Eight road transport supply chains face sham contracting investigations

Eight road transport supply chains are under investigation over suspected sham contracting, Western Australian Labor Senator Glenn Sterle told trucking operators at the National Road Transport Association’s annual NatRoad Connect 26 conference on the Gold Coast.

Speaking in the opening-day keynote, the former owner-driver said the Fair Work Ombudsman had received 45 referrals from external stakeholders alleging sham contracting in road transport. The regulator had 52 road-transport cases on hand, including suspected sham contracting.

• The FWO has written to 106 road transport duty holders, setting out what it expects them to do to check their supply chains for sham contracting.
• That compares with 99 duty holders contacted after an Oct. 8 roundtable at NSW Parliament House, chaired by Sterle. Operators, unions and government agencies met to discuss enforcement and hear from businesses competing with operators accused of dodging employment costs.
• Sterle reported 14 compliance notices involving worker misclassification and more than $94,000 recovered for 17 workers.
• Across all industries, the FWO had 91 sham misclassification cases on hand.
• In an October update, the FWO said 25 of 39 infringement notices over unlawful independent-contractor job ads related to road transport businesses.

What does the crackdown change for carriers, shippers and forwarders?

The immediate commercial effect lands on carriers. Operators that pay proper wages and carry the cost of running trucks will keep losing ground if rivals can sidestep employment obligations, Sterle warned. For shippers and forwarders comparing roadfreight tenders, a noncompliant supplier can undercut a compliant carrier without carrying the same employment burden.

The FWO’s 106 duty-holder letters extend that scrutiny across supply chains rather than limiting it to drivers. They ask duty holders to check whether arrangements involving contractors remain genuine businesses rather than disguises for employment.

Sterle said genuine owner-drivers running their own businesses under an ABN have a legitimate place in trucking. His target was the driver who arrives with a lunchbox, climbs into someone else’s truck worth more than $250,000 and performs the work under an ABN.

Sterle called sham contracting the industry’s greatest curse and said it would remain in the shadows unless confronted head on. His warning was blunt: “This is a pox that drives good operators to the wall. This is a poison that steals food from the hardworking men and women in the trucking industry who are doing the right thing.”

Productivity and fuel-efficiency gains will count for little, he said, if sham contracting remains unchecked.

How are regulators finding hidden contracting?

About a year earlier, Sterle raised the hidden-contracting problem with the Australian Taxation Office alongside NatRoad CEO Warren Clark and Queensland Trucking Association CEO Gary Mahon. He said securing government recognition took sustained pressure and challenged regulators’ reliance on tip-offs to uncover conduct deliberately kept out of sight.

In March, the ATO and FWO announced a joint push against sham contracting in sectors including road freight. The tax office was matching contractor payment reports against tax returns, ABN records, superannuation data and payroll records to identify suspicious arrangements.

The ATO received more than 800 tip-offs relating to road freight in 2024–25, and nearly one quarter concerned suspected sham contracting. It also reported a rise in road freight businesses failing to report payments to contractors, adding a compliance issue around payment records.

Fair Work, the ATO, immigration officials and the Shadow Economy Taskforce are now involved in the enforcement effort, Sterle told delegates.

Can operators change the freight policy trajectory?

Sterle pointed to the new heavy vehicle subcommittee he chairs under the Freight Industry Reference Panel. Industry representatives, including Clark and Mahon, have a direct role in advising on the national freight strategy. The group has met twice and identified fuel security as an issue it wants the strategy to address.

He described winning politicians’ attention as the hardest part of his advocacy and said trucking’s voice in Canberra was becoming louder each year. His complaint was that engagement too often meant politicians putting on a high-vis vest and taking a photo in a cabover or a 9-Oh, rather than listening to operators.

Sterle urged operators to keep reporting what they see through industry associations so regulators can act on ground-level evidence. His final appeal was direct: “I just have to say to the good operators, we need your voice,” he said. “We need you to continue through your associations. Keep highlighting this.”

He expects NatRoad, himself and four other industry leaders to build traction, arguing that if the industry does not act, no one else will. The next test for roadfreight policy is whether operator evidence reaches the national freight strategy and accelerates sham-contracting enforcement, or whether compliant carriers keep absorbing the cost gap.