Just over a week ago on May 21, there was BHP (ASX:BHP) telling the world that – while it supported the goal of protecting vulnerable workers – the Albanese government’s proposed Same Job, Same Pay (SJSP) policy in its current form would seriously affect its operations, harm productivity and risk the future of all forms of labour hire.
“BHP estimates the financial impact of SJSP to our Australian operations will be up to $1.3 billion annually. This cost is equivalent to the labour cost of approximately 5000 full-time employees across our operational workforce,” the company said.
And so the irony couldn’t have been more telling yesterday, when BHP confessed that it had short-changed more than 28,000 of its current and former workers on certain allowances and entitlements to the tune of an estimated $US280 million pre-tax or over $A430 million.
And there will be more as BHP says the problem may have been found in OZ Minerals, which has just been bought for $A9.6 billion, and there are 400 other employees at its Port Hedland operations who are owed entitlements.
The eventual cost will be above the half a billion mark and leave BHP running second behind supermarket giant Woolworths (over $670 million) in the unenviable race to the bottom as to the employer with the biggest bill.
Other companies including Coles, National Australia Bank, Commonwealth Bank, Qantas, Super Retail Group, Bunnings (owned by Wesfarmers), 7-Eleven, Michael Hill (a jewellery chain), the ABC, National Library, Sunglass Hut, Grill’d (a fast-food chain) and even the 2018 Commonwealth Games have been found to have stiffed their employees (or contractors) on wages, salaries, holiday/sick leave and super.
It’s a debacle and from the wording in BHP’s ASX release, the involvement of labour hire firms, or as BHP described them “the employment entity” (in other words, not BHP) is to blame.
“A preliminary review suggests that certain rostered employees across our Australian operations have had leave incorrectly deducted on public holidays since 2010. There are approximately 28,500 affected current and former employees with an average of 6 leave days in total that have been incorrectly deducted from affected employees over this 13-year period.
“Initial investigations also suggest that OZ Minerals has been affected by a similar leave deduction issue before being acquired by BHP in May 2023.
“In addition, BHP has identified that approximately 400 current and former employees at Port Hedland are entitled to additional allowances due to an error with the employment entity in their contract.
“Based on currently available information, it is estimated that the cost of remediating the leave issue and the contracting issue will be up to US$280 million pre-tax, incorporating on costs including associated superannuation and interest payments (BHP share). BHP is continuing to investigate and an update will be provided in our full year results in August.”
BHP has apologised and brought in a company to review its payroll systems and self-reported to the Fair Work Ombudsman.
Federal Employment Minister, Tony Burke said on May 21 in reaction to BHP’s claim of the extra costs from the same job same pay changes ““If you close a loophole to stop workers being ripped off, it will result in an increase in the wages budget of any company that was using the loophole. We make no apologies for that.”
Seeing BHP made that submission public nine days ago, it’s hard to believe that it did so without the knowledge of one of the most serious examples of underpayment of its workers. From the tone of the BHP statement on June 1, it had to know that it had found the problem it self-reported.
Seeing the OZ Minerals takeover only ended in early May, BHP must have gone looking for underpayment of employees in its acquisition pretty soon after the deal closed for it to be mentioned in this statement less than a month later.
BHP shares edged up to close at $42.07, news of the pay problems had no impact so far as investors were concerned.