Kentucky Fried Chicken Pty. Limited
[2020] FWCA 2020
•22 APRIL 2020
| [2020] FWCA 2020 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.185—Enterprise agreement
Kentucky Fried Chicken Pty. Limited
(AG2019/4042)
KFC NATIONAL ENTERPRISE AGREEMENT 2020
Fast food industry | |
DEPUTY PRESIDENT CROSS | SYDNEY, 22 APRIL 2020 |
Application for approval of the KFC National Enterprise Agreement 2020.
[1] On 23 October 2019, an application (“the Application”) was made by Kentucky Fried Chicken Pty Ltd (the “Applicant” or “KFC”), for the approval of an enterprise agreement known as the KFC National Enterprise Agreement 2020 (the “Agreement”). The Agreement would cover the Applicant and 77 other named employers (the “Employers”) 1.
[2] The Shop, Distributive and Allied Employees’ Association (the “SDA”) was an employee organisation bargaining representative for the Agreement for the purposes of s.176(1)(b) of Fair Work Act 2009 (the “Act”). The Australian Workers’ Union (the “AWU”) was also an employee organisation bargaining representative for the Agreement for the purposes of s.176(1)(b) of the Act. Each of the SDA and the AWU, on 29 October 2019 and 21 November 2019 respectively, filed a Form F18 – Statutory declaration of employee organisation in relation to an application for approval of an enterprise agreement (other than a greenfields agreement).
[3] On 29 October 2019, Mr Joshua Cullinan filed a Form F18A – Statutory declaration of employee representative in relation to an application for approval of an enterprise agreement (other than a greenfields agreement). That Form F18A identified at question 2 that “The Union” was the bargaining representative. While the Form F18A did not define the term “Union”, in answer to question 3 it stated that the Retail and Fast Food Workers Union (“RAFFWU”) “…is the bargaining representative of an employee”.
Standing of RAFFWU
[4] When filing the Form F18A, RAFFWU also provided a redacted document in the form of a collection of emails titled “Instruments of Appointment – Bargaining Representative”. That document, which is annexed to this decision and marked “Annexure B”, consisted of four emails, three of which appointed RAFFWU as the bargaining representative of the persons who sent the emails. Unredacted copies of those emails were subsequently provided to the Fair Work Commission (the “Commission”) on 6 December 2019. Those unredacted emails disclosed that one employee in Butler, Western Australia, and one employee in Wagga Wagga, New South Wales (the “Two Employees”) had appointed RAFFWU as their bargaining representative.
(a) Submissions Regarding Standing
[5] By correspondence to the Commission dated 27 November 2019, the Applicant submitted that RAFFWU was apparently seeking to appear in its own right, rather than as the bargaining representative of the Two Employees. That correspondence relevantly provided as follows:
“3. RAFFWU provided to the Commission what it referred to as a “redacted bargaining representative appointment document”, which contained three emails presumably from KFC employees to RAFFWU. RAFFWU’s covering email to the Commission gave the appearance that it was making an application to appear in the proceedings in its own right possibly as the representative of anonymous employees, akin to a registered organisation. A Full Bench of the Commission has previously rejected such an approach by RAFFWU.
4. KFC submits that the role of a bargaining representative should be to act as a representative of the identified individual who appoints it, rather than a vehicle for expressing its own views.
…..
6. KFC’s position, as set out in paragraph 4 of its letter to the Commission of 26 November 2019, is that it “does not object to any bargaining representative of named individual KFC employees being heard if the bargaining representative establishes the requirements of the Fair Work Act (2009) (Cth) are met, and if the bargaining representative is acting in accordance with the instructions of the particular employees.
7. KFC does not press that the procedural requirements of the Act have not been met. However there remains a considerable lack of clarity about the capacity in which RAFFWU wishes to be heard by the Commission in opposing the approval of the Agreement.
…
9. In the circumstances, KFC submits that it would be premature to consider making the orders sought by RAFFWU today.”
[6] On 4 December 2019, an interlocutory hearing was convened as requested by the Applicant. At that interlocutory hearing, issues regarding the manner in which RAFFWU sought to appear, and the capacity of RAFFWU to so appear, were raised but not determined. In particular, it was noted that the direction for other interested parties filing submissions either in support or opposing the approval of the Agreement did not expire until 4.00pm on 5 December 2019. I observed that if each of the Two Employees happened to make identical submissions, notwithstanding that they were over 3000 kilometres apart, it may add weight to the Applicant’s assertions that RAFFWU was seeking to appear in the proceedings in its own capacity.
[7] At 4.06PM on 5 December 2019, my Chambers received an email from RAFFWU. It attached a document titled “Submission of Retail and Fast Food Workers Union (RAFFWU)” (the “RAFFWU Submission”). Regarding the issue of the standing of RAFFWU, the RAFFWU Submission was as follows:
“7. The submission of the applicant discloses it puts the standing of RAFFWU as bargaining representative into contest. This was resolved with the withdrawal of the demand of the applicant at Hearing on 4 December 2019.
8. We submit the Fair Work Commission should entirely disregard the submissions made by the applicant as to the standing of RAFFWU to be heard.
9. We have specifically confirmed our members, having appointed RAFFWU as their bargaining representative, wish to continue having RAFFWU act as their bargaining representative and specifically seeks RAFFWU prosecute its case as their bargaining representative.
10. Neither RAFFWU nor our members were on trial in this proceeding. The application of the applicant was the matter before the Fair Work Commission.
11. The statutory declaration filed as the F16 application for approval by the applicant places the fact of RAFFWU being a bargaining representative in evidence, as does the F18A of RAFFWU’s Secretary.
12. RAFFWU submits it is a common and accepted practice for bargaining representatives to appear in relation to applications for approval of enterprise agreements. The legislation provides special rights for bargaining representatives, including RAFFWU and SDAEA.
13. As a bargaining representative, RAFFWU has a direct interest in the matter. We submit RAFFWU has a right to be heard in this matter.
14. To avoid any doubt, we submit the Fair Work Commission is bound by the decision in CFMEU v Collinsville [2014] FWCFB 7940 where it was stated:
“[16] There can be little doubt that a bargaining representative for a proposed agreement will have standing to be heard in relation to an application to approve the agreement. Bargaining representatives play a central and important role in the agreement making scheme established by Part 2-4 of the FW Act. The FW Act places obligations on and grants privileges to a bargaining representative for a proposed agreement. These include:
● imposing an obligation to meet the good-faith bargaining requirements;
● standing to apply for a majority support determination;
● standing to apply for a bargaining order if the good faith bargaining
requirements are not being met by other bargaining representatives;
● standing to apply for a scope order;
● standing to apply for a low-paid authorisation;
● standing to apply for the approval of an enterprise agreement; and
● the right of an employee organisation that was a bargaining representative for the proposed agreement to give notice that it wants to be covered by the agreement.
[17] The Senior Deputy President determined that the CFMEU was not a bargaining representative for the Agreement and had no right in that capacity to be heard and nor did it have a right to give notice under section 183 of the FW Act.”
15. The Vickers case referred to by the applicant was a demonstrably different matter and that fact should have been drawn to the attention of the Fair Work Commission. Further, in considering the appropriateness of permitting RAFFWU to be Heard in an Award Review proceeding (see [2018] FWCFB 2797) a Full Bench of the Fair Work Commission stated:
[11] The gravamen of Ai Group’s submission is that RAFFWU be denied the opportunity to cross examine witnesses and make submissions in the review proceedings relating to the Fast Food Award. This submission is devoid of merit.
It is not contested that RAFFWU has members (at Domino’s) who may be affected by the outcome of these proceedings. In such circumstances we would have thought that RAFFWU has a right to be heard. But in any event we need not go so far, as we are satisfied that RAFFWU should be permitted to fully participate in the proceedings.
And at [12, (i)]
The fact that RAFFWU is not ‘directly affected’ by the variations which are the subject of the review proceedings is immaterial. The present proceedings are plainly distinguishable from the circumstances in Re Vickers. The point is that RAFFWU has members who may be so affected. In this respect RAFFWU is in no different position to the SDA or Ai Group, neither of which will be ‘directly affected’ by the proceedings as they are not covered by the Fast Food Award (the Fast Food Award does not apply to the SDA or Ai Group as the award is not expressed to ‘cover’ them, see ss.47-48 and clause 4 of the Fast Food Award).
16. That RAFFWU is an Industrial Association representing the interests of Fast Food workers goes beyond the decision in [2019] FWCFB 2797. In [2019] FCA 1799 with regard the Domino’s Pizza class action, the Federal Court said at [53]:
The RRFWU is one of the two unions representing the industrial interests of employees working in the sector, some of whom are likely to be class members in the proceeding.
17. Further, RAFFWU as an Industrial Association is the first applicant in Retail and Fast Food Workers Union Incorporated & Anor v Tantex Pty Ltd in the Federal Court of Australia prosecuting matters pertaining to McDonald’s, another major fast food employer.
18. In any event, RAFFWU does not seek to be heard as an interested party. RAFFWU has standing as the bargaining representative of the two members who have appointed RAFFWU as their bargaining representative. That standing entitles RAFFWU to be heard in accordance with Collinsville.
