The industrial relations landscape in Australia’s resources and energy sector is undergoing, and will continue to undergo, a significant recalibration. In our Emerging Issues publication last year we outlined the impact of the Federal Government’s significant amendments to the Fair Work Act 2009 (Cth) (FW Act), including:
- increasing the role the Fair Work Commission (FWC) has to play in Australian businesses including through bargaining, regulating labour hire, flexible work requests, creating model terms, fixed term contracts and sexual harassment; and
- forcing businesses to directly engage permanent labour rather than using casual labour or contracting out services to contractors or labour hire firms.
Over one year on and the FW Act changes have already had a substantial impact on the industrial landscape and labour costs for many businesses in the resources and energy sector. There have been numerous significant decisions of courts and the FWC, including in relation to multi-employer bargaining, the use of labour hire and ‘same job, same pay’ orders and redeployment obligations through redundancy processes.
With operating costs increasing and margins softening, industrial relations strategy and labour costs continue to be a key focus area for many in the resources and energy sector.
‘Same-job, same-pay’ orders
Labour hire continues to be widely used in the resources and energy sector, providing greater flexibility and lower fixed labour costs than direct employment. The introduction of ‘same job, same pay’ orders (known as regulated labour hire arrangement orders or RLHAOs) was one of the more contentious changes made to the FW Act, with the changes specifically targeted at reducing the use of labour hire arrangements in the resources sector.
As foreshadowed in last year’s publication of Emerging Issues, unions quickly set their sights on seeking RLHAOs in relation to third-party workforce arrangements that were in place at many resources and energy projects across Australia, particularly in coal mining.
A year into the commencement of RLHAOs, there have been a significant number of RLHAOs made, resulting in substantial wage increases for employees performing work for a host (reported as being as high as 60%) and increased operating costs for labour hire providers and hosts.
While some applications for RLHAOs in the resources and energy sector have been hotly contested, many have been made without opposition by the host or provider. Some host organisations have even decided to ‘insource’ labour hire workers in response to, or in anticipation of, unions applying for RLHAOs.
The first RLHAO made was in relation to WorkPac employees performing work at the Callide Mine. Since then, there have been RLHAOs made in relation to the supply of labour at various mines across Australia, including the South32’s Cannington Mine, Anglo’s Capcoal Surface Operations Mine, Peabody’s Coppabella Mine, Whitehaven’s Daunia and Blackwater Mines and Glencore’s Mount Owen Mine.
What is a regulated labour hire arrangement order and when will one be made?
The FW Act gives the FWC power to make ‘same job, same pay’ orders (RLHAOs) requiring an employer that supplies employees to perform work for a host to pay those employees at least the full rate of pay (including minimum wage rates, loadings, overtime or penalty rates, loadings and other entitlements) payable under the regulated host’s enterprise agreement (the ‘protected rate of pay’ (PROP)). While RLHAOs are referred to as ‘same job, same pay’ orders, supplied employees will be paid at the highest watermark of either the PROP or their full rate of pay with their employer.
The provisions operate such that, if the FWC is satisfied that the preconditions for a RLHAO are met and no exception applies, it must make a RLHAO. This makes it difficult for suppliers of employees and their hosts to defend an application for an RLHAO.
A RLHAO is not confined to the life of the host’s enterprise agreement and will continue to apply even if a regulated host bargains a new enterprise agreement. As has occurred with the Callide Mine Union Enterprise Agreement 2024 approved in late 2024, the FWC will identify, when approving a new enterprise agreement, that it is a host employment instrument under a RLHAO.
BHP test case – service contractor exemption
The first test case for the ‘service contractor exemption’ arose in the Mining and Energy Union’s and Australian Manufacturing Workers’ Union’s applications for RLHAOs in relation to employees of BHP’s in-house OS Maintenance and Production entities (OS entities), WorkPac and Chandler Macleod supplied to work at BHP’s Goonyella Riverside, Peak Downs and Saraji mines.
The Full Bench of the FWC was satisfied that the preconditions to making the RLHAOs were met in relation to all of the RLHAO applications – namely:
- the OS entities, WorkPac and Chandler Macleod supply employees to BHP;
- BHP has an enterprise agreement that would apply to the regulated employees if they were employed by BHP; and
- the OS entities, WorkPac and Chandler Macleod are not small business employers.
‘Not fair and reasonable’
Under the FW Act, the FWC must not make a RLHAO if it is satisfied that it is not fair and reasonable in all the circumstances to do so.
Chandler Macleod and WorkPac sought to challenge the making of the RLHAOs on the basis that it was not fair and reasonable to make the RLHAOs.
