Fair Work Commission’s ruling against BHP leaves national resources industry in a state of confusion

Business groups have roundly criticised a Fair Work Commission ruling in favour of unions against BHP, as mining and energy companies scramble to figure out what the landmark decision means for them.

BHP is on the hook for an extra $66 million in wage rises per year to more than 2,000 workers at three of its Queensland coal mines following a ruling by the nation’s workplace umpire on Monday.

Unions leveraged the Albanese Government’s ‘same job, same pay’ legislation to secure a victory in the Fair Work Commission that the Australian Council of Trade Unions boasted would have “flow-on effect throughout the mining industry”.

BHP had hoped the carve-outs in the legislation for specialised contractors to be exempt from FWC orders would hold up.

Minerals Council of Australia chief executive Tania Constable said the group was “deeply concerned” by the “incredibly disappointing” precedent set by the national workplace umpire.

“This is an incredibly disappointing decision that will directly threaten thousands of specialised contractors who play a vital role in mining operations across the country,” Ms Constable said.

“Unlike labour hire, these businesses exist to provide a specialised service, not just workers, and should never have been covered by these laws.

“The Commission’s ruling confirms what the MCA has long argued; that the government’s legislation goes well beyond its original promise to target only the ‘limited circumstances’ where ‘labour hire’ is used to deliberately undercut wages.”

Numerous industry sources, speaking on the condition of anonymity, are divided over what the ruling could mean for their business.

Some believe it will drastically change the mining services contractor model that has served the Australian mining industry well for decades, while others believe it’s specific to the unique nature of BHP’s coal mines it runs in partnership with Mitsubishi.

This BHP-Mitsubishi joint venture essentially contracts operational work out to subsidiaries controlled by BHP.

“In contrast to traditional contracting, the (Fair Work Commission) found there was little difference in the ‘substance’ of the BHP operational service arrangements and those involving labour hire firms WorkPac and Chandler MacLeod,” Australian Resources and Energy Employer Association chief executive Steve Knott said.

Queensland Resources Council chief executive Janette Hewson said the FWC’s decision sets “a concerning precedent” and “puts thousands of jobs at risk”.

“QRC supports the national resources agenda that calls on the Federal Government to review the legislation in order to protect jobs and maintain operators’ viability,” she said.

“Coupled with the state government’s decision to maintain the world’s highest coal royalty tax rates, this decision is a further blow to the competitiveness of Queensland resources sector.”