Mining giant BHP faces $280 mn cost for underpaying staff

Workers at BHP Billiton's Escondida, the world's biggest copper mine, are seen in front of the open pit, in Antofagasta, northern Chile March 31, 2008. Picture taken March 31, 2008. Credit: Reuters Photo

Global mining giant BHP said Thursday it had been underpaying thousands of Australian staff for more than a decade, an error that will cost at least US$280 million to fix.

The company said 28,500 current and former employees were stripped of paid leave they were entitled to.

BHP Australia president Geraldine Slattery said the error would be rectified "as quickly as possible" and "with interest".

The company did not explain how the error occurred.

"We are sorry to all current and former employees impacted by these errors. This is not good enough and falls short of the standards we expect at BHP," Slattery said.

BHP expects to have a fuller estimate of the cost of the error when it reports earnings in August, but it put the initial price tag at "US$280 million pre-tax."

The company's share price fell almost one per cent on the news.

BHP is one of the world's largest companies, and a leading producer of metallurgical coal, iron ore, nickel, copper and potash.

Australia has some of the world's strongest labour protections and it is not uncommon for companies to discover problems with past payrolls and be forced to rectify the situation.