BHP (ASX:BHP) Group has revealed that the Albanese Government’s Fair Work Legislation Amendment (Closing Loopholes) Bill could have a greater financial impact than its initial estimate of A$1.3 billion per annum.
The bill aims to ensure equal pay and conditions for labour hire workers and those directly employed.
The Australian Government dismissed BHP's estimates in the preamble to the bill.
“At the department’s request, BHP provided further information with respect to this modelling, on a confidential basis. The department has considered this information and does not consider that it aligns with the scope and anticipated application of this proposal,” said the explanatory memorandum attached to the bill.
BHP contended that the ambiguous language in paragraph 558 of the memorandum could inadvertently include service providers like Thiess and Downer, in addition to labour hire firms.
The company noted that these kinds of service providers were not factored into its initial A$1.3 billion estimate. Given BHP's reliance on companies such as Thiess to operate mines like Mt Arthur Coal in New South Wales, the actual financial impact could exceed their initial projections.
BHP Minerals Australia president Geraldine Slattery expressed deep concern, stating “We remain deeply concerned that this bill will create further uncertainty and complexity for no gain in productivity, reduce the ability of Australian industry to successfully compete in the global arena and ultimately increase costs for businesses and consumers at a time of already high inflation.”
Exposed to changes
The company is highly exposed to the proposed changes as about 4,500 of its Australian production and maintenance workers are employed by its wholly-owned Operations Services division.
This division was criticised as an in-house labour hire firm.
The Fair Work Commission may order higher payments for workers employed by related bodies corporate, as clarified by paragraph 582 of the memorandum, thereby affecting Operations Services.
“This would capture circumstances where a company is established to employ employees and provide them to a related body corporate host business under a labour hire arrangement where there is a covered employment instrument applying to the regulated host,” said the explanatory memorandum.
Unions have accused BHP of undercutting traditional workplace agreements through Operations Services, claiming it offers lower salaries for the same work.
BHP counters by stating Operations Services has enhanced safety, productivity and workforce diversity. The company supports the bill for low-paid and vulnerable workers but opposes its application in the well-paid mining sector.
BHP continues to face challenges in formalising workplace agreements for Operations Services, especially after the Fair Work Commission quashed previous agreements for failing the "better off overall test".
The company's recent attempts to secure new deals have met with mixed success, adding another layer of uncertainty to its future operational costs.