Rising Fuel Costs: Protecting Your Workforce and Profits
- Nijo Antony
- Apr 6
- 5 min read
Updated: Apr 21
Rising fuel costs are putting pressure on businesses across Australia, particularly those in transport, trades, agriculture, construction, delivery, field services and regional operations.
The Federal Government is currently managing the issue under the National Fuel Security Plan, and as at 1 April 2026 Australia is operating at Level 2 - Keep Australia Moving. In simple terms, fuel is still available, but there are supply pressures and disruptions across the system.
For many businesses, this creates two separate issues.
The first is the employment side - what you can and cannot do with staff if fuel shortages or rising costs start affecting normal operations.
The second is the commercial side - how to protect profit margins when fuel costs are materially higher than they were only weeks ago.
Both matter. There is no point keeping work flowing if every job is now being done at a reduced margin because the increased fuel cost has not been properly priced into your business.
What employers need to know
From an employment law perspective, businesses need to be careful before assuming they can stand employees down without pay.
Under the Fair Work Act, a stand down without pay is only available in limited circumstances. Broadly, this requires there to be a stoppage of work, the employee must not be able to be usefully employed, and the cause must be something the employer cannot reasonably be held responsible for. Fair Work also makes it clear that employers generally cannot rely on stand down provisions simply because business conditions have worsened or operating costs have increased.
That distinction is important.
At the moment, where fuel is still available but is more expensive or harder to access, this will usually be seen as a commercial difficulty rather than a lawful basis for an unpaid stand down. In other words, the fact that fuel is costing more or creating logistical headaches does not automatically mean staff can be sent home without pay.
If a business gets this wrong, it can lead to underpayment claims, disputes and possible penalties.
What employers should do now
For most businesses, the better approach right now is to manage the issue practically rather than jump straight to formal workforce action.
That may include reviewing delivery runs, consolidating trips, reducing unnecessary travel, adjusting rosters, reallocating duties, prioritising higher-value jobs, delaying lower-priority work, and using remote work where appropriate. It is also worth reviewing leave arrangements, staffing flexibility and whether certain operational changes can be agreed with employees without creating compliance issues.
The key point is that a slowdown in profitability and a genuine stoppage of work are not the same thing. Employers need to keep that distinction front of mind.
What business owners need to do now
For many business owners, the bigger issue is actually pricing.
If your business relies on diesel for machinery, deliveries, transport, service calls, farm operations or travelling to jobs, then this is not a cost you should simply absorb and hope settles down. It needs to be reviewed properly.
The ACCC’s 2 April 2026 Weekly Fuel Price Monitoring Report noted that average terminal gate prices for diesel increased by 146.9 cents per litre, or around 91%, from 20 February to the end of March 2026. Across the 5 largest cities, retail diesel prices increased by 145.8 cents per litre, or around 83%, over the same period.
That is a significant increase in a very short period of time. For businesses with heavy fuel usage, that can erode margin quickly if prices and quoting have not been reviewed.
Work out the impact on your business
A practical starting point is to calculate the additional fuel cost your business is now carrying.
Example:
If diesel has increased by $1.20 per litre, and your business uses 2,000 litres per month, that is an extra: 2,000 litres x $1.20 = $2,400 per month
If your business completes 80 jobs per month, that additional cost works out to: $2,400 / 80 jobs = $30 per job
That means, before even considering any other cost increases, you may already need to recover around $30 extra per job just to maintain the same margin position.
That is why business owners should not guess. The numbers need to be worked through properly.
Fuel surcharge or price increase?
There are generally two ways to deal with this.
A fuel surcharge may suit businesses where travel or transport is a clearly identifiable part of the service. This can work well for delivery businesses, freight operators, mobile trades, service technicians and businesses servicing regional or remote areas.
A general price increase or broader margin review may be the better option where fuel is only one of several rising costs, or where a separate surcharge may complicate quoting and invoicing.
Neither approach is automatically right or wrong. The better option depends on how your business operates, how jobs are priced, and how easy it is to explain the increase to customers.
The main thing is that the response should be based on actual cost recovery, not instinct.
A simple way to calculate the increase required
A useful formula is: Required price increase % = Extra monthly fuel cost / Current monthly sales x 100
Example, if your additional fuel cost is $2,400 per month and your monthly sales are $40,000, then: $2,400 / $40,000 x 100 = 6%
That means you would need roughly a 6% increase across your pricing just to recover that added fuel cost.
If your monthly sales are $80,000, the same fuel increase would still require about a 3% increase.
This is why every business owner needs to run their own numbers. The answer will be different depending on fuel usage, turnover, job volume and existing margins.
Practical questions business owners should be asking
Now is the time to step back and review a few key questions:
Are we still recovering our actual travel and fuel costs?
Which jobs or clients are becoming less profitable at current prices?
Do our quote templates and charge-out rates need updating?
Should regional or longer-distance work be priced differently?
Is a fuel surcharge appropriate, or is it better to increase overall pricing?
Have margins been reviewed recently, or are we still charging based on old assumptions?
This is especially important for businesses doing fixed-price quotes, servicing large geographic areas, or working on already tight margins.
There is no benefit in staying busy if each job is quietly wearing away profitability.
Our practical takeaway
For employers, the message is straightforward: do not assume rising fuel costs give you the legal right to stand staff down without pay. The rules around stand downs are much narrower than that.
For business owners, the message is just as important: do not absorb major fuel increases without reviewing your pricing and margins. Whether that means introducing a fuel surcharge, revising your quote rates, increasing your prices or reviewing client-by-client profitability, the numbers need to be worked through properly.
In the current market, protecting cash flow and margin is just as important as keeping work moving.
Need help reviewing your pricing or business position?
If your business is being affected by rising fuel costs, now is a good time to review your pricing, quote margins, recovery rates and overall profitability. A relatively small pricing adjustment made early can make a meaningful difference over the course of a year.
If you would like help working through the numbers or reviewing whether a fuel surcharge, margin increase or broader repricing strategy makes sense for your business, we are here to help.
Nijo Antony
Director
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