Fair Work Act 2009

s.242 - Supported bargaining authorisation

Application by Shop, Distributive and Allied Employees Association

Application for a supported bargaining authorisation in respect of McDonald's franchises in South Australia.

[1] On 5 August 2024, the Shop, Distributive and Allied Employees Association (SDA) filed an application under s 242 of the Fair Work Act 2009 (Cth) (FW Act) for a supported bargaining authorisation. The SDA seeks[1] that the authorisation cover the following employers, each of which is party to a licence agreement with McDonald's Australia Limited (MAL) and operates at least one McDonald's-branded restaurant in South Australia:

• (1) Peter Russo Investments Pty Ltd

• (2) Sedah Pty Ltd (Sedah)

• (3) Ballavarra Pty Ltd

• (4) Ardeen Pty Ltd

• (5) Majero Investments Pty Ltd (Majero)

• (6) Jameri Pty Ltd

• (7) Neka Enterprises Pty Ltd (Neka)

• (8) Kalbak Pty Ltd

• (9) Bandec Pty Ltd

• (10) Gintonak Pty Ltd

• (11) BL Edwards Group Pty Ltd

• (12) Nieumorr Pty Ltd

• (13) Nimali Pty Ltd

• (14) Big 3 Group Pty Limited

• (15) J & M Hodge Investments Pty Ltd

• (16) PWR Enterprises Pty Ltd

• (17) Dutschke Enterprises Pty Ltd

• (18) Paderson Pty Ltd

[2] The above employers (collectively, SA Licensees) operate every franchised McDonald's-branded restaurant in South Australia. MAL itself also directly operates a number of McDonald's-branded restaurants in South Australia. The authorisation sought would cover all employees of the SA Licensees who:

(i) perform work at McDonald's restaurants within any classification which falls within the classification definitions provided at clause 12.4 of the Fast Food Industry Award 2020; and/or

(ii) perform maintenance work at or in connection with McDonald's restaurants.

[3] We heard the SDA's application on 11 and 12 February 2025 in Adelaide. The SDA and the SA Licensees led evidence and made submissions. We also allowed the Australian Council of Trade Unions (ACTU) to be heard in the matter for the purposes of making submissions in relation to the questions of statutory construction that arise. Accordingly, the ACTU appeared and made submissions at the hearing.

[4] From 6 June 2023, Part 20 of Schedule 1 to the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 (Cth) (SJBP Act) amended Division 9 of Part 2-4 of the FW Act to introduce a new scheme enabling parties to apply for a 'supported bargaining authorisation' for the purpose of making a 'supported bargaining agreement', replacing the former low-paid bargaining scheme. The key provisions are ss 241, 242 and 243:

1. Objects of this Division

(a) to assist and encourage employees and their employers who require support to bargain, and to make an enterprise agreement that meets their needs; and

(c) to address constraints on the ability of those employees and their employers to bargain at the enterprise level, including constraints relating to a lack of skills, resources, bargaining strength or previous bargaining experience; and

(d) to enable the FWC to provide assistance to those employees and their employers to facilitate bargaining for enterprise agreements.

(1) The following persons may apply to the FWC for an authorisation (a supported bargaining authorisation) under section 243 in relation to a proposed multi-enterprise agreement:

(b) an employee organisation that is entitled to represent the industrial interests of an employee in relation to work to be performed under the agreement.

Note: The effect of a supported bargaining authorisation is that the employers specified in it are subject to certain rules in relation to the agreement that would not otherwise apply (such as in relation to the availability of bargaining orders, see subsection 229(2)).

(a) the employers that will be covered by the agreement; and

(b) the employees who will be covered by the agreement.

(3) An application under this section must not be made in relation to a proposed greenfields agreement.

1. When the FWC must make a supported bargaining authorisation

(1) The FWC must make a supported bargaining authorisation in relation to a proposed multi-enterprise agreement if:

(a) an application for the authorisation has been made; and

(b) the FWC is satisfied that it is appropriate for the employers and employees (which may be some or all of the employers or employees specified in the application) that will be covered by the agreement to bargain together, having regard to:

(i) the prevailing pay and conditions within the relevant industry or sector (including whether low rates of pay prevail in the industry or sector); and

(ii) whether the employers have clearly identifiable common interests; and

(iii) whether the likely number of bargaining representatives for the agreement would be consistent with a manageable collective bargaining process; and

(iv) any other matters the FWC considers appropriate; and

(c) the FWC is satisfied that at least some of the employees who will be covered by the agreement are represented by an employee organisation.

Note: This subsection is subject to section 243A (restrictions on making supported bargaining authorisations).

(2) For the purposes of subparagraph (1)(b)(ii), examples of common interests that employers may have include the following:

(b) the nature of the enterprises to which the agreement will relate, and the terms and conditions of employment in those enterprises;

(c) being substantially funded, directly or indirectly, by the Commonwealth, a State or a Territory.

Supported bargaining authorisation - declared industry etc.

(2A) The FWC must also make a supported bargaining authorisation in relation to a proposed multi-enterprise agreement if:

(a) an application for the authorisation has been made; and

(b) the employees specified in the application are employees in an industry, occupation or sector declared by the Minister under subsection (2B).

Note: This subsection is subject to section 243A (restrictions on making supported bargaining authorisations).

(2B) The Minister may, by legislative instrument, declare an industry, occupation or sector, if the Minister is satisfied that doing so is consistent with the objects of this Division set out in section 241.

(a) the employers that will be covered by the agreement; and

(b) the employees who will be covered by the agreement; and

(c) any other matter prescribed by the procedural rules.

(4) The authorisation comes into operation on the day on which it is made.

[5] Section 243A provides for restrictions on the power to make a supported bargaining authorisation, none of which is applicable in this case.

1. The proper interpretation and application of s 243 in the context of the statutory scheme for supported bargaining was comprehensively considered in the Full Bench decision in Application by United Workers' Union, Australian Education Union and Independent Education Union of Australia[2] (Re UWU). The following propositions may be derived from that decision:

(1) The current scheme of supported bargaining for which Division 9 of Part 2-4 of the FW Act provides, which was effected by the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 (Cth) (SJBP Act), substantially modifies the previous low-paid bargaining scheme with the objective of rendering the scheme more accessible and therefore more widely-used. This is the principal contextual consideration in the interpretation and application of s 243.

(2) Section 243(1) imposes an obligation on the Commission to make a supported bargaining authorisation if: first, an application for the authorisation has been made (s 243(1)(a)); second, the Commission reaches the required state of satisfaction under s 243(1)(b); and, third, at least some of the relevant employees are represented by an employee organisation (being an organisation of employees registered under the Fair Work (Registered Organisations) Act 2009 (Cth)) (s 243(1)(c)).

(3) As to the first of these three preconditions, the application must have been made by a person with standing under s 242(1), must specify the matters prescribed in s 242(2), and must not be made in relation to a proposed greenfields agreement in accordance with s 242(3).

(4) As to the second precondition, the consideration required under s 243(1)(b) requires a broad evaluative judgment to be made having regard to the matters specified in subparagraphs (i)-(iv). A requirement to have regard to a matter means that, insofar as it is relevant, it must be treated as a matter of significance in the decision-making process. However, no single matter in s 243(1)(b) is to be regarded as being determinative as to whether the requisite state of satisfaction is reached.

(5) The assessment required by the matter identified in s 243(1)(b)(i) extends beyond the pay and conditions of the employees to whom the authorisation sought will apply (unless the authorisation sought would encompass the entirety of the relevant industry or sector). That will mean that, in the normal course, an applicant for an authorisation might be expected to adduce evidence concerning prevailing pay and conditions within the relevant sector. 'Prevailing' is to be given its ordinary meaning; that is, 'predominant' or 'generally current'. In relation to the words in parentheses in s 243(1)(b)(i), prima facie 'low rates of pay' will prevail in an industry or sector if employees are predominantly paid at or close to the award rates of pay for their classification, since this is the lowest rate legally available to pay.

(6) 'Common interests' is used in s 243(1)(b)(ii) in connection with the employers the subject of an authorisation application. The expression is one of wide import, and on its ordinary meaning extends to any joint, shared, related or like characteristics, qualities, undertakings or concerns as between the relevant employers. The diversity of the non-exhaustive list of 'examples' of common interests in s 243(2) gives contextual support to the breadth of meaning which we assign to the expression. The common interests must be 'clearly identifiable', that is, plainly discernible or recognisable, but need not be self-evident.

