McDonald's Australia Pty Ltd on behalf of Operators of McDonald's outlets - [2010] FWA 1347

Note: Appeals pursuant to s.604 (C2010/3643, C2010/3668) were lodged against this decision - refer to Full Bench decision dated 21 July 2010 [[2010] FWAFB 4602] for result of appeal.

[2010] FWA 1347

FAIR WORK AUSTRALIA

DECISION

Fair Work Act 2009
s.185 - Application for approval of a single-enterprise agreement

McDonald's Australia Pty Ltd on behalf of Operators of McDonald's outlets
(AG2009/23475)

Fast Food Industry

COMMISSIONER MCKENNA

SYDNEY, 23 APRIL 2010

McDonald's Australia Enterprise Agreement 2009.

[1] On 23 December 2009, McDonald’s Australia Pty Ltd (“the applicant”) filed an application, pursuant to s.185 of the Fair Work Act 2009 (“the Act”), seeking the approval of an enterprise agreement titled the McDonald’s Australia Enterprise Agreement 2009 (“the Agreement”). At the time the Agreement was made, there were discrete industrial instruments in the States and Territories regulating the minimum pay and conditions of employment for certain classes of employees. The Agreement is intended to cover the applicant itself and licensee operators of all McDonald’s retail food outlets across Australia. The application was made in accordance with a single employer authorisation (PR991483).

[2] The Agreement would apply to approximately 80,000 employees employed in all McDonald’s outlets. Based on certain statistical information provided by the applicant, the demographic profile of those employees may be summarised as follows:

Male employees: 37,200 (46.5%)

Female employees: 42,800 (53.5%)

Employees from non-English speaking backgrounds: 28,800 (36%)

Employees who are Aboriginal and Torres Strait Islander people: 2,400 (3%)

Employees with disabilities: 2,400 (3%)

Employees who are not otherwise categorised: 46,400 (58%)

Full-time employees: 7,888 (9.86%)

Part-time employees: 7,656 (9.57%)

Casual employees: 64,456 (80.57%)

Employees under 21 years of age: 65,600 (82%)

Employees aged 21-45 years: 11,200 (14%)

Employees over 45 years of age: 3,200 (4%)

[3] Of the 80,000 employees, 35,249 (44.06% of eligible voters) cast a valid vote in the ballot for the Agreement. Of the 44.06% of employees who cast a valid vote, 31,970 (90.70% of those who voted (39.96% of all eligible voters)) voted in support of the Agreement.

[4] The Shop, Distributive and Allied Employees’ Association (“the SDA”) was the only bargaining agent in the making of the Agreement. The SDA was closely involved in processes leading to the making of the Agreement now before Fair Work Australia; it supports the approval of the Agreement.

[5] I have concluded that the Agreement is incapable of approval, given the deficiencies in the application and for failure to meet the Act’s pre-approval requirements. I would, in any event, decline to approve the Agreement as it fails to meet the no disadvantage test, which was the relevant statutory test given the Agreement was made on 21 December 2009. My reasons for so concluding are dealt with in this decision under the following general headings:

1. Deficient application

2. Failure to meet pre-approval requirements

Section 180(3) - Time, place at which vote will occur, and voting method

Section 180(5)(a) - Ensuring the terms of the agreement, and the effect of those terms, are explained to the employees

Section 180(5)(b)-180(6) - Explaining the agreement in an appropriate manner, taking into account the particular circumstances and needs of the relevant employees

Section 186(2)(a) - Genuinely agreed

Section 180(2)(a)(ii) - Provision of material incorporated by reference in agreement

3. Particular matters arising from earlier statement

Opting out

Level 4 employees

Casual loadings for the Territories

4. General matters arising from earlier statement

5. Advantages and disadvantages

6. No disadvantage test

7. Deduction from wages on termination

8. Proposed undertaking

9. Concluding remarks

1. DEFICIENT APPLICATION

The matter was listed initially on 19 January and 3 February 2010, when I raised a number of preliminary queries and concerns about the application and the Agreement. On 25 February 2010, I made a detailed statement (the “statement”) expressing further concerns about the application and the Agreement. In consequence of some of the matters addressed in that statement, the applicant and the SDA have since acknowledged that the statutory declarations filed in support of this application by the applicant and the SDA are incomplete and inaccurate. Those statutory declarations are the Form F17 (Employer’s Declaration in Support of Application for Approval of Enterprise Agreement) and the Form F18 (Declaration of Employee Organisation in Support of Application for Approval of Enterprise Agreement), which indicated the SDA’s agreement with the answers given to each question addressed in the employer’s declaration.

[6] On the hearing of the matter on 29 March 2010, counsel for the applicant, Mr M Moir, apologised on behalf of the applicant for providing “deficient” and “incorrect” responses in the employer’s declaration filed in support of the application, adding that additional material should have been provided. Mr D Bliss, for the SDA, submitted the SDA acknowledged the statutory declaration made on its behalf was not fully accurate and complete, and should have addressed many of the issues which Fair Work Australia had now “correctly identified”. He submitted this was unintentional and had not been done in bad faith.

[7] I am bound to say, even noting the apologia from the applicant’s counsel, and the position advanced in both submissions and in a supplementary statutory declaration tendered by Mr Bliss, it is, put at its lowest, unsatisfactory that the application for approval of the Agreement should have been brought before Fair Work Australia with such declarations. This is particularly so in circumstances where a major employer represented by a major industrial organisation (namely, the Australian Industry Group (“AIG”)) and a major union have been involved in the processes for the application concerning the approval of an enterprise agreement proposed to cover approximately 80,000 employees.

[8] The applicant, while now conceding through its counsel that its employer’s declaration in support of the application for approval is deficient and contains incorrect information, still has not properly addressed the matters required of it in any application for the approval of an enterprise agreement. For example, the applicant acknowledges the information provided at cl.3.3 of its employer’s declaration is incorrect. Clause 3.3 asks the following question:

“3.3 Does the agreement contain any terms or conditions of employment that are less beneficial than any of the terms and conditions contained in the reference instruments identified in the reference instruments identified in questions 3.1 or 3.2?”

The response provided in the employer’s declaration to the question at cl.3.3 was “No”. That response is now acknowledged to have been incorrect. In light of that acknowledgment, it was the responsibility of the applicant to provide the information required to be provided at cl.3.4.

[9] Clause 3.4 of the employer’s declaration requires that the following information be provided if an agreement contains any terms or conditions of employment that are less beneficial than any of the terms and conditions contained in the reference instrument(s):

“3.4 If the answer to question 3.3 is “Yes”, please identify the terms and conditions of the reference instrument that are more beneficial than the agreement, the employees affected and the specific terms in the agreement that bring about the reductions:

[Note: your answer must indicate whether all or only some of the employees are affected and, if only some employees are affected, identify which employees.]”

The information required at cl.3.4 of the employer’s declaration to be provided by any applicant by way of statutory declaration for the approval of an enterprise agreement has not been provided by the applicant in this matter. For example, the applicant has not provided a supplementary statutory declaration properly identifying all the terms and conditions of the reference instruments that are more beneficial than the Agreement; it has not identified the employees affected; and it has not identified the specific terms of the Agreement that bring about the reductions. Further, the applicant has not provided a supplementary statutory declaration identifying, as specified by the notation to cl.3.4, whether all or only some of the employees are affected and, if only some employees are affected, identifying which employees. The submissions for the applicant referred to only selected matters rather than providing the information required at cl.3.4; and, I might add, highlighting by example principally only those matters which assisted the applicant in its claim the Agreement should be approved.

[10] Clause 3.5 of the Form F17 requires the following information:

“3.5 If the answer to question 3.3 is “Yes”, please identify the terms in the agreement which may result, on balance, in terms and conditions that are more beneficial to one or more relevant employees than the terms and conditions contained in the reference instruments identified above:

[Note: your answer must indicate whether all or only some of the employees are affected and, if only some employees are affected, identify which employees.]”

I accept the supplementary statutory declaration by Frank McManus, the applicant’s Senior Vice President/Director People Resources, tendered on 29 March 2010 and marked as Exhibit 5, identified at least some information required by the Form F17 to be provided by an applicant. However, neither Mr McManus’s supplementary statutory declaration nor the two supplementary statutory declarations of Kathryn Allen, National Employment Relations Manager, addressed, for example, the requirement that an applicant “must indicate whether all or only some of the employees are affected and, if only some employees are affected, identify which employees”. In this respect, I note there are different arrangements under the Agreement that apply as between Levels 1-2 employees, Level 3 employees and Level 4 employees; and there are discrete and different State-based and Territory-based arrangements concerning numerous aspects of the wages and conditions for employees. As such, the application remains deficient with respect to the provision of information required to be provided by an applicant in support of an application for the approval of an enterprise agreement.

[11] Dealing with the matters in order of clause numbers in the employer’s declaration, I note the following further examples of incomplete or incorrect information.

[12] The employer’s declaration described at cl.1.5 the work to be done by the employees under the Agreement as follows:

“The preparation, the receipt of orders, cooking, sale, serving or delivery of meals, snacks and/or beverages which are sold to the public primarily to take away or consume in food courts in shopping centres, and other incidental duties.”

As can be seen from a plain reading of the classifications in Schedule A of the Agreement, the information provided at cl.1.5 of the employer’s declaration is deficient in as much as it describes the work only of Level 1 and Level 2 employees. The information in the employer’s declaration makes no reference, for example, to the work of the Level 3 “supervisory” employees and the Level 4 “managerial” employees proposed to be covered by the Agreement.

[13] Clause 2.3 of the employer’s declaration requires the identification of the steps taken by the employer to ensure that the relevant employees were given, or had access to, the written text of the Agreement and any other material incorporated by reference in the Agreement. While there is evidence indicating the applicant arranged for the Agreement to be available to employees, there is no information as to if and when, for example, the National Employment Standards (“NES”) were provided to employees – some aspects of which are incorporated by reference in the Agreement.

[14] Clause 2.4 of the employer’s declaration referred to attached posters said to contain information about the “time and place at which the vote was to occur and the voting methods to be used”. The posters were not, however, attached to the employer’s declaration - a matter I drew to the applicant’s attention at the initial listing. The matters required to be addressed in cl.2.4 of the employer’s declaration have now been the subject of two supplementary statutory declarations, which I will return to in more detail later in the decision in relation to pre-approval steps.

[15] Clause 2.12 of the employer’s declaration requires the identification of any terms of an agreement that deal with matters contained in the NES. The information provided in the employer’s declaration is incomplete, in as much as it identified only the following clauses: 6, 16, 26, 29, 30, 31, 32, 33, 34, 35 and 39. For example, cll.12, 13 and 14 in conjunction with cl.27 of the Agreement deal with hours and related matters; cl.15 deals with notice of termination of employment; and cl.18 deals with minimum weekly wages.

[16] Clause 2.13 of the employer’s declaration requires the identification of any terms of an agreement that exclude, in whole or in part, the NES. The employer’s declaration asserted there are no such provisions in the Agreement. There appears to be at least one such example. The Agreement provides at cl.29.4 for cashing-out of annual leave, but only for Level 4 employees – thereby, arguably at least, inferentially excluding cashing-out for employees at Levels 1-3.

[17] Although an applicant is required at cl.2.16 of the employer’s declaration to provide information as to the details of the geographical, operational or organisational basis for choosing the group of employees to be covered by an agreement when that agreement does not cover all employees, the applicant did not provide any of the information required to be provided. For example, the applicant would have “head office” clerical, administrative and managerial employees who are not covered by the Agreement. Although not all the employees of the applicant or its licensees, or both, are covered by the Agreement, the employer’s declaration failed to provide information as to the details of the geographical, operational or organisational basis for choosing the group of employees to be covered by the Agreement. That is, the response provided in cl.2.16 of the employer’s declaration, without any further elaboration of the required information, read as follows: “The agreement only covers employees classified in Schedule A of the Agreement.”

