meeting with a representative of the business who knows the reason. If the contractor requests a meeting, schedule it promptly.

Step 4: Consider the show cause response. If the contractor provides a response, evaluate it. If they request a meeting, attend it. During the meeting, the contractor may bring a support person (section 12). Listen to the contractor’s arguments.

Step 5: Make the termination decision. Before deciding, the business must have regard to all mandatory considerations in section 10(1) that are applicable. Document each factor and how it was weighed. The contractor’s financial investment in vehicles and equipment is a particularly important factor - obtain information from the contractor if not already known. Also consider the contractor’s performance history and length of service. If the contractor shows that the circumstances leading to the show cause resulted from complying with heavy vehicle or road laws, give that significant weight. The business may only terminate if there is a valid reason and it has reasonable grounds to believe that reason has been established. The valid reason can be one of the examples in section 14 or another reason. Document the valid reason.

Step 6: Notify the contractor of the decision. If the decision is not to terminate, notify as soon as reasonably practicable. If the decision is to terminate, notify as soon as reasonably practicable of: the decision, the reason, the termination date, and when and how final payments will be made (section 10(5)). It is prudent to provide this in writing.

Step 7: Keep records. Ensure all communications about the termination are clear. Make written records of any oral communications as soon as practicable. If the contractor requests written confirmation of an oral communication, provide it.

Step 8: Respect privacy. Do not disclose personal information of third parties in the warning or show cause documents unless authorised. If limited by privacy, still provide as much information as possible to give the contractor a fair opportunity to respond.

Step 9: Ensure reasonable time frames. Use best endeavours to keep the entire process from warning to decision within a reasonable overall period, and give the contractor a reasonable time to show cause. There is no fixed timeline; assess based on the complexity of the issue and the contractor’s circumstances.

Document every step contemporaneously. If a termination is later challenged in the Fair Work Commission, the documentation will be critical evidence that the Code was followed. A template letter for warnings, show cause notices, and decision letters should be developed and tailored for each case. Legal advice should be sought where the facts are complex or where the business is uncertain whether the reason falls within the Code.