The BHP Group Ltd (ASX: BHP) share price is down around 1% as the company faces an equal pay action from a union.
BHP is involved in a number of commodities including iron ore, copper, potash and coal. It’s the coal mines that are facing the equal pay applications.
Application for equal pay
According to reporting by various media outlets, including Reuters, the Australian Mining and Energy Union (MEU) has filed for same job, same pay orders that cover 1,700 labour-hire workers at three BHP coal mines in Queensland.
The legal action covers regulated labour-hire arrangement workers employed by WorkPac, Chandler Macleod, and BHP subsidiary Operations Services at Peak Downs, Saraji, and Goonyella Riverside mines in Queensland’s Bowen Basin, according to Reuters. These mines are owned by the BHP Mitsubishi Alliance and operated by BHP.
The goal of the legal action to the Fair Work Commission is to lift the pay of the relevant labour-hire workers, which could lead to increases of between A$10,000 to A$40,000 per year.
MEU Queensland President Mitch Hughes’ said:
Today’s applications are a major step towards stamping out this model (casual labour hire model) and closing the loopholes that have allowed BHP to avoid paying fair rates in site enterprise agreements.
The MEU argues that labour hire workers should be paid the same rate as permanent employees when performing the same job. While the Australian federal government recently changed the law, each site needs to go through an application progress.
BHP has previously argued that a labour hire worker may be new to the business, may have significantly less experience and may not have built a reputation of reliability and quality work.
The miner suggested these changes will produce inflationary wage pressure and put jobs at risk, while failing to recognise the “positive role of performance-based pay or incentive arrangements”.
Final thoughts on BHP shares
It remains to be seen how much this would affect BHP’s profitability, but it would clearly increase costs, with the new laws seemingly giving weight to the MEU’s applications.
However, BHP’s outlook is likely to be influenced most by changes in commodity prices, which are unpredictable.
The BHP share price is closer to a 52-week low, but I wouldn’t call it a great buy just yet. With a business that big, I’d look to buy at a cheap valuation, which for me would be under $40.
