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[16]
[2024] FWCFB 250
General information, not legal advice.
Fair Work Commission (Full Bench)
2024-05-03
Original judgment source is linked above.
s.185 - Enterprise agreement
Application for approval of the Coles Retail Enterprise Agreement 2024.
[1] Coles Supermarkets Australia Pty Ltd (Coles) has made an application under s 185 of the Fair Work Act 2009 (Cth) (FW Act) for the approval of an enterprise agreement known as the Coles Retail Enterprise Agreement 2024 (Agreement). The application is supported by a Form F17B declaration made on behalf of Coles by its head of employee relations, Robert Rondinelli, which explains the steps taken by Coles to comply with the pre-approval requirements in the FW Act, and why in the opinion of Coles the Agreement passes the _'_better off overall test' (BOOT) against the General Retail Industry Award 2020 (Award). Attached to the declaration are explanatory materials relating to the Agreement that Coles provided to employees before the vote on the Agreement, as well as documents relating to other pre-approval requirements.
[2] On 16 April 2024, the Full Bench raised three issues with Coles concerning the approval requirements for the Agreement and issued directions to Coles and the bargaining representatives to file submissions and declarations. The issues raised by the Full Bench were the following:
Clause 5.1.2 of the Agreement provides that the employer and a majority of employees at a store may agree to substitute a nominated public holiday. On one view this provision purports to exclude the NES entitlement to particular public holidays that may be substituted only by agreement between the employer and an individual employee: see ss 115(1), 115(3) of the FW Act.
Clause 4.3.3 of the Agreement provides for voluntary additional shifts. What implications does this clause have for whether the Agreement passes the 'better off overall test' (BOOT), given the Award does not provide for split shifts and prescribes minimum breaks?
Appendix A3.5.1 of the Agreement states that trainees may be engaged 'under the arrangements contained in the GRIA'. If trainees are to receive award conditions, how does the Agreement pass the BOOT in respect of these employees?
[3] As to issue A, Coles has provided an undertaking that clause 5.1.2 of the Agreement will have no effect. The undertaking meets our concern that this provision might purport to exclude the NES. Issue B corresponds with one of the arguments raised by the Retail and Fast Food Workers Union Incorporated (RFFWU Inc) in support of its contention that the Agreement does not pass the BOOT, which we consider below. In respect of issue C, Coles said that it did not currently employ, nor did it intend to employ trainees, but if it did engage trainees under the training arrangements in the Award, they would nevertheless receive the other entitlements of the Agreement which are more beneficial than the Award. We are accordingly satisfied that no BOOT concern arises in connection with trainees.
[4] The Shop, Distributive and Allied Employees Association (SDA) filed a Form F18 declaration in support of the application for approval of the Agreement. The SDA is a union that represents a significant proportion of the employees covered by the Agreement. Coles estimates that more than 30,000 of the 92,574 employees covered by the Agreement are members of the SDA. In its declaration the SDA stated that, although it disagreed with certain statements in Coles' declaration, it was of the view that the Agreement passed the BOOT. It said that the Agreement provided some 21 terms that are more beneficial than the Award, including minimum wages that will exceed those in the Award in every year of the Agreement. The SDA stated that in its opinion the benefits provided for in the Agreement outweighed the terms that were less beneficial than those in the Award. The SDA did not raise concerns that the Agreement was not genuinely agreed to by employees.
[5] The Australian Workers' Union (AWU) lodged a Form F18 declaration in support of the application in terms substantially the same as those of the SDA's declaration.
[6] The Australasian Meat Industry Employees Union (AMIEU) filed a Form F18 declaration opposing the application for approval of the Agreement on the grounds that the AMIEU had been excluded from the Agreement and that the Agreement contained objectionable provisions. We return to these contentions further below. The AMIEU did not express any view as to whether the Agreement passed the BOOT or raise any concern that the Agreement had not been genuinely agreed to by employees.
[7] RFFWU Inc submitted a Form F18A declaration in which it stated that it opposed the approval of the Agreement on the grounds that the Commission could not be satisfied that the Agreement had been genuinely agreed to by employees, and that it did not pass the BOOT. It filed submissions elaborating upon these objections, together with a witness statement of its member, Melanie Juliana. Coles filed submissions contending that both of these approval requirements had been met, and a witness statement from Mr Rondinelli.
