Although Australia is a long way from the Middle East, the reverberations of the ongoing conflict are being felt down under. Australia’s response to pending fuel shortages is evolving and, in recent days, suggestions have ranged from encouraging businesses to offer more flexible work-from-home options through to considering whether increased ethanol levels in fuel might help offset supply shortfalls. While it remains possible that the conflict will be resolved before rationing measures are needed, prudent businesses are already thinking about how a fuel crisis could affect them.

Businesses dependent on ready access to fuel, with low profitability margins to absorb increased prices, will be most directly impacted. However, there will also be a cascading impact on other, less directly fuel-dependent businesses, as freight, transport and production-related cost increases and decreased availability of inputs flow through the supply chain.

Immediate issues arising for Australian businesses and their directors as a result of the pending crisis include:

1. Erosion of profit margins and potential impact on solvency due to unanticipated and significant increases in the price of fuel, transport and logistics.
2. Uncertainty about whether work-from-home mandates will be adopted for non-essential workers to reduce demand on fuel supplies, and the legal implications of directing employees to work from home and, later, to return to the office.
3. Whether changes to employee rosters and travel arrangements will be required where fuel availability or cost impacts on drive-in, drive-out (DIDO) and fly-in, fly-out (FIFO) operations.
4. The work health and safety and employment law considerations associated with changing roster arrangements, standing down employees and restructuring working arrangements more broadly.
5. Whether continued operations are feasible. In particular, farming, mining and transport operations may need to consider whether to proceed with planned activities, shift to care and maintenance, or explore renegotiation of contractual obligations.

Financial Distress

Directors concerned about the financial impact of rising fuel costs and/or supply chain uncertainty on the cash flow position of their business need to understand and consider what operational or financial restructuring options are available. It is important to keep in mind that such options may be available even if the director suspects that the company may be, or is, insolvent. This is because the statutory ‘safe harbour’ regime under the Corporations Act 2001 (Cth) can support genuine restructuring attempts while providing protection for directors who might otherwise face personal liability for insolvent trading.

Contractual Disputes

The supply chain disruptions caused by fuel shortages and uncertainty will inevitably give rise to an increase in contractual disputes. Businesses will face questions about whether contractual obligations have been met and may seek to recover costs arising from disrupted stock availability, restricted access to critical inputs (such as fertiliser supply for farmers) and transport and logistics delays. If your business is exposed to counterparty risk because suppliers or contractors are likely to be impacted by fuel shortages or supply chain disruptions, now is the time to review your contractual position, including any price escalation, termination for convenience or force majeure clauses, and to consider whether the doctrine of frustration may be relevant.

Employment and Safety Issues

The fuel crisis raises a number of employment and safety issues for employers. When making changes to working arrangements to manage the crisis, whether by directing employees to work from home, altering rosters or standing down employees, employers must ensure that they are complying with work health and safety legislation, the Fair Work Act 2009 (Cth) (Fair Work Act), applicable modern awards and enterprise agreements, and individual employment contracts. Set out below is a summary of the key issues that employers should be considering.

Work From Home Mandates

While the Federal Government has not issued a formal work-from-home mandate, Energy Minister Chris Bowen has described working from home as a ‘sensible’ measure during the fuel crisis, and the International Energy Agency has recommended that workers stay home where possible to reduce oil demand from road transport. Several countries, including the Philippines, Vietnam and Thailand, have already implemented mandatory work-from-home arrangements for public servants. The Federal Government has indicated that it favours a flexible approach, with Industry Minister Tim Ayres stating that working from home is a ‘viable option for many’ and that employees and employers can decide where it is appropriate.

An employer’s ability to direct employees to work from a particular location will depend on the terms of the relevant employment contract, any applicable modern award or enterprise agreement, and the National Employment Standards. Employees who have completed at least 12 months of continuous service already have a right to request flexible working arrangements under section 65 of the Fair Work Act, and employers may only refuse such requests on reasonable business grounds. Employers should anticipate an increase in flexible work requests from employees seeking to reduce their commuting costs during the crisis.