(7) Section 243(1)(b)(iii) is concerned with whether the likely number of bargaining representatives is consistent with a 'manageable' - that is, workable or tractable - collective bargaining process. This requires an assessment to be made which is to some extent speculative or predictive, since the choice of bargaining representative by the relevant employers and employees may not be known at the time an application for an authorisation is considered, and weight has to be given to the scope of their capacity to choose, and change, their bargaining representatives under s 176 of the FW Act. However, the consideration required is what is 'likely' - that is, probable to happen - not what may possibly happen. Any past history of bargaining, representation at the hearing of the authorisation application, and any sameness or diversity of views amongst employees and employers concerning the prospect of multi-employer bargaining may all inform the assessment to be made. Because s 243(1)(b)(iii) is concerned with the process of bargaining, rather than the outcome, the prospect of an agreement being reached if an authorisation is made will not be a significantly relevant consideration.

(8) Section 243(1)(b)(iv) gives the Commission a broad discretionary scope as to the relevance and weight of other matters to be taken into account. The applicable objects of the FW Act in ss 3, 171 and 241 will guide the Commission in identifying those matters which may appropriately be taken into account, as will the circumstances of the particular case.

[7] Section 246 specifies the powers of the Commission to provide 'assistance' to the bargaining representatives for an agreement if a supported bargaining authorisation is in operation:

1. FWC's assistance

(1) This section applies if a supported bargaining authorisation is in operation in relation to a proposed multi-enterprise agreement.

(2) The FWC may, on its own initiative, provide to the bargaining representatives for the agreement such assistance:

(a) that the FWC considers appropriate to facilitate bargaining for the agreement; and

(b) that the FWC could provide if it were dealing with a dispute.

Note: This section does not empower the FWC to arbitrate, because subsection 595(3) provides that the FWC may arbitrate only if expressly authorised to do so.

(3) Without limiting subsection (2), the FWC may provide assistance by directing a person who is not an employer specified in the authorisation to attend a conference at a specified time and place if the FWC is satisfied that the person exercises such a degree of control over the terms and conditions of the employees who will be covered by the agreement that the participation of the person in bargaining is necessary for the agreement to be made.

(4) Subsection (3) does not limit the FWC's powers under Subdivision B of Division 3 of Part 5-1.

[8] The SDA contends that the purpose of the SJBP Act amendments was to increase the take-up of what was the former low-paid bargaining stream by making it easier to access and by removing unnecessary limitations to the new form of supported multi-employer bargaining. It also contends that the new stream was intended to assist employees and employers who may have difficulty with bargaining at the single-enterprise level, and this was not limited to particular industries or circumstances, other than the requirements and considerations set out in the provisions themselves.

[9] The ACTU supports the application and the above approach. Further, it contends, in effect, there are now options for multi-employer bargaining, including supported bargaining and single-interest employer authorisations; however, there is no warrant under the scheme of the legislation to treat the availability of the other options as a relevant consideration or to imply a preference. The ACTU also contends that Part 2-4 of the FW Act provides two forms of enterprise agreement, namely single-enterprise and multi-enterprise agreements, and both give effect to the preference for enterprise level bargaining.

[10] The SA Licensees advance six 'observations' relevant to the construction and application of Division 9 of Part 2-4.

[11] The first is that the SJBP Act amendments were not intended to materially expand the scope of enterprises to which Division 9 would otherwise apply. In this respect, the SA Licensees pointed to the Revised Explanatory Memorandum (REM) and Minister's Second Reading Speech for the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Bill 2022 which referred to employees in low-paid industries such as aged care, disability care, and early childhood education and care, employees in government-funded industries and female-dominated sectors, and employees with a disability and First Nations employees, as examples of employees and their employers who may have difficulty in bargaining at the single-enterprise level and whom the supported bargaining stream was intended to assist.

[12] The second is that, notwithstanding the SJBP Act amendments, ss 3(f), 171(a) and 241(c) of the FW Act indicate that enterprise-level bargaining is intended to remain the primary and preferred mode of agreement-making under the FW Act.

[13] The third observation is that the assessment of appropriateness required by s 243(1)(b), and the identification of matters which might be considered appropriate under s 243(1)(b)(iv), is informed by the object provisions of the FW Act and also by Division 9's place within Part 2-4 and the respective roles to be played by each of the four bargaining streams which Part 2-4 establishes. In that respect, it is important that franchisees are expressly contemplated under the single interest employer stream in Division 10 (s 249(2)), and nothing in the scheme of Division 9 gives any express or implied indication that the supported bargaining provisions were intended to apply to franchise operations generally, or to the fast food industry in particular. Section 243(2)(c) identifies government funding as an example of common interests that employers may have for the purpose of the supported bargaining stream, but this is not given as an example of 'clearly identifiable common interests' in s 249(3A) for the purpose of the single interest bargaining stream, suggesting that the supported bargaining stream contemplates a different scope of employers than those to whom the single interest employer bargaining stream will apply. Additionally, the fact that franchise operations are not included within the meaning of 'common interest employers' in the single interest employer agreements stream (ss 249(3) and (3A)) but are dealt with separately in s 249(2), suggests that the notion of a 'common interest' is not intended to include 'related employers' such as joint venturers, related bodies corporate and franchise operations.

[14] The SA Licensees' fourth observation is that the inquiry required under s 243(1)(b) should be construed as referring to whether it is appropriate for the relevant employers to bargain together for a supported bargaining agreement specifically, rather than under the other streams in which franchisees might bargain together for an enterprise agreement. Fifth, the expression 'common interests' in s 243(1)(b) extends to any joint, shared, related or like characteristics, qualities, undertakings or concerns as between the relevant employers, and the requirement that they be 'clearly identifiable' means that they must be plainly discernible or recognisable, albeit they need not be self-evident. Sixth, the common interests contemplated by s 243(1)(b)(ii) extend only to those which are relevant to the facilitation of enterprise bargaining by the FWC via a supported bargaining authorisation.

1. As we understand it, none of the SA Licensees' observations is intended to suggest that s 243 should be construed as excluding fast food franchisees from its operation altogether, but rather seek to identify matters which should inform the Commission's consideration of appropriateness generally under s 243(1)(b) and the identification of matters considered appropriate under s 243(1)(b)(iv).[3] We consider it to be uncontroversial, and consistent with Re UWU, that the consideration of appropriateness under s 243(1)(b) would be informed by that part of the general object of the FW Act concerned with enterprise bargaining (s 3(f)) as well as the more specific objects of the FW Act concerned with enterprise agreements (s 171) and supported bargaining (s 241). It may also be accepted that ss 3(f) and 171(a) disclose a general preference for collective bargaining at the 'enterprise level' but, as s 241 discloses, that is subject to the availability of supported multi-enterprise bargaining where there are constraints on the ability of employees and their employers to bargain at the single-enterprise level or to provide support to such employees and employers to bargain. The existence of such constraints, and whether support is needed to bargain, may be taken into account in considering appropriateness under s 243(1)(b).

[16] We do not accept that the legislature intended that some limitation on the business categories of employers and their employees who might be the subject of a supported bargaining authorisation is to be taken into account in the consideration of appropriateness under s 243(1)(b), as suggested by the SA Licensees' first and third observations. No such limitation is contained in the text of s 243, and the fact that examples of categories of employers and employees who might be assisted by the supported bargaining stream were identified in the REM and the Second Reading Speech does not provide a proper basis to read down the scope of s 243, including as to the consideration of appropriateness. Section 243(1)(b) specifies the matters to which the Commission is to have regard when considering whether it is appropriate for the relevant employers and employees to bargain together, and the extrinsic material cannot legitimately be used to place a restrictive gloss upon the scope of this provision. Similarly, the fact that, in respect of the separate single interest employer bargaining scheme, s 249(2) makes special provision for the position of franchisees does not provide any legitimate contextual basis to restrict the scope of the consideration required under s 243(1)(b) in a way not supported by the text of the provision.

[17] We accept the proposition in the SA Licensees' fourth observation that the consideration under s 243(1)(b) as to whether it is appropriate for the relevant employers to 'bargain together' should properly be construed as a reference to bargaining together for a supported bargaining agreement. The wider context of Division 9 of Part 2-4, the subject of which is the facilitation of enterprise agreement-making through supported bargaining, makes that clear enough. However, we do not accept the SA Licensees' further proposition, which is implicit in the framing of its fourth observation but made more explicit elsewhere in its submissions, that this requires consideration of whether it might be more appropriate for bargaining to proceed via single-enterprise bargaining (initiated by a majority support determination made under s 237) or single interest multi-employer bargaining (initiated by a single interest employer authorisation made under s 249). This further proposition is advanced as the foundation for the contention that the SDA's application should be rejected because its rationale is said to be to avoid having to demonstrate majority employee support for bargaining (either under s 237(2)(a) or s 249(1B)(d)). Whether it may have been open to an applicant for a supported bargaining authorisation to have made an alternative application under Part 2-4 to force the initiation of bargaining is not something which, as a matter of construction, forms part of the consideration required by s 243(1)(b). The SA Licensees' contention in this respect fails to recognise that the making of an authorisation under s 243 leads to a type of bargaining that is distinct from the other modes of bargaining contemplated under Part 2-4 because it enables the Commission on its own initiative to provide such assistance as it considers appropriate to facilitate bargaining (s 246(2)). It is this which gives content to the notion of 'supported' bargaining. Thus, an applicant may elect to apply for a support bargaining authorisation because it leads to a particular mode of bargaining which is perceived to be effective for the employees and employers in question. In that context, the inquiry required by s 243(1)(b) is whether it is appropriate for multi-employer bargaining of that particular type to occur, as guided by the mandatory consideration of the matters identified in subparagraphs (i)-(iv). The different mandatory considerations in respect of other modes of bargaining prescribed by ss 237(2) or 249 are not relevant in this context. That is not to say, however, that the views of employees as to bargaining may not be taken into account as a matter considered to be appropriate under s 243(1)(b)(iv) and, as we set out below, we have in fact taken into account the evidence concerning the views of employees in this case.

