The Road Transport Industry Termination Code is Out: How can you protect against an unfair termination claim by a contractor in the Road Transport Industry?

We have previously written about a number of big changes to the road transport industry that commenced last year (which you can read here). One of those changes was the introduction of unfair termination claims through the Fair Work Commission, with claims available to eligible road transport contractors from 26 February 2025.

Now that the unfair termination jurisdiction for road transport contractors is up and running (although there have not yet been any published decisions), let’s have a look at the Fair Work Commission’s published Road Transport Industry Termination Code. This document outlines the processes that will be considered by the Commission when assessing whether the termination of a road transport contractor will be deemed as unfair.

The Commission will also consider whether there was a valid reason for the termination, whether the worker lacked capacity to do the job, whether they have not met your required standards of misconduct, or whether there have been safety breaches. In terms of the process to be followed? That’s where the Code comes in.

So, what process does this Code require?

1. Warnings

Before terminating a services contract, you will generally need to give a warning that provides enough information for a reasonable person in a contractor’s shoes to understand:

• the reason they are being given the warning, whether it is their conduct or capacity; and
• that there is a risk their contract will be terminated if they do not remedy the matters within a reasonable time, or if another similar issue arises.

Warnings will generally also need to give the contractor a right to respond. However, they will not be required if the contractor’s conduct or capacity requires immediate steps to terminate the contract, or if it is not reasonable to expect the business to allow the contractor to continue to perform work.

2. Show cause

Contractors will generally need to be given an opportunity to show cause why their contract should not be terminated before a final decision is made. The business will need to provide enough information to the contractor to understand that termination is on the cards, the reason(s) why, but that the contractor has the opportunity to provide reasons why the contract should not be terminated. Any show cause process should also explain the steps the business intends to take next (subject to the response from the contractor).

If requested by the contractor, the business will also need to make a representative available to meet with the contractor to discuss the proposed termination. The contractor should be afforded the right to have a support person or representative at that meeting, who may also participate in the discussions. If requested, the business must provide confirmation of the meeting in writing.

3. mandatory considerations before deciding on termination

Once the show cause process is complete, the Code outlines a number of requirements that the business must consider before reaching a decision on termination of the contract. These include the contractor’s response in the show cause process, whether the issues were beyond the contractor’s control or were required to comply with relevant heavy vehicle laws, the contractor’s financial investment in vehicles and other equipment, and their history and length of performance.

4. Communications requirements

After considering the required matters, the Code outlines requirements for communicating with the contractor, in each case requiring that any communication be as soon as reasonably practicable and states the reason for the decision and timing of its implementation. The Code also requires road transport businesses to be clear in all communication, to use their best endeavours to keep written records of any oral communication.

Exceptions for serious misconduct

It is worth noting that you are not required to follow the Code when terminating a contract for serious misconduct. You will be in a better position if you have made it clear to contractors the kinds of things that constitute serious misconduct.

As a starting point, serious misconduct is defined in the Fair Work Regulations as including theft, fraud, assault, sexual harassment, intoxication at work, and conduct that creates safety breaches.