RFFWU Inc's contentions that the Agreement was not 'genuinely agreed to'
[8] RFFWU Inc contended that the Agreement had not been genuinely agreed to by the employees because Coles had made misrepresentations to them about the Agreement. First, it submitted that Coles had told employees that they would receive guaranteed wage increases under the Agreement when this was not in fact the case. Only supermarket employees were entitled to wage increases, and only in the amounts awarded in the Commission's Annual Wage Review, if any, which could not be said to constitute a guaranteed increase, as the Commission might not award any increase. RFFWU Inc said that certain liquor employees would not receive any wage increases because of the effect of clause A4.3.3, whereby no increase will occur until an employee's minimum rate of pay under the Agreement exceeds their current rate.
[9] We reject the contention that Coles misled employees about the wages that they would receive under the Agreement. It is clear from the explanatory material attached to the Form F17B application that Coles distinguished between the wage increases that would apply to supermarket and liquor employees respectively. It was supermarket employees who were told that they would receive 'guaranteed' wage increases. This distinction is evident, for example, in a message sent by Coles to employees on 11 March 2024, and in information packs sent to supermarket and liquor employees (see appendices E-10 and E-13 to Coles' Form F17B declaration respectively). Further, infographics provided to supermarket employees stated that employees would receive guaranteed wage increases based on the Annual Wage Review, whereas infographics provided to liquor employees did not contain this statement but instead provided a reference to the 'mycoles' website which set out the wage arrangements for liquor employees.
[11] RFFWU Inc further contended that Coles did not make clear to employees that the wage increases under the Agreement did not apply to employees' effective or actual pay rates. This submission was directed at the position of employees who under the Coles Supermarkets Enterprise Agreement 2017 (2017 Agreement) receive a 'protected pay rate' that entails a 'top-up' arrangement. Mr Rondinelli explained these concepts in his witness statement. He said that immediately prior to the 2017 Agreement being made, certain employees had received higher average pay over the previous 12 months than they would receive under the 2017 Agreement. Under clause 5.3.3 of the 2017 Agreement these employees would therefore receive a _'_protected rate' of pay. RFFWU Inc contended that, in explaining the Agreement to employees, it was not made clear that the wage increases under the Agreement would not be applied to the protected rate, but instead would apply only to the base rate of pay.
[12] We disagree. First, the Agreement discontinues the top-up arrangements. This is clear on the face of the Agreement. It was also clearly explained to employees in the entitlements comparison document (appendix E-12 to the Form F17B declaration). Further, the amount of the top-up payment received by employees under the 2017 Agreement, if any, can vary from week to week. It is not a rate of pay that one would expect to be affected by a general wage increase. Finally, to the extent that RFFWU Inc is to be understood as making a more general submission that Coles failed to tell employees that wage increases did not apply to the actual rate of pay, we reject it. The explanatory material is replete with references to increases in the base rate of pay. We consider that Coles complied with s 180(5) in respect of its explanation of this aspect of the Agreement.
[13] In its declaration, RFFWU Inc submitted that Coles had represented to employees that certain benefits would derive from the Agreement when this was not the case. It said that Coles had told employees that a vote for the Agreement would mean that employees would receive additional discount shopping days, and referred to a particular infographic in support of a 'yes' vote which contained the words 'Twice as many Double Discount days in 2024'. The Agreement does not deal with discount shopping days. But Coles did not tell employees that it did so. It simply said that if the Agreement was approved, this additional benefit would be provided. It confirmed this position following the vote in a message sent to employees on 26 March 2024. There was no misrepresentation here.
[14] In its written submissions, RFFWU Inc contended that the SDA had misrepresented the wages that would be provided to employees under the Agreements by sending them a text message encouraging them to vote 'yes' for 'better wages', when the Agreement's wages were not better. In our view, they are. Supermarket employees will have higher minimum rates of pay in each year of the Agreement in line with increases awarded through the Annual Wage Review. The minimum rates for liquor employees will be enhanced in the way described in Appendix 4 to the Agreement. Employees who have received top-up payments will cease to do so from this year, but this was abundantly clear, including from the explanatory material provided to employees. This might have been a reason for employees subject to the top-up payments to vote against the Agreement. But there is no basis for a conclusion that these or other employees were misled about the wages that they would receive under the Agreement.
