BHP OS Same Job, Same Pay Decision: Stitching up the Australian Labour Hire Loophole

What you need to know

• The Full Bench has adopted a narrow interpretation of when work is performed for a ‘provision of a service’, thereby widening the scope of contractors who may be caught by the regulated labour hire arrangement order (RLHA Order) regime under the Fair Work Act 2009 (Cth).
• The Full Bench found the degree of control exercised by a host through its systems, structures, policies and procedures is highly relevant in determining whether an arrangement is the supply of labour. This includes health and safety processes that are implemented to ensure statutory compliance.
• The ‘fair and reasonable’ test will be assessed holistically, with particular attention to the impact on employees and the overall financial health of the labour hire provider in the context of the wider group of companies which it is part of, as opposed to simply the financial implications at the relevant site.

What you need to do

• Labour hire providers and host employers should proactively review their arrangements to assess the risk of being the subject of a RLHA Order in the event an application is made. This is particularly relevant for organisations providing intragroup services.
• Organisations should consider the potential impact of RLHA Orders on their bargaining strategy in upcoming enterprise negotiations.

Background

On 7 July 2025, a Full Bench of the Fair Work Commission handed down its decision ([2025] FWCFB 134) regarding the MEU's and AMWU's applications for regulated labour hire arrangement orders (RLHA Orders) in respect of employees of two BHP Operations Services entities (BHP OS Entities), WorkPac and Chandler Macleod, performing work at Goonyella Riverside Mine, Peak Downs Mine and Saraji Mine in the Queensland Bowen Basin.

The applications were opposed, with the BHP OS Entities relying on the 'service provider' exemption under section 306E(1A) of the Fair Work Act 2009 (Cth) (FW Act). WorkPac and Chandler Macleod relied on the 'fair and reasonable' considerations under section 306E(2) of the FW Act. In deciding that RLHA Orders should be made against each of the respondent employers, the Full Bench undertook a detailed analysis of the relevant provisions in section 306E that will likely have broader implications for hosts and contractors that provide services that include a labour component.

We will need to wait and see whether the Full Bench's decision is the subject of judicial review and, if so, how that unfolds.

Provision of service vs supply of labour

The Full Bench rejected BHP and the BHP OS Entities' submission that there was a 'binary choice' between the provision of services and the supply of labour such that the performance of work must be for the provision of a service if it cannot be characterised as labour. Instead, the Full Bench held that the core question is whether the work can be "properly characterised as being for the provision of an identifiable and discrete service to the regulated host which is distinct from the supply of labour". The Full Bench also held that the factors in s 306E(7A) are not exhaustive and that the Commission is ultimately tasked with conducting an overall assessment under section 306E(1A).

The key matters arising from the Full Bench's analysis include:

• Significance of pricing structure: The Full Bench considered it was significant that the contractual arrangements between BHP and the BHP OS Entities supported a finding that the work performed was the supply of labour because the overwhelming majority of the price paid is a set amount calculated by reference to the cost of employing the employees to perform work at the mines, plus a margin.
• Involvement in matters relating to the performance of work (s 306E(7A)(a)): The Full Bench interpreted this phrase to be broader than matters of immediate control of the performance of particular tasks. However, it did not extend to matters related to the "work" or the employment of the regulated employees (eg recruitment, managing leave requests). Similarly, training relating to the performance of work will be considered more relevant than broader training such as leadership training and cultural inductions.
• Supervision and Control (s 306E(7A)(b)): The fact that the employer of the regulated employees provides supervisory staff does not, in itself, mean the employer exercises meaningful supervision or control. It is possible for the supply of supervisory staff to also constitute the supply of labour.
  
  Relevantly, the BHP OS Entities are wholly owned subsidiaries of BHP Group Operations Pty Ltd which currently employ approximately 3,797 employees who perform work across various BHP Group operations in Australia. The evidence before the Full Bench was that OS employees performed work in separate crews to BHP employees. Further, OS supervisors provided day-to-day supervision and directions to the OS crews. Those OS supervisors reported to an OS production superintendent who then in turn reported to an OS production manager.
  
  While the Full Bench accepted that the OS supervisors had direct supervision of the OS employees, the Full Bench held that the significance of this was reduced by various factors including the fact that ultimate control rested with BMA, particularly in relation to safety and operational matters.
  
  The Full Bench also considered the evidence before it with respect to the detailed Standard Operating Procedures and Safe Work Instructions promulgated and enforced by BMA. These documents detailed "the manner in which virtually every task associated with the operation of the mines is to be performed", which the Full Bench found necessarily diminished the extent of the direction, supervision or control exercised by the OS Parties.

• Industry or Professional Standards (s 306E(7A)(d)): The Full Bench observed that if the regulated host is subject to the relevant industry or professional standards, that fact may support an inference that the regulated employees' work involves the supply of labour which remains the responsibility of the regulated host. In the case of the BHP OS Entities, the Commission found that BMA’s statutory safety obligations as a coal mine operator were relevant and supported the characterisation of the arrangement as the supply of labour.
• Use of Systems, Plant or Structures (s 306E(7A)(c)): This was interpreted broadly to include both physical and non-physical systems, such as health and safety management systems and workplace policies and procedures. The Full Bench also observed that the provision of facilities such as crib rooms, toilets or accommodation is likely to be less significant to the overall characterisation of the performance of work than provision of plant and equipment necessary for the performance of the work itself.
• Specialist or Expert Work (s 306E(7A)(e)): The Full Bench emphasised that the Commission must have regard to the extent to which the work is of a specialist or expert nature. This invites consideration of the degree to which specialised knowledge, skills or expertise are required to be applied in the performance of work by the regulated employees.

'Fair and reasonable' test

It is also worthwhile keeping in mind the following observations made by the Full Bench when dealing with WorkPac and Chandler Macleod's 'fair and reasonable' submissions:

• Only one application was made in respect of Chandler Macleod, which meant that granting a RLHA Order against Chandler Macleod would create a disparity in pay amongst Chandler Macleod employees at the various BMA mines. While the Full Bench accepted that this was a relevant consideration, the Full Bench determined this did not weigh against making the order given that only a very small number of Chandler Macleod employees are currently deployed at the other mines that would not be the subject of a RLHA Order.
• Detailed evidence will be required to support any submission that an RLHA Order would significantly impact profitability or create operational difficulties.
• Further, the Commission expressed the view that the financial impact on an entity proposed to be the subject of a RLHA Order should be considered in the context of the wider group of companies of which it is a part. In this regard, the Full Bench also left open the prospect of an employer impacted by the RLHA Order regime relying on the cumulative effect of the orders on its operations.

Authors: Kathy Srdanovic, Partner; Amanda Wu, Senior Associate and Catlin McKenzie, Graduate.