[18] As to Schedule A, I note it reads as follows:

“A.1 McDonald’s Employee Level 1

A Trainee engaged in the preparation, the receipt of orders, cooking, sale, serving or delivery of meals, snacks and/or hot or cold beverages which are sold to the public primarily to take away or consume in food courts and/or in shopping centres.

A McDonald’s Employee Level 1 will undertake duties as directed within the limits of their competence, skills and training including incidental cleaning, cleaning of toilets, other handy work.

A.2 McDonald’s Employee Level 2

An employee engaged in the preparation, the receipt of orders, cooking, sale, serving or delivery of meals, snacks and/or beverages which are sold to the public primarily to take away or in food courts in shopping centres.

A McDonald’s Employee Level 2 will undertake duties as directed within the limits of their competence, skills and training including incidental cleaning, cleaning of toilets, other handy work

McDonald’s Employee Level 2 may be required from time to time to undertake coaching and training of other staff.

McDonald’s Employee Level 2 means an employee who has completed either a Front Area Verification or Back Area Verification.

A.3 McDonald’s Employee Level 3

A McDonald’s Employee Level 3 means an employee is appointed to the position of ‘Shift Supervisor’ by the employer, performs such work. The Level 3 employee has the major responsibility on a day to day basis for supervising McDonald’s Employees Level 1 and Level 2 and/or training new employees or employees required to exercise trade skills. [My emphasis]

A McDonald’s Employee Level 3 does not have management responsibilities.

A.4 McDonald’s Employee Level 4

A McDonald’s Employee Level 4 means an employee who is appointed to the position of ‘Shift or Trainee Manager’ or higher by the employer.”

As I will outline later, the terms and conditions of employment for the managerial Level 4 employees are markedly different, and adversely so, from those applicable to the Level 1-3 employees under the Agreement. This raises questions about whether I could be satisfied the “managerial” group was “fairly chosen”, within the meaning of s.186(3)-(3A) of the Act, for inclusion in the Agreement - which is one of the purposes for the type of information required by cl.2.16 of the employer’s declaration.

[19] Clause 2.17 of the employer’s declaration stated the Agreement did not contain any discriminatory terms. However, cl.21.4.7.1 of the Agreement discloses discrimination against same-sex partners. That is, the definition of “dependant” for the purpose of payment of certain allowances relevantly includes only a spouse or de facto spouse, rather than also including a same-sex de facto partner.

[20] Clause 2.30 of the employer’s declaration stated the Agreement did not cover any shift workers, whereas the definitions section at cl.3 of the Agreement defines a shift worker, thereby suggesting shift workers are, or could be, covered by the Agreement. After raising this issue, information was provided by Ms Allen in Exhibit 2 as follows:

“6. I refer to clause 2.30 and confirm that in answering that question, I considered whether the Agreement had shift worker terms and conditions and omitted to consider the definition section of the agreement. I confirm that the Agreement does not have any shiftworker provisions except for the definition of shiftworker for the purposes of the annual leave provisions and the NES. McDonald’s does not employ any shiftworkers.”

As to this, I would simply observe that, to my knowledge, there are McDonald’s outlets which operate 24 hours a day, seven days a week, and on public holidays - leaving open the question of who might be expected to work such shifts if it is not employees regularly engaged in shift work and such as those, for example, who are envisaged as receiving the early morning work allowance of 10 per cent for work between the hours of 1.00am and 5.00am under cl.27.3 the Agreement. In Exhibit 4, Ms Allen, in describing the way the applicant proposed to deal with the savings provision in the Agreement for payroll purposes, otherwise referred to “… employees whose regular pattern of work included overnights and/or weekends”.

[21] Clause 3.1 of the employer’s declaration identified the reference instruments as follows:

“— the Restaurants Industry – McDonald’s South Australia/Northern Territory – Award 2000 (AP795822) (referred to hereafter in this decision as “the SA/NT instrument”);

the Restaurants Industry – McDonald’s Australian Capital Territory – Award 2000 (AP811475) (“the ACT instrument”);

the McDonald’s – Shop, Distributive and Allied Employees’ Association – NSW – Award 2006 (AW846739) (“the NSW instrument”);

the McDonald’s – Shop, Distributive and Allied Employees’ Association – Victoria – Award 2004 (AW834864) (“the Victorian instrument”);

the Quick Service Food Outlets (QSFO’S) Award – State 2004 (AN140250) (“the Queensland instrument”); and

the Fast Food Outlets Award 1990 (WA) (AN160127)(“the WA instrument”).”

The employer’s declaration indicated at cl.3.1 that the NSW instrument “includes Tasmania”. This advice, on which I originally relied without further checking, was only partly correct. There are two roping-in awards to the NSW instrument. The McDonald’s – Shop, Distributive and Allied Employees’ Association – NSW (Roping-in No 1) – Award ropes-in seven businesses in New South Wales, including the applicant itself; it simply applied the NSW instrument under roping-in arrangements. However, the McDonald’s – Shop, Distributive and Allied Employees’ Association – NSW (Roping-in No 2) – Award, ropes-in eight companies, operating over fourteen outlets in Tasmania, as well as “McDonald’s Australia Limited, Regional Office, 2 Smith Street, Collingwood, Victoria 3066”. The Roping-in Award No 2 does more than rope-in; it applies different conditions concerning wages, public holidays and savings. Clause 3.1.1 of the (Roping-in No 2) – Award provides that in lieu of the wages in cl.16.1.1 of the NSW instrument, the Grade 2 employee rate will be $531.00 (as at 23 March 2006), adjusted in line with the increases applicable to the NSW instrument. Clause 3.1.2 provides the Grade 1 rate of pay will become 90 per cent of the Grade 2 rate, provided that it is no less than then federal minimum wage, in which case the federal minimum wage shall apply.

[22] The employer’s declaration also noted, in response to the question at cl.4.3, the following certified agreements operated in relation to the employees prior to the making of the Agreement:

the McDonald’s & SDA - Australian Capital Territory - Certified Agreement 2004 (AG837643 PR953647);

the McDonald’s & Shop Distributive and Allied Employees’ Association McDonalds (SA & NT) Certified Agreement (AG2004/6673 AG837642); and

the McDonald’s & Shop Distributive and Allied Employees’ Association McDonalds (WA) Certified Agreement (AG2003/10362).

[23] I should note, in this respect, that at the initial listing of this matter on 19 January 2010, one of the first matters I raised with the applicant was to seek clarification as to which reference instruments regulated the pay and conditions of the employees, noting this was a matter that perhaps needed to be addressed more fully, so there could be “absolutely no scope for confusion”.

[24] In Ms Allen’s first supplementary statutory declaration (Exhibit 2), she declared that McDonald’s is aware the pay and conditions of all other employees in New South Wales, Victoria, the Northern Territory, Tasmania, the Australian Capital Territory and South Australia not covered by the reference instruments in cl.5 of Exhibit 2 will have their pay and conditions covered by the SA/NT instrument, the ACT instrument, the NSW instrument and the Victorian instrument. Ms Allen added:

“[7] I confirm that the during [sic] the preapproval period of this Agreement, McDonald’s is aware that the pay and conditions of all other employees engaged in Queensland and Western Australia not covered by the instruments in clause 5 or 6 [of Exhibit 2], will have their pay and conditions of regulated [sic] by the Fast Food Industry Award 2010.”

[25] Ms Allen also declared in Exhibit 2 as follows, correcting some of the incorrect numbers and names of the certified agreements originally provided in the employer’s declaration:

“I confirm that during the preapproval period of this Agreement. McDonald’s is aware that the pay and conditions of the employees covered by the following certified agreements will be in accordance with these agreements:

McDonalds’s and SDA – Australian Capital Territory Certified Agreement 2004 AG867343

McDonald’s (SA & NT) Certified Agreement 2004 AG837642

McDonald’s Employees, SDA Agreement 2003 AG831918.”

[26] I doubt the list of reference instruments provided by the applicant is complete. In this respect, I note, first, that a Level 3 employee is classified as including “employees required to exercise trade skills”. As such, the Level 3 classification appears to comprehend tradespersons. In this respect, I note all the McDonald’s/SDA-specific reference instruments already refer to maintenance workers. That is, the SA/NT instrument, the ACT instrument, the NSW instrument and the Victorian instrument each specifically define an employee as meaning “all crew members and maintenance employees”. If it is the case that this Agreement, like all the McDonald’s/SDA-specific reference instruments presently provide, is intended to cover maintenance employees, potentially also including tradespersons, the applicant has not identified the reference instruments that would have been applicable to any such employees in Western Australia and Queensland.

[27] Second, by cl.4 of both the SA/NT instrument and the Victorian instrument, their provisions apply only to employees at Grade 1 and Grade 2. By contrast, cl.4 of the ACT instrument applies to Grades 1 and 2 employees, and applies also to a Grade 3 employee - who is defined at cl.4 as being an employee “appointed to the Grade by the Employer who is responsible for training and supervising employees of a lower grade (not including an employee who is required to conduct one on one training crew training)”. Similarly, cl.4 of the NSW instrument contains a definition of Grade 1 and Grade 2 employees, as well as a definition of a “Shift Supervisor”, being an employee engaged in a supervisory capacity, but not including one-on-one training.

[28] Again, if it is the case the SA/NT instrument and the Victorian instrument cut-out at Grade 2 (now broadly Level 2 under the Agreement), then the applicant has not identified the reference instruments that would have been applicable to employees undertaking supervisory responsibilities at McDonald’s outlets in South Australia, the Northern Territory and Victoria of the same type otherwise specifically identified in the ACT instrument and the NSW instrument – that is, the work of Level 3 employees under the Agreement. I doubt the work of employees engaged in basic supervisory roles in fast food retail outlets would have been award-free in South Australian and the Northern Territory (although the position would be less clear for Victoria), in circumstances where their classification of work is not comprehended by the McDonald’s/SDA-specific reference instruments.

[29] Third, the Queensland instrument applies to all relevant employees, as defined in cl.1.7, relevantly engaged by “McDonalds Australia Pty Ltd; and the franchises thereof”. Clause 3 of the WA instrument similarly applies to all employers throughout Western Australia “who are trading as … McDonalds”. On the other hand, the SDA/McDonald’s-specific reference instruments, namely the SA/NT instrument, the ACT instrument, the NSW instrument and the Victorian instrument, have named employers either in the principal reference instrument or by virtue of roping-in arrangements. I would expect there would have been at least some new McDonald’s outlets which have opened across Australia since the making of the relevant reference instruments and the associated roping-in awards. I do not know, and have not researched, which reference instruments may have applied to employees in more recently-opened McDonald’s outlets such as to any newer outlets in South Australia, the Northern Territory and the Australian Capital Territory. In this respect, I note there were at least some examples of names suggesting there are some non-corporate operators of McDonald’s outlets. I would expect, in New South Wales for instance, the relevant reference instrument for retail employees working at more recently-opened McDonald’s outlets not covered by the NSW instrument would have been the NSW Shop Employees (State) Award as a notional agreement preserving a State award (AN 120499) or, for non-corporate licensees or trusts, the NSW Shop Employees (State) Award 324 IG 935, as varied. In this decision, I will refer, in a short-hand way, to the award and its notional agreement counterpart as the Shop Employees (State) Award - albeit there are, for example, differences in applicable rates of pay.

