Mining giant BHP has admitted it has underpaid almost 30,000 workers, dating back to 2010, and it will cost more than $400 million to make amends.
In a statement to the ASX, BHP said a review suggested rostered employees in Australia had their leave incorrectly deducted on public holidays since 2010.
"There are approximately 28,500 affected current and former employees with an average of six leave days in total that have been incorrectly deducted from affected employees," the company told the ASX.
BHP also said it has found around 400 current and former employees in Port Hedland are entitled to additional allowances "due to an error with the employment entity in their contract".
BHP has significant export infrastructure in Port Hedland, where iron ore from its Pilbara operation is shipped.
In February it reported a half-year profit of $9.3 billion, a drop of 32 per cent.
It estimates the cost of fixing the issue will be around $US280 million pre-tax — which works out to be roughly $430 million.
The company told the ASX it is continuing to investigate the matter and an update will be provided in its full year results in August.
'Falls short of standards': BHP
BHP's Australian president Geraldine Slattery has apologised to employees affected by the errors.
"This is not good enough and falls short of the standards we expect at BHP," she said.
"We are working to rectify and remediate these issues, with interest, as quickly as possible."
BHP said it has self-reported to the Fair Work Ombudsman, and will contact current and former employees who have been affected.
Company is 'deeply sorry'
In a video statement to employees, Ms Slattery said BHP had "discovered some issues" with the payroll system which affected employees.
"Let me call out a few things, this should not be happening at all," she said.
"I'm deeply sorry that you're being impacted."
"Please know we're committed to understanding and correcting these issues quickly."
She said the issues had been reported to the Fair Work Ombudsman and former employees who may have been affected would be contacted.
BHP's chief people officer Jad Vodopija said a preliminary review showed leave had been incorrectly deducted when some employees had taken time off work on a public holiday.
She said leave hours that had been incorrectly deducted would be re-credited, plus 10 per cent, as a recognition that "this never should've happened".
Ms Vodopija said those employed by copper and gold miner OZ Minerals before it was bought by BHP in April may have also been affected.
"Our initial investigation suggests OZ Minerals has been affected by a similar issue before being acquired by BHP," she said.
"We are committed to fixing this also."
Union hits out at BHP
Mining and Energy Union general secretary Grahame Kelly said BHP had been "sprung ripping workers off" and the union would ensure affected members received their full entitlements.
"Today's revelation goes to show that we need to keep up the pressure on big companies like BHP to do the right thing," Mr Kelly said.
"BHP has assumed that because they want round-the-clock profits from their mining operations, their workers aren't entitled to their public holiday rights.
"We will make sure all our affected members receive every cent they are owed due to this stuff-up."
Mayor 'shocked' by news
Port Hedland mayor Peter Carter said BHP was a major employer and business in the town, and he was "shocked" by the underpayments.
However, he said it would not affect the miner's local reputation.
"They reward our town, they look after our town, and we were shocked to hear the announcement today," he said.
"We're still getting our head around it. [But] I believe that employees and past employees will be rewarded."
Employee keen for back pay
Port Hedland resident Julie Arif, whose husband has worked for BHP for 38 years, said he had learned of the underpayments via the media, not the company.
Ms Arif said she was looking forward to a potential payout.
"I reckon everyone's going to be a little bit happy, it's always good when you get a little bit extra in your pay packet," she said.
"It's been like a community lotto win, I suppose.
"People hadn't picked it up before now. If they haven't picked it up, then what have you got to be angry about?"
BHP's admission is the latest in a string of corporate underpayment incidents reported in Australia in recent years.
Last year, Woolworths announced it had underpaid workers by $144 million, on top of $427 million it had already disclosed.
In 2021, the Fair Work Ombudsman (FWO) began legal action against Coles supermarkets, alleging the chain underpaid more than 7,500 salaried employees a total of $115 million.
In June 2020 it was revealed the ABC back-paid over $11.9 million to more than 1,800 current and former casual staff.
BHP critical of pay legislation
Last week the mining giant was critical of the federal government over its 'same job, same pay' legislation, which would require labour-hire workers to be paid at least as much as company employees doing the same job.
BHP estimated the policy, which the government plans to introduce this year, could cost it $1.3 billion per year.
"This cost is equivalent to the labour cost of approximately 5,000 full-time employees across our operational workforce," the company said.
Workplace Relations Minister Tony Burke hit out at the company after news of its underpayment issues were revealed.
"Just last week BHP were trying to assure us that their employment practices were impeccable and the government didn't need to close any loopholes to protect wages," Mr Burke said.
"That's clearly not true.
"Australia can do better to make sure workers are properly paid. That'll be the focus of our legislation in the coming months."