[15] Section 188 of the FW Act requires the Commission to take into account the statement of principles made under s 188B in determining whether it is satisfied that an enterprise agreement has been genuinely agreed to by employees. Paragraph 19 of the statement of principles states that if one or more employee organisations (unions) acting as a bargaining representative for a 'significant proportion' of the employees covered by the agreement supports approval of the agreement and does not have concerns that it was not genuinely agreed to by the employees, this should be given 'significant weight' by the Commission in considering whether the agreement has been genuinely agreed. We accept Coles' estimate, based on payroll deduction data, that the SDA is a bargaining representative for in excess of 30,000 employees at least, and hence for a significant proportion of employees. By contrast, RFFWU Inc, on its own numbers, represented less than 900 employees in the bargaining process. It does not represent a significant proportion (less than one per cent) of the employees covered by the Agreement. The SDA supports the approval of the Agreement by the Commission and has expressed no concerns that the Agreement was not genuinely agreed to by employees. We give this significant weight. Further, taking into account the materials before the Commission about the information and explanations provided to employees before the vote, we consider that Coles complied with the requirement in s 180(5) by taking all reasonable steps to explain the terms of the Agreement and the effect of those terms to employees. We conclude that the Agreement was genuinely agreed to by employees.
[16] RFFWU Inc submitted that the Agreement did not pass the BOOT. In its written submissions, it referred to seven respects in which the Agreement was said to be less favourable than the Award, which together resulted in employees not being better off overall under the Agreement. These were the following:
The Agreement does not provide for a laundry allowance, thereby reducing the small margin by which wages exceed their Award counterparts.
The Agreement was said to provide for a lesser penalty when employees do not receive a 10- or 12-hour break between shifts, because it states simply that the penalty is at the rate of 200%, rather than the rate of 200% 'of the rate they would be entitled to', as per clause 16.6(b) of the Award.
Under the Agreement, the days on which part-time employees can be compelled to work, and the hours they work on those days, can be changed without the agreement of employees, whereas under the Award their agreement would be required.
The circumstances under which a part-time employee can be required to work are broader than under the Award. (This submission was withdrawn at the hearing in light of Coles' submission that part-time employees receive overtime payments in the relevant circumstances.)
Unlike the Award, the Agreement does not require termination payments to be made within seven days of termination.
Employees can be required to use annual leave during a close-down without the conditions imposed by the Award, including that the requirement be reasonable and that employees be given written notice.
The Agreement introduces split shifts which are prohibited under the Award and would, according to RFFWU Inc, attract overtime payments under the Award if they were to be worked, whereas such payments are not replicated in the Agreement.
[17] It is true that the absence of a laundry allowance in the Agreement reduces the margin by which employees' wages exceed the Award minima, and that this margin is a relatively small one. Nevertheless, the margin exists and is not disputed by RFFWU Inc.
[18] As to the penalty that applies when shift breaks are not observed, we consider that the effect of the provision in the Agreement is the same as that in the Award, but in any event the Award provision deals with a circumstance which can reasonably be expected to arise only on an exceptional basis. If the Agreement provision were to be understood as less favourable to employees than the Award provision, this would be a minor matter in the BOOT analysis.
[19] RFFWU Inc expanded on its contentions relating to part-time employees in its written submissions. It said that the Agreement omitted important protections in the Award that prohibit changes to the number of hours worked by a part-time employee on a day without that person's agreement, as well as changes to the days on which they work (clause 10.10(b)), whereas the Agreement allows Coles to change working arrangements unilaterally on 14 days' notice. RFFWU Inc submitted that this was a great detriment to part-time workers, particularly women, parents and carers, and referred in this regard to the witness statement of Ms Juliana in which she describes her concerns about these matters.