[30] Last, as to the initiating process itself (Form F16 – Application for Approval of Enterprise Agreement), it specifies as follows in relation to service requirements:

“Service requirements

A copy of this application must be served on each employer covered by the agreement, each employee organisation that was a bargaining representative and any other employee bargaining representative of which the Applicant is aware, as soon as practicable after the application is lodged.

A copy of this application must also be brought to the attention of employees covered by the agreement through the usual means adopted by the employer(s) for communicating with employees e.g. posting on employee notice boards or by email to employees where this is the usual method.

Note: Rules 9 and 10 deal with service.”

[31] At the first listing of this matter, I queried whether the service requirements had been met and was advised all documentation was put on the employee noticeboards in a similar fashion as the other documentation. In Exhibit 2, in response to the query I had raised about service, Ms Allen deposed:

“3. I refer to the Application for Approval of Enterprise Application [sic] (“Form 16) lodged in this matter on behalf of McDonald’s Australia Limited on 23 December 2009. I confirm that Form 16 was brought to the attention of all employees by being placed on the electronic notice board being Metime. This is a usual means of communication with the employees and all employees have access to this. In addition, Form 16 was placed on the employee noticeboard in some restaurants.”

Evidence by way of a computer screen shot now before Fair Work Australia indicates the Form F16 was posted on “Metime” on 20 January 2010 (Metime was described as an electronic notice board and a common form of communication used throughout outlets, which have consoles for access; and it can be accessed remotely). I note the posting on Metime is recorded as having occurred the day following the initial listing of this matter 19 January 2010, namely, only after I had queried whether the service requirements had in fact been met.

[32] The applicant has had ample opportunity to put its application to Fair Work Australia in order - but still has not done so. In this regard, I note the final hearing date was scheduled to meet the time-frames agreed by the advocates. I should add that in circumstances where the application for approval comes before Fair Work Australia with the support of the applicant and the SDA, there has been no one to adopt the role of contradictor. Although it would be appropriate for me to receive additional evidence in the witness box, I do not envisage my role in these approval proceedings as one of cross-examiner of persons who had prepared statutory declarations for the purposes of the proceedings, albeit there was evidence that otherwise was deserving of close cross-examination. I have been reliant on the materials and submissions of the applicant and the SDA, and on information that is in the public domain.

[33] I note the SDA has, by way of supplementary statutory declaration, appropriately now confirmed the Agreement does contain terms or conditions that are less beneficial than some of the terms and conditions contained in the reference instruments identified by the applicant in the employer’s declaration – thereby rectifying in sworn form the response initially provided. Added to that, the SDA, again entirely appropriately, has, in consequence of the rectification in the supplementary statutory declaration, provided various tables which neutrally detail comparative information concerning the provisions of the Agreement and each of the identified reference instruments. The material provided by the SDA contains information of a general type that would be expected to be provided at cl.7 of the Form F18 by an employee organisation which files a declaration in support of an application for the approval of an enterprise agreement which contains terms and conditions that are disadvantageous apropos the reference instruments.

[34] An acknowledgement that the employer’s declaration in support of the application for approval was incorrect and incomplete, attended by an apology by the applicant’s counsel, does not, and nor could it, relieve the applicant of the obligation to provide the information required of any applicant in support of an application for approval of an enterprise agreement. The applicant has not put on any supplementary declarations seeking to rectify in sworn form many of the incorrect assertions initially made in the employer’s declaration. Further, even with the provision of supplementary statutory declarations, the applicant still has not provided information about a wide range of matters that must be addressed by an applicant in support of an application for the approval of an enterprise agreement. To that extent, the application before Fair Work Australia, even with the supplementary declarations, remains deficient as to the provision of required information. I would dismiss the application for that reason.

2. FAILURE TO MEET PRE-APPROVAL REQUIREMENTS

SECTION 180(3)

Time, place at which vote will occur, and voting method

[35] Section 180(3) of the Act provides that an employer must, by the start of the access period, take all reasonable steps to notify employees of the time and place at which the vote will occur, and the voting method that will be used. As I understand it, principal reliance is placed on the following matters as to compliance with s.180(3):

the posting on Metime of a joint letter from the applicant and the SDA dated 3 December 2009;

employees’ electronic access to posters on Metime with voting information;

employees’ access to advice concerning voting information through local management; and

employees’ access to advice concerning voting information through information sessions.

I will deal with each of these matters in turn.

The posting on Metime of a joint letter from the applicant and the SDA dated 3 December 2009

[36] By co-signed letter dated 3 December 2009, Mr McManus and Mr Joseph de Bruyn, the SDA’s National Secretary-Treasurer, wrote to crew members relevantly advising as follows:

“All crew members will also be asked to cast a vote for the new Agreement, within a minimum of seven days after attending an Information Session. The Voting process will occur by Secret Ballot between 17th and 21st December 2009, and this will also be outlined on the crew notice board.” [Bold in original]

The letter does not specify the place where voting would be held. Mr Moir submitted it could be strongly inferred from this letter that the place for the voting would be the workplace. To the extent any reliance is placed on this letter as having satisfied the requirements of s.180(3), that reliance is misplaced. The Act does not require that inferences be drawn; it specifies that advice must be provided as to the time and place at which the vote will occur, and the voting method that will be used. This letter does not specify the place for the vote and, therefore, does not meet the statutory requirements.

[37] As to this letter, I note also, first, that it was addressed only to “crew members”, rather than to all employees - such as the managerial employees. Second, there is contradictory evidence before Fair Work Australia as to the date the letter was posted on Metime. At cl.14 of Exhibit 4, Ms Allen suggests she ensured the letter was posted on Metime on 3 December. However, the computer screen shot annexed to Exhibit 4 shows a “Letter from McDonald’s & SDA to Crew” was added to Metime on “02/12/2009”, rather than 3 December 2009.

Employees’ electronic access to posters on Metime with voting information

[38] Clause 2.4 of the employer’s declaration requires information about “the steps taken by the employer (at least seven days before the start of the voting process) to notify all relevant employees of the time and place at which the vote was to occur and the voting method to be used”. In response to this, Ms Allen deposed in the employer’s reply:

“From 3rd December 2009, Information Posters (attached) were displayed on the Employee Notice Board [sic] and also available on Metime. These Posters contained information about the time and place at which the vote was to occur and the voting method to be used.

Employees were also informed about this by their managers and the Union during meetings held between 4^th December 2009 and 17^th December 2009.”

[39] The posters referred to in cl.2.4 were not, however, attached to the employer’s declaration. I drew this to the applicant’s attention at the initial listing. The matters required to be addressed in cl.2.4 have now been the subject of two, subsequent supplementary statutory declarations by Ms Allen. As I have noted earlier, the applicant tendered a supplementary statutory declaration on 3 February 2010 (Exhibit 2) and a further supplementary statutory declaration on 29 March 2010 (Exhibit 4). In Exhibit 2, Ms Allen deposed as follows:

“4. I refer to clause 2.4 of Form F17 and enclose a copy of the information poster referred to in clause 2.4. Now shown to me and attached as Attachment 1 is a copy of the information poster referred to in clause 2.”[Bold in original]

Despite the indication in Exhibit 2 there was only one poster, three posters were annexed to the document tendered in proceedings – none of which is marked as Attachment 1. Inquiries made to the AIG have since indicated that all three documents accompanying Exhibit 2 were intended to be Attachment 1 to Exhibit 2. I make the following observations about the three posters, in the order in which they were annexed to Exhibit 2 when tendered.

[40] The first, unmarked poster accompanying Exhibit 2 does not provide information about the “time and place at which the vote was to occur and the voting methods to be used”. I will refer to this poster in the decision as “Poster #1”. Poster #1 advises only as follows:

“How will I know when to vote?

Following the information session you will be given the opportunity to vote by secret ballot. Voting session times will be displayed on the staff notice board. Voting will not start before 14 December 2009.”

[41] The second, unmarked poster accompanying Exhibit 2 is not concerned with advice about the time and place at which the vote was to occur and the voting methods to be used. It conveys advice only about information sessions. I will refer to this poster as “Poster #2”

[42] The third, unmarked poster accompanying Exhibit 2, which I will refer to as “Poster #3”, provides the following advice:

“How Will I Vote?

All employees will be asked to cast a vote by Secret ballot in their Restaurant between 17^th and 21^st December 2009. Voting takes place at least seven days after attending an Information Session, or after Agreement documents have been posted on your crew notice board.[My bolding]

Instructions for Voting?

1. Voting is not compulsory. However, all employees must have the opportunity to vote

2. Voting slips & further info will arrive at your restaurant with the Red Bag delivery on 14^th December 2009

3. Between the 14^th and 17^th December each employee will be provided ONE voting slip

4. Voting slips cannot be replaced if they are lost!

5. Employees will need to sign that they have received a voting slip

6. Voting is by Secret Ballot, so voting slips are anonymous

7. One McHappy Day Donation Bucket will be selected, labelled & used as the Ballot Box

8. The Ballot Box will be kept in the Restaurant Manager’s office, and employees will be allowed to vote anytime from 17^th-21^st December 2009

9. The Ballot Box will be closed at 5pm on 21^st December 2009

10. The vote will then be counted and recorded by the Restaurant Manager/Licensee and 2 employees”

[43] Hence, Poster #3 accompanying Exhibit 2 provides advice to employees that they would be asked to vote between 17 and 21December 2009 and that the voting would take place (on an indeterminate date): (a) at least seven days after attending an information session; or (b) after Agreement documents have been posted on the crew notice board. Within the same document, however, employees were otherwise advised voting would be allowed any time from 17-21 December 2009. Despite what seems to be somewhat of an internal contradiction on the face of the document, I accept the information in Poster #3 provided information that would satisfy the requirements of s.180(3) of the Act.

[44] There is, however, conflicting evidence before Fair Work Australia about the date the posters, relevantly including Poster #3, were said to have been accessible on Metime. Ms Allen’s third statutory declaration providing information for the purposes of cl.2.4 of the employer’s declaration (Exhibit 4), contradicts the employer’s declaration and Exhibit 2, at least as to the date steps were said to have been taken to provide access to relevant information on Metime.

[45] First, in the employer’s declaration, Ms Allen declared that from 3 December 2009, information posters were displayed on Metime – albeit without attaching the posters. Second, in Exhibit 2, in the course of providing the posters that had not been attached to the employer’s declaration, Ms Allen deposed as follows:

“4. I refer to clause 2.4 of Form 17 and enclose a copy of the information poster referred to in clause 2.4. Now shown to me and attached as Attachment 1 is a copy of the information poster referred to in clause 2.4.” [Bold in original]

Three posters were attached, none of which, as I have noted earlier, was marked as Attachment 1 - but which I have treated in this decision as Poster #1, Poster #2 and Poster #3 respectively.

[46] However, in Exhibit 4, Ms Allen deposed as follows:

“16. … I took measures on the 7th December 20009 [sic] to upload onto Metime the “Store Posters” advising of the voting method and procedure and a document entitled “It’s time to Vote”. Attached to this declaration and marked with the letters “D” and “E” respectively is a copy of the “Store Posters” and the “It’s time to Vote” outline.” [Bold in original; my underlining]

[47] Attachment D to Exhibit 4 is the same as Poster #1, relevantly advises that “Voting will not start before 14 December 2009”. Further, unmarked posters accompanied Exhibit 4, relevantly including Poster #2 and Poster #3, together with another unmarked poster – which I will refer to as Poster #4. The full text of Poster #4 reads:

“MCDONALD’S & SDA NATIONAL AGREEMENT

IT’S TIME TO VOTE!

