Supermarket chain accused of short changing part-time employee when negotiating new enterprise agreement

A recent case before a full bench of the Federal Court has highlighted the importance of employers seeking expert advice to determine that their enterprise agreements satisfy the requirements provided for by relevant legislation, including the Better Off Overall Test (BOOT).

Enterprise Agreements, formerly known as Enterprise Bargaining Agreements (EBAs), are a collective industrial instrument generally made at an enterprise level between the employer and its employees regarding terms and conditions of employment. The BOOT test requires that each of the employees covered by the agreement are better off overall than under the relevant modern award.

In this case, the part-time employee of a large supermarket chain is seeking to overturn the approval of the retailer’s new enterprise agreement. This agreement affects about 77,000 employees.

Counsel for the employee outlined to the full bench of the Federal Court how the agreement would affect workers at a metropolitan and regional supermarket store. Evidence was presented detailing the impact on seven employees at these two stores, along with the impact on the part-time employee who is challenging the agreement.

The employee’s counsel argued that the evidence presented by the supermarket chain assumed that all employees accessed a range of benefits in full, every year, including four weeks annual leave; blood donor leave; 10 days defence service leave; five days of pre-approved leave; 11 days carer’s leave; three days compassionate leave; three days of emergency leave; three days of natural disaster leave; and a lengthy period of accident make-up pay.

Counsel contended that the employee would be about 8.2% worse-off under the agreement, losing about $1768 a year. One employee would be 31% worse off. It was argued that the only proper decision for the full bench would be to quash approval of the agreement. The full bench reserved its decision after a two-day hearing.

There are several points that should concern employers in relation to this case.

Firstly, that despite the agreement receiving 90% endorsement in a ballot of employees and the support of the major retail union, the employee’s counsel argued that, despite this overwhelming majority, the employees did not give full informed consent and did not understand that the biggest financial disadvantage applied to part-time and night work.

Secondly, the employer’s counsel advised that it would take about another year to negotiate a new agreement if the Commission quashed the current deal, meaning a replacement would not apply until mid-2017. Having such uncertainty regarding wages and employee benefits would, argued the employer’s counsel, have a negative impact on workplace culture. Flow-on effects could be increased workplace turnover and low team morale.

Thirdly, the employer’s counsel advised that, if the agreement was quashed, this would require the employer to change its payroll settings back to those used in the 2011 agreement. Employees would miss out on scheduled pay rises due this year, although the employer would not seek to recover any pay rises that had already been paid.

Irrespective of whether the above agreement is quashed, this has been an extremely costly and time consuming exercise for the employer. Employers can protect themselves from such situations by seeking professional advice from an experienced HR professional in order to guide them through the enterprise bargaining process. Having an independent set of eyes to oversee a process such as this is crucial, as the employer’s perspective was that the majority of supermarket employees would be financially better off under the agreement.

iHR Australia believes prevention is the best cure and can help organisations through the development, negotiation, approval and implementation phases of an enterprise agreement. Their services include:

• Development and drafting your enterprise agreement in line with organisational objectives and strategies;
• Communication strategies, agenda setting and timetabling;
• Negotiations with your employees and their nominated bargaining representatives (including unions);
• Providing advice in relation to protected industrial action, if any;
• Approval processes (voting etc);
• Applications for approval to relevant tribunals;
• Representation and advocacy in tribunals, as required;
• Advice and interpretation of applicable legislation;
• Adherence to the Fair Work Act 2009; and
• Adherence to good faith bargaining requirements and scope orders.