19. The desperation of the applicant to avoid RAFFWU being heard belies the weakness in its application.”
[8] At 3.45pm on 5 December 2015, the SDA filed a Submission (the “SDA Submission”) that put relevantly:
“By way of general protest, the SDA objects to RAFFWU Incorporated (“RAFFWUI”) being characterized as a Union. It is an incorporated association under the (Vic) Associations Incorporation Reform Act 2012. It operates entirely outside the legislative framework governing registered organisations. In the context of the present proceeding, RAFFWUI has no greater authority than a mere bargaining representative appointed to represent (and only represent) the employees who have appointed it to act in that capacity. It would be an error for the Commission to accord RAFFWUI any greater status than its status as a bargaining representative and it is submitted with respect that the Commission must not elevate the status of RAFFWUI to that of an organization of employees registered under the Fair Work (Registered Organisations) Act 2009.”
[9] In Reply, the Applicant and the Employers submitted that while RAFFWU claimed to represent two casual employees of KFC franchisees, the RAFFWU Submission made no submission regarding particular concerns of either employees or their personal circumstances, and no evidence is given by the Two Employees. The failure to give any evidence was submitted to give rise to an inference that such evidence would have harmed RAFFWU’s case 2.
[10] The Applicant submitted that there existed the distinct impression that RAFFWU was simply using the Two Employees as a vehicle for expressing what are in substance RAFFWU’s views, in circumstances where the Full Bench of the Commission in Vickers 3 had found that it was entirely inappropriate to allow RAFFWU to appear as of right in Commission proceedings.
(b) Consideration Regarding Standing
[11] Regarding bargaining representatives, Section 176(1) of the Act provides:
“176 Bargaining representatives for proposed enterprise agreements that are not greenfields agreements
Bargaining representatives
(1) The following paragraphs set out the persons who are bargaining representatives for a proposed enterprise agreement that is not a greenfields agreement:
(a) an employer that will be covered by the agreement is a bargaining representative for the agreement;
(b) an employee organisation is a bargaining representative of an employee who will be covered by the agreement if:
(i) the employee is a member of the organisation; and
(ii) in the case where the agreement is a multi-enterprise agreement in relation to which a low-paid authorisation is in operation--the organisation applied for the authorisation;
unless the employee has appointed another person under paragraph (c) as his or her bargaining representative for the agreement, or has revoked the status of the organisation as his or her bargaining representative for the agreement under subsection 178A(2); or
(c) a person is a bargaining representative of an employee who will be covered by the agreement if the employee appoints, in writing, the person as his or her bargaining representative for the agreement;
(d) a person is a bargaining representative of an employer that will be covered by the agreement if the employer appoints, in writing, the person as his or her bargaining representative for the agreement.
[12] However, regarding employee organisations as defined by the Act (being organisations registered under the Fair Work (Registered Organisations Act) 2009) 4, sub-section (3) of s.176 provides.
“(3) Despite subsections (1) and (2):
(a) an employee organisation; or
(b) an official of an employee organisation (whether acting in that capacity or otherwise);
cannot be a bargaining representative of an employee unless the organisation is entitled to represent the industrial interests of the employee in relation to work that will be performed under the agreement.”
[13] Section 178 of the Act deals with other matters relevant to the appointment of bargaining representatives. It provides:
“178 Appointment of bargaining representatives--other matters
When appointment of a bargaining representative comes into force
(1) An appointment of a bargaining representative comes into force on the day specified in the instrument of appointment.
Copies of instruments of appointment must be given
(2) A copy of an instrument of appointment of a bargaining representative for a proposed enterprise agreement must:
(a) for an appointment made by an employee who will be covered by the agreement--be given to the employee’s employer; and
(b) for an appointment made by an employer that will be covered by a proposed enterprise agreement that is not a greenfields agreement--be given, on request, to a bargaining representative of an employee who will be covered by the agreement.
Regulations may prescribe matters relating to qualifications and appointment
(3) The regulations may prescribe matters relating to the qualifications or appointment of bargaining representatives.
[14] In Jones v Queensland Tertiary Admissions Centre Ltd (No.2) 5, Collier J. observed, when considering an employer bargaining representative but which analysis was equally apposite to the appointment of an employee bargaining representative, as follows:
“ 25. References to the role of “bargaining representative” are repeated throughout the Act. The term is not defined in the Act and is a newly-created role, replacing the role of “bargaining agent” under the previous Workplace Relations Act 1996 (Cth). Paragraph 697 of the Explanatory Memorandum to the Fair Work Bill 2008 (Cth) provided:
Bargaining representatives have a more significant formal role in the bargaining process compared to bargaining agents under the WR Act. Bargaining representatives are entitled to: bargain for enterprise agreements and depending on the type of agreement will usually be entitled to apply for (among other things) protected action ballot orders, bargaining orders, majority support determinations, scope orders and serious breach declarations. Bargaining representatives are also entitled to represent a person in matters before FWA (see clause 596). As part of their responsibilities, bargaining representatives for a single-enterprise agreement and a multi-enterprise agreement to which a low paid authorisation is in operation are required to meet the good faith bargaining requirements set out in subclause 228(1). Non-compliance with the requirements exposes a bargaining representative to bargaining orders. Division 3 also makes clear that an employer must not refuse to recognise or bargain with a bargaining representative.
26. In my view the legislation referable to the appointment of a bargaining representative in these circumstances should be interpreted liberally. The Act is intended to be accessible to employers large and small, as well as to employees both in their own capacity and through union membership. It is intended to assist relevant parties and facilitate the processes contemplated by the Act, including negotiation of enterprise agreements. The role of bargaining representative is clearly significant, however I consider that, in relation to the circumstances relevant to such appointments, the key factor is that there be attendant certainty upon the creation of the role rather than a requirement of overt formality. So, it must be clear on the face of the relevant document that the position has been created, and a copy of that document must be capable of being given to a bargaining representative of the employee (s 178(2)). Accordingly, for example, I do not consider that reference to “instrument of appointment” in s 178(1) requires that a document purporting to record the appointment of a bargaining representative of an employer be a document of the formality of a deed under seal. Provided the appointment is made in writing, as required by s 176(1)(d), and provided it clearly evidences the creation of the role, the appointment is effective.”
[15] RAFFWU is clearly not an employee organisation as defined by the Act, and its attempt to equate it’s position to that of the SDA, contained at paragraph 12 of their submission extracted above, is baseless and contrary to the entire scheme of the Act and the the Fair Work (Registered Organisations Act) 2009. 6
[16] The provisions of the Fair Work (Registered Organisations Act) 2009 impose significant obligations upon all registered organisations, and employee organisations in particular, regarding such issues as their Rules, the keeping of accounts and the filing of relevant documentation with the Commission. Failure to comply with those obligations can have serious consequences, including significant pecuniary penalties 7. RAFFWU is not subject to any such obligations, and its attempt to equate itself with a registered organisation by the use of the term “union” in its name is misleading.
[17] While RAFFWU points to the decision of the Full Bench in 4 yearly review of modern awards – Fast Food Industry Award 2010 8, regarding the “appropriateness of permitting RAFFWU to be heard in an Award Review proceeding”9, it is clear that as Modern Awards no longer have named respondents or parties principal, and cover certain persons, organisations and entities who are not named respondents, that procedural fairness can demand that a broad range of persons or entities may be heard. That was particularly so where it was not contested in the Award Review that RAFFWU had members who may have been affected by the outcome of the proceedings.
[18] Unlike the broad nature of Modern Award coverage however, the delineation of the permissible participants in Enterprise Agreement negotiation is significantly more restrictive. The SDA, being an organisation entitled to represent the industrial interests of employees in this area, is as of right a bargaining representative of its members unless that status is revoked (s.176(1)(b)). RAFFWU only becomes a bargaining representative if it is appointed, in writing, by a person as “his or her bargaining representative” (s.176(1)(c)). Its participation in the Application is therefore limited to it being the bargaining representative of the Two Employees. RAFFWU seems to accept that limitation at paragraph 18 of their submission extracted above.
[19] When the content of the Two Employees’ Submission is considered, there would appear to be some force to the Applicant’s Reply Submission that there exists at least an impression that RAFFWU is using the Two Employees as a vehicle for expressing what are in substance RAFFWU’s views, rather than those of the Two Employees. Nonetheless, the RAFFWU Submission has been made, and I am not prepared to find that the RAFFWU Submission is not an expression of the views of the Two Employees merely on the basis of the text of the Submission or on the basis of a Jones v Dunkel 10inference.
[20] I consider the parties interests would be best served by my directing my attention to whether or not the Agreement can be approved, rather than embarking on a preliminary enquiry into whether the RAFFWU Submission is actually an expression of the Two Employees’ views, though I note that such latter course would clearly be available to the Commission (for example, pursuant to s.590(2)(a)).
Directions, Submissions and Hearing
[21] On 7 November 2019, Directions were issued to the parties that identified a number of possible issues with the Agreement in relation to forms and signature requirements, the National Employment Standards (“NES”), the Better off Overall Test (“BOOT”), and potential unlawful deductions.
[22] In response to the Directions of 7 November 2019, the Applicant filed Submissions (the “Applicant’s Submission”) together with the undertakings that the Applicant was prepared to provide (the “Undertakings”). A copy of the Undertakings is attached to this agreement and marked “Annexure A”.
[23] As anticipated in response to the Directions of 7 November 2019, and the Applicant’s Submission and the Undertakings:
(a) The SDA filed submissions (the “SDA Submission”) on 5 December 2019; and
(b) The RAFFWU Submission was filed, also on 5 December 2019.
