BHP has been a leader in the explosion of casual labour hire in the coal mining industry over the past five to 10 years.

Across BHP’s Australian operations, over half of employees are contractors rather than directly employed.

BHP set up Operations Services as an in-house labour hire service in response to worker and community backlash against casual labour hire, creating a new supply of workers on lower rates than union-negotiated site agreements.

In mid-2018, BHP created two $1 shelf companies to act as employing entities under the name ‘Operations Services’.

Dodgy agreements

In late 2018, the above entities submitted two proposed enterprise agreements with the Fair Work Commission:

  • Operations Services Maintenance Agreement 2018
  • Operations Services Production Agreement 2018

Both agreements were voted on by a small number of non-union iron ore workers in WA. They are intended to cover a workforce of thousands in the coal industry in NSW and Queensland. The Production agreement was voted up by just 9 out of 16 employees, the Maintenance agreement by 37 out of 50.

The agreements allow for workers to be transferred to any of the company’s operations nationally, including coal and iron ore, at any location at any time.

They contain pay rates of $30,000 to $50,000 a year less than current BHP agreements for coal mines negotiated by the CFMEU, with no pay rise over their four-year term. The CFMEU is challenging the agreements in the Fair Work Commission, meanwhile Operations Services is employing workers on contracts with similar pay and conditions.

Cutting wages

BHP is promoting Operations Services publicly as their way of addressing the casualisation problem (which they created), by providing employees with permanency. It’s really a strategy to funnel more money back to shareholders and executives by cutting workers’ wages.

In August 2019, CEO Andrew Mackenzie told an investor briefing:

“There are labour cost pressures around …. We have addressed this via our Operations Services model, where we are actually steadily converting a lot of our more permanently contracted workforce and some not so permanent to our own contracting organisation…Already we see ... a 20% reduction in costs.”

BHP posted record shareholder dividends for the year ending June 2019.