[20] Coles submitted that although the Agreement allows it to change the guaranteed hours of a part-time employee without the employee's agreement, any dispute that arises in relation to this change can be put through the dispute resolution procedure in the Agreement and ultimately be determined by the Commission and, until that occurs, the status quo applies and work will continue in accordance with the existing roster. Coles submitted that the practical effect of the difference between the part-time provisions of the Agreement and the Award was minimal and not a detriment.
[21] We agree with RFFWU Inc that the Agreement's provision for Coles to unilaterally change the hours and days of work of part-time employees should be considered a detriment. Although the possibility of having the Commission determine any dispute about changes to part-time working arrangements is a safeguard, it is less beneficial to employees than the right to refuse to accept the change. The loss of the ability of part-time employees to refuse an employer-initiated change to their hours and days of work under the Award must be weighed in the overall assessment of whether they are better off overall under the Agreement. At the same time, the Agreement improves the position of part-time employees in several respects, which must also be taken into account. It expands the circumstances in which part-time employees will be paid overtime (clause 4.9.2 of the Agreement compared with clause 21.2(b) of the Award) and introduces a higher minimum entitlement to hours of work (clause 2.2.3(a)(iii) of the Agreement compared with clause 10.9 of the Award). The Agreement also provides part-time employees with a qualified right to request an increase to their hours which can only be refused on reasonable business grounds (clause 4.3.4(g) of the Agreement). Part-time employees also have the benefit of the rostering principles in clause 4.3.1 of the Agreement.
[22] As to the fact that the Agreement does not contain an equivalent of the Award provision requiring termination payments to be made within seven days, we consider this to be a relatively minor matter. This was also a difference between the 2017 Agreement and the Award and there is no evidence of it having caused disadvantage to employees (or rather, former employees). The same can be said of the Agreement's provision allowing employees to be required to use annual leave during a close-down without the conditions imposed by the Award, including that the requirement be reasonable and that written notice be given to the employee. We consider that the Agreement provision is to be read down in the context of s 93(3) of the FW Act, which allows enterprise agreements to include terms allowing for employees to be required to take leave, but only if the requirement is reasonable. Whether notice was provided would affect whether the requirement was reasonable.
[23] This brings us to the question of the significance, for the purposes of the BOOT, of clause 4.3.3 of the Agreement, which allows employees to work voluntary additional shifts on the same day as a rostered shift. RFFWU Inc contended that the Award prohibited such shifts, which it characterised as 'split' shifts. It also said that 'historically', additional hours could be worked as overtime, but it did not substantiate this with reference to any provisions of the Award or its antecedents, or to any evidence. RFFWU Inc said that the new provision was akin to one allowing for voluntary overtime, which was not an inherent benefit to employees, and that in this case it was a detriment because employees would not receive any overtime payment as they would under the Award in respect of the 'second shift'. RFFWU Inc further contended that, although the clause states that the additional shifts are voluntary, it was 'clear' that whether employees have agreed to such shifts would be used by Coles to inform future rostering decisions, and that workers who were threatened with roster changes would be forced to consider them to avoid adverse consequences. It referred to the statement of Ms Juliana who said, at [21], that if she was approached to change her part-time days and an alternative was to work such shifts, she would have to consider them.
[24] Coles agreed with RFFWU Inc that the Award prohibits voluntary additional shifts that are not continuous with the rostered shift on the same day, but contended that the effect of clause 4.3.3 was to permit employees who wanted to work such shifts to do so, making it possible for them to earn additional income. Coles submitted that RFFWU Inc was wrong to say that employees who worked voluntary additional shifts under the Award would be entitled to overtime and that it had offered no justification for this assertion, nor was it compatible with RFFWU Inc's submission that these shifts were prohibited under the Award. The arrangements in clause 4.3.3 were not akin to voluntary overtime, the overtime provisions in the Award would not be engaged, and the most that could be said of a voluntary additional shift worked under the Award was that it would be in breach of the Award. Coles said that the additional shifts under clause 4.3.3 were entirely voluntary and that there was simply no basis to say that employees would be forced to work these shifts.