17TH – 21ST DECEMBER 2009”

[48] In the employer’s declaration, as supplemented by Exhibit 2, Ms Allen declared Poster #1, Poster #2 and Poster #3 were available on Metime from 3 December 2009. In Exhibit 4, Ms Allen declared that Attachment D to Exhibit 4 (which is the same poster as Poster #1) was placed on Metime on 7 December 2009. It may, however, be the case that, consistently with the advice from the AIG that all three unmarked attachments to Exhibit 2 were intended to be Attachment 1, then, by extension, Poster #1 together with the unmarked Poster #2 and Poster #3 were collectively intended to be Attachment D to Exhibit 4. Further inquiries to the AIG resulted in the electronic transmission to chambers of the documents in what, I had expected, was supposed to be the intended order. However, the number of pages tendered as attachments in the proceedings totalled twelve, whereas the number of pages forwarded electronically totalled fifteen.

[49] The dates provided in the employer’s declaration as supplemented by Exhibit 2 (declaring the document or documents were posted to Metime on 3 December 2009) and Exhibit 4 (declaring the document or documents were posted to Metime on 7 December 2009) are irreconcilable. There is no suggestion in the evidence that arrangements were made by the applicant to post the same materials on Metime twice.

[50] It is possible the applicant did take steps to place “Poster #3” on Metime - which contained information that, as I have noted, would probably meet the requirements of s.180(3) of the Act. However, I cannot be satisfied as to which date information posters were said to have been posted on Metime - albeit I note that neither date would offend the access period requirements. I cannot be satisfied as to whether one or more documents, pertinently Poster #3, was or were posted on either of the dates.

[51] The applicant’s evidence before Fair Work Australia concerning the s.180(3) pre-approval steps is in disarray. I reiterate my earlier comment that the applicant has had ample opportunity to put its application in order. I do not propose to speculate about which document or documents was or were posted on Metime and on which date or dates, in circumstances where there is irreconcilable, conflicting evidence from a declarant who has now provided no fewer than three statutory declarations addressing pre-approval steps concerning advice to employees about the time of the vote, the place at which the vote will occur and the voting method. It suffices to say the evidence in this respect is unreliable.

Employees’ access to advice re voting information through local management

[52] Ms Allen deposed at cl.17 of Exhibit 4 it was her understanding that “all employees were informed by Licensees and Restaurant Managers as to the time, place and method of voting prior to the 10^th December 2009.” This is hearsay, and improbable at that. I do not to propose to accept Ms Allen’s evidence in this respect as supporting the proposition that 80,000 employees (including, for example, those on annual leave, parental leave, sick leave, long service leave or workers’ compensation-related absences; or those who were intermittent casuals) were all informed individually or collectively by the managers and licensees of the time place and method of voting prior to 10 December 2009. The managers and licensees may have been, for example, tardy or too busy to provide this advice or immediately post documentation on notice boards, despite instructions from the applicant. Nothing otherwise turns on Ms Allen’s understanding that reminders about the vote were displayed on “ticker tape” messages at the “drive-thru” outlets.

Employees’ access to advice re voting information through information sessions

[53] In my statement, I noted Exhibit 2 did not assist the applicant in establishing it had met the requirements of s.180(3). In short, Ms Allen initially declared that such information was conveyed to employees at meetings held as late as 17 December 2009. As this was the date the vote commenced, the access period requirements for this step had not been met. To the extent Exhibit 2 sought to clarify the date on which this particular information was brought to the employees’ attention, I noted that it matters not, in terms of the Act’s pre-approval requirements concerning this application, whether this information was conveyed to at least some employees at meetings held during a period from a start date of 4 December 2009 to as late as either 17 December 2009 (as in the employer’s declaration) or, alternatively, as late as 14 December 2009 (as in Exhibit 2). If at least some employees were advised in meetings held as late as 14 December 2009 about the time, place and method of voting scheduled to commence on 17 December 2009, then the application cannot be approved because that information was provided during the access period, as defined in s.180(4) of the Act.

[54] McDonald’s availed itself of the opportunity to provide clarification about dates information was conveyed to employees in circumstances where I had raised a query about the response initially provided in cl.2.4 of the employer’s declaration. In so clarifying, Ms Allen declared that notification within the meaning of s.180(3) of the Act was conveyed to employees at meetings held over a period from a start date of 3 December 2009 to as late as 14 December 2009. As noted in the statement, I have already accepted the evidence in Exhibit 2, which was prepared for the very purpose of seeking to provide clarification as to the timing of pre-approval requirements for the purposes of s.180(3) as to the response initially given in cl.2.4 of the employer’s declaration. That being the case, the applicant cannot rely on the information sessions as having satisfied its obligations concerning the timing as to voting advice, because the primary sessions (as opposed to the additional sessions) were scheduled to as late 14 December 2009.

[55] In this ballot, only 35,249 out of 80,000 employees cast a valid vote for the Agreement (albeit with a strong majority of that group of voters - 31,970 - voting in support of the Agreement). This low voter participation rate, comprising less than 40 per cent of the eligible employees, may well be attributable to the deficiencies in the methods of communicating the advice to employees about the ballot. Equally, however, it may well have been the result of voter apathy.

[56] In conclusion, on this topic, I am not requisitely satisfied as to if and when the employees may have been given access, for the purposes of s.180(3) of the Act, to voting information on Metime (with Poster #3 being the only document which might reasonably be considered to provide any relevant information that would satisfy statutory requirements, albeit it contains what might be viewed as internally-contradictory information). I have the evidentiary spectacle of statutory declarations from the same deponent providing different dates (either 3 December or 7 December 2009) as to when information posters were said to have been accessible on Metime; and also now have evidence that a fourth poster was accessible on 7 December 2009. I am not otherwise satisfied on the improbable, hearsay evidence that “all” employees would have been informed by local managers of this information within the time-frames specified in the Act, if at all. Further, in the statement I had otherwise already accepted Ms Allen’s evidence that some employees were not informed about the voting arrangements until meetings held as late as 14 December 2009. As such, I am not satisfied the applicant appropriately provided information to employees for the purposes of s.180(3) of the Act. I would dismiss the application for that reason alone.

SECTION 180(5)(a)

Ensuring that the terms of the agreement, and the effect of those terms, are explained to the employees

[57] The pre-approval step in s.180(5)(a) of the Act requires that an employer must ensure the terms of the agreement, and the effect of those terms, are explained to the employees. In the statement, I accepted Ms Allen’s evidence that at least some employees were not provided with relevant information until they attended information meetings held as late as 14 December 2009 in anticipation of a vote opening on 17 December 2009. Accepting this to be the case, then the application would fail to meet the requirements of the Act, because such information was provided within the access period.

[58] Against that background, the applicant’s case now contends it provided access to relevant information as to summary information on Metime in such a way as would otherwise satisfy the pre-approval requirements. I do not accept this to be the case.

[59] The first observation to be made is that the evidence would not lead me to conclude the applicant properly discharged the obligations placed on it as the employer pursuant to s.180(5)(a) of the Act. Section 180 of the Act provides as follows:

“180 Employees must be given a copy of a proposed enterprise agreement etc

…

(5) The employer must take all reasonable steps to ensure that:

(a) the terms of the agreement, and the effect of those terms, are explained to the relevant employees; and

(b) the explanation is provided in an appropriate manner taking into account the particular circumstances and needs of the relevant employees.

(6) Without limiting paragraph 5(b), the following are examples of the kinds of employees whose circumstances and need are to be taken into account for the purposes of complying with that paragraph:

(a) employees from culturally and linguistically diverse backgrounds;

(b) young employees;

(c) employees who did not have a bargaining representative for the agreement.”

[60] The applicant relies on a number of documents summarising the Agreement which were posted on Metime to support the contention that it took all reasonable steps to ensure the terms of the Agreement and the effect of those terms, were explained to employees. While it is true certain summary information was posted on Metime, those documents were not the applicant’s documents; the documents were the SDA’s documents. There is no evidence the applicant itself provided any such information apart from the documents from the SDA that it posted on Metime (except as may otherwise have been orally presented at the information sessions).

[61] The documents in question were adduced in the proceedings as part of the evidence of Mr de Bruyn. The documents are titled as follows:

“Summary of the proposed McDonald’s Australia Enterprise Agreement – For Crew Members in NSW [Newcastle and Northern]” (Exhibit 9-SDA8);

“Summary of the proposed McDonald’s Australia Enterprise Agreement – For Crew Members in NSW [for NSW generally]” (Exhibit 9-SDA9);

“Summary of the proposed McDonald’s Australia Enterprise Agreement – For Crew Members in ACT” (Exhibit 9-SDA10);

“McDonald’s Australia Enterprise Agreement 2009 – Summary Document [South Australia]” (Exhibit 9-SDA11);

“Summary of the proposed McDonald’s Australia Enterprise Agreement – For Crew Members in Victoria” (Exhibit 9-SDA12);

“Summary of the proposed McDonald’s Australia Enterprise Agreement – For Crew Members in Tasmania” (Exhibit 9-SDA13);

“A summary of the proposed new McDonald’s Australia Collective Agreement 2009-2012 [Queensland]” (Exhibit 9-SDA14);

“A new agreement for McDonalds [Western Australia]” (Exhibit 9-SDA15);

“McDonald’s Australia Enterprise Agreement 2009 – Summary Document [for Broken Hill, NSW]” (filed post-proceeding; now treated as Exhibit 9-SDA16).

[62] Mr Moir submitted these summary documents were “jointly prepared and issued” by the applicant and the SDA. He submitted the front page of each document bears the logos of both the SDA and the applicant, such that the summary information was provided not just by the SDA, but was provided by the applicant and the SDA collectively.

[63] Mr Bliss submitted the SDA viewed itself as “partners in the process” of explaining an enterprise agreement it had negotiated. I note there seems to be a continuing, high level of convergence in approach between the applicant and the SDA concerning the Agreement. For example, one of the SDA’s summary documents, Exhibit 9-SDA15, contains remarkable similarities to the statutory declaration of Mr McManus in Exhibit 5; passages of both documents are identically worded. Provided the SDA agreed in principle that an agreement should be approved, the SDA would, Mr Bliss submitted, normally stand “shoulder to shoulder” with a company to explain the terms of the agreement and to encourage employees to participate in the process. Mr Bliss submitted that although a union performing the s.180(5)(a) function is not necessarily what the Act requires, the Act requires only that the employer take all reasonable steps to ensure the terms of the agreement and the effect of those terms is explained to the relevant employees. He submitted it would not be inconsistent with s.180(5) of the Act for a union to perform that task in conjunction with an employer.

[64] The summary documents other than Exhibit 9-SDA11, Exhibit 9-SDA14, Exhibit 9-SDA15 and Exhibit 9-SDA16 follow a similar template. The information in Exhibits 9-SDA8, 9-SDA9, 9-SDA10, 9-SDA12, 9-SDA13 is set out in a relatively neutral way over a dozen or so pages, together with some State-specific and Territory-specific information. I have given consideration to whether Exhibits 9-SDA8, 9-SDA9, 9-SDA10, 9-SDA12 and 9-SDA13 might be regarded as documents provided for employees by the applicant, in as much as they all have a cover sheet bearing the applicant’s logo and SDA logos. I am inclined to accept Mr Bliss’s submission there would be nothing untoward in terms of an applicant satisfying its obligations through, for example, the provision of a statement that was jointly prepared and jointly authorised by an applicant and a bargaining agent. From the following descriptions, however, it can be seen that the summary documents relied on by the applicant as having discharged its obligations under s.180(5)(a) of the Act were not the employer’s documents. They were, with two exceptions, unambiguously identifiable as SDA documents rather than joint documents of the applicant and the SDA.