[24] On 12 December 2019, the Applicant filed submissions in reply (the “Applicant’s Reply Submission”), that responded to the SDA Submission and the RAFFWU Submission.
[25] On 16 December 2019, the Two Employees filed an additional submission regarding the dispute clause of the Agreement (the “RAFFWU Supplementary Submission”).
[26] On 16 December 2019, a Hearing occurred in Sydney at which the Applicant, the SDA, and RAFFWU as bargaining representative for the Two Employees, addressed the Commission further.
[27] On 20 February 2020, I sought the response of the parties to various enquiries regarding the standing and authorisation of the Applicant and the Employers. Responses to my enquiries were received on:
(a) 26 February 2020, from the Applicant;
(b) 28 February 2020 from the SDA;
(c) 28 February 2020, from the Two Employees; and
(d) 3 March 2020, from the Applicant in reply to the response of the Two Employees.
Outstanding Issues
[28] Arising from the issues raised by the Commission, the Applicant’s Submission, the Undertakings, the SDA Submission, the RAFFWU Submission, the Applicant’s Reply Submission, and the RAFFWU Supplementary Submission, the following issues require my consideration and determination in order to determine whether the Agreement must be approved:
(a) The standing and authorisation of the Applicant and the Employers;
(b) The evidence of the Applicant and the Employers, particularly regarding the obligations pursuant to s.180 of the Act;
(c) The Notice of Employee Representative Rights (“NERR”);
(d) Whether the group of employees is fairly chosen;
(e) BOOT issues;
(f) Terms undermining the NES;
(g) The dispute term obligation; and
(h) Unlawful terms.
(a) The Standing and Authorisation of the Applicant and the Employers
[29] The Two Employees challenge the standing of Kentucky Fried Chicken Pty Ltd to make applications on behalf of any other employer. They note that the Single Interest Employer Authorisation (“SIEA”) 11 made by the Commission on 17 April 2019, does not specify any person who may make applications on behalf of employers after the SIEA is made (s.250(1)(c) of the Act). The Two Employees’ challenge was expressed in the RAFFWU Submission as follows:
“20. We note the Single Interest Employer Authorisation ([2019] FWC 2604) identifies Yum! Restaurants Australia Pty Ltd to make the application for the Single Interest Employer Authorisation on behalf of the applicant – at [4]. It is unclear what standing Kentucky Fried Chicken Pty Ltd has to make applications on behalf of any other employer. No material has been served on RAFFWU which would identify the basis for the application by the applicant.
21. The decision in [2019] FWC 2604 does not specify any person who may make applications on behalf of employers after the authorisation is made – see s.250 (1)(c) of the Fair Work Act. The Order (PR707102) does not specify any person whatsoever for the purposes of s.250 (1)(c).
…
23. Further Mr Jon D’Souza is identified in [2019] FWC 2604 at [4] as an employee of Yum! Restaurants Australia Pty Ltd. However, he makes the F17 presumably declaring the actions of Kentucky Fried Chicken Pty Ltd. He does not identify what steps he took to confirm the actions of the applicant.
24. It would appear Yum! Restaurants Australia Pty Ltd is not an employer. It is not listed in [2019] FWC 2604 as an employer at [3]. It would appear to be the franchisor.
25. Mr D’Souza is not a bargaining representative nor an authorised person named in the Order. Mr D’Souza led bargaining with a Mr Champion who, despite the statutory declaration of Mr D’Souza, advised RAFFWU that he was not a bargaining representative.
26. It would appear that bargaining was not conducted by employers or their bargaining representatives. This may be a relevant factor as to whether the Proposed Agreement was genuinely agreed.
…
30. The submissions, undertaking and response filed on 21 November 2019 by Mr McDonald make numerous references to “KFC” as if it is some identifiable entity. The F16 of the applicant identifies the applicant (Kentucky Fried Chicken Pty Ltd) is “KFC”. It would appear we have been served with the submissions, undertaking and response of a single entity – one of 78 employers – who is not authorised under the Order to make applications on behalf of the employers (let alone give undertakings, file submissions or make responses.)
31. The Fair Work Act provides at s.185 in relation to an application for approval of an agreement:
(2) The application must be accompanied by:
(a) a signed copy of the agreement; and
(b) any declarations that are required by the procedural rules to accompany the application.
32. The Rules provide at Rule 24:
24 Application for approval of an enterprise agreement Agreements other than greenfields agreements
(1) If an application is made under section 185 of the Act for approval of an enterprise agreement that is not a greenfields agreement, each employer that is covered by the agreement must lodge a statutory declaration, in support of the application for approval, by the employer or by an officer or authorised employee of the employer within 14 days after the agreement is made.
33. We have been served with a single F17 by a person who does not appear to be an officer or employee of any of the 78 employers. We have not been served with a single compliant statutory declaration let alone 78.
34. There is no valid application before the Fair Work Commission and the application ought be dismissed.
STANDING OF SIGNATORY
35. The Proposed Agreement has been purportedly signed by Mr D’Souza as “Employer Authorised Person”. No material is identified as to what that is or how it is relevant.
36. The Fair Work Regulations stipulate the signature requirements at 2.06A
2.06 A Bargaining representative must apply for FWC approval of an enterprise agreement—requirements for signing agreement
(1) For subsection 185(5) of the Act, this regulation prescribes the requirements for the signing of an enterprise agreement.
(2) For paragraph 185(2)(a) of the Act, a copy of an enterprise agreement is a signed copy only if:
(a) it is signed by:
(i) the employer covered by the agreement; and
(ii) at least 1 representative of the employees covered by the agreement; and
(b) it includes:
(i) the full name and address of each person who signs the agreement; and
(ii) an explanation of the person’s authority to sign the agreement.
37. It is unclear how Mr D’Souza is entitled to sign on behalf of any employer. He does not appear to be an officer or employee of any relevant employer. He was not a bargaining representative.
38. We submit that there is no signed agreement before the Fair Work Commission and it cannot be approved. The application ought be dismissed.”
[30] The SIEA was made by the Commission on 17 April 2019. It contained the following important observations and conclusions of Deputy President Sams:
[7] It is to be observed that if the Commission is satisfied that all the requirements set out in ss (1)-(3) of s 249 of the Act have been met, the Commission must make the single interest employer authorisation. Section 249(4) deals with the operation and duration of the authorisation.
[8] Given the nature of this application, I propose to determine it ‘on the papers’.
[9] Having considered the terms of the application and the accompanying statement of Mr D’Souza, I am satisfied that the Employers have agreed to bargain together and have not been subject to any coercion and that the relevant Employers are franchisees of the same franchisor. I have taken into account confirmation from the Union party to previous agreements covering the employees of the Employers, the SDA, that it consents to the application and is anxious to commence bargaining for a new enterprise agreement. Accordingly, I will issue a single interest employer authorisation for the Employers to bargain together for the proposed agreement.
[31] Further, as set out at paragraph [10] the SIEA Decision:
“In accordance with s 249(4) of the Act, the single interest employer authorisation comes into operation on 17 April 2019 and will cease operation on the day on which the proposed enterprise agreement is made or on 17 April 2020, whichever is the earlier.”
[32] Pursuant to s.182, the Agreement was made on the date when majority of employees cast a valid vote to approve it, being 11 October 2019. The Application by Kentucky Fried Chicken Pty Limited for the approval of the Agreement was made on 23 October 2019, by which time the SIEA Order had ceased to operate.
[33] The conclusion that the relevant employers were franchisees of the same franchisor was entirely consistent with previous Full Bench determination in 2010 that KFC franchisees carry on a business as a common enterprise. The Full Bench found:
“…KFC outlets are not isolated stand alone businesses. They are operated under franchise agreements which require a very high level of standardisation and cooperation. Most features of the business are standardised and operated under the KFC umbrella. This extends to appearance, design, purchasing, operations, pricing and marketing. Profit is effectively shared as KFC Pty Ltd obtains a proportion of revenue from franchisees.
In our view KFC Pty Ltd and its franchisees carry on a business as a common enterprise. They are closely connected and contribute to the overall purpose of successfully operating KFC outlets.” 12
[34] The Applicant identified in the Form F16, Kentucky Fried Chicken Pty Ltd (“KFC”), is an employer to be covered by the Agreement (clause 2.1 of the Agreement). KFC is a bargaining representative for the purposes of s.176(1)(a) of the Fair Work Act (2009) (Cth) (“the Act”), and is therefore entitled to apply for the approval of the Agreement under s.185(1) of the Act.
[35] Section 185(1) of the Act requires “a bargaining representative” to apply to the FWC for approval of the agreement. It does not require “all bargaining representatives” to do so.
[36] Insofar as it has been identified that Yum! Restaurants Australia Pty Ltd was, at least in the title of the SIEA, the putative Applicant for the SIEA, I note that:
(a) Paragraph [1] of the SIEA notes that the Application was made by Yum! Restaurants Australia Pty Ltd and 78 other named employers, including KFC;
(b) Yum! Restaurants Australia Pty Ltd and KFC are “related bodies corporate” and so deemed to be “single interest employers” (s.172(5)(b)); and
(c) Mr Jon D’Souza named in reference to Yum! Restaurants Australia Pty Ltd in the SIEA is the same person that is named in reference to KFC in the Forms F16 and F17.
