The Fair Work Commission (FWC) has granted a supported bargaining authorisation, forcing 18 franchisees operating 53 McDonald’s restaurants across South Australia to bargain with the Shop, Distributive and Allied Employees Association (SDA), for a multi-employer enterprise agreement.
This marks the first time the government’s supported bargaining laws have been applied outside the public sector.
Background
One of the key reforms introduced under the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 was the creation of the supported bargaining stream.
Under these provisions, a union (or another bargaining representative) may apply to the FWC for a supported bargaining authorisation to enable bargaining for a ‘multi-employer’ enterprise agreement.
The FWC must grant a supported bargaining authorisation if it is satisfied that it is appropriate for the employers and employees to be covered by the agreement to bargain together, taking into account factors such as:
- the prevailing pay and conditions within the relevant industry or sector, including whether low rates of pay prevail;
- whether the employees involved have clearly identifiable common interests, such as a common geographic location, similar enterprises, or comparable terms and conditions of employment;
- whether the number of bargaining representatives is likely to be manageable; and
- any other matters the FWC considers appropriate.
However, the FWC cannot grant a supported bargaining authorisation specifying an employee already covered by a single-enterprise agreement that has not passed its nominal expiry date, unless the FWC is satisfied that the agreement was made primarily to avoid being included in a supported bargaining process. Supported bargaining authorisations also cannot cover employees in relation to general building and construction work.
It is important to note that while the FWC must be satisfied that at least some of the employees who would be covered by the proposed agreement are represented by a union, the union does not need to demonstrate majority employee support to apply for a supported bargaining authorisation. Instead, it can make the application on its own initiative, as long as the relevant requirements under the Fair Work Act are met.
The Application
The McDonald’s franchisees strongly opposed the application brought by the SDA, informing the FWC earlier this year that they considered the application “unnecessary”, emphasising that the franchisees are each independent businesses that do not operate collaboratively. The franchisees also argued that requiring collective bargaining of this nature would be impractical and create unnecessary complexity.
However, the FWC ultimately found that the SDA’s application met all of the necessary statutory requirements. In particular, the FWC determined that the employees shared clearly identifiable common interests and faced genuine barriers to bargaining.
The authorisation covers 18 franchisees employing over 5,000 workers who fall within the classifications under the Fast Food Industry Award or who perform maintenance duties.
One significant consequence of this decision is that the franchisees can no longer unilaterally present a proposed single enterprise agreement to their employees without the union’s consent, unless they first obtain permission from the FWC.
Implications
The decision reflects a broader push under recent changes to the Fair Work Act to increase collective bargaining, particularly in underrepresented sectors. It also highlights the risk for employers, particularly those in lower-paid industries such as fast food, retail, and hospitality, of being forced to participate in multi-employer bargaining, even if most of their employees do not support it.
In light of this, employers should review their enterprise agreement strategies.
If you have questions about the decision or would like to discuss enterprise bargaining at your business in more detail, please feel free to contact a member of the HMB Law team on (03) 9448 9600.
HR Forum
We will be hosting an HR forum in August to discuss recent developments in the enterprise agreement space in more detail. Please keep an eye on your inbox for your invitation.
The above is general information and should not be taken as legal advice.
Liability limited by a scheme approved under Professional Standards Legislation