Employers who direct or permit employees to work from home must also be mindful of their duties under work health and safety legislation. The Work Health and Safety Act 2020 (WA) (WHS Act) (and equivalent legislation in each State) requires a person conducting a business or undertaking (PCBU) to ensure, so far as is reasonably practicable, the health and safety of its workers. This duty extends to home-based work and includes obligations to identify and manage risks associated with the home work environment, including ergonomic risks, psychological health risks and the adequacy of the employee’s home workspace. Employers should ensure that appropriate policies, risk assessments and support mechanisms are in place before transitioning employees to remote work.

Roster Changes

Employers in industries that rely on DIDO or FIFO arrangements, such as mining, oil and gas, and remote construction, may need to adjust rosters in response to fuel shortages or increased fuel costs. Any changes to rosters must be made in compliance with applicable awards, enterprise agreements and employment contracts. Many enterprise agreements contain specific consultation obligations that require employers to consult with affected employees and their representatives before implementing changes to regular rosters or ordinary hours of work. Under the Fair Work Act, a term is implied into every modern award and enterprise agreement requiring employers to consult employees about such changes, and failure to comply with these obligations may expose employers to disputes before the Fair Work Commission.

From a safety perspective, changes to roster arrangements, particularly extensions to swing lengths, increases in driving distances or reductions in rest periods, must be carefully assessed against remote work and fatigue management obligations. Employers must ensure that any revised roster arrangements do not give rise to unacceptable fatigue-related risks for workers. This is particularly critical for DIDO operations where employees may be required to drive longer distances if flight availability is reduced due to fuel shortages affecting aviation.

Stand Downs

If the fuel crisis reaches a point where businesses cannot usefully employ their workforces, for example, because fuel-dependent operations must cease or because supply chain disruptions prevent productive work, employers may consider exercising stand down rights under section 524 of the Fair Work Act. An employer may stand down an employee without pay during a period in which the employee cannot usefully be employed because of a stoppage of work for any cause for which the employer cannot reasonably be held responsible.

The right to stand down is not unfettered. There must be no useful work the employees can be deployed into and the stoppage of work must be one for which the employer cannot reasonably be held responsible, and the employee must genuinely be unable to be usefully employed.

Employers should also check whether applicable enterprise agreements contain stand down provisions, which may modify or supplement the statutory entitlement. It is also critical to note that a stand down does not terminate the employment relationship, and employees retain their entitlements to accrued leave and other benefits during the stand down period.

Given the complexity and potential for dispute, employers should seek legal advice before implementing any stand down.

Contract Chain Orders

On 23 March 2026, the Federal Government announced proposed amendments to the Fair Work Act to support Australia’s trucking industry. The amendments, if passed, will allow truck drivers and road transport businesses to make emergency applications for contract chain orders to address the spike in fuel prices caused by the conflict in the Middle East.

Under the existing provisions of the Fair Work Act, the Fair Work Commission can require transport clients (including retailers, mining companies and manufacturers) to offer fair contract terms to ensure that truck drivers and transport operators are paid enough to cover the cost of fuel. The announced amendments will remove the current six-month minimum waiting period for contract chain orders, enabling the Fair Work Commission to act more quickly in response to the crisis.

Employers who engage road transport contractors, or who are part of supply chains that rely on road transport, should be aware of these changes. They may be subject to urgent contract chain orders, requiring adjustments to contractual terms and pricing to reflect increased fuel costs. More broadly, the amendments signal the Government’s willingness to intervene in contractual arrangements where the fuel crisis is causing unfairness in supply chains, and further legislative measures cannot be ruled out if the crisis deepens.

A Final Note

The fuel crisis is a rapidly evolving situation and the legal and regulatory landscape is likely to shift as the Federal Government responds to developments in the Middle East. Businesses should be proactively reviewing their contractual arrangements, employment obligations and operational plans now in preparation. Early legal advice can help identify risks, preserve rights and ensure that any changes to working arrangements are implemented lawfully.

This article was written by Melissa Ferreira, Partner, and Danielle Flint, Partner.

Danielle Flint is a partner in our Workplace Relations and Safety team with expertise in complex employment matters. Melissa Ferreira is a Commercial Litigation partner with expertise in complex restructuring, enforcement and commercial litigation matters.