[65] Exhibit 9-SDA8 bears the applicant’s logo and the logo of the Newcastle and Northern Branch of the SDA on the cover sheet, but it is signed only by Barbara Newhart, Branch Secretary-Treasurer of the Newcastle and Northern Branch of the SDA.

[66] Exhibit 9-SDA9, for New South Wales generally, bears the applicant’s logo and an SDA logo. Is unsigned, but is clearly an SDA document in as much as it includes a page of promotional material for the SDA.

[67] Exhibit 9-SDA10, for the Australian Capital Territory, has the same cover sheet as Exhibit 9-SDA9. It is unsigned, but is also clearly an SDA document given the inclusion of promotional material for the SDA.

[68] Exhibit 9-SDA11, for SA, is a two-page coloured brochure. It has an SDA logo and the applicant’s logo, adjacent to a photograph of the Branch Secretary of the South Australian Branch of the SDA, Peter Malinauskas in the company of four employees at a McDonald’s counter. The brochure bears Mr Malinauskas’s signature next to a further photograph of him. Text at the foot of the second page reads: “McDonald’s Agreement 2009 SDA SUMMARY DOCUMENT”.

[69] Exhibit 9-SDA12 (for Victoria) and Exhibit 9-SDA13 (for Tasmania) have the same cover sheet as Exhibit 9-SDA9 and Exhibit 9-SDA10. They are unsigned and do not contain any promotional material for the SDA.

[70] Exhibit 9-SDA14 (for Queensland) is on the letterhead of the Queensland Branch of the SDA, attaching a three-page summary, a “notes page”, and promotional materials from the Queensland Branch of the SDA. The applicant’s logo does not appear on this document.

[71] Exhibit 9-SDA15 (for Western Australia) does not contain the logos of either the applicant or the SDA. It is in the form of a personally-styled letter, using the first-person pronoun. It is authorised by the SDA’s Western Australian Branch Secretary, Joe Bullock. Exhibit 9-SDA15 is a discursive document, containing commentary on matters including the world economy, stimulatory measures, inflation and business’s capacity to pay. It also contains Mr Bullock’s opinions about aspects of the Agreement, for example, “… rather than the Public Holidays being regarded as falling on the days on which they are most commonly observed in [Western Australia], the Agreement contains arrangements for additional and substitute days to be observed. This is likely to give rise to improved Public Holiday arrangements in future years”. Exhibit 9-SDA15 concludes: “Having been involved throughout the negotiation process, I have no hesitation in recommending this Agreement for endorsement by McDonald’s employers [sic].”

[72] Exhibit 9-SDA16 (for Broken Hill), like Exhibit 9-SDA11 for South Australia, has an SDA logo and the applicant’s logo, adjacent to a photograph of Mr Malinauskas and employees at a McDonald’s counter. It is a three-page document, signed by Mr Malinauskas next to a further photograph of him. Text at the foot of the second and third pages reads: “McDonald’s Agreement 2009 SDA SUMMARY DOCUMENT”.

[73] The summary documents have been prepared according to geographical areas relevant to the SDA’s Branches, for example, Exhibit 9-SDA8 for the Newcastle and Northern Branch of the SDA. Exhibit 9-SDA16 for Broken Hill is from the South Australian Branch of the SDA which, to my knowledge, is the Branch which provides services for members in Broken Hill (in New South Wales) for reasons of geographical proximity. From the foregoing descriptions, the only summary documents that could be considered to have been joint documents were Exhibit 9-SDA12 (for Victoria) and Exhibit 9-SDA13 (for Tasmania), as they are unsigned and do not contain any promotional material for the SDA - but otherwise contain the logos of the applicant and the SDA. The remaining documents are either strongly identifiable as SDA documents or do not contain anything to indicate a connection with the applicant.

[74] I do not accept the proposition that electronic posting on Metime of SDA documents (or manual posting on a notice board at the workplace or provision of such documents at information sessions) satisfies the obligations on the applicant itself to provide such information. The applicant cannot come before Fair Work Australia saying it did not actually provide the information contemplated by s.180(5) of the Act, but the application should be approved because another organisation or person provided such information. It is irrelevant, in terms of satisfying the applicant’s own obligations for the purposes of s.180(5) of the Act, whether, for example, an officer of a union wishes to extol what he or she personally perceives as the benefits of an enterprise agreement and, in so doing, provides some summary of the terms of the agreement (as in the case of Exhibit 9-SDA15), and the applicant determined to post that commendation on Metime. Similarly, the minimalist brochure in Exhibit 9-SDA11, for South Australia, is bereft of any information which reasonably could be regarded as satisfying the requirements of s.180(5) of the Act – but nothing turns on that, because it was the applicant’s statutory responsibility to comply with s.180(5), not that of the South Australian Branch of the SDA.

[75] I do not consider the applicant’s own obligations under s.180(5) are somehow delegable in the way that has been adopted in this matter. If the applicant’s contention were to be accepted that it can rely on the SDA’s materials as having discharged its own responsibilities under s.180(5) of the Act, then there could be, by extension to other applications that may come before Fair Work Australia, some perverse outcomes. For instance, an employer could come to Fair Work Australia saying it had not provided any information whatsoever to employees proposed to be covered by an enterprise agreement, but the application should be approved because: (a) the employer was aware another organisation, such as a union, had provided a summary document for the information of employees/members in recommending a vote for or against a particular agreement; and (b) the employer was aware these union materials had been posted on the staff notice board or the union notice board at the workplace; or (c) the employer had, for example, allowed a union to disseminate its materials concerning the enterprise agreement on the internal email system at the workplace.

[76] I note also there was no evidence of any summary document at all having been provided to employees in the Northern Territory so as to ensure the terms of the Agreement, and the effect of those terms were explained to employees in that Territory. Exhibit 9, which contained the SDA’s summary documents, did not contain any documentation for employees in the Northern Territory. Moreover, if the computer screen shot in the applicant’s evidence is complete, it shows no summary of the Agreement having been posted on Metime for employees in the Northern Territory (or, for that matter, Tasmania). The computer screen shot shows only the following postings:

Policy name	Reference	Added	Last edited
McDonald’s & SDA National Agreement	1.1	02/12/2009
SA Agreement Summary	1.10	09/12/2009
Broken Hill Agreement Summary	1.11	09/12/2009
Form 16 Application for Approval of Enterprise Agreement	1.12	20/01/2010
Letter from McDonald’s & SDA to Crew	1.2	02/12/2009
ACT Agreement Summary	1.3	02/12/2009
NSW (General) Agreement Summary	1.4	02/12/2009
Newcastle & Northern NSW Agreement Summary	1.5	02/12/2009
QLD Agreement Summary	1.6	07/12/2009
VIC Agreement Summary	1.7	07/12/2009
McDonald’s & SDA Store Posters	1.8	07/12/2009
WA Agreement Summary	1.9	07/12/2009

[77] On the evidence before me, there is nothing to indicate the applicant, even via the SDA summary documents, took any steps at all to ensure the terms of the Agreement, and the effect of those terms, were explained to the employees in the Northern Territory. There is no evidence of any summary document having been prepared by the SDA for those employees and nothing to indicate anything else was posted by the applicant on Metime for employees in the Northern Territory. Although there was evidence of a summary document having been prepared for Tasmania, there was no evidence indicating it was posted by the applicant on Metime; and the evidence otherwise indicated that employees, likely including some employees in the Northern Territory and Tasmania, were provided with information in meetings held as late as 14 December 2009.

[78] Similarly, as I have noted earlier, the minimalist two-page brochure in Exhibit 9-SDA11, for South Australia, is bereft of information that would satisfy the requirements of s.180(5). The sparse information runs to barely a page, because of the amount of space otherwise devoted to photographs of Mr Malinaukas and employees of the applicant.

[79] I would dismiss the application as I have not been satisfied the requirements of s.180(5) of the Act have been met. The evidence does not support a conclusion the applicant properly discharged its own responsibilities concerning the provision of documentation such as might otherwise satisfy the requirements of s.180(5)(a) of the Act.

SECTION 180(5)(b)-180(6)

Explaining agreement in appropriate manner, taking into account the particular circumstances and needs of the relevant employees

[80] If I am wrong in my assessment about s.180(5)(a) of the Act, and the applicant is entitled somehow to appropriate the SDA summary information in satisfaction of its own obligations, then the provisions of s.180(5)(b) and s.180(6) of the Act have not been met. The information provided to the employees about the Agreement was the same irrespective of whether the employee was 15 or 55 and irrespective of any employees’ culturally or linguistically diverse backgrounds, or other needs.

[81] In this respect, I note the recent comments of Cambridge C, who, in dismissing an application for the approval of the an enterprise agreement titled the Bowland Salisbury Agreement [2010] FWA 6842, said:

“[7] Further, in this instance some potential difficulties may arise in respect of subsections 180(5) and 180(6) of the Act which state:

(5) The employer must take all reasonable steps to ensure that:

(a) the terms of the agreement, and the effect of those terms, are explained to the relevant employees; and

(b) the explanation is provided in an appropriate manner taking into account the particular circumstances and needs of the relevant employees.

(6) Without limiting paragraph (5)(b), the following are examples of the kinds of employees whose circumstances and needs are to be taken into account for the purposes of complying with that paragraph:

(a) employees from culturally and linguistically diverse backgrounds;

(b) young employees;

(c) employees who did not have a bargaining representative for the agreement.

[8] The Declaration stated that 8 of a total of 24 employees were under 21 years of age. The response to question 2.5 of the Declaration about steps taken by the Employer to explain the terms of the Agreement to relevant employees was;

“On Monday 23^rd November 2 information meetings were held for staff to attend. One at 9am the other at 4pm.”

[9] Consequently FWA had no evidence of any particular step taken by the Employer relevant to the circumstances and needs of the young employees who constitute a significant proportion of the total number of employees to be covered by the Agreement. It may have been that each of the young employees was invited to have a parent or other older person attend the information meetings. Additionally the Employer may have invited each of the young employees to have a parent or other older person provide any questions or concerns about the terms of the Agreement on behalf of the young employee(s).

[10] The difficulty for FWA is that the absence of any mention of anything done by the Employer that connects to the circumstances and needs of young employees would create an evidentiary impediment to any compliance with subsection 180(5) of the Act.” [Underlining in original]

[82] Unlike the enterprise agreement considered by Cambridge C, which covered eight young employees, this Agreement is proposed to cover 65,600 employees aged under 21 years. In this respect, I note also the comments of Mr Bullock in Exhibit 9-SDA15 that the applicant employs “large number of crew members aged under 16 years”. If the applicant (or the SDA, or both) took any steps to differentiate the approach in the presentation of information about the Agreement to the young employees, many apparently very young indeed, there was no evidence of it in these proceedings. Moreover, there was no evidence of differential arrangements being put in place by the applicant (or the SDA, or both) to meet any special needs that may have been involved, for example, for the 2,400 employees with disabilities or the 28,800 employees from non-English speaking backgrounds who would be covered by this Agreement.

[83] I would dismiss the application for failure to address the obligations identified in s.180(5)(b) and s.180(6) of the Act.

