The Commission says "preferred and predominant" has teeth - but not the way the union argued
Can an employer hire contractors when its enterprise deal says permanent staff come first? The Fair Work Commission just said yes, with limits.
In a decision dated May 26, 2026, the Fair Work Commission handed Sydney Trains a qualified win in a fight over contractors - and gave HR and industrial relations leaders a useful read on what a "permanent employment preferred" clause actually demands.
The case turned on a single line. Sydney Trains wanted to bring in external contractors, temporarily, to fill shifts for Signal Electricians - the licensed electricians who maintain the signalling systems that keep trains moving safely. They take years to train, and Sydney Trains says it doesn't have enough of them. The union objected. The enterprise agreement, it said, requires that the employer "will use direct permanent employment as the preferred and predominant employment option within the organisation."
So what does that clause force an employer to do?
The union read it strictly: exhaust every reasonable internal option - overtime, transfers, faster apprentice intakes, recruiting electricians from interstate or overseas - before reaching for a contractor. Sydney Trains read it as a genuine preference and a policy commitment, not a gate it had to clear every time.
Commissioner Matheson came down closer to the employer. The words "The Employer will" create an obligation, the decision found, not just an aspiration. But that obligation splits in two. Permanent staff must stay the "predominant" option - the most common type of employment across the organisation - and the "preferred" one. On predominance, the Commission noted that permanent employees make up the overwhelming majority of Sydney Trains' workforce, and a small contractor group wouldn't change that.
On preference, the Commission accepted that Sydney Trains had tried internally first. According to the decision, it advertised shifts through an internal register reachable by QR code, emailed staff and managers before each roster period about overtime, coordinated weekly to match volunteers to open shifts, and had local leaders reach across depots for cover. It also added two permanent trainers and set regular apprentice intakes.
The risk wasn't theoretical. Dale Curran, an Associate Director of Maintenance Operations who gave evidence for Sydney Trains, said missed signal maintenance can force assets to be "taken out of service," bringing speed restrictions, delays and, at worst, a halt to services on affected lines. Between February and August 2025, the decision records, 50 shifts at one satellite depot went uncovered. Lucas Dobosz, a Team Leader Signals who gave evidence for the union, argued the gaps could be closed internally.
The line HR leaders should mark: the Commission said Sydney Trains does not have to "exhaust every possible alternative avenue" before using contractors to fill immediate and near-term gaps. Genuine effort and a real preference, the decision suggests - not an obstacle course.
The green light came with strings. The Commission's finding rests on commitments Sydney Trains made through Curran: that contractors would be strictly time-limited, phased out as internal capacity is rebuilt, and that permanent roles would go to permanent staff as they became available. Wary of contractors filling permanent roles for years - Sydney Trains estimated a six-year window in which it might need to backfill 22 to 30 positions - the Commissioner also recommended capping any single contractor engagement in a core Signal Electrician role at two years.
For HR and IR teams, the takeaways are practical. A clause calling permanent employment "preferred and predominant" can bite - the Commission treated "will use" as an obligation, not an aspiration. To lean on it, paper the file: the overtime calls, the transfer attempts, the training and recruitment steps. And mind the clock. Temporary has to mean temporary. An open-ended contractor sitting in a permanent role is exactly where these clauses turn against an employer.
The Commission found the proposal was not contrary to the agreement and said the dispute should be considered resolved on that basis.
