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A true David and Goliath battle: how one employee can bring down your entire EBA

By Kristin Ramsey06 Jun 2016

Last week’s decision by the Fair Work Commission to overturn the approval of the Coles Store Team Enterprise Agreement 2014 – 2017 (EBA) shows that all it takes is one disadvantaged employee to bring down a whole agreement.

The EBA reportedly covers in excess of 75,000 Coles supermarket employees and has been in operation for just under 12 months.

A key feature of the EBA is the payment of higher hourly rates as a trade-off for lower penalty rates for late night, weekend and public holiday work.

The EBA was originally approved by Commissioner Bull in June 2015 and, in order to get the deal passed, Coles was required to provide a variety of undertakings.

One of those undertakings was to incorporate a right for casual and junior employees to seek a reconciliation of the wages received versus what they would have been paid under the applicable award in any four week roster period (with any shortfall being paid to the employee as back pay). This undertaking was provided to address the Commission’s concerns that casual and juniors were at particular risk of being worse off under the EBA.

A part-time employee (Mr. Duncan Hart) appealed the decision to approve the EBA alleging that it did not pass the better off overall test (BOOT).

Mr. Hart adduced evidence demonstrating that he, personally, was worse off under the EBA compared to the General Retail Industry Award 2010, and also provided calculations and analysis about the rosters of seven other employees who were also disadvantaged.

Earlier this week a Full Bench of the Fair Work Commission determined that the EBA did not pass the BOOT.

In its decision the Full Bench noted that, in order for an agreement to pass the BOOT, the Commission must be satisfied that each prospective award covered employee would be better off if the agreement covered the employee than if the relevant modern award covered the employee. As Mr. Hart and the seven other employees were worse off, the EBA could not pass the BOOT.

The Full Bench has indicated that the situation can be remedied by the provision of further undertakings from Coles either to provide adjustments for employees that are ultimately disadvantaged as a result of the reduction in penalty rates, or otherwise to limit the number of hours that would otherwise have attracted penalties under the Award.

Coles is required to inform the Commission of its intentions by 10 June 2016.

If Coles is unable or unwilling to provide adequate undertakings, the entire EBA will fall over and employees will revert to the previous enterprise agreement. It is not clear what impact this will have on employee entitlements.

Ramifications and learning’s for the Aged Care industry

Whilst the decision relates to the retail industry it is important for aged care providers as it reinforces that the BOOT applies to each individual employee.

It is not enough to show that employees as a class will be better off under the agreement, providers must ensure that each and every employee will be better off.

If one employee can show they will be worse off, the whole agreement can come tumbling down.

It can be extremely difficult to ensure (or demonstrate) that each individual employee will be better off in situations where higher rates are paid for ordinary hours in exchange for a reduction in penalties, loadings, and allowances. In these situations, employees who work a greater proportion of hours that would otherwise attract special payments are at risk of being disadvantaged.

Where you have a large workforce and a large number of roster patterns BOOT calculations can become quite complex and the number of variables that need to be taken into account can be overwhelming.

In a practical sense, provided on the face of it employees appear to be better off overall (supported by a reasonable level of calculations covering the most common working patterns and scenarios), you can likely overcome most BOOT issues by including provisions in the agreement which provide for “reconciliations” in situations where employees feel they have been personally disadvantaged.

However, such clauses need to be drafted with care to ensure that the value of non-monetary entitlements (such as additional leave) has been appropriately taken into consideration and that the timeframes for requesting and undertaking reconciliations are reasonable.

If you are currently involved with negotiating an enterprise agreement or are about to commence negotiations, we can help you ensure that your agreement does not suffer the same fate as Cole’s has!

We regularly assist aged care providers by drafting agreements, undertaking BOOT assessments, negotiating with unions, and preparing communications documents.

Please contact Kristin Ramsey – Director, Employment and Workplace Relations if you would like to have a no-obligation preliminary discussion about your agreement negotiations and how we can assist. 

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