Other hosts and suppliers subject of RLHAO applications had already unsuccessfully tested this avenue, highlighting the difficulty of positively satisfying the FWC that it is not fair and reasonable in all the circumstances to make a RLHAO.
Chandler Macleod and WorkPac did not satisfy the FWC that it was not fair and reasonable in all the circumstances to make the RLHAOs. With the preconditions satisfied, the Full Bench was required to make the RLHAOs ordering Chandler Macleod and WorkPac to pay regulated employees the PROP.
In reaching its view as to whether it was not fair and reasonable to make the RLHAOs, the Full Bench considered a range of factors including:
‘Service contractor exemption’ – test case
BHP and the OS entities contended that the employees of the OS entities were supplied to BHP for the provision of services, rather than labour. In deciding whether the ‘service contractor exemption’ applies, the Full Bench held that the key question is:
‘whether the purpose of the work performed by the regulated employees can properly be characterised as contributing to the provision of an identifiable and discrete service to the regulated host which is distinct from the supply of the labour of the workers to work in or as part of the business of the regulated host.’
In making this assessment, the Full Bench examined what it found to be a non-exhaustive list of factors set out in section 306E(7) of the FW Act, including:
Agreement and pricing structure: Contractual arrangements provided that OS parties must provide ‘services’ based on a number of FTE employees and the price paid was overwhelmingly determined by the cost of employing labour to perform the work
Performance of work: Work performed, directed and controlled by BHP – OS consulted and provides feedback but mine and maintenance plans determined by BHP
Supervision and control: While OS employees under day-to-day supervision and direction of OS supervisors, they must perform work per detailed BHP SOPs, SWIs and policies/procedures
Plant, systems, equipment: Use of BHP’s plant, equipment and systems, and same plant and equipment used by BHP employees
Specialised or expert work: While the work performed by the OS employees is of a specialist and expert nature in the general sense, involves same specialised and expert skills as BHP’s own employees performing the same work
The Full Bench was satisfied that the performance of work by employees of the OS entities was not or will not be for the provision of a service, rather than the supply of labour.
In light of this finding and the Full Bench being satisfied that the preconditions to making the RLHAOs were met, it was required to make the RLHAOs.
The financial impact of the RLHAOs is significant for BHP and the OS entities:
- the OS entities must pay their regulated employees at no less than the PROP, which represents an increase of approximately 15% of the employees’ pre-RLHAO remuneration. BHP must provide the OS entities with information necessary to determine the PROP; and
- the total cost of the RLHAO to the OS entities is estimated to be between approximately $25.8 million and $28.4 million from September 2025 to August 2026, plus an additional $3.6 million increase in the value of accrued annual and personal leave.
Where to from here?
BHP and the OS entities have filed judicial review proceedings in the Federal Court of Australia (FCA) to challenge the RLHAOs made by the FWC Full Bench.
Given the practical challenges of the OS entities recouping wages paid under the RLHAO if the Full Bench decision is quashed by the FCA, the OS entities and BHP applied for a stay of the RLHAOs. The FCA rejected this application and the RLHAOs came into effect on 14 September 2025.
The hearing challenging the RLHAOs will commence on 14 November 2025. This matter will be closely watched by many in the resources and energy sector.
If your business utilises third-party workforce arrangements, whether labour hire or service providers, assess your arrangements and exposure to a RLHAO, consider the impact a RLHAO would have on your business, review your contractual arrangements and ensure contracts contemplate what will occur if a RLHAO is made.
Multi-employer bargaining in the resources and energy sector
Multi-employer bargaining was another contentious change to the Fair Work Act that drew union interest and that many in the resources and energy sector were concerned about, particularly with the Australian Council of Trade Unions identifying the renewable energy sector as a particular target for multi-employer bargaining.
The first contested application for a multi-employer single interest employer authorisation arose in the resources sector, with APESMA seeking to extend enterprise agreement coverage in the coal mining industry to senior ‘staff’ employees. While APEMSA’s application was robustly contested and has now been subject of appeal to the FCA, there has otherwise been limited activity in relation to multi-employer bargaining in the resources and energy sector.
APESMA application
In the landmark case APESMA (on behalf of the Collieries’ Staff and Officials Association) sought an authorisation to bargain for a multi-employer enterprise agreement in relation towith four companies operating underground coal mines in NSW – Delta, Whitehaven, Peabody and Ulan Coal.
On 23 August 2024, the FWC issued the authorisation, compelling three of the four coal companies (Peabody, Whitehaven and Ulan Coal) to engage in multi-employer bargaining covering supervisors at three underground coal mines across NSW for a period of 12 months, or longer if extended.
