Same-job, same-pay decision triggers more than just $30,000 pay rises

More than 2,000 workers will see $30,000 pay rises following a major ruling on the Fair Work Act 2009 (Cth)'s new same-job, same-pay provisions. And it's not just workers' pay checks that will be affected: we anticipate that the decision will have far-reaching implications across mining, construction, healthcare and other industries (Applications by the Mining and Energy Union re: Goonyella Riverside Mine, Peak Downs Mine and Saraji Mine; Applications by “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU) re: Peak Downs Mine, Saraji Mine and Goonyella Riverside Mine [2025] FWCFB 134).

Background to the unions' Applications

The decision of the Fair Work Commission (FWC) concerned applications made by the Mining and Energy Union (MEU) and the Australian Manufacturing Workers’ Union (AMWU) for regulated hire arrangement orders under section 306E of the Fair Work Act 2009 (Cth) (FW Act).

Section 306E was introduced by the Fair Work Legislation Amendment (Closing Loopholes) Act 2023 (Cth) and allows employees, unions and host businesses to apply to the FWC for an order that labour hire employees must be paid at least what they would receive under a host business’ enterprise agreement. In determining an application, the FWC must be satisfied that the performance of the work is for the supply of labour (rather than the provision of a service) and that it would be fair and reasonable in all the circumstances to make the order, taking into account factors such as the comparative pay rates of the labour hire employees and the host employees, and the terms and nature of the labour hire arrangement. Employees will be exempt from the operation of a regulated hire arrangement order where a training arrangement or an exemption period applies to their employment, as defined under section 306G of the FW Act.

MEU and AMWU sought the orders on behalf of labour hire workers working at the Goonyella Riverside, Peak Downs, and Saraji mines in Queensland to ensure that they are paid no less than the "protected rate of pay" under the enterprise agreement covering employees directly employed by BHP (the BMA Enterprise Agreement 2022). The mines are operated by the BHP Mitsubishi Alliance (BMA) (a joint venture between Mitsubishi and BHP) and both BHP employees and labour hire workers are engaged to carry out the work. Among the labour hire workers, a portion were employed by BHP subsidiaries (OS Production and OS Maintenance) and the rest by external labour hire companies, WorkPac and Chandler Macleod.

Why the FWC found the labour hire workers were doing the same job

The FWC made regulated labour hire arrangement orders for all the applications, with the effect that over 2,000 labour hire employees will receive pay increases equivalent to the protected rate of pay under the BMA Enterprise Agreement 2022.

The OS Parties argued that they were providing a service, not supplying labour, submitting that they are substantial businesses in their own right and compete for work with external service providers.

The FWC rejected the arguments put forward by the OS Parties, noting that some of the OS Parties' submissions were a "distraction" from the analysis required by section 306E(1A), which is focused on the "work performed by the regulated employees". The FWC also rejected an argument of BHP and the OS Parties that the distinction hinged on the provision of a service involving more than "just" or "simply" the supply of labour, concluding that this approach is "overly simplistic" and could not be reconciled with section 306E. In forming its conclusion that the work performed by employees was not for the provision of a service but rather the supply of labour the FWC considered (among other things) that:

• the work performed was directed and controlled by BMA, including control over mine and maintenance planning processes;

• while the OS Parties had some role in the discipline and performance management of their employees, this would be expected, and ultimately BMA has the ability to remove an employee from the mines;

• BMA provided, or at least dictated most of the training and induction provided to the employees of the OS Parties;

• employees used "virtually all" of BMA's plant, equipment and systems; and

• the work performed by OS employees was of the same nature as that performed by directly employed BHP employees.

Regarding the external labour hire companies, WorkPac and Chandler Macleod, both companies conceded that the work performed by their employees was not for the provision of a service, rather, it was the supply of labour. However, they argued that it was not fair and reasonable to make the orders due to the potential financial impact on their businesses and the disruption to their enterprise agreements. In rejecting these arguments, the FWC noted the assessment of whether it is not "fair and reasonable" to make an order requires a "broad value judgment" and the balancing of various interests having regard to the matters listed in section 306E(8). These include matters such as pay arrangements for employees of the regulated host, and also any other matter not specifically identified in that sub-section that the FWC considers relevant. With respect to considering the consequences of an order being made, the FWC noted that this assessment is not "a one-dimensional trade-off between the benefits to employees and asserted detriments to the employer or regulated host".

In relation to both companies, the FWC found that employees were "performing the same work in the same crews… and receiving substantially lower remuneration because of the identity of their employer". In each case, the FWC considered that the financial impact on the companies was not sufficient to render the orders unfair or unreasonable, particularly given the size and financial health of the companies.

"[Labour hire employees] are performing the same work in the same crews… and receiving substantially lower remuneration because of the identity of their employer"

Implications for labour hire firms and host businesses

The decision of the FWC has significant implications for various stakeholders, including labour hire companies, host businesses, unions, and employees.

The Mining and Energy Union, which brought the case alongside the AMWU, said the ruling marks "the biggest win so far under new labour hire laws". However, the broad ambit of section 306E has worried industry leaders, with the CEO of the Minerals Council of Australia Tania Constable contending that the decision "confirms that instead of a 'straight exclusion' for service contractors, almost any service contractor could be captured by the legislation unless they can litigate their way out".

Given the clarified broad reach of section 306E, companies should be aware of the following key impacts that the decision could have on their operations and workforce.

Labour hire companies

Labour hire companies will need to prepare for the possibility of employees seeking regulated hire arrangement orders under section 306E of the FW Act. Where such an order has been made, labour hire companies will need to ensure that workers are paid no less than the "protected rate of pay" under the host business' enterprise agreement. This will also increase the value of an employer's liabilities in respect of existing employee entitlements, such as annual leave and personal leave.

Further, the FWC has made clear that enterprise agreements applying to labour hire companies should not be given "unconstrained priority" over regulated labour hire arrangement orders. Given that the FWC is required to consider whether it is not fair and reasonable to make the order "in all the circumstances", the FWC emphasised that factors including pay disparities between labour hire employees and host employees and the terms and nature of the labour hire arrangement should be considered alongside the existence of any industrial arrangements. This may reduce the overall utility of labour hire companies engaging in enterprise bargaining with their employees, or cause parties to reconsider their negotiation approach.

Host businesses

While the decision only applies to this particular group of workers, host businesses will need to prepare for labour hire employees and/or unions seeking increased rates of pay (specifically that workers are to be paid at the same rates as directly employed workers under the host business' enterprise agreement), and/or applying for regulated hire arrangement orders under section 306E of the FW Act.

Ultimately, labour hire companies will likely look to renegotiate their contracts with host businesses to share the burden of any increased costs, reducing the cost advantages to host businesses which are traditionally associated with using a labour hire workforce.

This may prompt a reassessment of the use of labour hire arrangements for host businesses. It may be the case that the flexibility that labour hire arrangements provide, such as, for example, the ability to scale the workforce up or down efficiently in response to operational needs, and the reduced obligations that would otherwise come with an employment relationship, means that overall, labour hire is still the most cost-effective option for a host business. However ultimately, host businesses will need to form a view on the commercial arrangement which best suits their company for the relevant engagement/work period.