[25] Clause 15.3 of the Award states that 'ordinary hours of work on any day are continuous'. It therefore precludes 'split' shifts. The benefit of this is the prevention of various disabilities that might be experienced by an employee being required to work such shifts, such as personal inconvenience, additional commuting time and fatigue. However, clause 4.3.3 of the Agreement operates in a way which removes these potential detriments. First, it is only at the request of an employee that an additional shift may be undertaken. The employee must initiate the matter (see clause 4.3.3(b) and (d)). There will be some workers for whom voluntary additional shifts are an unattractive proposition because they are inconvenient. Those workers will not request to work them and cannot be required to do so. Other employees may want to work these shifts. They will be able to request to work them and thereby earn additional income that they would not have been able to earn under the Award. The clause simply gives employees work choices. Secondly, clause 4.3.3 prescribes minimum breaks between shifts which will guard against fatigue. Thirdly, we cannot identify any other dimension of disadvantage associated with the working of voluntary additional shifts by employees in the particular circumstances of this Agreement. In particular, we reject the contention of RFFWU Inc that employees who worked such shifts under the Award would be entitled to overtime. The Award does not say this, nor is there any implication to that effect.
[26] At the hearing, two concerns were raised concerning the volitional nature of the voluntary additional shifts. First, Coles was asked to confirm the understanding of the Full Bench that a request to work voluntary additional shifts could only be made by an existing employee, and that it could not be made by a prospective employee, who might apprehend this to entail an improved prospect, or even the satisfaction of some condition of gaining employment. Coles confirmed that the request must be made by an existing employee. It has subsequently submitted an undertaking to this effect, for the avoidance of any doubt, to address the concern raised. Secondly, Coles was asked to comment on whether there might be a BOOT concern connected with clause 4.3.3(d), which allows employees to unilaterally revoke their agreement to work voluntary additional shifts only on 28 days' notice, as this relatively lengthy notice period might, on one view, compromise the quality of an employee's consent to the arrangements. Coles has submitted an undertaking that the notice of an employee to revoke their agreement to work voluntary additional shifts will take effect from the commencement of the next roster cycle, or following the conclusion of any published roster, whichever is later. The Full Bench sought and received views from the bargaining representatives pursuant to s 190(4) and certain modifications were suggested. However the undertaking meets our concerns in its current form. Overall, and subject to these undertakings, we view clause 4.3.3 as either a benefit for those employees who may wish to use it, or as neutral for those who do not.
[27] We are satisfied that the Agreement passes the BOOT. The Agreement provides terms of employment that are more beneficial to employees than those in the Award, including marginally higher salaries. These terms outweigh the terms which, in certain respects, are less beneficial than those in the Award. In our opinion, each award covered employee and each reasonably foreseeable employee will be better off overall under the Agreement. We have reached this conclusion having undertaken the global assessment required by s 193A(2). We have also considered the views that have been expressed about the BOOT by the employers, employees, and bargaining representatives for the Agreement, as we are required to do by s 193A(3).
[28] In its Form F18 declaration, the AMIEU opposed the approval of the Agreement on the basis that Coles had 'removed' it from the proposed agreement, leaving only the SDA and the AWU to remain 'present within the agreement'. It objected to clause 1.2.4 of the Agreement, which states that the Agreement will cover the SDA and the AWU, and to Part 12, in which Coles recognises the SDA and the AWU (in North Queensland) as unions with coverage of employees covered by the Agreement and confers certain benefits on those unions, including arrangements for deduction of union membership fees, union noticeboards, and delegates' rights, including paid leave to attend delegate training. The AMIEU contended that its exclusion from these arrangements made these clauses 'objectionable terms' within the meaning of s 194 of the FW Act, and thus unlawful per s 186(4), because they had the effect of permitting a contravention of Part 3-1, including in particular s 350, which prohibits an employer from making an 'inducement' to an employee to take 'membership action', which includes becoming or ceasing to be a member of a union. It said that the exclusion of the AMIEU would harm employees by limiting their knowledge of other unions they could join, by limiting the role of AMIEU delegates, and by de-legitimising the AMIEU.
