Traffic Control Subcontracts: The Clauses That Matter

The traffic control subcontract clauses that matter most are scope, rates and minimums, standby and cancellation, payment terms and set-off, indemnities and insurance, WHS responsibilities, and termination. Read those first, because they decide who pays when a job runs long, a TGS changes, a vehicle hits your signs or the client disputes an invoice. Get legal advice before relying on any of them.

A typical traffic control company signs dozens of subcontracts, purchase order terms and supplier agreements a year, usually under time pressure and often without reading past the rates. Most of the time nothing goes wrong. When something does, the clause you skipped decides the outcome. This guide is a practical reading list for operators, written from the operations side.

Know what you are actually signing

Before reading individual clauses, work out what kind of document it is and which terms win if they conflict.

• The principal's subcontract. Usually a standard form written for all trades and "back-to-back" with the head contract. Many clauses will not fit traffic control at all.
• Purchase order terms. The small print on the back of a PO can override what you thought you agreed by email.
• A master services agreement. Sets terms for ongoing call-off work, with each booking a separate order.
• Your own terms of trade. Useful for smaller clients, but large principals rarely accept them.

Look for the order of precedence clause. If it says the principal's general conditions override your quote, your carefully worded exclusions may disappear.

If you are a small business and the contract is offered on a take-it-or-leave-it basis, the national unfair contract terms laws may apply. Since 9 November 2023, unfair terms in standard form contracts with a small business, generally one with fewer than 100 employees or under $10 million turnover, are prohibited and penalties can apply. That is a reason to raise a clause, not a guarantee it is unenforceable.

Scope and responsibilities

Vague scope is the root of most disputes. A traffic control scope should say clearly:

• Who prepares the TGS and TMP, who pays for revisions and who is responsible if the design does not suit the site. A TGS must be prepared by a suitably qualified person.
• Who obtains approvals: road occupancy licences, council permits and police or transport authority notifications, and who pays the fees.
• Who supplies what: controllers, vehicles, signs, barriers, TMAs, VMS boards, lighting, pedestrian devices.
• Who inspects and maintains the site outside working hours, including after-care and overnight sign checks.
• Who directs your crew. Your supervisor should direct your workers; the principal's foreman should direct the work. Mixed lines of authority create safety problems.
• What happens when the TGS needs to change. Who can approve a change on site, and who pays for redesign and extra devices.

If the contract just says "provide traffic management as required", ask for a schedule that defines it.

Rates, minimums, standby and cancellations

These clauses decide whether a job makes money.

• Rates by time band: weekday day, night, Saturday, Sunday and public holiday rates, and the times each starts.
• Minimum charges: commonly 4 hours per controller and often 6 to 8 hours for vehicles and operators. If the subcontract is silent, the principal may argue they only pay actual hours. Our guide to minimum shift charges explains why they exist.
• Standby: a crew waiting because the client is not ready is still paid by you. The contract should say standby is chargeable.
• Cancellation: notice periods, and what is payable for cancellations inside them, including wet weather calls.
• Extensions and overtime: how time beyond the booking is charged and who on site can approve it.
• Rate review: award rates change through the Fair Work Commission's annual review. A fixed rate for a multi-year contract without a review mechanism is a slow loss.

Payment, set-off and security

Payment terms and claim dates

Note the claim date, the information each claim needs, the payment period and where invoices are lodged. Missing a monthly claim cut-off can cost a month of cash. Building a consistent evidence pack helps; see our guide to progress claim evidence.

Security of payment

Every state has construction security of payment legislation. Where it applies, it gives a statutory process to claim progress payments and have disputes decided by an adjudicator, and it limits how long payment can be delayed. In NSW, "pay when paid" provisions generally have no effect, and the Act is on the NSW legislation website. Whether your traffic control work is covered depends on the work and contract, and deadlines are strict, so get advice early.

Set-off and backcharges

Set-off clauses let the principal deduct amounts it says you owe: damage, delay costs, rectification or fines. Check what can be deducted, whether written notice is required and whether you can dispute it before money is withheld.

Retention and security

Some subcontracts ask for cash retention or a bank guarantee. For a labour-heavy service paid shift by shift, that can be hard to justify and painful to fund. Ask for it to be removed, capped or released promptly.

Time bars

Many contracts say a claim for a variation or extra cost is lost unless notified in writing within a set number of days. Crews and supervisors need to know these deadlines, or valid claims die in a site diary.

Indemnities, liability and insurance

Indemnities

An indemnity is a promise to cover another party's losses. A broad clause might require you to indemnify the principal for any loss "arising out of or in connection with" your work, even where the principal or a third party caused it. Common negotiated positions are to limit your indemnity to losses caused by your negligence or breach, and to reduce it to the extent the principal contributed.

Limitation of liability and consequential loss

Look for a cap on your total liability and an exclusion of consequential loss such as the principal's delay costs and lost profits. Without them, a single late start on a major project could expose you to costs far beyond the contract value.

Insurance

Contracts usually specify public liability cover, often naming the principal as an interested party, plus workers compensation, motor vehicle and sometimes professional indemnity if you design TGSs. The critical question is whether your policies actually respond to the liabilities the contract creates. Insurers commonly exclude liability you accept under a contract that you would not otherwise have. Send the risk clauses to your broker before signing. Our guide to traffic control insurance covers the main policies.

Damage to your equipment

Signs, boards and TMAs get hit by the public and sometimes by the principal's plant. Make sure the contract does not make you bear the loss when someone else causes it.

WHS and site control clauses

You cannot contract out of WHS duties. Where more than one business has duties for the same work, each must consult, cooperate and coordinate with the others. Safe Work Australia explains this shared-duty principle. Good subcontract clauses support it rather than shifting everything onto you.

Check for:

• Site rules and inductions you must follow, and who provides them.
• SWMS requirements. Work on or next to a road used by traffic is high-risk construction work, so a SWMS is needed before work starts; see our guide to traffic control SWMS.
• A right to stop work when traffic arrangements are unsafe or no longer match the TGS, without being in breach or losing payment for standby.
• Fatigue. Clauses requiring you to supply crews "as directed" for unlimited hours conflict with your fatigue management duties. Your fatigue limits should be respected in the contract.
• Incident notification timeframes and who notifies the regulator for notifiable incidents.
• Records: what you must provide, and the principal's right to audit them.

People, subcontracting and termination

• Qualifications and substitution: the contract may require named personnel or specific cards. Make sure you can substitute equally qualified workers.
• Subcontracting: many contracts require written consent before you send another company's crew. Our partner network is built for TC companies sharing work, but the contract with your client still decides whether you can.
• Non-solicitation: a clause stopping the principal from hiring your trained controllers directly may be worth asking for.
• Workers' status: if you engage individuals as contractors, the arrangement must be genuine. The Fair Work Ombudsman explains sham contracting risks.
• Termination for convenience: check notice periods and what you are paid for committed costs and demobilisation.
• Disputes: look for a practical escalation path before formal proceedings.

Traffic control subcontract clause checklist

Next steps

Use the checklist on your next subcontract and mark every clause that is missing or one-sided, then raise them before signing, not after the first dispute. Keep your rates, minimums and dockets aligned with what the contract says, and get legal advice on the clauses that carry real risk. TrafWise keeps signed dockets, approvals and shift records together, which is the evidence you will need if any of these clauses is ever tested.