Shop, Distributive and Allied Employees Association
[2023] FWCA 66
•9 JANUARY 2023
| [2023] FWCA 66 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.225—Enterprise agreement
Shop, Distributive and Allied Employees Association
(AG2022/4552)
CHICKEN TREAT EMPLOYEES, SDA AGREEMENT 2009
| Fast food industry | |
| DEPUTY PRESIDENT BEAUMONT | PERTH, 9 JANUARY 2023 |
Application for termination of the Chicken Treat Employees, SDA Agreement 2009
The application and its outcome
This decision concerns an application made by the Shop, Distributive and Allied Employees Association (the Applicant) on 28 October 2022 for the termination of the Chicken Treat Employees, SDA Agreement 2009 (the Agreement)[1] made under s 225 of the Fair Work Act 2009 (Cth) (the Act). The Agreement has passed its nominal expiry date of 30 September 2013.
Ms Kathryn Farnell, Chief People Officer of Craveable Brands Pty Ltd (Craveable Brands), principally gave evidence in support of the Applicant’s application.[2] Ms Farnell explained that Australian Fast Foods Pty Ltd (Australian Fast Foods) is a subsidiary of Craveable Brands.[3] As Chief People Officer, Ms Farnell assumed responsibility for reviewing the existing enterprise agreements of Australian Fast Foods with a view to ascertaining whether they aligned to best practices.[4] This included a review of the Agreement.[5]
Ms Farnell explained that the Applicant and Australian Fast Foods had negotiated the Agreement in 2009. Ms Farnell further explained that since 30 September 2013, the nominal expiry date of the Agreement, the Agreement had not been renewed or renegotiated,[6] and as such, the terms and conditions of the Agreement had remained static for the past eight years.[7]
In or around June 2022, Australian Fast Foods and the Applicant discussed and agreed to terminate the Agreement and proposed to place employees of Australian Fast Foods on the Fast Food Industry Award 2020 (the Award).[8] Ms Farnell said that as part of the discussions, the Applicant and Australian Fast Foods agreed that any new Chicken Treat stores outside of Western Australia would similarly be covered by the Award.[9]
Whilst Australian Fast Foods is one of the employers covered by the Agreement, there are multiple Franchise Partners. Clause 3 of the Agreement provides that the Agreement is binding upon the employers listed in Schedule A to the Agreement trading as Chicken Treat in Western Australia. The employers listed in Schedule A amount to 19 entities, with the entity Australian Fast Foods trading as ‘Various Chicken Treat Stores’.[10] However, in its application, the Applicant initially stated that the Agreement covered 52 employers, named in the Schedule to the application. At a later point in its application, the Applicant acknowledged that Schedule 1 to the Agreement lists the original employer parties but due to several transfers of business there are now some 304 employers covered by the Agreement.
Having sought clarification from the Applicant and Australian Fast Foods about the number of employers covered by the Agreement, both confirmed that 52 employers were covered, and a list of the employers was provided to the Commission. I accepted that the reference to 304 employers in the application was a typographical error.
It is uncontroversial that the Applicant has standing to bring the application,[11] and Australian Fast Foods and the Applicant recognise that employees covered by the Agreement would receive more beneficial terms and conditions if covered by the Award.[12] Further, it appears that the Applicant and Australian Fast Foods comprehensively consulted the Franchise Partners (employers covered by the Agreement) and their employees in respect of the proposed termination of the Agreement.
In the face of no opposition to the termination of the Agreement and noting the support for the termination from the Applicant, Australian Fast Foods, the Chicken Treat Franchise Advisory Council (CTFAC),[13] and employees of the Franchise Partners, I considered it appropriate to determine the matter on the papers given the cooperative approach assumed by all. In fact, the Applicant relied, in part, upon the evidence filed by Australian Fast Foods and the submissions it had made.
In short, I have decided to terminate the Agreement having been satisfied of those factors in ss 226(1)(a) and 226(1A) of the Act. I have had regard to the views of the Applicant, Australian Fast Foods, the CTFAC, the remaining employers (Franchise Partners) and the employees. Further, I have considered the factors outlined in ss 226(4) and (5) of the Act. Pursuant to s 227 of the Act, the termination of the Agreement is to take effect on the date proposed by the parties, namely, on and from 5 February 2023. An Order[14] to that effect issues concurrently with this decision. My reasons follow.
Background
Expanding upon the point made by Australian Fast Foods and the Applicant that employees covered by the Agreement would receive more beneficial terms and conditions if covered by the Award,[15] Ms Farnell gave examples where the Agreement deprived employees of certain entitlements that they would otherwise receive under the Award. Those examples included:
a) Fast Food Employees Level 2 and Level 3 will receive a 50% loading for working on Sunday. This is in contrast with the 25% loading under the Agreement;
b) employees required to undertake delivery duties will receive a delivery allowance of $2.10 for completing 3.4 deliveries within an hour under the Agreement. The Award provides a motor vehicle allowance based on kilometres travelled by the employee at a rate of either $0.48 per km if delivery is a primary duty or $0.91 per km if the delivery is ad hoc. The allowance provided in the Award allows an employee to be reimbursed a greater amount than the amount in the Agreement;
c) permanent employees will now receive a public holiday penalty loading of 225% in contrast with the 200% public holiday loading in the Agreement;
d) casual employees will now receive a public holiday penalty loading of 250% in contrast with the 200% public holiday loading in the Agreement;
e) the Award provides evening and late night penalties of 10% and 15% for work performed between 10:00 PM to 12:00 AM, and 12:00 AM to 6:00 AM respectively. The Agreement does not provide any penalties for work performed during these hours;
f) permanent employees who are required to work overtime on a public holiday will receive public holiday overtime penalty rates of 250%. In contrast, the Agreement does not provide penalty rates for overtime work performed on a public holiday; and
g) casual employees who are required to work overtime on a public holiday will receive public holiday overtime penalty rates of 275%. In contrast, the Agreement does not provide penalty rates for overtime work performed on a public holiday.[16]
Ms Farnell, however, acknowledged that there were terms and conditions in the Agreement that were better than the Award.[17] In this respect, she spoke of the following examples:
a) junior rates of pay for employees 16 years and under and over 20 years old;
b) the requirement to publish the work roster 1 week in advance; and
c) status quo provisions when an employee raises a workplace grievance.