SECTION 186(2)(a)

Genuinely agreed

[84] Section 186(2)(a) of the Act provides Fair Work Australia must be satisfied that “the agreement has been genuinely agreed to by the employees covered by the agreement”. I consider there are reasonable grounds, within the meaning of s.188(c), for believing the agreement has not been genuinely agreed to by the employees. Section 188 of the Act deals with the meaning of “genuinely agreed”, reading:

“188 When employees have genuinely agreed to an enterprise agreement

An enterprise agreement has been genuinely agreed to by the employees covered by the agreement if FWA is satisfied that:

(a) the employer, or each of the employers, covered by the agreement complied with the following provisions in relation to the agreement:

(i) subsections 180(2), (3) and (5) (which deal with pre-approval steps);

(ii) subsection 181(2) (which requires that employees not be requested to approve an enterprise agreement until 21 days after the last notice of employee representational rights is given); and

(b) the agreement was made in accordance with whichever of subsection 182(1) or (2) applies (those subsections deal with the making of different kinds of enterprise agreements by employee vote); and

(c) there are no other reasonable grounds for believing that the agreement has not been genuinely agreed to by the employees.”

[85] Genuine agreement within the meaning of s.188(c) of the Act, in my view, necessarily comprehends properly-informed agreement. If, for example, employees were provided with information about a proposed enterprise agreement that was, for example, incorrect or misleading - whether intentionally or inadvertently - and the employees voted for the agreement in reliance on such information, then I do not consider the employees could be considered to have been genuinely agreed.

[86] First, to the extent the applicant relies on information in the summary documents prepared by the SDA, one important aspect of the information provided to some employees about the Agreement was incorrect. Clause 14 of the Agreement does not provide any casual rates for employees in the Australian Capital Territory and the Northern Territory. While I accept it was the intention of the applicant and the SDA that the casual loadings should apply to employees in the Territories, it remains the case the Agreement does not provide such loadings for employees in the Australian Capital Territory and the Northern Territory. Despite this, the summary document prepared for employees in the Australian Capital Territory of key changes indicated that: “Casual loadings increase from 20% to 22% over the life of the agreement (see point 2)”. As I have noted earlier, there is no evidence of any summary document having been provided for Northern Territory employees, but I infer employees would have been informed at the information sessions about increases in casual rates. So much was confirmed in the submissions by Mr Bliss.

[87] The second aspect going to genuine agreement focuses on what the employees understood the savings provision to mean. Clause 41 of the Agreement provides that “No employee will, as a result of the introduction of this agreement, suffer a reduction in their hourly rate for hours worked prior to the commencement of this agreement”. Clause 41 is a very limited saving provision - referencing only to the hourly rate as opposed, for example, to pay and conditions. Of course, the hourly rate is itself conditioned by the provisions in an industrial instrument attaching to working the hours in question by the individual employee.

[88] It emerged in the proceedings there appears, potentially at least, to be a significant divergence between the applicant and the SDA as to the meaning of this savings provision. The applicant’s evidence and submissions indicated the calculations would be considered, for payroll purposes, in the context of the “base rate” of pay for employees who were administratively categorised for sampling purposes as “Group 1” and “Group 2” employees. The administrative payroll processes described in Ms Allen’s evidence, such as basing entitlements on a sampling of “8 weeks’ time clockings for each person in October and November 2009”, are not reflected in the Agreement. Mr Bliss said there had been discussions between the Branches of the SDA and the applicant in the weeks preceding the final hearing date to ensure employees are not “worse off” under the Agreement. Mr Bliss submitted, first, it was the SDA’s understanding the savings provision of the Agreement would be applied such that employees who currently work hours attracting a penalty rate would continue to receive that penalty rate, i.e. the hourly rate would be fully preserved. Second, the “grandfather employees” who were the subject of the savings provisions in the NSW instrument concerning the Shop Employees (State) Award would have their pay, but not their conditions, preserved. Mr Bliss continued that the hourly rate meant employees would be paid the difference between the Agreement base rate, including shift penalties and loadings applicable under the reference instrument, taking into account the regular pattern of work undertaken by the employee during an eight week period immediately preceding the approval of the Agreement.

[89] The applicant’s evidence from Ms Allen and Mr McManus, coupled with the submissions by Mr Moir, seemed quite pointed in using the term “base rate” of pay. I do not consider cl.41 of the Agreement, within terms (as opposed to any arcane payroll policy, as described in the evidence of Ms Allen, that may be adopted by the applicant from time to time - such as sampling what employees earned in eight weeks around October-November 2009), actually preserves anything other than the “base rate” of pay. The savings clause does not preserve money allowances and, importantly, it does not preserve the conditions that would have attached to work performed at certain times and which otherwise would have set the parameters for what would be regarded as the appropriate hourly rate. For example, a part-time employee would have entitlement to payment of overtime under the WA instrument for all hours worked in excess of 30 hours a week, but that condition, which gives form and substance to the meaning of the appropriate hourly rate, is not preserved by the Agreement; instead, the Agreement provides that overtime payments are attracted after 36 hours’ work for part-time employees or, in the case of regular part-time employees, hours in excess of those mutually arranged. By way of further example, as to employees working between the unsociable hours of 1.00am and 5.00am, their base rate of pay would be preserved – but not the much higher loading for work performed in ordinary hours that would have applied, for example, under the NSW instrument. As to the meaning of base rate of pay, see, for example, the general meaning in s.16 of the Act:

“16 Meaning of base rate of pay

(1) The base rate of pay of a national system employee is the rate of pay payable to the employee for his or her ordinary hours of work, but not including any of the following:

(a) incentive-based payment and bonuses;

(b) loadings;

(c) monetary allowances;

(d) overtime or penalty rate;

(e) any other separately identifiable amounts.”

[90] It is also entirely unclear whether the rate for calculations was to be determined against the various reference instrument or against the rates the employees actually received (which were higher in some instances, the SDA’s submissions indicated, than the rates provided in the reference instruments). The evidence indicated it is the lower rates under some of the reference instruments that would be used, rather than the rates that actually were being received by the employees.

[91] The applicant and the SDA were partners in promoting a vote in favour of the Agreement, for example, in presenting information sessions to explain the Agreement. It appears the applicant and the SDA are now not as one in relation to the meaning of cl.41 of the Agreement, leading to questions about what information was actually provided to employees concerning the operation of this clause – so as to allow them to make a properly-informed decision when casting their votes and, thereby, genuinely agree to the Agreement. The SDA, of course, prepared the summary documents.

[92] The third aspect going to genuine agreement is that the summary documents concerning the Agreement contain some examples of information which is misleading; and which, I understand, would have formed the basis of the advice provided to employees at information sessions. It appears the summaries were not strictly a comparison of entitlements that would be considered by Fair Work Australia in assessing the application for approval, but an amalgam of pay and conditions that applied under certified or uncertified agreements; by way of policy; by way of local custom and practice; or, as some summaries added, “commitments made by the Company”. Mr Moir submitted that the summary document for New South Wales was based on the reference instrument but in South Australia, for example, it was based on the certified agreement providing terms and conditions which were different from the SA instrument. Mr Moir submitted it was “thought by both [the applicant and the SDA] that the best way in which to explain the terms of the Agreement to employees in the various jurisdictions was to compare it with what the employees already received in the relevant jurisdictions”. Mr Bliss submitted that with the summary for the Australian Capital Territory, for example, the information was reflective of what actually applied rather than what was contained in the reference instrument – with the result, for example, the actual increase in the case of an employee aged under 16 would be a movement in the hourly rate from $5.94 to $5.98. In the case of Queensland the summary document reflected the actual rates.

[93] I note and accept Mr Bliss’s submission this approach to the presentation of information by the SDA was adopted so as to give the employees an appreciation of what the Agreement might actually involve for them in a practical sense. The reference instruments contain, after all, only notional terms and conditions against which an enterprise agreement must be assessed. But, in the end, the adoption of this approach in the summaries and any related information sessions meant employees were not provided with the appropriate information about at least some matters concerning the content of the Agreement itself, as opposed to matters outside the Agreement.

[94] Fourth, some of the summary materials put what might be described as the “best gloss” on the Agreement, rather than providing objective information. The summaries did not relevantly provide any information about the disadvantages or potential disadvantages that would arise under the Agreement. While there are many examples in this respect, the minimum engagement payment of one hour for attendance at crew meeting is perhaps one of the more pertinent examples. Most of the summaries referred to the one hour minimum payment for attendance at crew meetings - but without adverting to the loss of more financially-beneficial minimum engagement arrangements that would, but for the Agreement, have applied under all the reference instruments except the NSW instrument. For example, Exhibit 9-SDA11 (for South Australia) stated that: “The minimum engagement for employees in food court restaurants has been increased from 2 hours to 2.5 hours”. The summary also indicated that as to part-time employees (only) that the minimum engagement “has been increased from 2.5 hours to 3 hours (except for crew meetings where a 1 hour minimum applies).”

[95] To put the minimum engagement provisions in some context, the youngest of employees under this Agreement would receive between approximately $6.00 and $9.00 as payment for attendance at a crew meeting – which would hardly be regarded as a reasonable minimum payment when considering the time involved in travelling and any travelling expenses associated with attending work. The minimum engagement provisions are considered in more detail later in this decision. Similarly, the inclusion of Level 4 employees apparently was presented as being a benefit to those employees, when it was nothing of the sort.

[344] I note the reliance by the applicant and the SDA on the miscellaneous paid and unpaid leave entitlements for what I might describe as “worthy purposes”, but they really do not amount to much in terms of tipping the balance in favour of finding this Agreement satisfies the no disadvantage test. For example, seeking an “approved period of unpaid leave” is available within any employment relationship, whether for study or other purposes such as those contemplated in cl.36.3 of the Agreement.

[345] It is important to note the other forms of leave and payments under the Agreement concerning jury service, emergency services, blood and bone marrow donations, natural disasters, and defence force activities are all contingent entitlements only. They are of benefit to the employees only if certain circumstances are met. I am not satisfied that the inclusion of contingent entitlements in the Agreement, being benefits which may not be realised, would satisfactorily offset the removal of so many core, guaranteed conditions that were otherwise specified under the reference instruments. The contingent entitlements principally apply to permanent employees, a statistically small group. The jury service and defence force provisions would provide no benefit to employees aged less than 18 years. I would expect bone marrow donations would be even less common than blood donations and there was no evidence as to the number of permanent employees who are members of the ADF. The ADF pays most reservists, other than trainees, better pay rates than this Agreement provides – so the contingent benefit of “make-up” pay for this group of employees is even further diminished.

[346] Before leaving the topic of blood donor leave, Mr Moir drew attention to the provisions of the Agreement entitling permanent employees to paid donor leave on four occasions a year at two paid hours per occasion. He submitted the Agreement provisions are modelled on and directly in line with blood donor arrangements under the Queensland instrument. He submitted the other reference instruments do not contain an entitlement to blood donor leave and, as such, the extension of the Queensland blood donor national workforce is another important overall advantage for employees. As to this, I note that paid blood donor leave has been a very long-standing entitlement for retail employees in New South Wales, by virtue of cl.19 of the Shop Employees (State) Award – but that condition was not preserved by the Agreement for relevant employees, given the limited nature of the savings provision. Now this entitlement is being presented in the applicant’s case as a benefit, whereas for at least some employees it only maintains what otherwise would have been an established entitlement. The same observation applies to paid jury service leave (see cl.22 of the Shop Employees (State) Award).

