The company said an average of six days’ leave was incorrectly deducted on public holidays since 2010.

“Initial investigations that Oz Minerals has been affected by a similar leave deduction issue before being acquired by BHP in May,” BHP told the market on Thursday.

“In addition, BHP has identified that approximately 400 current and former employees at Port Hedland (Western Australia), are entitled additional allowances due to an error with the employment entity in their contract.

“Based on currently available information, it is estimated that the cost of remediating the leave issue and the contracting issue will be up to $US280 million pre tax, incorporating on costs including associated superannuation and interest payments.”

It said it was still investigating the issue and would provide a full update in its annual results in August.

BHP President Australia Geraldine Slattery apologised to those affected.

“We are sorry to all current and former employees impacted by these errors,” she said,

“This is not good enough and falls short of the standards we expect at BHP.

“We are working to rectify and remediate these issue with interest as quickly as possible.”

Workplace Relations Minister Tony Burke said the revelation highlighted the need to improve protections for workers.

“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.”

The Mining and Energy Union said BHP had been “sprung ripping workers off”.

“Today’s revelation goes to show that we need to keep up the pressure on big companies like BHP to do the right thing,” general secretary Grahame 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.”

Shares in BHP opened 12 cents down on Wednesday’s close of $42.02.

BHP said the estimated cost of remediating the leave issue and the contracting issue would be up to $US280 million ($A430 million) pre-tax, including necessary superannuation and its share of interest payments.

Global assurance firm Protiviti has been brought in to thoroughly review the payroll systems.

An update is expected when BHP announces its full-year results in August.

BHP says it self-reported to the Fair Work Ombudsman and will contact affected current and former employees as soon as possible.

A dedicated hotline and website will be running from Friday.

-with AAP