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...

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