1. The SA Licensees' fifth observation concerning the meaning of 'clearly identifiable common interests' in s 243(1)(b)(ii) is consistent with Re UWU and may be accepted. In respect of the sixth observation, we also accept that the clearly identifiable common interests that must be the subject of consideration under s 243(1)(b) are those which have relevance to the subject matter of Division 9 of Part 2-4, namely the facilitation of bargaining through a multi-employer supported bargaining process. In this respect, we adopt the analogous analysis concerning 'clearly identifiable common interests' in the context of s 249 stated in the Full Bench decision in APESMA v Great Southern Energy Pty Ltd and Ors:[4]

[348] We have earlier found that the legislation promotes collective bargaining which achieves productivity and fairness through collective bargaining at the level of the enterprise, including where authorised and subject to the express provisions giving some priority to single enterprise agreements, at a multi-enterprise level. Given the history of the provision and the intended purpose of the single interest employer authorisation process, the Commission must evaluate the evidence about the purported interests with a view to assessing whether the employers should be required (or permitted) to bargain together. This task extends beyond considerations at the macro or conceptual level and warrants close consideration of what the discernible interests of the parties are at the level of the enterprise, particularly those that are directly relevant to the proposed bargaining. Further, we consider that the Commission must take a broad, evaluative approach and undertake a qualitative assessment consistent with the objects of the FW Act in determining whether it can be found that each of the Respondent Employers shares relevant clearly identifiable common interests.

[19] The SDA relied on witness statements made by the following persons:

• Ali Amin, National Industrial Officer for the SDA. Mr Amin's witness statements annexed a number of documents concerning the fast food industry generally and McDonald's operations, and also documents concerning attempted bargaining between the SDA and McDonald's restaurants.

• Shae Monopoli, an organiser with the SDA South Australian Branch. Ms Monopoli was employed at the McDonald's restaurant at Woodville in Adelaide from June 2017 until September 2021, became an SDA workplace representative in July 2021 and, after she was employed by the SDA as an organiser in January 2022, was responsible for organising employees at McDonald's restaurants until September 2024 and thereafter organised in retail and fast food stores generally.

• Chris Matonti, an organiser with the SDA South Australian Branch. Mr Matonti was responsible for organising McDonald's restaurants from about January 2021 until mid-2022 and has otherwise been involved in a number of campaigns and projects involving McDonald's.

[20] None of these witnesses was required for cross-examination, although the SA Licensees made submissions that certain parts of the witness statements, principally involving the expression of opinions, should either not be admitted or alternatively not assigned any probative value. It has not been necessary for us to make findings based on any of these aspects of the witness statements except in respect of the evidence referred to in paragraphs [51] and [59] below, which we consider to be sufficiently probative to be taken into account.

[21] The SDA also relied on a bundle of documents which included 12 franchise agreements, standard position descriptions, and a pricing list for various McDonald's menu items across restaurants operated by three of the SA Licensees.

[22] The SA Licensees relied upon witness statements made by the following persons:

• Christopher Turner, employed by MAL as Director - Workplace Relations and Safety of McDonald's Australia and New Zealand. Mr Turner's witness statements annexed a number of documents concerning the operations of the McDonald's restaurants operated by the SA Licensees and MAL in South Australia.

• Neil Lucas, the Director of Neka and the current licensee for the McDonald's restaurants at Green Fields, Pooraka and Hollywood Plaza in South Australia since 2018. Mr Lucas worked at McDonald's restaurants from 1987 until 2002 and was previously the licensee for McDonald's restaurants at Port Pirie, Port Augusta and Whyalla.

• Matthew Rogers, the Director of Majero and the licensee for McDonald's restaurants at Camden Park, Cross Roads, Frewville, Mount Barker, West Beach and Hove in South Australia. Mr Rogers entered into his first licence agreement (for Camden Park) in 2015.

• Emma Burgess, the Director of Sedah and the licensee for McDonald's restaurants at Aldinga, Murray Bridge and Victor Harbor in South Australia. Ms Burgess was previously the licensee for the McDonald's restaurant at Renmark, which she purchased in 2014.

• Stephen Smith, the Principal of Actus Workplace Lawyers, engaged by Ai Group Workplace Lawyers to represent the SA Licensees in this matter. Mr Smith's statement annexed a number of documents concerning enterprise agreements in the fast food sector.

[23] Mr Turner, Mr Lucas, Mr Rogers and Ms Burgess were cross-examined by the SDA. No issue of credit arose with respect to any of these witnesses.

[24] The relevant primary facts in this matter were not in dispute, although the parties differed as to the inferences to be drawn from those facts and the matters to which emphasis and weight should be given. Our findings as to the relevant facts are set out below.

[25] The fast food industry forms part of the Accommodation and Food Services industry. This industry has the highest proportion (59.6 per cent) of employees who are paid no higher than the minimum award rate of pay (award-reliant employees). There are over 27,000 businesses in the fast food industry.

1. The Fast Food Industry Award 2020[5] (FFI Award) covers the fast food industry. The characteristics of award-reliant employees covered by the FFI Award include:

• the average age is 21.4 years;
  • 61.8 per cent of employees are paid junior rates of pay;
  • 86 per cent of employees work part-time hours;
  • average paid weekly hours is 19.8;
  • 70.6 per cent of employees are casual;
  • average hourly earnings, adjusted for the casual loading, for all employees is $18.30, and for employees on adult rates of pay it is $24.30;
  • adjusted for the casual loading, 50 per cent of employees are 'low paid' (that is, earn less than two-thirds of medial hourly earnings for all employees on an adult rate of pay); and
  • 58.1 per cent are employed in large business (200 or more employees).

[27] A significant proportion of employees in the fast food industry is undertaking secondary or tertiary education concurrently with their employment. There is a very high degree of labour mobility in the industry.

[28] Approximately 480 enterprise agreements in the fast food industry have been made under the FW Act. A list of these agreements was contained in an annexure to the statement of Mr Smith. It is apparent simply from a perusal of the year references in the titles of these agreements that the large majority were made in 2015 or before.

[29] The SDA is the only registered organisation which is entitled to represent the interests of fast food employees on a national basis (including South Australia). The SDA has bargained, or is bargaining, for enterprise agreements with some of the large fast food chains. The most significant of these is KFC and its franchisees, covering approximately 37,000 employees, and Hungry Jack's and its franchisees, covering approximately 17,000 employees. The rates of pay provided by the agreements with KFC and Hungry Jack's are only fractionally above the minimum rates of pay prescribed by the FFI Award.

[30] MAL is the Australian affiliate of an American multinational fast food business. There are currently 1,035 McDonald's restaurants in Australia, of which about 85% are operated by franchisees and the remainder by MAL directly. MAL and its franchisees employ almost 115,000 people in their restaurants and management offices. This represents almost half of all employees in the fast food industry. In South Australia, the SA Licensees operate 53 restaurants and MAL operates 11.

[31] MAL franchises the operation of McDonald's restaurants in Australia by means of, first, a licence to operate the 'McDonald's System' and, second, a lease of the restaurant premises to which the licence relates. The licence is granted pursuant to a standard licence agreement between, on the one hand, MAL and, on the other hand, a licensee (usually a corporation) and a principal (an individual). Each of the SA Licensees is a licensee pursuant to such an agreement for each restaurant which they operate.

[32] The licence agreements applicable to the restaurants operated by Neka (for which Mr Lucas is the principal), Majero (Mr Rogers) and Sedah (Ms Burgess) were placed into evidence by the SDA. These licence agreements were executed at various times, and the standard form of the agreements has changed slightly over time, but their essential features are the same. In a number of cases, the current licensee and principal became parties to the licence agreement by way of a deed of assignment, to which MAL is a party, from a previous licensee and principal. There is no dispute that the other SA Licensees are licensees under licence agreements with MAL in the standard form applicable at the time they were initially executed.