[37] I find that KFC has standing to make the Application. Further, s.185(1) of the Act only requires “a bargaining representative” to apply to the Commission for approval of an agreement. It does not require “all bargaining representatives” to do so.
[38] Insofar as Rules 24(1) of the Fair Work Commission Rules 2013 (“the Rules”) provides that each employer that is covered by the Agreement must lodge a statutory declaration, bearing in mind the conclusions contained in the SIEA, and its terms, pursuant to Rule 6 of the Rules I waive the need for compliance with Rules 24(1).
[39] I further find that Mr D’Souza is clearly entitled to sign the Application documents on behalf of the Applicant. Mr D’Souza is the People and Capability Director of KFC. KFC is an employer stipulated at clause 2.1 as being covered by the Agreement. As such, Mr D’Souza is entitled to sign the Agreement.
(b) The Evidence of the Applicant and the Employers, Particularly Regarding the Obligations Pursuant to s.180 of the Act
[40] RAFFWU submitted that the obligations at s.180 of the Act fell on each relevant employer, and that there was no evidence from any employer (seemingly including KFC) that they complied with each of the requirements of s.180.
[41] RAFFWU further noted that the Applicant was the only employer to whom the proposed Agreement was said to apply as no other employers were listed at Schedule A. As such it raised questions regarding whether persons not covered by the Agreement voted on the Agreement. It put, without any basis, that “…the voting pool was infected by tens of thousands of persons who will not be covered by the Proposed Agreement because of its terms”.
[42] Finally RAFFWU submitted that there was no evidence as to how employees were given access to the Policy of promoting union membership identified in clause 41.2 of the Proposed Agreement during the access period, and noted that the definition of employees in the Proposed Agreement was circular and exclusive of Shift Supervisors.
[43] As the Full Bench previously observed 13, KFC is a business that involves not isolated stand alone businesses, but businesses that are operated under franchise agreements which require a very high level of standardisation and cooperation. It would be ludicrous to suggest, and the Act does not require, that after the group of 78 employers identified in the SIEA bargained together for one enterprise agreement to apply to all of them, that each of the 78 employers must then individually undertake the pre-approval steps outlined in s.180.
[44] Mr D’Souza provided significant detail in the Form F17 Statutory Declaration at questions 2.5, 2.6, 2.7 and 2.8 (with numerous annexures) regarding the steps taken to ensure provision of relevant materials and understanding of those materials. Those steps were taken in relation to each of the 661 KFC Outlets nationally. As such Mr D’Souza was ensuring, from his position of People and Capability Director of KFC, complete and consistent compliance with the Act’s requirements for all employers covered by the SIEA. By doing so, those employers and Mr D’Souza took all reasonable steps to ensure compliance with the Act.
[45] There is no evidence, even from the Two Employees, that there was any confusion as to whom the proposed agreement related. Additionally, the detail and dissemination of the relevant materials, together with the substance of the proposed Agreement as a whole, would have left employees in no doubt as to coverage.
[46] I do not consider it was necessary that employees be given access to the Policy of promoting union membership identified in clause 41.2. It is unclear whether any such written policy exists. The focus of that particular sub-clause of the Agreement is provision of an application form to join the union. I further see no uncertainty in the definition of Shift Supervisors.
(c) The Notice of Employee Representative Rights (“NERR”)
[47] RAFFWU alleges that the F17 incorrectly states that the NERR was placed in KFC outlets on 23 April 2019, and argues that:
“57. It is clear from the Single Interest Employer Authorisation decision that the applicant had agreed to bargain for the proposed agreement prior to 12 April 2019. It is clear the other employers had agreed to bargain. It is beyond doubt the notification time had occurred prior to 12 April 2019 and very likely before 9 April 2019. The NERR was not issued until 23 April 2019.
58. Had employees been issued with the NERR in accordance with the Act, employees could have exercised their right to be represented. They may have also engaged in the case for the Single Interest Employer Authorisation. They were denied those rights. RAFFWU is concerned the applicant and other employers almost certainly failed to comply with the requirement to issue the NERR within 14 days.
59. It is also of note the obligation falls on each employer – not merely the applicant.
60. RAFFWU is concerned that no valid NERR was issued and therefore the applicant cannot satisfy the Fair Work Commission that the statutory requirement at s.188(1)(a) (ii) is met. The Application ought be denied.
61. In the alternative, the NERR that was issued was not concordant with the decision and order in [2019] FWC 2604. We submit this makes the NERR invalid.”
[48] I reject those submissions. An application for a SIEA necessarily occurs before bargaining commences so as to authorise the SIEA employers to bargain together. This is noted in the SIEA wherein it noted that the SDA “consents to the application and is anxious to commence bargaining for a new agreement” 14. The notification time for the purposes of s.173(3) of the Act, as recorded by Mr D’Souza in the Form F17 is clearly not wrong.
[49] RAFFWU advanced what it identified as an alternative argument, being a difference between the scope of the SIEA and the NERR that it described as “manifestly different in scope and…therefore invalid”. The difference identified was the following:
“[The SIEA] specified the persons employed as “Team Members (not including managerial employees), including employees engaged as commissaries or in home delivery call centres.” However, the NERR that was issued was for a different Proposed Agreement which would cover “employees that work in KFC outlets across Australia.”“
[50] It is an exaggeration to describe the above difference as manifestly different in scope. The coverage of the Agreement is certainly no less than that referred to in the SIEA. However, it is clear that single interest employee authorisations do not define the scope of bargaining. As the Full Bench observed in Stuartholme School and Others v Independent Education Union of Australia 15:
“In our view there is no indication in the relevant statutory provisions that the legislature intended that a single interest employer authorisation should define the scope of bargaining and that a bargaining representative who argues for a different scope is necessarily not genuinely trying to reach an agreement. The principle purpose of an authorisation is to permit a group of employers to do what the Fair Work Act does not otherwise permit and that is to bargain together for one enterprise agreement to apply to all of them. …”
[51] The NERR is not invalid.
(d) Whether the Group of Employees is Fairly Chosen
[52] RAFFWU submits the group of employees to be covered by the Proposed Agreement was not fairly chosen. It noted that the NERR that was issued included all employees, however the Application was made for approval of a Proposed Agreement that excludes Managerial employees.
[53] RAFFWU does not, however, say how the exclusion of managerial employees results in the group being not fairly chosen. It is unchallenged that Managerial employees have never been covered by an enterprise industrial instrument applying to KFC team members.
[54] Given the history of agreement coverage, the involvement in bargaining of professional and experienced bargaining representatives and the absence of any evidence of manipulation, I find there is no substance to the allegation that the group of employees is not fairly chosen.
(e) BOOT Issues
[55] Section 193 of the Act deals with the BOOT. It provides:
“193 Passing the better off overall test
When a non greenfields agreement passes the better off overall test
(1) An enterprise agreement that is not a greenfields agreement passes the better off overall test under this section if the FWC is satisfied, as at the test time, that each award covered employee, and each prospective award covered employee, for the agreement would be better off overall if the agreement applied to the employee than if the relevant modern award applied to the employee.
FWC must disregard individual flexibility arrangement
(2) If, under the flexibility term in the relevant modern award, an individual flexibility arrangement has been agreed to by an award covered employee and his or her employer, the FWC must disregard the individual flexibility arrangement for the purposes of determining whether the agreement passes the better off overall test.
When a greenfields agreement passes the better off overall test
(3) A greenfields agreement passes the better off overall test under this section if the FWC is satisfied, as at the test time, that each prospective award covered employee for the agreement would be better off overall if the agreement applied to the employee than if the relevant modern award applied to the employee.
Award covered employee
(4) An award covered employee for an enterprise agreement is an employee who:
(a) is covered by the agreement; and
(b) at the test time, is covered by a modern award (the relevant modern award) that:
(i) is in operation; and
(ii) covers the employee in relation to the work that he or she is to perform under the agreement; and
(iii) covers his or her employer.
Prospective award covered employee
(5) A prospective award covered employee for an enterprise agreement is a person who, if he or she were an employee at the test time of an employer covered by the agreement:
(a) would be covered by the agreement; and
(b) would be covered by a modern award (the relevant modern award) that:
(i) is in operation; and
(ii) would cover the person in relation to the work that he or she would perform under the agreement; and
(iii) covers the employer.
Test time
(6) The test time is the time the application for approval of the agreement by the FWC was made under section 185.
FWC may assume employee better off overall in certain circumstances
(7) For the purposes of determining whether an enterprise agreement passes the better off overall test, if a class of employees to which a particular employee belongs would be better off if the agreement applied to that class than if the relevant modern award applied to that class, the FWC is entitled to assume, in the absence of evidence to the contrary, that the employee would be better off overall if the agreement applied to the employee.”
[56] The BOOT is an evaluative determination, not to be conducted via a line by line analysis. It is an assessment that requires consideration of the advantages and disadvantages of an enterprise agreement to award covered employees and prospective award covered employees. There will invariably be some advantages to making an agreement, as there will likely be some disadvantages. An enterprise agreement may pass the BOOT even if some award benefits have been reduced, so long as they are more than offset by the benefits of the enterprise agreement. Ultimately the application of the BOOT is a matter that involves the exercise of discretion.
(i) More Beneficial Provisions
[57] The Agreement contains terms which are more beneficial than the Award. I find that the Agreement contains the following advantages to employees covered by the Agreement when compared to award covered employees and prospective award covered employees:
(a) Clause 5.2.1 provides guaranteed minimum hours of 6 hours under the Agreement, compared to 3 hours per week under the award.
