In 2024, the ‘Same Job, Same Pay’ amendments to the Fair Work Act 2009 (Cth) (FW Act) came into effect, allowing unions, employees and employers to apply to the Fair Work Commission (FWC) for a ‘Regulated Labor Hire Arrangement Order’ (RLHA Order). RLHA Orders can be made to require contractors and labour hire employers, who provide workers to a host employer, to pay their workers the same rate of pay contained in any enterprise agreement that applies to direct employees of the host employer and who are performing the same work.

A recent decision in the FWC demonstrates that there are few ways to avoid a RLHA Order once the basic criteria are met, which has broad implications for employers who use labour hire workers to perform work that is the same as the work performed by the employer’s own employees.

Summary of the recent application by various unions against BHP Coal for ‘Same Job, Same Pay’ orders

BHP Coal operated several sites in Queensland with direct employees on those sites. Two BHP operations entities (known within BHP as BHP Operations Services or ‘BHP OS‘) provided maintenance services to several BHP Coal sites in Queensland. BHP Coal was the regulated host employer and was covered by the BMA Enterprise Agreement 2022 (BMA Agreement). As the BHP OS employees were not employed by BHP Coal, they were not covered by the BMA Agreement.

The Mining and Energy Union and the Australian Manufacturing Workers’ Union (Unions) applied to the Full Bench of the FWC, seeking a RLHA Order on behalf of the BHP OS employees. The Unions argued that, under the FW Act, the BMA Agreement was the “host employment instrument” prescribing the “protected rate of pay” that should apply to BHP OS employees working on BHP Coal sites. The Unions argued that the BHP OS employees were performing the ‘Same Job’ as the BHP Coal employees and should therefore be entitled to the ‘Same Pay’ under the BMA Agreement.

BHP Coal opposed the application, arguing that the agreement with BHP OS was “for the provision of a service, rather than for the supply of labour”.

The Full Bench of the FWC determined that the employees of BHP OS were performing the same work as the employees of BHP Coal, and they were entitled to be paid the same pay for the same work, providing a precedent for future RLHA Orders.

BHP Coal’s argument

BHP Coal argued that BHP OS provided a service, rather than merely supplied labour, as:

• BHP OS was responsible for managing its employees and ensuring completion of tasks under a service agreement;
• BHP Coal did not have direct control over the management of the BHP OS employees and BHP OS had supervisors onsite and planned their employees’ work;
• the work under the service agreement was outcome-focused rather than task-specific or labour-driven, payment was tied to performance metrics (availability of equipment being maintained, and cubic meters) and was of a “specialist or expert nature”; and
• the service agreement between BHP Coal and BHP OS was not for the supply of labour but for the provision of maintenance services, with the provision of the employees required to perform those services being incidental.

The FWC found that the service agreement between BHP Coal and BHP OS was not a contract for the provision of services, but was instead a contract for the supply of labour. The FWC considered the elements of section 306E(7A) of the FW Act when determining that the performance of the work was not for the provision of a service but was for the supply of labour.

Factors considered by the FWC

Direction, supervision or control

Section 306E(7A)(b) of the FW Act requires consideration of the extent to which, in practice, the host employer or a person acting on behalf of the host employer, “directs, supervises or controls regulated employees when they perform work”. The Full Bench of the FWC held that the greater the extent to which the host employer directs, supervises or controls the labour hire employees when they perform their work, the more likely it is that the performance of work might be properly characterised as not being for the provision of a service.

While it was conceded by the FWC that there was an element of control exercised by BHP OS, in practice this was within the contexts of highly prescriptive arrangements that were ultimately controlled by the host employer.

Systems, plant or structures used to perform work

Section 306E(7A)(c) of the FW Act requires consideration of the extent to which the labour hire employees use or will use the systems, plant or structures of the host employer to perform work. The FWC noted that the term “systems, plant or structures” includes any plant, equipment, buildings or facilities used by the labour hire employees to perform their work, as well as to non-physical items such as health and safety management systems, modes of operating and performing work, and workplace policies and procedures.

Although consideration was given to the fact that the equipment used to provide the maintenance services was solely used by BHP OS employees, and not shared with BHP Coal employees, this was ultimately unpersuasive as the equipment was provided by BHP Coal. This factor was a significant consideration which favours a conclusion that the ‘work by the employees supplied to the [host employer] is not… for the provision of a ‘service’ rather than for the supply of labour‘.

Industry or professional standards or responsibilities

Section 306E(7A)(d) of the FW Act requires consideration of the extent to which either the labour hire employer or another person is or will be subject to industry or professional standards or responsibilities in relation to the labour hire employees. Statutory obligations may limit the degree to which a labour hire employer can be said to provide a discrete service to the host employer or may at least be relevant to that assessment.

Specialist or expert nature of work

Section 306E(7A)(e) of the FW Act requires consideration of the extent to which the work performed by the labour hire employees is of a specialist or expert nature. The purpose of this is to determine whether the FWC is satisfied that the work is not for the provision of a service, rather than the supply of labour.

In this decision, the Full Bench of the FWC was pointed in its assessment. The Full Bench said that, despite an ability to conclude generally that the work was of a specialist nature, where the same work with the same level of specialism was being performed by the BHP Coal employees, and the performance of that work is part of the usual operations of the mines, the specialist or expert nature of the work does not go very far to support a conclusion that the work is for the provision of a service rather than for the provision of labour.

Little weight was placed on whether requiring the labour hire company to pay its employees the same as the host employer’s employees was fair and reasonable. Finally, the observation was made that if a labour hire company wished to succeed on a submission that a RLHA Order would have severe financial implications on the labour hire company, significant evidence would need to be led to that effect.

Implications of the BHP Coal Decision and Key Considerations for Employers

The decision in this case demonstrates that the FWC will assess each factor in section 306E of the FW Act in great detail, looking beyond the paperwork, to the true nature of the relationship between the host employer and the labour hire provider to make its determination.

In light of the decision in this case, host employers and labour providers should keep the following in mind:

• Labour hire companies will need to be alive to any situation where their workers are engaged on a worksite with an enterprise agreement that has a classification structure wide enough to cover the work that they are performing;
• Businesses and industry should review their operations and, if bargaining, ensure the scope of any enterprise agreement is limited to the work that they anticipate will be performed by their own employees; and
• Although BHP Coal was unsuccessful in its defence in this case, the reasons in this decision will provide good fodder to defend other applications where the distinction between service and labour are less clear cut.

This article was written by Danielle Flint, Partner, Robert Malcom, Senior Associate, and Jackie Sorial, Solicitor.