[33] The recitals in the licence agreements explain the 'McDonald's System' and the licensing of the use of that system to licensees in the following terms:

1. McDonald's Corporation, a Delaware corporation ('McDonald's') has developed and operates a restaurant system ('the McDonald's System'). The McDonald's System includes proprietary rights in certain valuable trademarks, service marks and trade names, including the trade names 'McDonald's' and 'McDonald's Hamburgers', designs and colour schemes for restaurant buildings, signs, equipment layouts, formulae and specifications for certain food products, methods of inventory and operation control, bookkeeping and accounting, and manuals covering business practices and policies. The McDonald's System is operated and is advertised widely within Australia and in other countries.

2. The McDonald's System is a comprehensive restaurant system for the retailing of a limited menu of uniform and quality food products, emphasising prompt and courteous service in a clean and wholesome atmosphere which is intended to be particularly attractive to families. The foundation and essence of the McDonald's System is the adherence by licensees to standards and policies of McDonald's and its related corporations providing for the uniform operation of all McDonald's restaurants within the McDonald's System including, but not limited to, serving designated food and beverage products; the use of only prescribed equipment and building layout and designs; and strict adherence to designated food and beverage specifications and to prescribed standards of quality, service and cleanliness in restaurant operation. Compliance by licensees with the foregoing standards and policies in conjunction with McDonald's trademarks, service marks and trade names provides the basis for the valuable goodwill and wide acceptance of the McDonald's System. Moreover the establishment and maintenance of a close personal working relationship with Licensee in the conduct of his McDonald's restaurant business, his accountability for performance of the obligations contained in this agreement, and his adherence to the tenets of the McDonald's System constitute the essence of the licence provided for herein.

3. McDonald's Corporation and its subsidiaries own all of the Intellectual Property and have licensed to Licensor the right to operate restaurants using the McDonald's System in Australia. Licensor's licence from McDonald's includes the right in Licensor to sub-licence.

4. Licensee wishes to be granted the right to adopt and use the McDonald's System in a restaurant at the location specified in item four of the schedule hereto ('the Restaurant') and Licensor has agreed to grant such right to Licensee, subject to the terms covenants and conditions contained herein.

5. Where there is or are persons named in item three of the schedule hereto as Principal, Principal has requested Licensor to agree to grant the licence provided for herein to Licensee and to execute this agreement. In consideration of Licensor's compliance with that request, Principal has agreed to guarantee to Licensor the performance of all the obligations of Licensee under this agreement upon the terms and conditions contained herein.

6. McDonald's Australia Limited and Licensee and Principal, have simultaneously with the conclusion of this licence agreement concluded a lease agreement ('the Lease') with respect to the land and buildings constituting the Restaurant.

[34] The licence agreements include a number of 'Licensee's Undertakings'. Using the clause numbering in the licence agreement relating to the Murray Bridge restaurant (noting that some of the other licence agreements have different clause numbering), these are contained in clause 6. The first undertaking, in clause 6.01, is an undertaking to comply with the entirety of the 'McDonald's System'. Clause 6.01 provides:

Licensee hereby acknowledges the importance to Licensor and to the operation of the Restaurant as a McDonald's restaurant, of every component of the McDonald's System including a designated menu of food and beverage products, uniform food specifications, preparation methods, quality and appearance, and uniform facilities and service. Licensee shall comply with the entire McDonald's System and shall adopt and use every such component thereof, in the Restaurant. Without limiting the generality of the foregoing Licensee shall:

(a) promptly adopt and use exclusively the formulae, methods and policies contained in the business manuals, now and as they may be modified by McDonald's or Licensor from time to time;

(b) operate the Restaurant in a clean, wholesome manner in compliance with Licensor's prescribed standards of quality, service and cleanliness; comply with all business policies, practices and procedures imposed by Licensor; serve at the Restaurant only those food and beverage products now or hereafter designated by Licensor, and maintain the building, equipment, and parking area in a good, clean, wholesome condition and repair, well lighted and in compliance with designated standards as may be prescribed from time to time by Licensor;

(c) use kitchen fixtures, lighting and other equipment, seating and signs in accordance with equipment specifications and layout designated by Licensor;

(d) keep the Restaurant equipped in accordance with equipment layout plans that are standard in the McDonald's System;

(e) not, without prior written consent of Licensor make any alterations, conversions, or additions to the building design, building, equipment or parking area;

(f) make repairs or replacements required because of damage or wear and tear and maintain the Restaurant building and parking area in good condition and in conformity with blueprints and plans;

(g) where parking is provided, maintain the parking area for the exclusive use of Restaurant customers;

(h) except as otherwise approved by Licensor, operate the Restaurant seven days a week throughout the year and at least during the hours from 7:00 a.m. to 11:00 p.m. or such other hours as may from time to time be prescribed by Licensor whether as a consequence of Council approval or otherwise (except when the Restaurant is untenantable as a result of fire or other casualty) maintain sufficient supplies of food and paper products, and employ adequate personnel so as to operate the Restaurant at its maximum capacity and efficiency;

(i) cause all employees of Licensee, while working in the Restaurant to: (i) wear uniforms of such colour, design and other specifications as Licensor may designate from time to time, (ii) present a neat and clean appearance, and (iii) render competent and courteous service to Restaurant customers;

(j) in the dispensing and sale of food products: (i) use only containers, cartons, bags, napkins and other paper goods and packaging bearing the approved trademarks of McDonald's and which meet the McDonald's System specifications and quality standards; (ii) use only those flavourings, garnishments and food and beverage ingredients which meet the McDonald's System specifications and quality standards, which Licensor may designate from time to time; and (iii) to employ only those methods of food handling and preparation which Licensor may designate from time to time;

(k) make prompt payment in accordance with the terms of invoices rendered to Licensee on any and all purchases by or on behalf of Licensee of fixtures, signs, equipment, food, paper supplies and other supplies and services in connection with the running of the Restaurant;

(l) at his own expense, comply with all federal, state and local laws, ordinances and regulations affecting the operation of the Restaurant; and

(m) comply in all respects with the covenants, undertakings, terms and conditions contained in the Lease.

[35] The 'Licensee's Undertakings' also included a requirement to permit MAL to inspect the restaurant premises to ensure compliance with the McDonald's System (clause 6.02) and to keep confidential information provided by MAL in relation to the McDonald's System (clause 6.03). Clause 6.04 concerns advertising, and provides:

(a) Licensee hereby acknowledges that he obtains and will continue to obtain benefit from the advertising programs conducted or arranged by Licensor and in consideration thereof Licensee hereby agrees to contribute towards the costs incurred by Licensor in conducting or arranging such advertising programs by paying to Licensor such sum, which together with any amounts:

(i) paid to the associations referred to in clause 6.04(c) hereof; and

(ii) expended by Licensee in recognised premium (time and space) commercial media, namely, commercial television, commercial radio and metropolitan newspapers; is equal to at least [amount omitted] of Licensee's Gross Sales.

(b) Licensee shall not use advertising or promotional materials and programs which include, or include a reference to, the word 'McDonald's' or any other trademarks or trade names which are owned by Licensor or by McDonald's or any of its subsidiaries unless such materials and programs have been approved in advance by Licensor as or acting on behalf of the owner of the trademark or name.

(c) Licensee hereby agrees to become a member of any national, relevant State and relevant local co-operative advertising association formed with the approval of Licensor for the purpose of administering marketing plans and to contribute to total annual budgets thereof such amounts as shall be determined by the association as being payable by members.

[36] MAL's obligations under the licence agreement are set out in clause 5. These include, in clause 5.02, an obligation upon MAL to communicate to the licensee 'its know-how and details of new developments, techniques and improvements in areas of restaurant management, food preparation and service which are pertinent to the operation of a restaurant using the McDonald's System.' Clause 5.03 provides for the provision of business manuals:

Subject at all times to clause 6.03 hereof, Licensor shall provide Licensee with one (1) copy of each of the business manuals prepared by McDonald's or Licensor for use by licensees of McDonald's restaurants similar to the Restaurant to be operated by Licensee. The business manuals contain detailed information relating to operation of the Restaurant including: (a) food formulae and specifications for designated food and beverage products; (b) methods of inventory control; (c) bookkeeping and accounting procedures; (d) business practices and policies; and (e) other management, advertising and personnel policies.

[37] In addition, clause 5.04 requires MAL to make available, at its cost, 'the services of Hamburger University, the international training centre for the McDonald's System and to provide to Licensee and his managers, if any, both basic and advanced instruction for the operation of a McDonald's System restaurant'.

[38] Clause 8 provides for restrictions on competing interests on the part of the licensee and principal, which include prohibitions on the appropriation, use or duplication of the McDonald's System at any other fast food, self-service, take-away or other similar restaurant business, and the disclosure without MAL's consent of any portion of the McDonald's System to any other person other than restaurant employees as an incident of their training.