(b) Part-time employees only being rostered according to their availability as to days of the week, and the periods in each of those days, as agreed on engagement. Such availability cannot be changed without the written agreement of the employee. Part-time employees may also be offered additional hours within their agreed availability, which they are free to accept or reject (except for a maximum period of 15 minutes at the end of a shift).
(c) The ability for part-time employees to request in writing that the employer agree to increase the guaranteed minimum hours where such part-time employee has over a period of at least 12 months regularly worked a number of ordinary hours that is in excess of the guaranteed minimum hours.
(d) Additional benefit to part-time employees base rates of an extra 0.25% / 0.5% applied to their base rate in addition to the award penalties for working weekends, nights and public holidays.
(e) Improved benefit of access to a formal traineeship qualification for part-time school-based trainees as part of their employment with KFC.
(f) Part Time School-based Trainees receive at least 0.25 or 0.5% in excess of the relevant award rate for an award employee of the same type (i.e. 15 year-old trainees, and 16 year-old employees in Year 12), or the higher team member rate plus a loading of 7.5%. School-based trainees are paid at least an hour for attending traineeship review meetings.
(g) Full and part-time employees will receive an additional 0.25% over the award rate from 1/2/20 and 0.5% over the award rate from 1/7/21.
(h) Casual employees will receive an additional $0.01 per hour at the adult level (plus the additional 25% loading) over the award rate from commencement of the agreement.
(i) Clause 6.5 Protection of Rates provides existing employees at the date of the Agreement coming into operation shall not suffer a reduction in their total rate of pay (including allowances) for working the same hours, as a result of the implementation of the Agreement.
(j) Clause 9.1 Spread of Hours provides for a maximum of 10 hours within a 11 hour spread, whereas the Award provides an employee may be rostered to work up to a maximum of 11 ordinary hours on any day.
(k) Clause 12.2 Rest Breaks provides that employees can access an additional 10 minute rest break after 8 hours rather than after 9 hours under the Award.
(l) Clause 20 Family and Domestic Violence Leave provides employees may access their accrued personal/carers leave for a maximum of 3 days paid leave in addition to their entitlement to 10 days unpaid leave. Additionally, under the Agreement, employees are entitled to 10 days unpaid leave compared to 5 days unpaid leave under the award and NES.
(m) Clause 24 Compassionate Leave provides full and part-time employees are entitled to 3 days paid compassionate leave, as opposed to 2 days under the NES. Under the Agreement, casuals are also entitled to 3 days unpaid leave, as opposed to 2 days under the NES. Employees may also access 1 days paid leave to attend the funeral of an aunt or uncle, which is in addition to NES entitlements.
(n) Clause 25.2 Parental Leave provides that employees have an entitlement to unpaid leave for permanent care and long-term foster arrangements.
(o) Clause 26.5 Time Off in Lieu of Overtime provides that an employee has the benefit of the time off within one month rather than potentially having to wait for 6 months to get the benefit under the Award.
(p) Clause 29.4 Termination notice by employee provides that an employee is only required to provide one week’s notice where the Award requires additional notice based on years of service.
(q) Clause 32 Disputes Procedure provides that dispute which cannot be resolved by conciliation may be dealt with by compulsory arbitration.
(r) Clause 35 Accident Pay provides that accident pay at Agreement rates continues for 26 weeks from the date of injury.
(s) Clause 40 Union Delegates provides that delegates may be granted leave for union training courses or programs at the employer’s discretion.
(t) Clause 41 Redundancy specifies that employees of small employers also receive redundancy entitlements under the Agreement.
(ii) Less Beneficial Provisions
[58] It was also apparent that the Agreement contained certain possible disadvantages for employees it covered when compared to award covered employees and prospective award covered employees. BOOT concerns were expressed to the parties by way of the Commission’s Single Enterprise Agreement Legislative Checklist that was provided to the parties.
[59] After considering the Applicant’s Submission, the SDA Submission, the RAFFWU Submission, and the Applicant’s Reply Submission, I considered the following matters as possible concerns regarding whether the Agreement passed the BOOT:
(a) Rates if pay for junior casual employees were calculated as slightly lower than the Award.
(b) Clause 5.2.7 of the Agreement states that a part-time employee may be offered ordinary hours in addition to ‘guaranteed minimum hours’ paid at ordinary rates and 5.2.7(d) provides that agreed additional hours paid at ordinary rates will accrue entitlements such as annual leave and personal/carer’s leave.
(c) Clause 5.2.7(e) of the Agreement provides that a part-time employee may decline additional hours, with the exception of up to a maximum of 15 minutes at the end of a shift, to be paid at ordinary time subject to the daily and weekly maximums provided elsewhere in the Agreement, however it is unclear whether the additional 15 minutes would accrue leave entitlements as conferred at clause 5.2.7(d) of the Agreement.
(d) Clause 10.10 of the Agreement provides for time off in lieu (“TOIL”) however it does not indicate that any unpaid TOIL must be paid to the employee upon termination as Clause 26.5(h) of the Award provides, nor does it provide that if the employee requests at any time, to be paid for overtime worked but not taken off, the employer must pay the employee for the overtime in the next pay period following the request as provided at Clause 26.5(d) of the Award.
(e) Clause 35.1 of the Agreement provides that the amount of accident pay shall be increased by the employer to the amount of the ordinary time weekly rate for the average rostered hours worked by the employee at the time of the accident, however ‘average rostered hours’ appears inconsistent with Clause 20.1(a) of the Award which provides that the weekly accident payment made to an employee is the difference between the weekly workers’ compensation payment and the employee’s weekly wage payable under the Award. Also, the Agreement does not provide that the entitlement to accident pay continues on termination of an employee’s employment as provided by Clause 20.3 of the Award, or the return to work protections at Clause 20.5 entitling the employee to reduced accident pay when the employee returns to work on reduced hours or modified duties (for the performance of such work).
(f) The Agreement does not provide that the time of taking rest and meal breaks, and the duration of meal breaks, form part of the roster and are subject to any agreement reached regarding part-time employees’ regular pattern of work.
(g) Clause 8.7 of the Agreement provides that Team Members occasionally rostered by Employers to assist other team members in learning non-certified, on-the-job skills (but without the major responsibility on a day to day basis for supervising and/or training new employees) shall receive an additional skills champion allowance of 1.5% of their base rate whilst performing such work. Team Members are equivalent to an Award Level 1, however employees at this level are not required to assist in training other employees, and supervision is not necessarily a requirement of an employee classified at an Award Level 2.
(iii) Resolution of Preliminary BOOT Analysis
[60] The Undertakings were provided subsequent to the Commission’s concerns being outlined to the parties. I consider that my concerns that the Agreement did not meet the approval requirements of ss.186 and 187 of the Act, in particular the BOOT, were addressed by the Undertakings in the following way:
(a) My concern in respect of rates of pay for school-based trainees and casuals was addressed by Undertaking 3 of the Undertakings;
(b) My concern regarding part-time employee who are offered ordinary hours in addition to ‘guaranteed minimum hours’ being paid at ordinary rates is addressed in two ways:
(i) Firstly, Clause 12.3 of the Award was varied on 11 October 2019 16to provide that part-time employees may agree to vary the regular pattern of work for a particular rostered shift provided that the variation is recorded by the end of the affected shift; and
(ii) The provision of Undertaking 1 of the Undertakings.
(c) My concern expressed at paragraph [59(c)] above was addressed by Undertaking 2 of the Undertakings.
(d) My concerns expressed at paragraph [59(d)] above were addressed by Undertaking 5 of the Undertakings.
(e) My concerns expressed at paragraph [59(e)] above were addressed by Undertaking 11 of the Undertakings.
(f) My concerns expressed at paragraph [59(f)] above were addressed by Undertaking 6 of the Undertakings.
(g) My concerns expressed at paragraph [59(g)] above were addressed by Undertaking 4 of the Undertakings that such employees will not have the responsibility for supervising team members and/or training new employees.
[61] I formed the preliminary view that the concerns that I possessed regarding the less beneficial terms and the BOOT analysis were addressed by the Undertakings. Indeed, the position of the SDA at the Hearing was expressed that it advanced only the following limited BOOT concern:
“The final question I need to deal with is this issue of part-timers working additional hours and there’s an undertaking that’s been offered, which is the first undertaking. I have to say that the SDA’s position is that the agreement provisions are superior to the award and we would not want clause 5.2.1 to be completely replaced by 12.3 of the award. If there’s an issue about 12.3 replacement it should be limited, in our submission, to the first 15 minutes which under the agreement are required additional time at ordinary time rates if an employee needs to finish serving a customer or what have you.” 17
(iv) RAFFWU Further Boot Issues
[62] RAFFWU, however, highlighted a number of further BOOT issues which, it submitted, would preclude approval of the Agreement. RAFFWU remains of the view that the Commission cannot be satisfied that the Agreement passes the BOOT. I will consider each issue below and outline whether or not I am satisfied the issue affects the BOOT analysis, and in what way. In my determination, I have concluded that the uniform deductions clause in the Agreement is not better off as against the Award, however, this detriment is offset by those items which are.
(a) Non-Skills Champion
[63] RAFFWU submits that the wage rate payable to employees is only between 1c and 10c more than the Award. RAFFWU submits this is so miniscule so as to be a neutral factor in the BOOT consideration.
