The Full Federal Court has dismissed BHP Coal’s challenge to landmark Regulated Labour Hire Arrangement Orders (RLHAOs), delivering the clearest judicial guidance to date on how service arrangements will be treated under the so-called “same job same pay” (SJSP) laws.
In its ruling of 19 December 2025, the Court upheld the Fair Work Commission’s (FWC) July 2025 decision that labour hire-style orders could be made in respect of BHP Operations Services (OS) employees at three Queensland coal mines, dismissing the employer’s arguments the arrangements were for services rather than labour supply.
Importantly, the Court confirmed that the service contractor exemption in section 306E(1A) of the Fair Work Act – negotiated into the laws by AREEA at the time crossbench senators were preparing to pass the Closing Loopholes amendments – will turn on fact-specific assessments of how contracting arrangements operate in practice, not merely how they are described contractually.
AREEA has previously provided members with detailed commentary following the July 2025 decision to assist with risk assessment and planning.
This latest judgment confirms that earlier guidance, while underscoring the need for careful attention to contracting structures in integrated operating environments.
Background
The case arises from the Albanese Government’s SJSP reforms, introduced in December 2023 as part of the Fair Work Legislation Amendment (Closing Loopholes) Act. Those reforms were directed at perceived misuse of labour hire arrangements and empowered the Commission to make Regulated Labour Hire Arrangement (RLHA) orders requiring labour hire workers to be paid at host enterprise agreement rates.
Following strong advocacy by AREEA during the passage of the legislation, the reforms included a carve-out for service arrangements. This provision prevents the Commission from making RLHA orders where workers are employed to provide a service to a host, rather than to supply labour.
In August 2024, the Mining and Energy Union and the AMWU applied for RLHA orders covering employees of BHP-owned OS Production and OS Maintenance entities working at BHP’s Goonyella Riverside, Peak Downs and Saraji mines. The unions argued the OS entities were supplying labour into BHP’s operations. BHP and the OS entities contended that OS was operating as a mining services provider and relied on the service contractor exemption.
AREEA intervened in both the Commission proceedings and the subsequent judicial review to press for a proper construction of the exemption that protects genuine service contracting models across the resources sector.
While the Fair Work Commission accepted the unions’ position in July 2025, BHP sought judicial review, arguing that the Commission had misapplied the exemption and imposed an unworkable test.
Federal Court rejects BHP arguments
In undertaking judicial review, the Court’s role was constrained to considering whether the Commission applied the correct legal framework and reached a conclusion that was reasonably open on the evidence.
It was not entitled to reconsider the case on its merits, though the Court usefully did affirm and clarify aspects of the FWC’s reasoning and the tests used.
Firstly, the Court confirmed that the service contractor exemption is a jurisdictional threshold that must be addressed before RLHA orders can be made. However, whether that threshold is met involves evaluative judgments about facts, degree and characterisation – matters entrusted primarily to the Commission.
Secondly, the Court accepted that it was open to the Commission to ask whether the contractor was providing an “identifiable and discrete service” that was meaningfully different from the supply of labour.
The Court rejected arguments that this formulation made the exemption illusory, emphasising that a service does not need to be completely separate from labour, but must be something more than labour supply alone.
Thirdly, the Court endorsed a strong focus on how arrangements operate in practice. Contractual labels, outcome-based descriptions and commercial framing will not be determinative if in practice workers are integrated into the host’s core operations and subject to host control.
The Court also upheld the Commission’s reliance on features such as labour-based pricing, host direction and control (including where driven by statutory safety obligations), and the fact that OS employees were performing the same type of production and maintenance work as BHP employees.
While OS provided supervision, planning, training and corporate support, the Commission was entitled to treat those features as equally consistent with “sophisticated labour hire”.
Implications for AREEA members
Crucially, the Court did not find that service contracting models are inherently captured by the SJSP regime. Rather, it confirmed that the outcome in this case turned on how BHP structured and operated its OS model.
While the OS model is unique to BHP, there are some important lessons for the broader resources sector, including more traditional contracting arrangements.
Firstly, genuine service arrangements where contractors assume commercial risk, deliver identifiable outcomes and operate with a meaningful degree of independence from host operations remain very capable of falling outside the SJSP regime.
At the same time, the decision demonstrates that highly integrated contracting models face elevated risk of being characterised as labour supply, particularly those embedded in core production and maintenance activities, priced primarily by reference to labour inputs, and subject to extensive host control.
In summary, the judgment reinforces that outcomes will be fact-driven.
Many contracting arrangements across the resources and energy sector differ materially from the BHP-OS model considered by the Court and will have little or no exposure as a result of this decision.
Others may warrant closer review, particularly where integration and labour-based pricing are central features.
AREEA’s reform priorities
AREEA will continue to advocate for a regulatory framework that properly accommodates legitimate service contracting models that are fundamental to modern mining and energy operations. This includes engagement through the forthcoming statutory review of the Closing Loopholes reforms, where the practical operation of the service contractor exemption will be a key focus.
In parallel, AREEA will continue to provide members with practical guidance to support risk assessment, contract structuring and workforce planning in light of evolving Commission and court decisions.
Members seeking further advice or assistance are encouraged to engage with AREEA’s policy team as part of this ongoing work program. Contact [email protected] for more information.
Join the AREEA team for the latest on 2026’s big IR/ER issues
Q&A Workforce Webinar Thursday 29 January | 12:30 pm – 1:00 pm AEST
2026 is shaping up to be a huge year in industrial and employee relations, in policy and in practice. With dual reviews on-foot of the National Employment Standards and the controversial “Closing Loopholes” legislative amendments, plus recent Federal Court decision on workplace delegates rights and BHP Coal ‘same job same pay orders’ in the mix, resources employers need to be prepared and informed.
Join the AREEA team for a wide-ranging 30-minute discussion on issues affecting your industry and workforce . Pre-load your questions with us via [email protected]