[39] Clause 9 provides:

Neither Licensee nor Principal shall employ or seek to employ any person who is at the time employed by McDonald's or by Licensor or by any of the subsidiaries or associated or related companies of McDonald's or Licensor or by any person who is at the time operating a McDonald's restaurant, or otherwise induce, or attempt to induce, directly or indirectly, such person to leave such employment.

[40] The Schedule to the licence agreements provide for a term, which is consistently one of 20 years, an upfront licence fee, and an ongoing service fee expressed as a percentage of gross sales. Licensees also pay the advertising fee prescribed by clause 6.04 of the licensing agreements. Separate rental agreements apply to the rental of the restaurant premises by the licensee from MAL, and the licensees pay rental payments pursuant to these agreements.

[41] The licensing arrangements do not confer upon licensees any exclusive right to any particular territory, and MAL retains control over the location of restaurants and the addition of new restaurants.

1. There are a number of arrangements in place, which appear to be co-ordinated by MAL, by which the SA Licensees co-operate in the of conduct their respective businesses. The SA Licensees together form the 'McDonald's South Australian Co-op' (Co-op), of which Mr Rogers is the current elected president. The Co-op elects six of the SA Licensees to constitute a State Leadership Committee (SLC) together with two MAL representatives. The Co-op also has representatives on the Australian Leadership Group and the National Licensee Council, as well as national committees which deal with supply chain, menu and other issues. The SLC is involved in decision-making as to the expenditure upon marketing activities including advertising and sponsorships, which expenditure is drawn from a marketing fund into which each of the SA Licensees makes contributions (consistent with the advertising provisions of the licence agreements). The SLC also monitors performance 'based on the measures and metrics that [licensees] adopt within the McDonald's environment',[6] and meets to discuss statewide operational matters such as sales and employment relations matters. The SLC meets at least four times per year, and sometimes meetings are called by MAL.

McDonald's employees and employment arrangements in South Australia

[43] The SA Licensees employ about 4,500 persons in total, of whom 91 per cent are casual employees. The average age and length of service for employees are as follows:

1. In respect of employment relations matters, MAL has expertise which the SA Licensees may call on as required. It provides licensees with standardised position descriptions which are aligned with classifications in either the FFI Award or the Miscellaneous Award 2020[7] (Miscellaneous Award). These position descriptions are for the positions of: Crew Member, Crew Coach, and McCafé Crew Coach (FFI Award Level 1); Shift Manager, Customer Experience Department Manager, People Performance Department Manager, Product Quality Department Manager and Assistant Restaurant Manager (FFI Award Level 2); Restaurant Manager (FFI Award Level 3); and General Maintenance (Miscellaneous Award, various levels). Mr Rogers, Mr Lucas and Ms Burgess all utilise these position descriptions in their restaurants where the positions exist. MAL also provides licensees with other standardised employment policies and procedures, but these may be adapted for local use or supplemented by other local policies.

[45] Most employees of the SA Licensees are award-reliant - that is, they are paid at the level of the minimum rates prescribed by the FFI Award or the Miscellaneous Award, as applicable. Some employees are paid at above-award rates, usually in more senior roles or in difficult-to-recruit areas. It appears to be standard practice that Shift Managers, Department Managers, Assistant Restaurant Managers and Restaurant Managers who enter into an Individual Flexibility Arrangement (IFA) pursuant to which they work more flexibly, including in relation to when they take breaks, are paid 10 per cent above their applicable minimum FFI Award rate of pay for ordinary hours worked. Restaurant Managers are generally paid a salary which is intended to compensate for all their pay entitlements, and salary reconciliations are conducted at least annually to ensure that total remuneration exceeds award entitlements.

[46] Notwithstanding the commonality in the terms of the licence agreements including the requirement to give effect to the McDonald's System, there are some differences between the operations of the SA Licensees. The most significant of these are:

• MAL does not dictate the prices of menu items served at the SA Licensees' restaurants, since this would likely contravene the Competition and Consumer Act 2010, and the SA Licensees have the freedom to and in fact do charge different prices. MAL engages an independent third-party pricing company that provides restaurant-level pricing recommendations for each menu item that is sold. A SA Licensee is free to depart from these recommendations but there would be a prior discussion with the pricing company to explain the rationale for this.

• The SA Licensees do not necessarily use the same suppliers for their food and equipment. A national committee determines a list of suppliers for each item to be supplied, and a SA Licensee may choose a supplier from the approved list.

• The physical layout and design of restaurants will differ depending on their location and type of restaurant, but they are styled in a consistent way and use approved fixtures and fittings.

• The large majority of the SA Licensees' restaurants are freestanding with a drive-through facility, but a small number are located in food courts or are 'in-store' (i.e. part of a greater building complex, but not in a food court).

• The items served from the McDonald's menu may differ, particularly as between those restaurants which have a McCafé facility and those which do not.

• The staffing structure will vary dependent upon the type and size of the restaurant.

• The opening hours of the restaurants vary. They are all open seven days per week, as required by the licence agreements, and the majority are open for 24 hours per day, but some have more restricted hours.

• There are differences between the business structures of the SA Licensees: some operate multiple restaurants, while other operate only one, and their corporate and financing structures may differ.

• The restaurants operated by the SA Licensees are geographically dispersed across South Australia, with some regional restaurants (such as those at Mt Gambier and Port Lincoln) a considerable distance apart. However, the large majority of the restaurants (40 of 53) operated by the SA Licensees are within the Adelaide metropolitan area.

[47] Prior to the commencement of the FW Act, a number of McDonald's-specific enterprise awards applied to some McDonald's franchisees in New South Wales, the Australian Capital Territory (ACT), South Australia, the Northern Territory and Victoria. The SDA was a party to these awards. In addition, the SDA entered into certified agreements with McDonald's franchisees in the ACT, South Australia, the Northern Territory and Western Australia.

[48] After the commencement of the FW Act, bargaining at a national level with MAL and McDonald's franchisees proceeded pursuant to a series of single interest employer authorisations made by the Commission on the application of MAL. The first authorisation was granted in 2009 and resulted in the making and approval of the McDonald's Australia Enterprise Agreement 2009 (2009 Agreement). The second was in 2013 and resulted in the McDonald's Australia Enterprise Agreement 2013 (2013 Agreement). The third was in 2015 and led to a variation of the 2013 Agreement to include delivery drivers and new franchisees. It was a feature of both the 2009 and 2013 Agreements that they contained 'loaded' hourly rates in lieu of weekend penalty rates.

[49] A fourth authorisation was granted in 2018, and this resulted in a further agreement intended to replace the 2013 Agreement (2019 agreement). Ten of the SA Licensees were involved in the consultation and negotiation process for this agreement, but MAL was the primary interlocutor with the SDA in the bargaining. MAL applied to the Commission for the approval of the 2019 agreement on 14 June 2019 but, on 27 September 2019, it discontinued its application.

1. Following this, the Commission terminated the 2013 Agreement effective from 3 February 2020 on application by the SDA and an individual employee.[8] Neither MAL nor the franchisees listed in Schedule 1 to the 2013 Agreement opposed the termination. The result was that, from that date, the FFI Award applied to McDonald's restaurants operated by MAL and its franchisees, including the SA Licensees. No enterprise agreement currently applies to any McDonald's restaurant.

Attempt by the SDA to re-initiate enterprise bargaining

1. Mr Amin's evidence, which was not contradicted, was that a 'disharmonious and later hostile relationship'[9] arose between MAL and the SDA because of the circumstances surrounding the aborted 2019 agreement and the SDA's application to terminate the 2013 Agreement, with MAL opposing a resumption in bargaining.

[52] On 1 July 2024, Mr Josh Peak, the Secretary of the SDA's South Australian branch, sent a letter to Craig Cawood, the General Counsel for MAL and all the McDonald's licensees then operating restaurants in South Australia. Omitting formal parts, the letter stated:

The SDA South Australian Branch wishes to formally commence discussions with McDonald's for a new Enterprise Agreement to cover McDonald's Australia, your licensees and all McDonald's employees in South Australia.

Commencing in the 1970s, McDonald's and the SDA in South Australia always had a positive working relationship and negotiated many Enterprise Agreements for over 40 years.

We seek to reengage the relationship in the form of [a] new Agreement.

For the past 5 years McDonald[']s has not been in the bargaining process which has meant that you, your licensees, and employees do not have a direct say over pay and conditions at McDonald's.

The SDA strongly believes there are a range of benefits for McDonald's and its employees from reengaging in the bargaining process.

As you know, the Fair Work Act 2009 has been amended and now provides a range of different options for bargaining representatives to commence the bargaining proces[s]. There are specific provisions for franchise operations in the Single Interest and Support[ed] Bargaining multi-employer streams.