[64] Table B of clause 6.1 of the Agreement states that pay rates are a percentage of the Award weekly rate plus 0.25% on commencement. The adult weekly rate in Table B has been rounded to the nearest 10 cents after this addition, which is how the Commission would also calculate Award rates if adding the same percentage. Combined with the Undertakings given, the result is that the rates under the Agreement will always be higher than the Award. I am satisfied that this actually weighs positively in the BOOT assessment.
(b) Skills Champion
[65] RAFFWU noted that it had previously raised concern with KFC that those paid a Skills Champion Allowance should be entitled to be paid at the rate of Level 2 in the Award. The proposed undertaking directed to this issue attempts to deal with this issue and RAFFWU maintains the Proposed Agreement contains detriment without the undertaking.
[66] However, the Skills Champion Allowance is not a benefit provided by the Award. KFC in the Undertakings has nonetheless committed to a position that an employee paid the Skills Champion Allowance will not have the responsibility for supervising team members and/or training new employees.
[67] RAFFWU’s complaint is clearly that it did not gain something in negotiations, not that there is detriment when compared to award covered employees. I am satisfied that this actually weighs positively in the BOOT assessment, but for a very limited category of employees.
(c) Uniform Deduction
[68] RAFFWU submitted that the Uniform Deduction was a clear and manifest detriment, and also an unlawful term.
[69] KFC noted that the Award has no restriction in relation to uniform deduction as it is silent in relation to uniform deduction. It submitted that accordingly, for the purposes of applying the BOOT, the uniform deduction cannot be regarded as a detriment as compared to the Award.
[70] I note that the terms of the Agreement reflect less a “deduction” and more “deposit and retention of deposit until uniform return on termination”, and in return employees gain the benefit of provision of a uniform. Overall, this issue weighs only slightly negatively in the Commission’s BOOT assessment.
(d) Meal Breaks and Rest Breaks
[71] RAFFWU submitted that the Award provides that the time of taking rest and meal breaks, and the duration of meal breaks, are subject to rostering provisions. The Award provides that an unpaid meal break must be taken after no more than 5 hours of work. The Proposed Agreement provides arrangements for the not taking of meal breaks, and for the non-rostering of meal breaks.
[72] In particular, it was submitted, Clause 11.3 of the Proposed Agreement permits an employer to direct an employee to take a period of shorter than 30 minutes as a “meal” break (of 20 minutes duration.) These are not genuine meal breaks and are “crib breaks”. It “is to be taken according to operational requirements.” These were submitted to be clear and manifest detriments, which in practice, are simply the abolition of the meal break. While the Applicant has proposed an undertaking in relation to the “rostering of meal breaks”, RAFFWU submitted the Applicant has not proposed any undertaking in relation to the time of taking rest breaks. This is a detriment.
[73] Finally, RAFFWU submitted that the “rostering” of meal and rest breaks, including the length of meal breaks, has particular benefit to part-time employees who have set rosters which can only change by agreement. The detriment inflicted by these provisions is amplified under the Proposed Agreement which casualises part-time work.
[74] KFC noted that Clause 11.3 of the Agreement only applies to shift supervisors and enables a crib break to be taken instead of an unpaid meal break. KFC submits that the provision of a paid break is more beneficial than the provision of an unpaid break.
[75] KFC disagreed that the Agreement’s provisions for rest breaks are detrimental as compared to the Award. Firstly, the Award does not have any requirement for there to be a roster that is set in advance. Conversely, the Agreement provides at clause 9.8 that the employer will determine and display a roster seven days in advance. To require a rest break to be incorporated into a roster set seven days in advance would place an obligation upon KFC in excess to what is required under the Award. Secondly, employees and employers being able to arrange a meal break when its suits them should not be regarded as a detriment.
[76] This issue is limited to Shift Supervisors. I consider that certain Shift Supervisors may see a 20 minute paid break as more beneficial than a 30 minute unpaid break. In the absence of evidence either stating benefit or detriment though, I consider this issue a neutral consideration in the BOOT assessment.
(e) Dispute Resolution - Representation
[77] RAFFWU noted that the Award provides for an employee to have a representative if they wish throughout the dispute resolution process. A party to the dispute may appoint a person, organisation or association to support and/or represent them in any discussion or process under clause 9.
[78] RAFFWU contended that the Proposed Agreement limits representation to SDAEA and AWU. Further, clauses 32.3 and 32.4 of the Proposed Agreement provide structural impediment to any worker progressing and resolving their dispute unless SDAEA, AWU or the employer agree. The clause does not meet the requirements of s.186 (6) as described below. However, this is also a substantial detriment.
[79] RAFFWU submitted that the proposed undertaking does not deal with the latter issue and mistakes the earlier issue. The undertaking refers to representation by clause 9 of the Award. The Award does not apply and the clause in the Proposed Agreement will apply. Any undertaking needs to be relevant to the disputed term.
[80] The undertaking provided by the Applicant is as follows:
“Clause 32: KFC undertakes that a party to a dispute may appoint a person, organisation or association to represent them in any discussion or process permitted by clause 9 of the Award”.
[81] The breadth of the undertaking seems to be mis-interpreted by RAFFWU. The reference to the Award in the Undertaking has the two-fold effect of:
(a) Ensuring employee entitlements arising from the Award are squarely preserved; and
(b) Recognising the steps under the Award that are equivalent to those under the Agreement.
[82] It is clear on the face of the Agreement, the Award and the Undertaking that the SDA and AWU are in no way “gatekeepers” to any step in the process (as RAFFWU allege in their Supplementary Submission). I consider this issue a neutral consideration in the BOOT assessment.
(f) Shut-down and Refurbishment
[83] RAFFWU noted that the Agreement introduces at Clause 26 a provision which allows the employer to direct an employee to take annual leave or, for employees who do not have sufficient leave at the time of the shutdown, require them to take leave without pay for the duration of the shutdown.
[84] RAFFWU submitted that while the term would appear to offend the National Employment Standards (relating to annual leave), it is also a substantial detriment. The Award provides no such right to an employer to direct annual leave be taken nor stand down an employee (other than in accordance with s.524 of the Act).
[85] In relation to the National Employment Standards, RAFFWU submitted that the term in the Proposed Agreement does not provide for a circumstance where the requirement to take annual leave is reasonable. As such, the proposed term is not compliant with the National Employment Standards nor section 55 of the Fair Work Act. It submitted that the Proposed Agreement cannot be approved (see s.186 (2) (c) of the Act).
[86] KFC accepted that there is no provision in the Award for an employer to direct an employee to take annual leave during a shutdown. However, there is nothing in the Award which would make it unlawful at common law for an employer to direct an employee to take annual leave during a shutdown or refurbishment period provided that such a direction is reasonable. Nor is there anything in the Act which would prevent such a direction.
[87] KFC also noted that the Act is clearly permissive of such provisions in industrial instruments. The ability of an employer to direct an employee to take annual leave is provided for in the Act at s.93(3):
“A modern award or enterprise agreement may include terms requiring an employee, or allowing for an employee to be required, to take paid annual leave in particular circumstances, but only if the requirement is reasonable.”
[88] KFC further noted that an employee can be directed to take annual leave during a shutdown under a number of awards. Some awards specify the requirement for an employee to take unpaid annual leave where the employee has insufficient accrued leave available. Such awards have not been found to exclude the National Employment Standards in contravention section 55 of the Act, and nor would the Agreement.
[89] KFC submitted that the provision under the Agreement at clause 26 for an employee to be required to take annual leave over an annual shut down or refurbishment period meets the National Employment Standards, and is a reasonable requirement for reasons which include:
(a) Notice will always be given to affected employees in advance of any shut down. The schedule of store refurbishments is generally known up to 12 months in advance;
(b) Store refurbishments are essential for the proper maintenance of the store building and equipment, to ensure that KFC continue to meet its occupational health and safety requirements, and to roll out any changes to branding, store layout, customer experience, and so on;
(c) Store refurbishments are not frequent. Stores are generally closed for refurbishment no more than once every 7 to 10 years;
(d) As set out in clause 26.2 of the Agreement, KFC is committed to providing employees with alternate employment where possible at a nearby store during any shutdown period; and
(e) Clause 26 seeks to provide for the continuation of employment, rather than its termination, in circumstances where there is a shutdown or refurbishment.
[90] Insofar as this issue is addressed as a BOOT issue, while it is clear that no clause dealing with shut down and refurbishment exists in the Award, the Award cannot be considered in a vacuum ignoring the surrounding legislative framework.
[91] The term does nonetheless represent a detriment when compared to the Award within the legislative framework, however the perceived rarity of the application of the clause must be considered. This issue does not weigh negatively in the Commission’s BOOT assessment. I note that in the recent decision of the Full Bench in Retail and Fast Food Workers Union Incorporated v Hungry Jack’s Australia Pty Ltd t/a Hungry Jack’s 18 (“Hungry Jack’s”), the Full Bench found a similar provision to be one that did not give rise to any relevant detriment19.
[92] Insofar as it is submitted that the clause is not compliant with the NES, I reject that submission. Clauses such as Clause 26 are in fact anticipated by the NES, provided their requirements are reasonable. It is clear that store refurbishments are rare but necessary, and so are a reasonable requirement. The provisions of Clause 26 regarding notification and alternate suitable work are also reasonable.
