BHP share price slips as union takes legal action

The union move could impact 1,700 workers.

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The BHP Group Ltd (ASX: BHP) share price jolted in early trading on Wednesday and is now drifting 0.85% lower at $43.37 apiece.

While the miner has no company-specific news out today, the Mining and Energy Union (MEU) reports it has filed a series of applications in the Fair Work Commission regarding three of BHP's coal mines.

Here's a closer look at what this means for investors and the BHP share price.

BHP share price drifts as union files suit

The MEU says it has launched a legal battle against BHP with the Fair Work Commission. It is aiming to increase the pay of 1700 labour-hire workers at three of BHP's sites from $10,000 to $40,000 annually.

The union filed applications with the commission on Wednesday for "same job, same pay" orders covering such workers at BHP's Peak Downs, Saraji, and Goonyella Riverside coal mines. These assets are a part of the BHP-Mitsubishi Alliance (BMA) but are operated solely by BHP.

BMA operates five coal mines in Queensland, including the three mentioned above. Its enterprise agreement, constructed in 2022, governs rates of pay for those workers directly employed at the site.

It does not cover labour-hire workers at the site, however. The "same job, same pay" orders argue against this. The total of 10 applications covers labour-hire workers employed by WorkPac, Chandler Macleod, and BHP subsidiary Operations Services.

The MEU alleges that BHP's current labour hire practices drive down wages and job security, labelling it a "labour-hire rort".

MEU Queensland president Mitch Hughes had this to say:

BHP has driven the casual labour hire model that has spread like a cancer throughout coal mining…

Today's applications are a major step towards stamping out this model and closing the loopholes that have allowed BHP to avoid paying fair rates in site enterprise agreements. 

BHP must accept that using labour hire purely to cut pay is out of step with community standards and is now out of step with the law.

There is no talk on whether the union's move could potentially disrupt BHP's operations and increase labour costs. BHP has yet to respond to the applications at the time of publication.

Implications for BHP

The MEU says it plans to expand its "same job, same pay" campaign across the coal industry, targeting other BHP operations and potentially affecting thousands of workers. This could set a precedent impacting labour hire practices industry-wide.

Despite the legal challenges, I think the BHP share price will likely remain resilient, as nothing has changed fundamentally for the company at this stage.

Goldman Sachs recently reinstated coverage of BHP shares with a buy rating and a price target of $49.00. This suggests a potential upside of 13% over the next 12 months. Goldman highlights BHP's robust position as Australia's largest miner, underpinned by strong fundamentals and favourable market conditions.

BHP shares have traded within a tight range in the last 12 months and are down 2% in that time. This year to date, as the S&P/ASX 200 Index (ASX: XJO) has lifted around 1.5%, the BHP share price is 14% in the red.

Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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