Whilst these options are available to the SDA, we believe it would be preferable to engage directly with you, and for you to commence bargaining for a single enterprise agreement (at least for all South Australian stores).

I would like to arrange to meet with you in the coming weeks to discuss how we can advance this proposal. Please liaise with my office to arrange a time to meet.

Should McDonald's not be interested in working collaboratively with the SDA to bargain for a new Agreement, this letter serves as notice that we will commence an application at the Fair Work Commission for a multi-enterprise agreement.

We acknowledge that since McDonald's exited bargaining nearly 5 years ago, that the relationship between the SDA and McDonald's has been under strain. We believe there is an opportunity to establish a positive relationship once again through negotiating an Enterprise Agreement.

We look forward to your positive reply within 21 days of this letter.

[53] On 17 July 2024, Mr Cawood sent a letter in response which relevantly stated:

We acknowledge receipt of your letter dated 1 July 2023. We confirm that McDonald's received this letter on 1 July 2024 and have noted there has been an error with the date on your letter.

Given the complex nature of the matters raised in your letter, McDonald's will need to internally consider before a response can be provided. As you are aware McDonald's is not subject to an existing agreement and we are currently operating under the Fast Food [Industry] Award.

Accordingly, McDonald's will not be able to provide a response by the date requested in your letter. McDonald's will provide a response once it has considered its position and expect this to be by the end of August 2024.

[54] On 5 August 2024, the SDA replied to Mr Cawood's letter as follows:

We acknowledge receipt of your letter dated 17 July 2024.

We welcome a response from McDonald's by the end of August 2024.

Whilst McDonald's considers its position, the SDA will today, on 5 August 2024, file an application for a supported bargaining authorisation in the Fair Work Commission covering:

2. the employees of the employers named in Schedule 1 employed to perform work at McDonald's restaurants within the State of South Australia in any classification which falls within the classification definitions provided at cl[ause] 12.4 of the Fast Food Industry Award 2020.

1. the employees of the employers named in Schedule 1 employed to perform maintenance work at McDonald's restaurants within the State of South Australia.

Should McDonald's decide to respond positively to the SDA's letter dated 1 July 2024, it will be able to:

2. Propose an alternative path to bargaining for our consideration.

[55] As indicated in the above letter, the SDA filed its application in this matter on 5 August 2024. MAL did not subsequently provide any response to the above letter.

[56] The SDA has members employed at each restaurant operated by the SA Licensees, but we infer that its membership constitutes only a minority of all the employees of the SA Licensees. From late April 2024, the SDA began to seek the views of employees in McDonald's restaurants in South Australia via a survey. This was provided in hard copy form by SDA officials who approached individual employees at the restaurants at which they worked, and was also accessible online. The introduction to the survey form stated:

The SDA is seeking to negotiate a new Enterprise Agreement (EBA) with McDonald's.

McDonald's Australia and its franchisees are one of the largest Australian employers that doesn't negotiate with its workers through an EBA - we want to change this.

An Enterprise Agreement is a document that sets out your pay and conditions. It must be better for each worker than the Fast Food Award that you are currently paid under.

The great thing about an Enterprise Agreement is that it's an opportunity for workers to be heard about the issues that matter to you.

So that the SDA can fight for the best outcomes for Macca's workers, we want to hear your views.

[57] The form then asked a series of questions concerning various conditions of employment and how they might be improved. As at 23 December 2024, a total of 235 employees had completed the survey. In addition, the SDA approached individual employees, generally at or near their workplace, and asked them to sign a form which stated:

I support bargaining for better pay and rights at Maccas.

McDonald's Australia and its franchisees are the largest employer in Australia not to have an Enterprise Agreement.

It's not fair and the SDA Union want to change that. Support our campaign to bargain for a new Enterprise Agreement.

[58] From about 27 April 2024 through to 12 December 2024, the SDA's officials approached 379 employees about signing the above form and 232 did so.

1. The SDA has not sought to obtain evidence of majority support for bargaining amongst employees. Mr Amin gave the following evidence concerning the reason for this:[10]

Based on my experience, including in having sought what I believe to be the biggest majority support determination ever made by the Commission (Shop, Distributive and Allied Employees Association v Eudunda Farmers Ltd and Others [2024] FWC 1340), I do not view it as realistic to obtain a petition from more than 50% of the Respondents workforce within a timeframe that means endorsements do not become stale because of employee attrition. That application concerned approximately 600 workers across 20 stores employed by 5 associated entities which operated in accordance with legislated shop trading hours. This application concerns approximately 4,500 workers across 52 [sic] stores employed by 18 entities with a much higher turnover of labour, considerably younger, working shorter shifts and operating across a much longer span of hours.

1. Mr Rogers gave evidence that the majority of his employees appeared to have no interest in an enterprise agreement and have given no indication that the FFI Award is not suitable for them or is not fulfilling their needs. Ms Burgess likewise gave evidence that none of her employees had expressed any interest to her or her managers in having an enterprise agreement or has otherwise raised the issue. However, Mr Rogers, Ms Burgess and Mr Lucas all agreed that they had never actually asked their employees whether they wanted an enterprise agreement.[11]

[61] As earlier outlined, we are required to make the supported bargaining authorisation sought by the SDA if each of the requirements specified in paragraphs (a), (b) and (c) of s 243(1) of the FW Act are satisfied. In relation to s 243(1)(a), it is not in dispute that the application in this matter has been made in accordance with the requirements of s 242, in that the SDA is an employee organisation that is entitled to represent the industrial interests of employees in relation to work to be performed under the proposed agreement (s 242(1)(b)), the application specifies the employers and employees who will be covered by the agreement (s 242(2)), and the application is not made in relation to a proposed greenfields agreement (s 242(3)). As to s 243(1)(c), the evidence establishes to our satisfaction that at least some of the employees who will be covered by the proposed agreement are represented by the SDA.

[62] The contest between the parties concerned whether we could be satisfied that it is appropriate for the SA Licensees and their employees who would be covered by the proposed agreement to bargain together. We consider each of the mandatory considerations in s 243(1)(b) in turn.

The prevailing pay and conditions within the relevant industry or sector (including whether low rates of pay prevail in the industry or sector): s 243(1)(b)(i)

[63] The SDA contends, and the SA Licensees accept, that the prevailing rates of pay, within the fast food industry are at, or close to, award rates of pay. This is clearly borne out by the evidence we have earlier recited concerning the labour force characteristics of the industry. It follows, applying the principles stated in Re UWU, that low rates of pay prevail in the industry since employees are predominantly paid at or close to the lowest rates which are legally available to be paid. Subject to some employees being on salaried arrangements or IFAs as earlier discussed, there is no dispute that the SA Licensees also apply the award conditions.

[64] The SA Licensees submit that this consideration should not be assigned material weight because while, in some cases, prevailing rates at or near the award might indicate imbalances that require the support of the Commission to be addressed, in this case there is no evidence of this. Rather, there is a demonstrated history of effective and efficient bargaining between sophisticated industrial participants under single interest employer authorisations going back decades, plus high levels of enterprise bargaining across the industry as a whole. Those prevailing rates, they submit, are not attributable to any want of bargaining ability or effectiveness, but are more readily explained by the high-volume and low-margin nature of the industry as a whole.

1. We do not accept this submission. The prescription of the prevailing rates of pay in the relevant industry or sector as a mandatory matter for consideration itself requires that this be given weight as a fundamental element in our overall consideration.[12] Section 241(a) identifies the object of Division 9 of Part 2-4 as being directed to 'employees and their employers who require support to bargain'. The inclusion in the statutory scheme of s 243(1)(b)(i) as a mandatory consideration, in the context of the origin of the supported bargaining scheme in the previous low-paid bargaining scheme and the references in the extrinsic material to low-paid industries and sectors as examples of where there may be difficulty in bargaining, suggests that a finding that low rates of pay prevail in an industry or sector is to be taken as at least an indicator that employees and their employers in that industry or sector may need support to bargain. For that reason, such a finding is to be assigned significant weight.

[66] We deal with the history and extent of bargaining in the fast food industry in more detail later in our decision. It is sufficient to say at this point that the evidence does not support the proposition that there is anything approaching 'high levels' of enterprise bargaining in the fast food industry, and there has been no enterprise bargaining involving MAL or any of its franchisees, including the SA Licensees, since 2019. As to the contention that the industry is of a 'high-volume and low-margin nature', this may well be the case, but there was no evidence that established this or demonstrated that this was the cause of low pay in the fast food industry. Accordingly, these matters do not provide any proper basis for declining to assign significant weight in our consideration to our finding that low rates of pay prevail in the fast food industry, This finding plainly favours the making of a supported bargaining authorisation.

Whether the employers have clearly identifiable common interests: s 243(1)(b)(ii)

[67] We are satisfied that the SA Licensees have clearly identifiable common interests. These are generally of a type which fall into the second example of common interests in s 243(2)(b), namely common interests as to the nature of the enterprises to which the agreement will relate and the terms and conditions of employment in those enterprises.