[347] In the statement, I commented there appeared to be a tension within cl.27.2 of the Agreement, reflected in some of the other McDonald’s/SDA-specific reference instruments, in as much as it is unclear whether overtime payments are attracted under cl.27.2.1.2 after 36 hours, or after the (undefined) hours as mutually arranged, in respect of regular part-time employees. The applicant did not clarify this matter specifically, but overtime payments may be attracted only after 36 hours are worked by part-time employees, rather than the hours in excess of those otherwise mutually arranged, such as 20 hours or 30 hours a week.

[348] I note the Agreement appears to use different terminology within cl.27.2 for part-time employees. Clause 27.2.1.2 of the Agreement refers to “36 hours per week for a part-time employee”, whereas cl.27.2.1.3 describes different overtime arrangements for what is called a “regular part-time employee”. The Agreement does not, in the definitions section at cl.3 of the Agreement or in cl.11 (Employment Categories), otherwise provide any definition of a “regular part-time employee” as opposed to the ordinary definition of “part-time employee” at cl.11.1.2. It is unclear, but it seems the reference to a “regular part-time employee” is some form of remnant from the McDonald/SDA-specific reference instruments, such as cl.11.4 and cl.11.5 of the NSW instrument, that provided for two classes of part-time employees, namely “flexible part-time employees” and “regular part-time employees”.

[349] My appreciation of the meaning of “flexible part-time employees” and “regular part-time employees” has been better informed as a result of Mr Bliss’s submissions that one of the perceived advantages of the Agreement is the deletion of the employment category named flexible part-time employees, which he aptly described a providing what was, in effect “cheap casual labour”. I accept the submission that the removal of this category of employment would be an advantage of the Agreement. Using the NSW instrument to illustrate this, flexible part-time employees are paid loadings of only 13 per cent on the ordinary rates, which is said to compensate the part-time employee for annual leave, annual leave loading, sick leave and personal/carer’s leave (and I doubt this loading would be adequate).

[350] Although I accept the submissions the Agreement is beneficial in as much as it is said to remove the flexible part-time work category found in a number of the McDonald’s/SDA-specific reference instrument, there is a clear tension in the Agreement concerning overtime for part-time employees. Clause 27.2.1.3 provides overtime is payable for overtime beyond those mutually arranged in respect of “regular part-time employees”. The Agreement at cl.27.2.1.2 otherwise provides that overtime payments for “a part-time” employee will be attracted after 36 hours per week. Thus, within terms, the Agreement contemplates two classes of overtime payments for differently-titled classes of employees, albeit there is no such delineation otherwise contemplated in the employment categories set out in cl.11 of the Agreement. Thus, the notion of a regular part-time employee, as opposed to another category of part-time employee who is not a regular part-time employee, seems to survive – at least from a plain reading of the overtime provisions.

[351] It is also unclear from the Agreement what would happen to employees who are presently engaged as flexible part-time employees. While the category of employment is not specified in the Agreement itself, I note that the employees’ permanency as part-timers is not preserved by the Agreement. To the extent there is information in the summary documents about the status of the flexible part-time employees, I note the summary document for New South Wales (Exhibit 9-SDA9), for example, reads as follows:

“[7 ] (iv) Flexible Part Time Employment

Flexible part-time employment is not included in the proposed Agreement.

At the commencement of the proposed agreement, any crew member who was engaged as a flexible part time crew member will become a casual crew member.

If a flexible part time crew member wishes to be engaged on a part time basis, they need to raise their request with the Company as soon as possible. The Company will consider all such requests on a case by case basis.”

Hence, if this summary document may provide any guidance, it is anticipated the flexible part-time employees would have their permanency (albeit under flexible working hours arrangements) as part-time employees removed. These part-time employees would be converted into casual employees, rather than permanent employees, unless the employees were successful in any requests made to the applicant or its licensees to be made part-time once the Agreement was introduced. The unilateral conversion from permanent employment to casual employment ordinarily would be regarded as industrially disadvantageous.

[352] On the application of ordinary industrial principle, if an employee’s permanent position as a part-time employee is abolished, the employee would, absent any other considerations, have a presumptive entitlement to redundancy entitlements specified in the relevant industrial instrument. While the loading presently payable to flexible part-time employees is said to cover certain leave entitlements, I note it is not expressed to apply to redundancy and severance entitlements.

[353] Mr Moir submitted, in part, as follows in relation to the principles to be applied concerning the application of the no disadvantage test:

“26. Those principles may be summarised as follows:

(a) The no-disadvantage test is an objective test;

(b) The no-disadvantage test is a global one and not a line-by-line examination.

(c) The Tribunal must undertake an objective topic by topic comparison of the terms and conditions of employment under the relevant award as against the terms and conditions of employment in the Agreement, and identify matters of advantage or disadvantage. The Tribunal must then compare the old terms and conditions of employment with those of the new in a global or aggregate fashion to determine whether, on balance, there is a reduction of the overall terms and conditions of employment for the employees concerned.

(d) An important implication of this approach is that the Agreement will not fail the test merely because a particular condition of employment is reduced provided that, on balance, there is no reduction of the overall terms and conditions of employment of the employees concerned.

(e) Whether the no disadvantage test has been met in a particular case is a matter for the impression and judgment of the Tribunal member. However, the key determinant remains a proper comparison of the terms and conditions of the competing instruments.

(f) The no-disadvantage test does not involve an analysis of matters outside the terms of the Agreement and the relevant award instruments. Thus, in MSA Security, a majority of the Full Bench of the Australian Industrial Relations Commission held that an employer’s rostering practices were irrelevant in determining whether the no-disadvantage test was met.

(g) Further, the Tribunal should refrain from exercising a value judgment by importing what it believes is an appropriate minimum level of entitlements for an employee, or discounting certain aspects of an Agreement as exceeding an acceptable level of entitlements.

(h) However, any diminution of widely established rights of employees should be carefully scrutinised with a view to preventing modification or undermining of community standards.”

[354] Mr Bliss made submissions to similar effect, emphasising the Act requires that Fair Work Australia make an evaluation on balance as to the overall position of employees. He highlighted matters the SDA considered to be the countervailing advantages of the Agreement, which were primarily identified as including: higher base wages for employees than the reference instruments, as adjusted by the Australian Fair Pay Commission scales, together with an “upfront” increase from the commencement of the Agreement; guaranteed increases above annual wage reviews in 2011 and 2012; introduction of new allowances, e.g. crew trainer allowances; removal of flexible part-time work arrangements; additional leave provisions; and improved hours of work provisions. He also submitted that where the Agreement leads to a reduction in the hourly rate of pay at a particular time of the day, the savings provision would apply. He referred particularly to the summary of principles concerning the relevant test given by Smith C in BUPA Care Services, ANF and HSU Enterprise Agreement 2009 [2010] FWA 16 at [6]. Mr Bliss’s submissions were encapsulated as follows:

“As a general proposition, the SDA submits that the improvements negotiated as a result of this Agreement will be widely enjoyed; disadvantages will apply at the margins to some, but not all employees, and any monetary disadvantage with respect to hourly rates of pay is saved [sic] to ensure employees will not be worse off as a result of the introduction of this Agreement.”

[355] In support of this, Mr Bliss annexed to his submissions various tables identifying the hourly rates of pay in the various States and Territories compared to the reference instruments. Some further tables subsequently were filed post-proceedings.

[356] While I do not repeat the matters already identified under the various headings in this decision, I have considered the disadvantages and advantages of the Agreement in terms of the reference instruments considered in the context of the further evidence and submissions. Accepting the submissions by the applicant and the SDA as a distillation of some of the relevant principles to be considered in terms of the no disadvantage test, and considering the matters relied on as to the content of the Agreement, I am not satisfied the multitude of disadvantages presented by the Agreement is, in a form of overall industrial equilibrium, offset by its marginal advantages. I do not consider the Agreement satisfies the no disadvantage test. I would dismiss the application for that reason.

7. DEDUCTIONS ON TERMINATION

[357] There was an issue I addressed in the statement concerning the operation of cl.15.2 of the Agreement concerning termination – as to whether one aspect of the clause could be included in an enterprise agreement. What follow largely reproduces the relevant part of the statement.

[358] The provisions in cl.15.2 of the Agreement concerning termination of employment are as follows:

“15.2 Notice of termination by an employee

The notice of termination required to be given by a Level 1, 2 employee is 1 week and the notice of termination required to be given by a Level 3 and 4 employee is the same as that required of an employer except that there is no requirement on the employee to give additional notice based on the age of the employee concerned. If an employee fails to give the required notice the employer may withhold from any monies due to the employee on termination under this award [sic] or the NES, an amount not exceeding the amount the employee would have been paid under this award [sic] in respect of the period of notice required by this clause less any period of notice actually given by the employee.”

[359] In my opinion, this provision, to the extent it permits unilateral deductions from wages or other monies due on termination, is a matter which cannot be the subject of a provision within the Agreement, considered in the terms of the Act. The following observations do not involve questions of the “no disadvantage” test; rather, the question is whether such a provision may be properly included in an enterprise agreement at all. Section 172 of the Act, relevantly provides as follows as to permitted matters for inclusion in an enterprise agreement:

“172 Making an enterprise agreement

(1) An agreement (an enterprise agreement) that is about one or more of the following matters (the permitted matters) may be made in accordance with this Part:

(a) …

(b) …

(c) deductions from wages for any purpose authorised by an employee who will be covered by an Agreement;

(d) …”

[360] Thus, to the extent an enterprise agreement may deal with deductions from wages, any such deductions must, pursuant to s.172(c) of the Act, be authorised by the employee. Section 172 of the Act does not contemplate the making of deductions that have not been authorised by an employee, such as is proposed in cl.15.2 of the Agreement. The approach to deductions in s.172(c) of the Act is consistent with the provisions of Ch.2, Part 2-9, Div.2 of the Act concerning payment of wages. I have also taken into consideration the provisions of s.326 of the Act (Certain terms have no effect) and reg.2.12 (Certain terms have no effect – reasonable deductions) of the Fair Work Regulations 2009 as they concern notions of reasonableness and the requirement for the written consent of the parent or guardian to the deduction if the employee is aged under 18 years. Relevantly, s.324 of the Act provides that deductions from wages may be made by an employer only in the following circumstances:

“324 Permitted deductions

(1) An employer may deduct an amount from an amount payable to an employee in accordance with subsection 323(1) if:

(a) the deduction is authorised in writing by the employee and is principally for the employee’s benefit; or

(b) the deduction is authorised by the employee in accordance with an enterprise agreement; or

(c) the deduction is authorised by or under a modern award or an FWA order; or

(d) the deduction is authorised by or under a law of the Commonwealth, a State or a Territory, or an order of a court.”

[My underlining]

[361] The concept of employee-authorised deductions (as opposed to unilateral, unauthorised deductions by employers) under industrial instruments is a familiar concept. Indeed, at cl.22 and cl.40 of this Agreement, there are two examples of authorised deductions. The first is in relation to voluntary superannuation contributions:

“22.3 Voluntary employee contributions

22.3.1 Subject to the governing rules of the superannuation fund, an employee may, in writing, authorise their employer to pay on behalf of the employee a specified amount from the post-taxation wages of the employee into the same superannuation fund as the employer makes the superannuation contributions provided for in clause 22.1.

22.3.2 An employee may adjust the amount the employee has authorised their employer to pay from the wages of the employee from the first of the month following the giving of three months’ written notice to their employer.

