By AREEA Chief Executive Steve Knott AM

Yesterday (7 July) the Fair Work Commission (FWC) issued its decision in relation to a major “same job same pay” test case – applications for orders made by the MEU and AMWU to cover three BHP coal mines in Queensland.

After deliberating for months over substantial evidence, the FWC Full Bench found the BHP-owned entities commonly known as “OS Production” and “OS Maintenance” supply labour rather than provide services to BM Alliance Coal Operations (BMA).

Thus, the FWC found it was not prevented from making the “Regulated Labour Hire Arrangements Orders” (RLHA Orders) sought by the MEU and AMWU, which means OS Maintenance and OS Production will soon be required, if the decision is not appealed, to pay their employees in accordance with the BHP Coal enterprise agreement.

The outcome is not unexpected given the trade union movement has long criticised the BHP-OS model and the Albanese Government was clear on its intentions to target those arrangements with its same job same pay laws.

This decision is also significant as it involves the first time an employer has sought to reply upon provisions in the laws that prevent the FWC from making RLHA Orders where the employer is providing a service to the “host” rather than supplying labour.

Known as the “service contractor exemption”, these provisions were negotiated into the laws by AREEA when it became clear in late 2023 that the Albanese Government had enough support in the Senate to legislate their long-held policy.

The provisions that resulted from those negotiations provide a much clearer exemption for businesses that are providing services to clients than otherwise would have been legislated had AREEA not intervened in the final stages of the legislative process.

In its 102-page decision, the FWC Full Bench clearly acknowledges it could not make the RLHA Orders sought unless it was satisfied the arrangements were not or would not be for the provision of a service rather than the supply of labour.

Thus, the decision reflects the Full Bench’s views on the unique facts surrounding the performance of work at the relevant BHP sites.

That is, evidence put forward by the union applicants that argue the OS entities supply labour rather than provide services to BMA was found to be more convincing than evidence put forward by BHP that the OS entities provided services, rather than supplied labour.

In making this determination, the Full Bench closely examined the various test factors including the level of involvement the OS entities have in the performance of the work at the BMA sites; how the work is supervised; the supply of equipment, plant and structures of work; whether the work could be considered specialist in nature; and other matters.

The Full Bench also made clear distinctions between the BHP-OS arrangement, where contractual terms centered on the supply of labour, and that of traditional contracting models that focus on production metrics and other commercial outcomes.

In contrast to traditional contracting, the Full Bench found there was little difference in the “substance” of the BHP-OS arrangements and those involving labour hire firms WorkPac and Chandler MacLeod, which yesterday’s RLHA Orders will also cover.

It is, of course, open to the affected employers to appeal the FWC’s decision to the Federal Court should they believe jurisdictional or factual errors have been made.

AREEA was an intervening party in this matter and firmly argued the intent of the provisions and the commitments made by the Government at the time of our negotiations that it did not intend for the same job same pay laws to cover traditional contracting arrangements.

We encourage members with a keen interest in the same job same pay laws to express your interest in receiving a more detailed breakdown of the decision, including how the FWC applied the service contractor provisions to the BHP-OS arrangements and found the arrangements fell under the “supply of labour”.

AREEA’s specialist workplace advisory team has been assisting members with reviewing and updating contracting arrangements, understanding risk and limiting exposure, since the new laws were legislated in 2023.

The team is available to assist members with applying key principles and findings within the BHP case to your operations and contractual relationships.

Advocating for change of the “same job same pay” laws

Any real prospect of having the “same job same pay” laws repealed or substantially watered down in the short term was erased by the re-election of the Albanese Government in May.

Notwithstanding this, AREEA has been very clear on its position that these laws are an unnecessary disruption to the contracting and employment models that contribute to the success and viability of the resources and energy industry.

To avoid risking operations and employment in our sector, amendments are needed to focus the laws only on arrangements where there is evidence labour hire is primarily being used to circumvent payment of another in-term enterprise agreement.

If the Government insists these laws are required, they should be far more confined in scope and the FWC should be prevented from making RLHA Orders unless the evidence proves labour hire is being used to undermine or undercut the client’s rates of pay.

Irrespective of the challenging political environment, AREEA will continue to advocate this point and ensure businesses that supply labour to clients via legitimate and lawful above-award arrangements, can do so with certainty and confidence.

All enquires: [email protected]