(g) Superannuation Choice
[93] RAFFWU submits the Superannuation provision is so poorly worded that it could exclude superannuation choice, and urges the Commission to seek express clarity that employees have choice of superannuation fund.
[94] KFC submits that RAFFWU’s submission ought to be rejected as the wording of the superannuation clause of the Award, and the wording of the superannuation clause of the Agreement, are relevantly exactly the same.
[95] In the absence of any material difference, I find this is a neutral consideration in the BOOT assessment.
(h) Part-Time and Casual Employment
[96] RAFFWU submitted that the Agreement provides for a form of part-time employment that, in effect, has workers rostered each week for the hours they might work in the week without any guarantee to regularity of those hours on set days at set times. In support of that contention RAFFWU footnoted reference to Clauses 12.2 to 12.8 of the Agreement, however, clause 12 of the Agreement deals only with rest breaks. Part-time employment is dealt with in clause 5.2 of the Agreement. Clause 5.2.1(b) provides that a part-time employee “has reasonably predictable hours of work”.
[97] RAFFWU noted that the Award provides specific arrangements for part-time work including (at Clause 12.2):
“At the time of first being employed, the employer and the part-time employee will agree, in writing, on a regular pattern of work, specifying at least:
(a) the number of hours worked each day;
(b) which days of the week the employee will work;
(c) the actual starting and finishing times of each day;
(d) that any variation will be in writing, including by any electronic means of communication (for example, by text message);
(e) that the minimum daily engagement is three hours; and
(f) the times of taking and the duration of meal breaks.”
[98] RAFFWU submitted that the Agreement arrangement for part-time workers is very similar (if not identical) to the proposed and rejected Award variation of the Australian Industry Group. That application, by the Australian Industry Group, was for a variation to the Fast Food Industry Award (the “Fast Food Award Application”) to include a term without the benefits of Clause 12.2 of the Award. In rejecting the application, the Full Bench observed: 20
“It seems to us that the proposed flexible part time clause provides little certainty as to when guaranteed minimum hours will be worked. Indeed the proposed clause may facilitate working arrangements which are more akin to casual employment rather than part time employment, albeit without the requirement to pay a casual loading.”
[99] Further, in the Loaded Rates Case ([2018] FWCFB 3610) the Full Bench stated 21:
“Having regard to the relevant provisions of the Aldi Agreements and the evidence of Paul Joyner, it is clear that Aldi’s system of part-time employment is inconsistent with the above provision, in that it does not involve reasonably predictable hours of work; does not require agreement at the commencement of employment upon a regular pattern of work specifying the days of work, the hours to be worked on each day or the starting and finishing times; and does not require any change to this to be by agreement with the employee.However it does not follow from this that Aldi’s part-time employment system is simply not permitted by the Retail Award and is for that reason alone to be regarded as failing the BOOT. Clause 12.6 of the award provides:
12.6 An employee who does not meet the definition of a part-time employee and who is not a full-time employee will be paid as a casual employee in accordance with clause 13.
Thus the Retail Award allows an employer to pay as a casual employee any employee who is not a full-time employee and does not fit its definition of a part-time employee. It follows, we consider, that where an enterprise agreement in the retail sector provides for a form of employment that does not constitute full-time or part-time employment as contemplated by the Retail Award, the appropriate point of comparison for the purpose of the BOOT is the catch-all of casual employment under the award.
Such a comparison would need to take into account, from a direct remuneration perspective, the rates of pay, casual loading, and weekend and public holiday penalties payable under the Retail Award and the loaded rates of pay, Sunday work allowances, public holiday penalties and leave entitlements payable under the Aldi Agreements. Attached to this decision in Schedule B is a preliminary BOOT analysis of the Aldi Prestons Agreement undertaken by Commission staff under the supervision of Commissioner Lee which takes these matters into account. It shows that part-time employees under the agreement are better off overall than under the award on all of the scenarios modelled except where the part-time employee works only weekend shifts.”
[100] RAFFWU submitted that the provisions pertaining to the wage paid to a worker who is not engaged as a part-time employee are directly comparable between the General Retail Industry Award and the Fast Food Industry Award. The Fast Food Industry Award includes the following provision at Clause 12.8:
12.8An employee who does not meet the definition of a part-time employee and who is not a full-time employee will be paid as a casual employee in accordance with clause 13 —Casual employment.
[101] RAFFWU contended that it follows that a more appropriate comparator for part-time staff under the Agreement is the casual rates of pay under the Award. The Agreement wage rates for part-time staff do not include the 25% casual loading. The wage rates include 1c to 10c more than the Award rate for an Award defined part-time employee. As such, the Agreement does not ensure all employees and prospective employees are better off overall compared to the Award and it should not be approved. The proper test comparator for the provision is the Award casual employee wage. In the alternative, the provision is a substantial and manifest detriment.
[102] KFC on the other hand noted that the Full Bench, in the Fast Food Award Application 22, acknowledged the use of enterprise agreements to include ‘flexible’ part time provisions to allow them to accommodate the employer practices. The Full Bench said23:
“Enterprise agreements are the most common method of regulating employment in the Fast Food sector. Further, a number of the Major Fast Food Chains have included flexible part time clauses in their enterprise agreements.”
and commented that 24:
“The demonstrated capacity of the Major Fast Food Chains to enter into enterprise agreements to address what are said to be inflexibilities in the current part time clause is a consideration which also tells against the proposition that the proposed variation is necessary to ensure that the Fast Food Award achieves the modern awards objective”.12
[103] KFC submitted that it would be incongruent with the observations of the Full Bench to deny KFC access to flexible part-time provisions on the basis they were different to the Award provisions. Moreover, clause 5.2.1(b) provides that a part-time employee “has reasonably predictable hours of work”.
[104] As to the contention that, for the purposes of the BOOT, the wages for part-time employees under the Agreement should be compared with the wage rates of casual employees under the Award, KFC notes that the casual loading is not intended to make casual employees better off than weekly employees but to compensate them for the disadvantage associated with foregoing the entitlements available to weekly employees.
[105] KFC noted that the 25% casual loading in the Award was adopted by the Full Bench for inclusion in all modern awards and arose from the decision in the Metal, Engineering and Associated Industries Award 1998 25(‘the Metal Industry Award”). The 25% loading in the Metal Industry Award was mainly assessed having regard to the relative annual costs to an employer of employing weekly versus casual employees, which could be as high as 125.88%.26 The payment of a casual loading is simply intended to compensate for entitlements that weekly employees, but not casual employees, receive.
[106] KFC further submits that the Agreement additionally provides a number of other additional benefits or protections not found in the Award, including a minimum weekly engagement of 6 hours per week.
[107] KFC also submits that it is relevant when comparing the part time provision of the Agreement to the Award as to whether there is a relevant Award prescription for existing part-time employees. The terms of the part-time provision of the Award only deal with the circumstance of a part time employee when they are first being employed. The Award does not address the circumstance of the 4183 part time employees who are already engaged by KFC pursuant to similar provisions. If these part-time employment arrangements (most of which are to enable formal traineeships leading to AQF qualifications) could not continue, the continuation of such employment and training could be jeopardised.
[108] In the Fast Food Award Application, the Full Bench made the following observation as to evidence: 27
“We would observe here that there is a paucity of evidence regarding the views of actual employees about the proposed flexible part time clause.”
That observation was later reinforced in the decision at paragraph [120].
[109] This Application does not suffer from the same paucity of evidence. At the time of the vote, 36,849 employees were covered by the Agreement, 12,159 cast a valid vote and of those 11,591, or around 95%, voted to approve the Agreement 28.
[110] Further, the Fast Food Award Application does not stand for the proposition that the clause there considered, upon which Clause 5.2.1 of the Agreement is clearly based, is somehow impermissible. The decision in the Fast Food Award Application turned on the application failing to satisfy the modern awards objective (s.134). When rejecting the application, the Full Bench observed: 29
“In doing so we are also conscious that s.138 provides that a modern award may only include terms ‘to the extent necessary to achieve the modern awards objective. As noted by the Full Federal Court in Anglo American:
‘The words “only to the extent necessary” in s.138 emphasise the fact that it is the minimum safety net and minimum wages objective to which the modern awards are directed. Other terms and conditions beyond the minimum are to be the product of enterprise bargaining, and enterprise agreements under Pt 2-4.’”
[111] The Full Bench specifically recognised that Major Fast Food Chains had included flexible part time clauses in their enterprise agreements, and expressed no concern as to the existence of those terms. In fact, one of the reasons for finding that the modern awards objective was not met was that the Full Bench were not persuaded that varying the Fast Food Award in the manner proposed would encourage such enterprise bargaining. The Full Bench held: 30
“We are not persuaded that varying the Fast Food Award in the manner proposed by Ai Group would encourage enterprise bargaining. Varying the award in the manner proposed would render it unnecessary to have an enterprise agreement to address what are said to be the inflexibilities in the current part time clause in the award; thus removing an incentive for fast food employers to engage in enterprise bargaining. This consideration weighs against making the variation proposed.”
[112] The part-time clause in the Agreement is simply a manifestation of acting on the incentive to remove award inflexibilities by enterprise bargaining.
