BHP says it will have to repay 28,500 workers up to $430m in massive wage theft scandal

BHP says it could be months before the company is able to identify the extent of its underpayments to separate groups of workers.

BHP says it could be months before the company is able to identify the extent of its underpayments to separate groups of workers after the mining giant admitted it had underpaid about 28,500 Australian workers hundreds of millions of dollars since 2010.

BHP called in assurance firm Protiviti this week after telling the Fair Work Ombudsman on Wednesday it believed it owes separate sections of its workforce at least $US280m ($430m) in leave and entitlements due to a failure to interpret industrial agreements correctly.

The company said on Thursday it had incorrectly stripped an average of 6 days of annual leave days from 19,000 current staff and about 9500 former employees in cases where they booked time off during weeks when public holidays fell.

It is understood the issue arose due to BHP’s failure to include 2010 changes to the national employment standards in its internal payroll system, with the underpayment scandal largely affecting workers rostered to work on mining sites – which do not shut down on Australian public holidays.

While BHP Australia president Geraldine Slattery told workers on Thursday their leave balances should be fixed within a few weeks – with a 10 per cent bonus as an apology – the company will also be forced to examine its application of industrial laws to other staff potential affected by a separate underpayment issue.

BHP may also owe up to 400 workers at its Port Hedland operations money for additional allowances that were not paid “due to an error with the employment entity in their contract”.

BHP President Australia Geraldine Slattery has apologised for a $430m wages scandal. Picture: NCA NewsWire / Ian Currie

The Australian understands the issue relates to the application of the wrong agreement to staff working at Port Hedland, which was not picked up by BHP, employees or relevant unions.

BHP said the figures were based on a “preliminary review” of its payroll systems, with a full review to be conducted by assurance firm Protiviti. The company promised to update staff and the market when it delivers its full year results in August.

BHP would not say how long it had been aware of the underpayments on Thursday, but The Australian understands the company has had a substantial external audit team examining the extent of its potential liability for some months.

It is understood that the investigation was partly triggered by a union win in the Federal Court over BHP’s labour hire subsidiary Operations Services, which found that companies could not automatically treat public holidays as work days without first asking employees to work the days, and employees having the opportunity to refuse that request. But The Australian understands the issue could have been raised internally in 2022.

Ms Slattery apologised for the error on Thursday, saying the company’s failure was “not good enough”.

“We are sorry to all current and former employees impacted by these errors. This is not good enough and falls short of the standards we expect at BHP. We are working to rectify and remediate these issues, with interest, as quickly as possible,” she said.

BHP’s disclosure is the latest in a series of wage theft scandals across corporate Australia blamed on changes to the industrial relations system that took effect in 2010 under Labor Prime Minister Keven Rudd, with retail giant Woolworths also attributing the complexity of the industrial relations system for its failure to pay more than $500m worth of entitlements to its massive Australian workforce.

In BHP’s case, its failure to pay staff also coincided with waves of job cuts across the company’s Australian white collar workforce as the company cut local jobs as commodity prices crumbled after 2012, in favour of extending the remit of its shared services offices in The Philippines and Malaysia.

Employment and Workplace Relations Minister Tony Burke seized on BHP’s admissions. Picture: NCA NewsWire / Jenny Evans

In 2005 BHP’s Melbourne headquarters employed more than 1000 workers, with that total falling to only around 300 by 2015.

The admission is a major embarrassment to the global mining giant as it pushes back against proposed “same job, same pay” industrial relations changes that would force the company to pay its contract workforce at the same rates as in union-negotiated enterprise agreements.

Employment and Workplace Relations Minister Tony Burke seized on BHP’s admissions on Thursday, given the company has been highly critical of the government’s proposed second wave of industrial relations changes. “Just last week BHP were trying to assure us that their employment practices were impeccable and the government didn’t need to close any loopholes to protect wages,” Mr Burke said.

“That’s clearly not true. Australia can do better to make sure workers are properly paid. That’ll be the focus of our legislation in the coming months.”

The Fair Work Ombudsman said on Thursday that the regulator would conduct an investigation into the underpayments.

“The Fair Work Ombudsman will conduct an investigation into BHP following its self-reported underpayments to staff in Australia,” the FWO said.

“As regulator we will hold the organisation to account for any breaches of workplace laws.

“We expect any employers that identify noncompliance to report to the FWO and fully co-operate with our investigation to ensure that employees are quickly and accurately repaid any outstanding entitlements. Any workers with concerns about their pay should contact us for assistance.”

BHP said on Thursday it would co-operate with the FWO investigation.

And more may still be to come on the scandal, with BHP saying it had identified the potential for a similar error after taking control of OZ Minerals.

BHP shares closed up 5c to $42.07 on Thursday.

Originally published as BHP says it will have to repay 28,500 workers up to $430m in massive wage theft scandal