[68] Our earlier factual findings make clear that all of the SA Licensees operate McDonald's restaurants pursuant to standard-form licence agreements with MAL (albeit that the forms of these agreements appear to have evolved slightly over time). Those licence agreements describe, in objective terms, the characteristics of the business model which is franchised pursuant to those agreements and the obligations attaching to the operation of those businesses. The fundamental common feature is that, by each agreement, MAL licenses the operation of a restaurant in accordance with the 'McDonald's System', which the recitals in the agreement describe as a 'comprehensive restaurant system for the retailing of a limited menu of uniform and quality food products, emphasising prompt and courteous service in a clean and wholesome atmosphere which is intended to be particularly attractive to families'. The restaurant premises themselves are owned or leased by MAL and rented to the licensees by way of a separate rental agreement.

[69] It is central to the McDonald's System that each licensee is obliged to comply with 'every component' of the system including 'a designated menu of food and beverage products, uniform food specifications, preparation methods, quality and appearance, and uniform facilities and service'. The obligation of compliance with the entire system involves a set of detailed requirements as to:

• the adoption and exclusive use of specified McDonald's formulae, methods and policies;

• menu items;

• food ingredients, handling and preparation;

• cleaning standards;

• specifications as to restaurant fixtures, lighting, equipment, signage, seating, and layout;

• parking facilities;

• opening hours;

• employee uniforms;

• customer service standards; and

• food packaging and container and paper products.

[70] These requirements means that the SA Licensees' restaurants have a broad degree of similarity both in the substance of their operations and the way they are presented to the public. Even more significantly, it means that the work performed by employees across all the restaurants is fundamentally the same, since it involves the preparation and service of the same menu items in the same way and using the same equipment. This similarity extends to the ancillary functions of cleaning and maintenance, since there is a high degree of standardisation in the environment in which employees work. That there are some differences between restaurants, such the fact that some have McCafé operations and some do not, or that the restaurants' layout and size may be different, do not detract from these fundamental similarities.

[71] This commonality in the work of employees is reflected in the standardisation of positions, and position descriptions, utilised by the SA Licensees across their operations. Although not all the SA Licensees use the entire range of standard positions (for example, they do not use the McCafé positions if they do not operate a McCafé facility, and some smaller restaurants may not use the Department Manager positions), the evidence before us indicates that they use the standardised position descriptions for the positions which exist in their respective operations. In addition, as described earlier, the remuneration arrangements for employees are largely common across all the SA Licensees' restaurants, in that employees are (consistent with the standardised position descriptions) paid the minimum rates prescribed by the FFI Award or the Miscellaneous Award except that, first, more senior employees may enter into an IFA in standard terms which entitles them to an additional pay increment in exchange for flexibility that benefits the employer (such as the timing of breaks) and, second, restaurant managers may be paid a salary. These matters demonstrate that the SA Licensees have clearly identifiable common interests with respect to the pay and conditions of their employees.

[72] Adding to these common interests concerning employees is clause 9 of the licence agreements, which among other things prohibits licensees and their principals from employing or seeking to employ any person employed in a McDonald's restaurant, whether operated by MAL or another licensee, or inducing such persons to leave their employment. The effect of this is to restrict the capacity of McDonald's employees to realise the market value of the experience and skills they acquire working in McDonald's restaurants by moving to another McDonald's employer to obtain higher wage rates. This is likely to have the effect of suppressing competition for labour between the SA Licensees, particularly those which have some degree of physical proximity (such as those within the Adelaide metropolitan area), thus facilitating the payment of low wage rates.

[73] In addition, the SA Licensees have clearly identifiable common interests because of their geographical location (s 243(2)(a)). This arises not because of physical proximity but rather because, in conjunction with MAL, they have organised themselves into the Co-op led by the SLC. The SLC is the mechanism by which the SA Licensees are involved in decision-making about the expenditure of the advertising levy they are required to pay under their licence agreements, and the SLC also deals with other statewide matters including, where necessary, employment relations matters. This organisational structure evidences common interests based on the geographical location of all the SA Licensees in South Australia.

[74] The SA Licensees submit that they (and MAL) do not have clearly identifiable common interests, and point to differences in location, size, configuration, facilities, pricing and business structure as demonstrative of this. Our factual findings in paragraph [46] above acknowledge these differences. However, the existence of clearly identifiable common interests as between the employers to be covered by the proposed agreement does not require that their interests, or the characteristics of their businesses, be identical, and the differences between the SA Licensees the subject of our findings are not of such a nature as to negate the common interests which can clearly be identified.

1. The SA Licensees also submit that the matters of common interest relied upon by the SDA in its submissions are, in many cases, 'factually wrong or overstated',[13] have not been demonstrated to be relevant to the facilitation of enterprise bargaining via a supported bargaining authorisation, and are not clearly identifiable. As to the matters of common interest we have set out above, they have not been the subject of any significant factual contest and are clearly identifiable on the basis of the relevant documents (in particular, the licence agreements) and the evidence of the SA Licensees' own witnesses. They are also plainly relevant to whether the SA Licensees should be required to bargain together. The employment arrangements for all employees across all the SA Licensees are essentially the same in terms of the nature of the work performed and their remuneration and conditions of employment, and this renders it practicable for an enterprise agreement to be negotiated which would apply common terms and conditions to all the employees. From the SA Licensees' perspective, the commercial interests which they would bring to bear in bargaining, while not identical, have much in common because they all operate according to the business model of the McDonald's System.

[76] Our finding that the SA Licensees have clearly identifiable common interests weighs in favour of the making of a supported bargaining authorisation.

Whether the likely number of bargaining representatives for the agreement would be consistent with a manageable collective bargaining process: s 243(1)(b)(iii)

[77] At this stage, there is no reason to think that, if an authorisation were granted, the likely number of bargaining representatives would be other than consistent with a manageable collective bargaining process. In past nationwide bargaining involving McDonald's, the licensees and MAL appear to have been jointly represented in bargaining by MAL operating with input from the licensees. A similar arrangement is likely to apply to any future bargaining involving the SA Licensees having regard to our earlier findings concerning the Co-op and SLC mechanisms by which the SA Licensees, and MAL, deal with matters of statewide interest. This would be consistent with manageable representation on the employer side.

[78] On the employees' side, the SDA is the only certain bargaining representative at this stage. It is possible that, if an authorisation were granted, some employees might nominate themselves or other persons as bargaining representatives. However, there is no evidence to suggest that it is likely that this will result in an unmanageable number of employee bargaining representatives. We conclude that it is more probable that not that the number of bargaining representatives would be consistent with a manageable collective bargaining process. This weighs in favour of the making of a supported bargaining authorisation.

Any other matters the Commission considers appropriate: s 243(1)(b)(iv)

[79] The other relevant matters that we consider appropriate to take into account are the history and extent of enterprise bargaining in the fast food industry and in McDonald's, the wishes of the SA Licensees and their employees and the extent to which the SA Licensees and their employees may require support of the type contemplated by s 246. We deal with these in turn.

[80] The SA Licensees submit that the SDA has a history of successful bargaining within the fast food industry and that there are high levels of bargaining in the industry. That submission, in the terms articulated, cannot be accepted. The evidence rather indicates that the extent of enterprise bargaining in the fast food industry, leaving aside the position of McDonald's, has been relatively low since the FW Act commenced and is declining. The evidence adduced by the SA Licensees is that there have been approximately 480 enterprise agreements made since the FW Act commenced, compared to there being over 27,000 businesses in the fast food industry. Even acknowledging that some of these agreements were made with multi-business franchised fast food chains, on any view only a very low proportion of businesses have made enterprise agreements under the FW Act. It is also significant that, as earlier stated, most of these 480 agreements were made a decade or more ago, indicating that the incidence of bargaining in the industry has declined to a significant degree. The SDA has bargained or is bargaining with some major fast food chains including KFC, Hungry Jack's, Grill'd, Taco Bell, Krispy Kreme and some Subway franchisees, but the agreements that have resulted have not led to rates of pay that are more than marginally above the FFI Award minimum rates. None of this is indicative of a current high level of successful bargaining in the industry or by the SDA.

[81] Given that McDonald's is the employer of almost half of all employees in the fast food industry, the extent to which it engages in enterprise bargaining is highly significant in the context of the industry as a whole. As earlier recounted, MAL and its franchisees were covered by enterprise agreements made pursuant to consent single interest employer authorisations until 3 February 2020, when the termination of the 2013 Agreement took effect. Until that time, it might have been said that a significant proportion of employees in the fast food industry was covered by enterprise agreements because of the predominance of McDonald's. By the same token, the proportion of employees in the industry covered by agreements has significantly dropped since that date. The position of MAL and, apparently, its licensees since the discontinuance of the application to approve the 2019 agreement and the termination of the 2013 Agreement is that they do not wish to resume enterprise bargaining and are content to continue to apply the FFI Award. No individual licensee has ever entered into an enterprise agreement under the FW Act, and there is no evidence that any licensee will voluntarily enter into enterprise bargaining.

