BHP warns of $1.3bn annual cost from labour law changes

Employment law changes proposed under the federal government’s Same Job, Same Pay initiative would cost BHP’s Australian operations as much as $1.3 billion per year, the company has revealed.

BHP’s submission in response to the Same Job, Same Pay (SJSP) consultation paper released by the federal government in April said blanket application of the proposed laws in their current form would cost its Australian operations up to $1.3 billion – the equivalent of 5000 full time employees.

“In order to address a cost impact of this magnitude, we will clearly need to review its implications for our Australian operations and the workforce that supports it,” the company said in its submission.

The proposed legislation would require labour hire workers to receive the same pay conditions as employees directly engaged by a business. The Fair Work Act currently allows businesses to engage temporary and permanent staff conducting the same work on different terms and conditions.

“Evidence recently accepted by several Senate inquiries has shown that some employers use these arrangements to deliberately undercut bargained pay and conditions to avoid bargaining for an enterprise agreement,” the SJSP consultation paper said.

But BHP said the proposed changes strayed from the government’s initial objective of protecting workers from exploitative labour policies.

“BHP supports targeted policies designed to protect vulnerable labour hire workers from exploitation,” the company’s response said.

“However, the proposed SJSP policy strays far beyond this objective and, as a result, threatens serious damage to every level of the Australian economy.”

The company said the policy in its proposed form would create unsustainable cost pressures.

“Australia already has some of the highest labour costs of any major mining nation, and within Australia, mining workers are among the nation’s highest paid, with average wages around $148,000 a year compared to $96,800 across all industries,” it said.

“SJSP will add to inflationary pressures by ratchetting up wages without any link to productivity and it will introduce economic uncertainty by interfering in the competitive labour market.”

It urged the federal government to take the policy back to its original stated objectives, which it said were to address “insecure work caused by casualisation and the practices of cowboy labour hire operators”.

The response to the SJSP was foreshadowed by earlier commentary from BHP Minerals Australia president Geraldine Slattery at an east coast conference in March. The Australian Resources and Energy Employer Association echoed similar concerns around the SJSP when the discussion paper was released last month.

The miner's response was disputed by the Mining and Energy Union, which said BHP had resorted to an "unfounded fear campaign" in response to the proposed legislation and accused it exploiting its workforce. 

"BHP is right to fear that Same Job Same Pay will lift their wages bill, because they have been exploiting labour hire mineworkers for years," union president Tony Maher said. 

"Along with other big mining companies, they have exploited weak laws allowing them to avoid paying wages and conditions achieved through genuine enterprise bargaining. Same Job Same pay laws will close this loophole."

The discussion paper invited stakeholders to further inform and design the implementation of SJSP as a legislative measure. The government said it intended to introduce SJSP laws in the second half of 2023.

BHP is Western Australia’s third-largest employer, according to Business News Data and Insights, with a workforce of more than 14,000.