Downstream labour liability

Food and beverage businesses face increasing scrutiny across their workforce and supply chain arrangements. Recent developments in labour hire regulation, road transport contractual chain orders and wage compliance reinforce the need for businesses to proactively manage employment and contractor-related risks.

Key takeaways

Labour hire regulation
- The regulation of labour hire licensing remains fragmented in Australia.
- Recent case law confirms that Same Job, Same Pay regulated labour hire arrangement orders (RLHA orders) must be confined to the specific roles actually supplied to the host employer.
Road transport contractual chain orders (RTCCO)
- The Transport Workers' Union (TWU) has applied for an RTCCO covering various parts of the road transport industry including meat and milk and cream transport.
- The key substantive provisions of the RTCCO – Fuel Cost Recovery 2026 issued in April 2026 (Fuel Cost Recovery RTCCO) have ceased to operate. However, the RTCCO itself has not yet been revoked by the Fair Work Commission (FWC). The FWC directed interested parties to lodge submissions and evidentiary material on whether the Fuel Cost Recovery RTCCO should be re-enlivened or revoked, and submissions were heard on 9 October 2026. The FWC reserved its decision..
Wage underpayments
- Food and beverage businesses continue to attract regulatory attention as workplace and superannuation laws evolve and as exposure to civil and criminal liability for underpayments increases, including under wage theft laws.
- Wage compliance issues commonly relate to long-service leave entitlements, the interpretation and application of enterprise agreements, superannuation guarantee obligations, annual leave loading and employee classification under modern awards.

Update on labour hire regulation

Labour hire licensing

The regulation of labour hire licensing varies by jurisdiction in Australia.

Some jurisdictions, including Queensland, Victoria, South Australia and the Australian Capital Territory, impose licensing requirements on labour hire providers, with potentially substantial penalties for non-compliance. While these jurisdictions adopt a similar regulatory approach in that they require in-scope labour hire providers to be licensed in order to operate, they each impose varying obligations, including in relation to license durations and reporting requirements.

Other Australian jurisdictions have no labour hire licensing scheme at all.

There has been persistent advocacy in favour of a national labour hire scheme in recent years, following the 2019 Report of the Migrant Workers' Taskforce which recommended national regulation. State governments, including the NSW Government (here and here), and key stakeholders such as the Australian Anti-Slavery Commissioner (here and here) have recently supported a national scheme. The Australian Government published a consultation paper on national labour hire regulation in 2023 which proposed parameters for a national scheme that would replace state and territory labour hire licensing regimes, but there is currently no plan for harmonisation.

Same Job, Same Pay

Under the Same Job, Same Pay laws introduced in late 2023, the FWC may make RLHA orders where labour hire workers are supplied to a host employer whose direct workforce is covered by an enterprise agreement. The RLHA orders may require the labour hire provider to pay those employees at least the rate they would receive if directly employed by the host under the enterprise agreement.

Recent cases have clarified how the Same Job, Same Pay regime applies. For example, one case confirmed that RLHA orders must be confined to the class of labour hire employees identified as being supplied, or to be supplied, to the host employer (ie, the employees actually performing work, or who will be performing work, for the host employer, as identified by the evidence).¹ In that case, the Full Court of the Federal Court of Australia set aside an RLHA order on this basis, finding that the evidence before the FWC established that specific production workers were being supplied to the host employer, whereas the RLHA order granted by the FWC extended beyond that class of workers by reference to the broader coverage of the host's enterprise agreement. The Full Court held that drafting the RLHA order in this way exceeded the FWC's powers, suggesting that an order that is defined broadly by reference to the coverage of the host employer's enterprise agreement, rather than the labour hire roles actually supplied, is likely to be set aside.

Road transport contractual chain orders

Background

The FWC can, by application or its own initiative, make RTCCOs regulating individuals and businesses in road transport contractual chains. RTCCOs contain rules about pay and other conditions. They are legally binding, and non-compliance can attract penalties.

A road transport contractual chain is a chain or series of contracts or arrangements under which work is performed for a party to the first contract or arrangement in the chain or series by a regulated road transport contractor or a road transport employee-like worker under a services contract, or an employee (where at least one party to the first contract or arrangement is a constitutional corporation). For an overview of a typical road transport contractual chain, see our Insight here.

Fuel Cost Recovery RTCCO

On 20 April, the FWC issued the Fuel Cost Recovery RTCCO. It aims to ensure parties at the top of a road transport contractual chain bear any increased fuel cost arising out of the ongoing conflict in the Middle East, and the regulated road transport contractors or employee-like workers at the bottom of the chain are wholly compensated for that increased cost.

The substantive obligations in the Fuel Cost Recovery RTCCO (contained in clause 4) have ceased to operate because the national weekly average terminal gate price for diesel for the week ending 7 June 2026 fell below $2 per litre. However, the Fuel Cost Recovery RTCCO itself remains in operation even though its key substantive obligations in clause 4 have ceased to apply, as it has not been formally revoked by the FWC. The FWC directed interested parties to lodge submissions and evidentiary material on whether the Fuel Cost Recovery RTCCO should be re-enlivened or revoked, and submissions were heard on 9 October 2026. The FWC reserved its decision.

Other relevant RTCCOs

While the Fuel Cost Recovery RTCCO has been a recent focal point for businesses in the food and beverage sector, the FWC may make other relevant RTCCOs. For example, on 26 September 2024, the Transport Workers' Union (TWU) applied for an RTCCO covering various parts of the road transport industry, including meat transport and milk and cream transport (MS2024/4). The TWU's draft RTCCO, which is still under FWC consideration, includes terms about payment timeframes and periodic rate reviews (amongst other things).

Wage underpayments

The Fair Work Ombudsman (FWO) continues to prioritise employment law compliance by large corporations and employers in the fast food, restaurant, café and agricultural sectors.

Here are some common wage compliance issues:

Employers failing to provide employees with their long service leave entitlements, often due to the complexity of state-based legislative frameworks.
Employers misinterpreting or misapplying enterprise agreements, which may arise from poorly drafted or onerous clauses that are difficult for HR and payroll teams to apply.
Employers failing to meet their superannuation guarantee obligations, especially for independent contractors who are deemed 'employees' under superannuation legislation.
Employers miscalculating annual leave loading under modern awards or enterprise agreements.
Employers applying the incorrect modern award or classification level within the applicable award.

Businesses should continue monitoring these issues, particularly given the significant civil penalties for contraventions, including 'serious contraventions' under the Fair Work Act 2009 (Cth), and the risk of criminal liability under wage theft laws.