In reaching this decision, the FWC was satisfied that:
- the majority of the Peabody, Whitehaven and Ulan Coal employees who would be covered by the proposed enterprise agreement wanted to bargain – APESMA conducted a vote of relevant employees, without awareness of the employers;
- the three employers had ‘clearly identifiable common interests’ – the FWC examined commercial, operational and employment-related features of the employers that will impact on or influence them in relation to bargaining an enterprise agreement covering the relevant employees, undertaking the assessment at company or entity level (not purely regarding each mine); and
- it was not contrary to the public interest to make the authorisation – the FWC did not consider the employers had put forward any public effects (as opposed to matters related to their own interests as employers) that rebutted the presumption that an authorisation is not contrary to the public interest.
Delta was excluded from the authorisation on the basis its operation is not reasonably comparable to the other three employers, including because Delta supplies coal to a single power station (not export markets) and has different operational and workforce arrangements.
Whitehaven, Ulan Coal and Peabody challenged the FWC’s authorisation in the FCA but their application was ultimately dismissed in September this year, with the full court of the FCA upholding the August 2024 authorisation decision. Prior to the FCA decision, Peabody was removed from bargaining after it announced it would close its Wambo mine in the second half of this year.
While APESMA was successful in obtaining the authorisation, little progress was made in bargaining for the multi-employer enterprise agreement and no enterprise agreement was made prior to the expiry of the authorisation. Despite initially applying to extend the authorisation to continue to pursue bargaining with Whitehaven and Ulan Coal, APESMA withdrew its application and has instead pivoted to bargaining individual site-based enterprise agreements with Whitehaven and Ulan Coal.
Take homes
To make a single-interest employer authorisation the majority of employees who will be covered by the proposed agreement must want to bargain. This highlights the importance of keeping employee engagement high. Even if this does not prevent employees providing support to bargain a multi-employer enterprise agreement, it may give you notice of any potential multi-employer authorisation application.
Although no multi-employer enterprise agreement was achieved by APEMSA, this decision highlights that resources and energy employers without in-term enterprise agreements applying to their workforce may be forced to bargain together. Whether that bargaining will actually lead to a multi-enterprise agreement is another question and one that will likely be dictated by the strategy of the union and employer parties.
Redundancy, redeployment and the contractor factor: the Helensburgh Coal decision
The Helensburgh Coal matter related to 22 former employees whose positions were made redundant in 2020 and who sought to challenge their dismissal by making unfair dismissal applications. Helensburgh Coal contended that the employees’ dismissals were a case of genuine redundancy and they were not eligible to commence unfair dismissal proceedings. Relevantly, an employee’s dismissal will not be a case of genuine redundancy if it would have been reasonable in all the circumstances for the person to be redeployed within the employer’s enterprise (or the enterprise of an associated entity).
The FWC found that the 22 employees’ dismissals were not cases of genuine redundancy because it would have been reasonable in all the circumstances for the employees to be redeployed to perform work that was being performed by contractors. The employees were therefore eligible to bring an unfair dismissal claim.
Helensburgh Coal challenged this decision numerous times, including to the Full Bench of the FWC, the full court of the FCA, and finally before the High Court of Australia. In August this year, the High Court found that, when considering whether Helensburgh Coal satisfied its redeployment obligations as part of the redundancy process, the FWC was permitted to inquire whether Helensburgh Coal could have changed how it uses its workforce to operate its enterprise (e.g. by replacing labour-hire or contractors with employees at risk of being made redundant). The outcome of this decision is that the former employees’ dismissals were not a genuine redundancy and they can pursue their unfair dismissal claims before the FWC. At the date of writing this article, the substantive unfair dismissal proceedings have not been determined by the FWC.
Take homes
This is a significant decision for employers in the resources and energy sector, with many operations using labour hire, contractors and other third-party workforce arrangements. Also, given the wide publication of the Helensburgh Coal decisions, we expect unions and employees will increasingly seek for employers to displace labour hire and contractors before making employees redundant.
Any employer undertaking a restructure or otherwise navigating a redundancy process should:
- consider redeployment opportunities in the context of its enterprise – not solely identify if there are any vacant positions into which an employee could be redeployed;
- ask what, at the time of dismissal, could it reasonably do to redeploy employees within its enterprise (or the enterprise of their associated entities) in the circumstances; and
- keep a record of the reasons for the position(s) no longer being required to be performed, redeployment opportunities considered and any relevant circumstances, and the reasons for its decision to redeploy or not redeploy employees.
Whether or not it is reasonable to displace contractors or labour hire to avoid terminating employees will ultimately turn on the particular circumstances, including the nature of the work being performed by the affected employees and third-party workforce and the ability for the affected employees to perform that work with reasonable training.
