Collective agreement spells trouble for retail giant

Australia’s workplace regulations are vast and ever changing. A best practice approach to industrial relations is difficult for organisations lacking the in-house expertise to make it a reality. Continual law reforms and policy changes can make it difficult to keep up and manage disputes to avoid litigation. When it comes to enterprise agreements in particular, it pays to have the know-how to not only develop an agreement, but also navigate your way through negotiations and the rollout to employees. So what’s involved?

Put simply, an enterprise agreement stipulates the terms and conditions of employment and includes anything from salary, employment conditions, hours worked, break times and overtime, to dispute resolution procedures. These agreements are made at enterprise level between employers, employees and their unions. Enterprise agreements are designed to be mutually beneficial to both employers and employees; for instance, from an employers’ perspective, agreements may improve flexibility when it comes to what can be defined as ordinary hours, salary and performance-based benefits. Employees too can benefit as they usually receive higher salaries and bonuses, as well as other benefits such as extra leave and entitlements like redundancy pay.

To be binding, these agreements must meet the conditions outlined in the Fair Work Act 2009 – a set of minimum terms and conditions of employment through the National Employment Standards (NES). One of these is to make sure the agreement meets the Better Off Overall Test (BOOT), meaning it must provide for the employee to be better off overall when conditions in the agreement are compared to the relevant award.

Believing that his enterprise agreement failed the BOOT test, an employee of one of Australia’s largest supermarket chains took his employer to the Fair Work Commission who in turn has granted him the right to appeal the agreement.

The employee asked the Commission to review its approval of the agreement, which covers almost 80,000 employees nationally. The retailer and its union had negotiated the agreement, giving supermarket workers a higher hourly base rate, but reduced penalty rates for weekends and nights. The employee calculated that many workers would be substantially worse off under the agreement. “I thought it was absolutely outrageous,” he said. “I found it mind-boggling that so many workers would be worse off compared to the base local minimum. For me personally it means $60 less a week. To give people a sense, it’s about 20 per cent cut to what I’d be earning under the award compared to the agreement. So it’s a pretty big deal for low-wage workers.”

The Commissioner said further analysis was needed to make sure the agreement passed the BOOT for all parties covered under the arrangement. In their decision, the commissioners said the agreement should be further tested to ensure it passed the BOOT for all of the 77,507 workers covered by the deal. “We propose to grant permission to appeal and allow parties to lead such additional evidence as they see fit.”

iHR Australia offers a wide range of specialist workplace relations and industrial relations expertise. For organisations seeking to outsource or support such functions as enterprise agreements, iHR can help with all phases of the process from development and negotiation to approval and implementation.