[113] As to the appropriate comparator rate, I find it is not the casual rate of pay as submitted by RAFFWU. Pursuant to Clause 5.2.1 of the Agreement, part-time employees would have reasonably predictable hours of work and pro rata equivalent pay and conditions to full-time employees. The payment of a casual loading is simply intended to compensate for entitlements that weekly employees, but not casual employees, receive. To then assess the BOOT analysis against a rate including the casual loading would involve double counting of benefits, and should not be the basis for the BOOT analysis.
[114] I am fortified in the above conclusion by the conclusions of the Full Bench in Hungry Jack’s 31. There, RAFFWU took a similar objection to a similar clause of an enterprise agreement. The Full Bench held:32
“The RFFWUI submitted that part-time employment under the Agreement would be casual employment under the Award by virtue of clause 12.8 of the Award because it does not meet the definition of part-time employment under the Award, or is generally more akin to casual employment, so that the BOOT comparison must be with casual employment under the Award. We reject this. The definition of part-time employment in clause 12.1 of the Agreement is relevantly the same as in clause 12.1 of the Award. Further, although clause 12.2 of the Agreement does not, unlike the Award, require agreement at the outset as to the days of the week required to be worked and the start and finishing times in each day, it does require that the amount of hours worked in each week or roster cycle must be fixed and confined to the days and times the employee agrees to be available to work. The requirement for agreement as to availability gives the employee a considerable degree of control over when hours are to be work, and the overriding requirement for reasonable predictability of hours remains. This position is to be contrasted to that considered by the Full Bench in Loaded Rates Agreements, where the scheme of part-time employment in the Aldi enterprise agreements in question there did not provide for any guarantee of the hours of work to be provided in any particular week or for reasonable predictability of hours. We note in addition that clause 12.4 of the Agreement provides for a minimum of 8 hours’ work each week – a guarantee which is not contained in the Award.” (Footnotes omitted)
(i) Casual Conversion
[115] In the Hearing, RAFFWU identified this issue as being referrable to the BOOT analysis 33. It submitted that, as the Agreement does not contain the part-time provisions in the Award, the opportunity for casual employees to convert to part-time employment is affected. RAFFWU submits this is a detriment. The Award provision would permit a casual employee to apply for and convert to ongoing employment in accordance with the part-time or full-time Award provisions.
[116] RAFFWU submit that since the Award part-time provisions do not exist in the Agreement, the benefit for casual employees in exercising their rights to apply for casual conversion is diminished. There is no offsetting provision, and this is a detriment. RAFFWU note that 85% of the persons purportedly covered by the Agreement are engaged on a casual basis.
[117] KFC submit that the right of casual employees to apply for casual conversion is not at all diminished. The Agreement in fact makes it easier for casual employees to apply for conversion to part-time employment because the part-time provisions of the Agreement are more flexible than the Award, which would make it easier to convert without significant adjustment as to hours as required by clause 5.5.2 of the Award.
[118] I reject the submission of RAFFWU. Its objection is not to the casual conversion clause of the Agreement when compared to the Award. Their complaint relates to the possible “destination” of conversion when it is desired to be part-time employment. I agree with KFC that the Agreement in fact makes it easier for casual employees to apply for conversion to part-time employment because the part-time provisions of the Agreement are more flexible than the Award.
(v) BOOT Conclusion
[119] While I have determined that the uniform deductions clause is an item not better off in the Agreement as compared to the Award, ultimately, all employees are made, in my view, better off overall as compared to the Award. Overall, I am satisfied that the Agreement passes the BOOT in accordance with s. 193 of the Act.
Dispute Term Obligation
[120] At paragraphs [77] to [82] above I have dealt with the dispute resolution clause as it was pressed by RAFFWU in relation to the BOOT. My conclusions therein apply equally to the question of compliance with s.186(6) of the Act.
[121] RAFFWU submits that the Agreement clause fails to meet the mandatory obligation of s.186 (6) of the Act, which provides:
Requirement for a term about settling disputes
(6) The FWC must be satisfied that the agreement includes a term:
(a) that provides a procedure that requires or allows the FWC, or another person who is independent of the employers, employees or employee organisations covered by the agreement, to settle disputes:
(i) about any matters arising under the agreement; and
(ii) in relation to the National Employment Standards; and
(b) that allows for the representation of employees covered by the agreement for the purposes of that procedure. (Emphasis added)
[122] As noted above, the breadth of the undertaking provided regarding this clause seems to be mis-interpreted by RAFFWU. The reference to the Award in the Undertaking has the two-fold effect of:
(a) Ensuring employee entitlements arising from the Award are squarely preserved; and
(b) Recognising the steps under the Award that are equivalent to those under the Agreement.
[123] It is clear on the face of the Agreement, the Award and the Undertaking that the SDA and AWU are in no way “gatekeepers” to any step in the process (as RAFFWU allege in their Supplementary Submission).
Unlawful Terms
[124] RAFFWU submit two clauses of the Agreement are unlawful. Firstly, Clause 21 (referred to also above in the BOOT analysis) is said to be an impermissible deduction, and contrary to s.324 of the Act.
[125] Secondly, RAFFWU submit that the coverage term of the Agreement purports to covers “franchisees” and “associated companies”, and “any new franchisee” and their “associated companies”. Such a term is submitted to be inconsistent with law. Transmission of business (and any transfer of an instrument) is dealt with comprehensively by the Act, and to the extent the Applicant would seek to have the Agreement apply to any employer other than the applicant (subject to transmission of business and laws governing the transfer of an instrument), the approach would be contrary to law.
[126] As to Uniforms, as noted above, the terms of the Agreement reflect less a “deduction” and more “deposit and retention of deposit until uniform return on termination”. Nonetheless, KFC correctly observes that it is well accepted that deductions are not an issue for consideration as part of the approval process. Commissioner Gooley stated in Radploy Pty Ltd t/a Lake Imaging: 34
“Fair Work Australia is not required, as part of the approval process, to determine if terms of an agreement offend sections 324 or 326 of the FW Act. It is not necessary for the approval process for Fair Work Australia to determine if clause 22 is or is not enforceable. Even if it is not, Fair Work Australia is not entitled on that basis to decline to approve the agreement.’”
[127] The Coverage term of the Agreement is also not unlawful. Indeed, as observed by KFC, the Commission has previously ordered the extension of coverage of the KFC National Enterprise Agreement 2009 to non-transferring employees of new franchisees. Commissioner Cribb characterised the Application, which was approved, as follows: 35
“The Shop, Distributive and Allied Employees’ Association (the applicant, the union) has made an application under section 319(1)(b) of the Fair Work Act 2009 (the Act). The union is seeking an order that the transferable instrument (the KFC National Enterprise Agreement 2009) (the National Enterprise Agreement) that covers the new employers (franchisees of KFC) will also cover the non-transferring employees who perform the transferring work for the new employers. This means that all of the new employers’ employees who perform the transferring work (whether they are transferring employees or non-transferring employees) will be covered by the transferable instrument. An amended draft order has been provided to this effect. Both the union and KFC consent to the making of this order in the terms sought.”
[128] Neither of the two terms identified by RAFFWU constitute unlawful terms.
Conclusion
[129] I am satisfied that the relevant requirements of ss 186, 187, 188 and 190 of the Act concerning this Application have been met, with the provision of written undertakings from the Applicant addressing miscellaneous matters. Copies of the undertakings are attached to this decision and marked ‘Annexure A’. I note that the undertakings are taken to be terms of the Agreement.
[130] The SDA and the AWU have given notice under s 183 of the Act that they wish to be covered by the Agreement. In accordance with s 201(2) of the Act, I note that the Agreement covers the SDA and the AWU.
[131] The Agreement, in accordance with s. 54 of the Act, will operate from 29 April 2020. The nominal expiry date of the Agreement is 29 April 2024.
DEPUTY PRESIDENT
Annexure A
1 As listed at Appendix A to this decision.
2 Jones v Dunkel [1959] HCA 8; Woolworths Group Limited T/A Woolworths [2019] FWCA 7 at [45].
3 [2017] FWCFB 3131, at [29] and [30].
4 See s.12 definitions of employee organisation and organisation.
5 (2010) 186 FCR 22, at [25] and [26].
6 See the Full Bench decision in Vickers [2017] FWCFB 3131.
7 See for example Registered Organisations Commissioner v Communications, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia [2020] FCA 96.
8 [2018] FWCFB 2797, at [11] and [12].
9 Two Employees’ Submission at [15].
10 (1959) 101 CLR 298.
11 [2019] FWC 2604.
12 [2010] FWAFB 8826 at [20] to [22].
13 [2010] FWAFB 8826 at [20] to [22].
14 At paragraph [9].
15 [2010] FWAFB 1714 at [16].
16 PR712899.
17 Transcript PN 97.
18 [2020] FWCFB 1693.
19 Ibid at {76}.
20 ([2019] FWCFB 272) at [143].
21 ([2018] FWCFB 3610) at [136] to [138].
22 [2019] FWCFB 272.
23 Ibid at [122].
24 Ibid at [150].
25 Award Modernisation [2008] AIRCFB 1000 at [49] to [50].
26 Metal, Engineering and Associated Industries Award 1998 (2001) 105 IR 27 at [199].
27 [2019] FWCFB 272, at [103].
28 Form F 17 at Q. 2.10.
29 [2019] FWCFB 272, at [149].
30 Ibid at [128].
31 [2020] FWCFB 1693.
32 Ibid at [72].
33 Transcript PN140.
34 [2011] FWA 39 at [50].
35 [2013] FWC 3859.
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