[29] We reject these contentions. In the absence of any evidence, we could not conclude that the mere fact that an enterprise agreement confers certain representational benefits on some unions but not others results in a contravention of s 350 of the FW Act or has the effect of permitting contraventions of s 350. Although in Part 12 Coles expressly recognises that the SDA and the AWU have coverage of work undertaken by its employees, this does not imply a rejection of the coverage that other unions might have. It is a normal and acceptable incidence of bargaining that some unions will play a more prominent role than others and have greater influence in negotiating terms and conditions, including in relation to union-related matters. This does not connote some de-legitimisation of the other unions.
[30] Further, the AMIEU has not been excluded from the coverage of the Agreement. Whether a union is covered by an agreement depends on whether it was a bargaining representative that has given notice to the Commission under s 183(1) that it wants the agreement to cover it, as the AMIEU has done in this case. Coles does not dispute that the AMIEU has coverage of employees covered by the Agreement. Further, we note that 'union' is defined in Appendix 1 of the Agreement as an organisation registered as such under the Fair Work (Registered Organisations) Act 2009 (Cth) that is entitled to represent the industrial interests of an employee covered by the Agreement. This includes the AMIEU. The practical effect of this will be that the AMIEU will be able to represent its members under the dispute resolution procedure. Clause 13.1.2(b) allows any union to initiate a dispute on behalf of a union member.
[31] We appreciate that the AMIEU would like to have obtained the agreement of Coles to be included in the new arrangements in respect of union matters that are found in Part 12 of the Agreement, but the fact that Coles did not agree does not mean that Part 12 contains objectionable provisions within the meaning of s 12 of the FW Act. These provisions do not require or have the effect of requiring a contravention of Part 3-1. The only provision in Part 3-1 that was said to be offended was s 350. We fail to see how benefits conferred on one or more unions under an agreement can be said to amount to an inducement to employees to become members of those unions or to cease being members of other unions. It seems to us that there would at the very least need to be some evidence about the effect of the impugned provisions and their tendency to effect or affect membership action in order for such a conclusion to be available. There is no such evidence in this case.
Employee objections concerning removal of 'top-up' arrangements
[32] A number of employees covered by the Agreement have sent correspondence to the Commission expressing their opposition to the approval of the Agreement on the basis that they believe they will not be better off overall under the Agreement than under the current 2017 Agreement, because of the fact that the Agreement removes the top-up arrangements referred to earlier. However, the top-up arrangements are a term of the 2017 Agreement, not the Award. The BOOT does not inquire as to whether an enterprise agreement results in employees being better off than under the previous enterprise agreement. The comparator is the relevant award. An enterprise agreement passes the BOOT if the Commission is satisfied that each award covered employee and each reasonably foreseeable employee would be better off overall if the agreement applied to the employee than if the relevant modern award applied to the employee. As we have said earlier, we are satisfied that the Agreement passes the BOOT. The correspondence from the employees does not cause us to have any concerns that any of the other approval requirements for the Agreement have not been met.
[33] Coles has provided undertakings in relation to clause 5.1.2, as well as the two concerns raised in respect of clause 4.3.3 of the Agreement. As earlier stated, those undertakings meet our concerns. We are satisfied that the undertakings will not cause financial detriment to any employee covered by the Agreement or result in substantial changes to the Agreement. The undertakings are appended to this decision as Attachment 1 and are taken to be terms of the Agreement. Subject to the undertakings, we are satisfied that the requirements of ss 186, 187 and 188 of the FW Act have been met. The SDA, the AWU and the AMIEU have given notice under s 183 that they want the Agreement to cover them. As required by s 201(2) of the FW Act, we note that the Agreement covers those organisations.
[34] The Agreement was approved on 3 May 2024. In accordance with clause 1.1 of the Agreement and s 54(1)(b) of the FW Act it will operate from 7 October 2024. The nominal expiry date of the Agreement is 3 May 2028.
R Sweet KC with A Crocker, counsel, for Coles Supermarkets Australia Pty Ltd.
W Friend KC for the Shop, Distributive and Allied Employees Association.
B Swan for The Australasian Meat Industry Employees Union.
J Cullinan for Retail and Fast Food Workers Union Incorporated.
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