[82] Our conclusions concerning the history and extent of enterprise bargaining favour the making of a supported bargaining authorisation. Absent the making of such an authorisation, the SA Licensees will not engage in bargaining, and that will constitute an ongoing impediment to their employees accessing bargaining. More generally, the non-participation of MAL and any of its franchisees in bargaining will mean that the proportion of employees in the fast food industry covered by enterprise agreements will remain low.

[83] As just stated, the SA Licensees do not wish to bargain for an enterprise agreement, and the making of the authorisation sought by the SDA would compel them to engage in a bargaining process and expend time and resources upon this, contrary to their wishes. This is a matter which weighs against the making of a supported bargaining authorisation.

[84] The SDA has not attempted to demonstrate that the majority of employees of the SA Licensees wish to bargain for an enterprise agreement. We accept Mr Amin's evidence, which was not challenged or contradicted by the SA Licensees, that demonstrating majority support by way of the usual means of a verified petition obtained within a reasonable timeframe would be impracticable having regard to the number of employees, their dispersal across a number of worksites, their high turnover, and the shortness of their shifts worked across a wide span of hours and days. However, the results of the SDA's survey of a proportion of the employees of the SA Licensees, and its limited petition, does demonstrate to our satisfaction the existence of significant employee support for the proposed enterprise bargaining. The evidence of Mr Lucas, Mr Rogers and Ms Burgess concerning the wishes of employees, to which we have earlier referred, is of no probative value since it effectively involves a conclusion from silence. Our findings as to the wishes of employees favour the making of an authorisation to some degree, but this cannot be given significant weight because of the limited evidence as to this issue.

[85] The evidence of the SA Licensees, which we accept, is that they do not require support to bargain and may call on the assistance of MAL as required. This weighs against the making of the authorisation sought. However, the position with respect to the employees is different. As earlier stated, the SDA will be the main employee bargaining representative, and it is a large and sophisticated registered organisation with a high degree of experience in enterprise bargaining. However, we have inferred from the evidence that, although it has members employed by each of the SA Licensees, it does not represent more than a minority of the employees overall. Moreover, Mr Amin's evidence concerning its practical incapacity to obtain a majority support petition indicates that it is unlikely that it will be able to communicate effectively with more than a relatively small proportion of the workforce. The evidence concerning the characteristics of the SA Licensees' workforce indicates that employees will have considerable difficulty, unaided, in becoming meaningfully involved in the enterprise bargaining process: the workforce is overwhelmingly casual, young and inexperienced in the workplace, and is widely dispersed both in terms of physical location and working hours. Assistance to the SDA and any other employee bargaining representatives, and indirectly to the SA Licensees, of the type that the Commission is empowered to provide under s 246 if an authorisation is granted would be required in order for the views of employees about bargaining issues to be obtained and communicated. This aspect is also important for the effectiveness of the bargaining process itself and is a significant matter weighing in favour of the making of a supported bargaining authorisation.

[86] The SA Licensees raise a number of matters not already dealt with which, they submit, renders it not appropriate to grant the authorisation sought. First, they contend that the SDA has made no meaningful attempt to bargain with them or even to outline a log of claims. We have earlier set out the circumstances in which, during 2024, the SDA attempted to initiate bargaining with the SA Licensees and then proceeded to lodge its application in this matter. Had there been an evidentiary basis to conclude that there was some possibility that that SA Licensees might have voluntarily entered into enterprise bargaining with the SDA in the right circumstances, the SDA's conduct might have been justly criticised on the ground that it prematurely lodged its application before the SA Licensees could give a considered response to the SDA's request to engage in bargaining. However, a year has now passed since the date of the SDA's request, and the SA Licensees have never provided any response to that request. Their opposition to engagement in bargaining, as expressed in this proceeding, has been unambiguous and unconditional. There is no basis to conclude that the provision of a log of claims by the SDA might have produced any change in the SA Licensees' position. In the circumstances described, we do not consider the SDA's limited attempt to engage the SA Licensees in bargaining before lodging its application is a matter that appropriately falls for consideration under s 243(1)(b)(iv).

[87] Second, the SA Licensees submit that, because of the SDA's failure to articulate any of its bargaining claims, neither the SA Licensees nor the Commission is in a position to assess whether supported bargaining will assist in identifying productivity improvements. We likewise do not accept this proposition as one appropriate for consideration under s 243(1)(b)(iv). Realistically, it will be for the employers, if bargaining occurs, to identify changes that might produce productivity improvements. The identification of the SDA's bargaining claims, if any, would be highly unlikely to provide any information about the likelihood of bargaining leading to an improved productivity outcome. In any event, provision for productivity improvements is not a requirement for approval of an enterprise agreement.

1. Third, the SA Licensees submit that the SDA's 'only apparent rationale for seeking to invoke Division 9 is the undoubted advantage of avoiding the need to obtain a majority support determination under s 237 of the FW Act'. For the reasons we have stated in paragraph [17] above, we do not consider that a statutory criterion that applies in respect of other types of bargaining applications can appropriately be raised as a bar to an application under s 242, to which that criterion does not apply. We have separately taken into account, as an appropriate consideration, the evidence concerning the views of employees, and it is not necessary to restate our conclusions in t[14]t respect.14

[89] Having regard to the matters we have taken into account above, we conclude that it is appropriate for the SA Licensees and their employees that will be covered by the multi-enterprise proposed by the SDA to bargain together because:

• The prevailing pay and conditions within the fast food industry are at or close to the minima provided for by the FFI Award, and low rates of pay prevail in the industry.

• The SA Licensees have clearly identifiable common interests of direct relevance to enterprise bargaining.

• It is more probable that not that the likely number of bargaining representatives would be consistent with a manageable collective bargaining process.

• Unless the authorisation sought is granted, the SA Licensees will not engage in bargaining, and as a result their employees will not have access to bargaining.

• Absent the re-engagement of McDonald's businesses in bargaining, the proportion of employees in the fast food industry who are covered by enterprise agreements will remain low.

• Support is required for the SDA and any other employee bargaining representatives in order for the employees to meaningfully engage in the bargaining process.

• A significant proportion of the employees support engagement in bargaining.

[90] The matters above, we consider, prevail over the matters which weigh against the grant of an authorisation, namely the SA Licensees' opposition to engagement in supported bargaining and the fact that they do not require support to bargain. Had the SA Licensees identified any alternative path, other than through supported bargaining, by which enterprise bargaining might proceed on a consensual basis, these matters may have been assigned greater and perhaps decisive weight. However, it is apparent to us that the SA Licensees do not propose to voluntarily engage in bargaining with their employees on any basis, since they prefer to continue to apply the FFI Award and the Miscellaneous Award. In those circumstances, a supported bargaining process pursuant to which the SA Licensees and their employees bargain together will in our view best serve the relevant objects of the FW Act in ss 3(f), 171 and 241.

[91] As result of our conclusions concerning the criteria in paragraphs (a), (b) and (c) of s 243(1), we are required to make a supported bargaining authorisation. The authorisation will be in the terms sought by the SDA in its amended application.

[92] An order giving effect to this decision is published together with this decision.

P Dean, counsel, for the Shop, Distributive and Allied Employees Association.

M Follett KC with A Pollock, counsel for the SA Licensees.

S Blewett, counsel, for the Australian Council of Trade Unions.

[1] By its amended application filed on 28 December 2024.

1. [2] [2023] FWCFB 176.
2. [3]SA Licensees' written submissions dated 15 November 2024, FN 39, and transcript, 12 February 2025 PNs 1212-1213.
3. [4]Association of Professional Engineers, Scientists and Managers, Australia v Great Southern Energy Pty Ltd & Ors [2024] FWCFB 253.
4. [5]MA000003.
5. [6]Transcript, 11 February 2025 PN419.
6. [7]MA000104.
7. [8] [2019] FWCA 8563.
8. [9]Exhibit 3 (reply witness statement of Ali Amin, 28 December 2024) [13].
9. [10]Ibid [7].
10. [11]Transcript, 11 February 2025 PNs 542-543, 727-731, 889-894.
11. [12]R v Hunt; Ex parte Sean Investments Pty Ltd [1979] HCA 32, 180 CLR 322, 329 (Mason J, Gibbs J agreeing); National Retail Association v Fair Work Commission [2014] FCAFC 118, 225 FCR 154 [56].
12. [13]SA Licensees' submissions, 15 November 2024 [37].
13. [14]Ibid [51].

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