22.3.3 The employer must pay the amount authorised under this sub clause no later than 28 days after the end of the month in which the deduction authorised under this sub clause was made.” [My underlining]

[362] The second example in the Agreement concerning authorised deductions relates to union dues:

“40 Union Membership

40.1. …

40.2. …

40.3. The Employer undertakes upon authorisation to deduct SDA membership dues, as levied by the SDA in accordance with its rules, from the pay of employees who are members of the SDA. Such monies collected shall be forwarded to the SDA at the beginning of each month together with all necessary information to enable the reconciliation of crediting of subscriptions to members’ accounts.” [My underlining]

[363] The provisions of the Act at s.172(c) and s.324(1)(b), which allow deductions pursuant to an enterprise agreement only when authorised by an employee, may be compared to, and contrasted with, the provisions of s.324(1)(c) concerning deductions under a modern award, which provides that an employer may deduct an amount from an amount payable to an employee in accordance with s.323(1) if the deduction is authorised by or under a modern award. It is an ordinary principle of statutory construction that an express reference to one matter indicates that others are excluded. Following from that principle, it is a reasonable assumption that where legislation includes provisions relating to similar matters, but in different terms, there is a deliberate intention to deal with them differently. Such appears to be the case here, given the different approaches to what may be permitted in an award and an enterprise agreement concerning deductions.

[364] I note there will be many instances where there would be a voluntary payment by an employee of any amounts which may be owed in relation to notice requirements, but not necessarily in all cases. Equally, however, payments on termination of employment, particularly if the termination has arisen in acrimonious circumstances, are often in sharp dispute between an employee and employer - with claims and counter-claims of alleged underpayments and overpayments. For example, an employee may disagree with the employer’s view that alleged misconduct justified a summary dismissal without notice or a payment in lieu of notice; but, if the employer did not give notice or make a payment in lieu of notice, the employee would have to initiate recovery proceedings to attempt to recoup the notice money amounts.

[365] Just as an employer may summarily terminate an employment relationship where there has been, for example, some serious and wilful misconduct, it is equally the case that an employee may be entitled to summarily terminate the employment relationship without notice or payment in lieu thereof where, for example, the employer has given an unlawful or unreasonable instruction. In circumstances where an employee was entitled to summarily terminate the employment relationship, it would seem inappropriate, considered in the different legislative contexts that apply to awards as against enterprise agreements, that the applicant or licensees should have the right to unilaterally make deductions from wages otherwise due on termination as envisaged in this clause of the Agreement if notice or a payment in lieu was not given by the employee.

[366] The applicant submitted that cl.15.2 of the Agreement would be a permitted matter within the meaning of s.172 of the Act. Mr Moir noted s.118 of the Act states that “a modern award or enterprise agreement may include terms specifying the period of notice an employee must give in order to terminate his or her employment”. He drew attention to Re Request from the Minister for Employment and Workplace Relations (2008) 177 IR 364; [2008] AIRCFB 1000, where the Full Bench dealing with award modernisation included a standard clause giving employers the right to deduct monies on termination for notice not given by employees - finding that the term “period of notice” in s.118 includes the ability to deduct monies for notice not given and the deduction of notice is “reasonable” for the purpose of s.326.Mr Moir submitted the Full Bench amended a draft provision for the withholding of monies by the employer should the employee fail to give the required notice of termination, observing at [53]-[54]:

"The redrafted clause will permit the employer to withhold monies due on termination equivalent to the amount the employee would have earned for the period of notice less an amount for any notice actually given. It is appropriate that the employer should only have the right to withhold monies due to the employee under the award or the NES. The redrafted clause is:

‘If an employee fails to give the required notice the employer may withhold from any monies due to the employee on termination under this award or the NES, an amount not exceeding the amount the employee would have been paid under this award in respect of the period of notice required by the clause less any period of notice actually given by the employee.’”

[367] He also submitted that cl.15.2 of the Agreement is replicated in cl.14.2 of the Fast Food Industry Award 2010; other members of Fair Work Australia have approved similar deduction clauses in enterprise agreements made under the Act; and this type of deduction clause has been inserted in federal awards since the original Termination, Change and Redundancy Test Case.

[368] Mr Moir further submitted that even if it is correct that cl.15.2 of the Agreement is not a permitted matter, the content of the notice of termination provisions would not constitute a barrier to the approval of the Agreement. Non-permitted matters may be included in an enterprise agreement, he submitted, provided they are not unlawful terms. In this respect, he drew attention to s.253 of the Act, which provides:

“Terms of an enterprise agreement that are of no effect

(1) A term of an enterprise agreement has no effect to the extent that:

(a) it is not a term about a permitted matter; or

(b) it is an unlawful term; or

(c) it is a designated outworker term.

(2) However, if an enterprise agreement includes a term that has no effect because of subsection (1), or section 56 or 326, the inclusion of the term does not prevent the agreement from being an enterprise agreement.”

[369] He added that the Explanatory Memorandum which accompanied the Fair Work Bill indicated the following legislative intention regarding the provisions contained in s.253 of the Act, in particular sub-section (2):

“Clause 253 will have the effect that an agreement will still be valid even where it includes terms that are not about permitted matters. It is not intended that FWA will have to scrutinise each enterprise agreement to ensure that all its terms are about permitted matters as this would unduly delay the agreement approval process.”

[370] Despite Mr Moir’s submissions, I have not been dissuaded from my preliminary view that cl.15.2 of the Agreement is not a matter which properly may be included in an enterprise agreement, albeit I consider it would be amenable to a written undertaking. Shortly stated, while it is clear such deductions are available under awards made by Fair Work Australia, there are different provisions applying under the Act concerning matters enterprise agreements.

8. THE PROPOSED UNDERTAKINGS

[371] The applicant has put forward the two sets of undertakings. The first set of undertakings (“the first undertakings”) was filed on 5 February 2010. The first undertakings relevantly read:

“I Kathryn Allen, National Resources Manager (Corporate) give the following undertakings with respect to the McDonald’s Australia Enterprise Agreement (“agreement”):

1. that the term “spouse” in the agreement will be interpreted by McDonalds Australia Limited to include a de facto partner as defined by the Fair Work Act.

2. that the term “standard rate” in the agreement means the rate of a level 2 employee.

3. that in clause 16.2 of the Agreement, an employee shall only be transferred to lower paid duties by reason of redundancy, where the employee whose job as become redundant, has accepted the offer for [sic] the lower paid duties.”

[372] The second set of undertakings was tendered in proceedings on 29 March 2010 and marked as Exhibit 7 (“the second undertakings”). Those undertaking relevantly read:

“I Frank McManus, Senior Vice President/Director People Resources for McDonald’s Australia Pty Ltd give the following undertakings with respect to the McDonald’s Australia Enterprise Agreement 2009 (“agreement”):

1. That in reference to the wage increases provided for under the agreement, Level 1 employees in Tasmania in which their base weekly rate of pay as at 1 January 2010 is $540.25. [sic]

2. McDonald’s undertakes to ensure that any applicable minimum base rate to these class [sic] of employees will be at least equal to the Federal Minimum Wages [sic] which is [sic] $543.78.

3. McDonald’s also undertakes that in the first increases under the agreement for level 1 employees in Tasmania as at 1 July 2010, there will be no discount of $5.00 removed to [sic] this class of employees.

4. These undertakings are provided to address any subsequent raise [sic] differences that may have arisen during the life of the agreement.”

[373] As to cl.1 of the first undertakings, I am satisfied this satisfactorily addresses the concern I raised about the unlawful term involving discrimination on the face of the Agreement against same-sex partners (except, perhaps, to the extent it appears to apply only to the interpretation that would be given by the applicant, but not its licensees).

[374] As to cl.2 of the first undertakings, it addresses an omission in the Agreement concerning the lack of a definition of the terms “standard rate” for the purposes of cl.20.10 (Adjustment of expense-related allowances). I consider this undertaking to be satisfactory, except as to its application to the crew meeting payments. As I have noted earlier, the effect of adjusting the crew meeting allowance in cl.20.3 of the Agreement by reference to the Level 2 rate as the standard rate would result in an erosion of the money amount of this allowance for Level 3 employees.

[375] As to cl.3 of the first undertakings, this satisfactorily addresses the concern I raised about the Agreement perhaps suggesting an employee could, on termination by redundancy, be unilaterally transferred to a lower-paid position. The undertaking accords with the wording and effect of similar clauses existing in other reference instruments, such as cl.13.9 of the SA/NT instrument and cl.12.9 of the ACT instrument.

[376] As to the second undertakings, I do not consider them satisfactory in terms of addressing the problem of the below-minimum wages in Tasmania. While the undertakings seek to address the sub-standard wages for Level 1 employees and provide they would not have wages further reduced as a result of the formulation in cl.18.3 of the Agreement providing for a wage increase of “Fair Work Annual Wage Review less $5.00”, it does not address the position of the Tasmanian employees at other levels. The wages for employees at Levels 2, 3 and 4 are leveraged from percentages of a below-minimum base rate. Two observations may be made. The first is that these undertakings, if accepted, would negatively compress wage relativities for employees whose wages are scaled by reference to a below-national minimum rate. Second, the value of the wages for Level 2, 3 and 4 employees would go further backwards in real terms with an adjustment formula that would still apply the $5.00 “discount” in 2010 even though the wages were derived from a sub-standard, below-minimum rate.

[377] I note Mr Moir foreshadowed in his written submissions that: “For the sake of clarity, the Applicant is prepared to give an undertaking to the effect that the words ‘All States except QLD & WA’ in the table appearing in cl.14.2 include the Australian Capital Territory and the Northern Territory”. Mr Bliss submitted, so far as the SDA was concerned, the omission of casual rates for the Australian Capital Territory and the Northern Territory was “patently a drafting error”, albeit one amenable to a written undertaking. Despite Mr Moir flagging the possibility of providing an undertaking and SDA’s suggestion this should be done, the applicant did not tender a proposed undertaking on 29 March 2010 (and none has since been filed) to address the issue of casual loadings for employees in the Territories.

9. CONCLUDING REMARKS

[378] I accept it would have been an onerous task endeavouring to meet the aim of developing a single, national enterprise agreement where there were many markedly different existing terms and conditions applicable in each State and Territory. I note also the evidence and submissions indicated the Agreement was the subject of detailed negotiations, with industrial concessions by both the applicant and the SDA. In my initial statement, I observed that in so many instances where provisions can be compared, the Agreement appeared to displace, remove, omit or reduce conditions that would have applied under the reference instruments. I now have fully considered the matters raised by the applicant and the SDA as to some countervailing advantages of the Agreement. While I accept the Agreement contains a mix of advantages and disadvantages, I have concluded the Agreement would represent an emphatic diminution in overall terms and conditions for the employees who would be subject to its proposed operation.

[379] The 80,000 employees of the applicant and its licensees would be poorly served by Fair Work Australia if the McDonald’s Australia Enterprise Agreement 2009 were to be approved. The Agreement not only fails to satisfy the no disadvantage test, on various levels it significantly compromises industrial standards that would be expected for agreement-reliant employees – considering, in particular, that these employees are mostly young and mostly casually employed.

[380] The application cannot be approved for the reasons detailed in this decision, including the deficient application; the failure to meet pre-approval requirements; the failure to meet the no disadvantage test; and the inadequacy of some of the proposed written undertakings.

[381] I decline to approve the Agreement.

[382] I propose also to direct that a copy of this decision be forwarded to the Fair Work Ombudsman, given the evidence suggesting the applicant or its licensees, or both, may have been underpaying some employees.

COMMISSIONER

Appearances:

M. Moir of counsel with A. Powter for the Australian Industry Group.

D. Bliss with B. Govind for the Shop, Distributive and Allied Employees’ Association.

Hearing details:

2010

Sydney

January 19;

February 3, 25;

March 11, 29.

Final written submissions:

6 April 2010.

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