To protect some terms and conditions in the Agreement that proved to be better than the Award, the Applicant and Australian Fast Foods reached an agreement embodied in the form of a Memorandum of Understanding (MOU),[18] and, in addition, Australian Fast Foods had established a ‘Leave and Rostering Additional Entitlements Policy’, endorsed by the Applicant.[19] With respect to the MOU, the parties agreed that it would form an undertaking for the purpose of the application, and were content to have that Undertaking annexed to this decision (see Annexure A).
Ms Farnell gave evidence that Australian Fast Foods had held consultation meetings with the Franchisees of Chicken Treat, including those listed in Schedule A of the Agreement.[20] On 6 October 2022, Australian Fast Foods met with the CTFAC.[21] Ms Farnell explained that the CTFAC is a representative committee of Franchisees which act as an interface between Franchisees and Australian Fast Foods on operational and strategic issues.[22] Ms Farnell said the purpose of the meeting was to update the CTFAC on the progress of moving towards termination of the Agreement and provide details of the differences between the Agreement and the Award and possible financial impacts on the Franchisees.[23]
It was Ms Farnell’s evidence that further consultation meetings were held between Australian Fast Foods and the Franchisees on 11 and 12 October 2022.[24] Ms Farnell said that during these consultation sessions, Australian Fast Foods again provided details of the differences between the Agreement and the Award and the possible financial impacts on the Franchisees.[25]
In Ms Farnell’s witness statement, it was noted that Australian Fast Foods sought that the termination of the Agreement occur on 5 February 2023.[26] Various reasons were advanced in support of the request, including that:
a) Australian Fast Foods would be consulting with all employees across 60 stores during the first two weeks of November 2022, the result of a coordinated effort between Australian Fast Foods, multiple Franchise Partners and the Applicant;
b) at the end of the consultation period, the busiest operational period of the year commences for the Franchisees and their stores – being the summer holiday period from mid-November until the end of January; and
c) Australian Fast Foods requires time to ensure that the supporting payroll and business systems are updated to reflect the new entitlements and allow the successful transition from the Agreement to the Award for hundreds of employees.
By early January 2023, Australian Fast Foods and the Franchisees had concluded their consultation with employees. It was explained that Franchise Partners had held consultation meetings with their employees to advise them of the proposed changes and discuss in detail the impact of the changes, in circumstances where the Agreement was terminated. In support of its application, the Applicant relied upon several documents filed by Australian Fast Foods, including the consultation presentation document, a ‘Frequently Asked Questions’ document and attendance records of consultation meetings held by Franchisees. In addition, the Applicant provided an email sent by Mr Gavin van Rensburg, National Industrial Officer of the Applicant, to all ‘Chicken Treat’ employees, dated 11 November 2022, which included hyperlinks to the following:
a) Forms F24B and F24C;
b) list of employers covered by the Agreement;
c) directions issued by the Commission;
d) the Chicken Treat MOU dated 26 October 2022;
e) the Chicken Treat Rostering and Leave – Additional Entitlements Policy Draft v1 27 September 2022; and
f) the Witness Statement of Ms Kathryn Farnell.
Australian Fast Foods submitted that to further ensure that it had a comprehensive understanding that terminating the Agreement was supported by Franchise Partners and employees, statements were collected from members of the CTFAC[27] and a survey was issued to all employees to vote on whether they did or did not support the termination of the Agreement. The results of the employee survey showed that a majority of employees that completed the survey supported the termination of the Agreement.
Legislative framework
Section 225 of the Act provides that an employer covered by an agreement can apply to the Commission for the termination of an agreement, if the agreement has passed its nominal expiry date. Evidently, given the nominal expiry date of the Agreement, the Applicant has standing.
Thereafter, the Commission is obliged to terminate the enterprise agreement if satisfied that the subsections of s 226 have been met. The section states as follows:
226 Terminating an enterprise agreement after its nominal expiry date
(1) If an application for the termination of an enterprise agreement is made under section 225, the FWC must terminate the agreement if:
(a) the FWC is satisfied that the continued operation of the agreement would be unfair for the employees covered by the agreement; or
(b) the FWC is satisfied that the agreement does not, and is not likely to, cover any employees; or
(c) all of the following apply:
(i) the FWC is satisfied that the continued operation of the enterprise agreement would pose a significant threat to the viability of a business carried on by the employer, or employers, covered by the agreement;
(ii) the FWC is satisfied that the termination of the enterprise agreement would be likely to reduce the potential of terminations of employment covered by subsection (2) for the employees covered by the agreement;
(iii) if the agreement contains terms providing entitlements relating to the termination of employees’ employment—each employer covered by the agreement has given the FWC a guarantee of termination entitlements in relation to the termination of the agreement.
(1A) However, the FWC must terminate the enterprise agreement under subsection (1) only if the FWC is satisfied that it is appropriate in all the circumstances to do so.
(2) This subsection covers a termination of the employment of an employee:
(a) at the employer’s initiative because the employer no longer requires the job done by the employee to be done by anyone, except where this is due to the ordinary and customary turnover of labour; or
(b) because of the insolvency or bankruptcy of the employer.
(3) In deciding whether to terminate the agreement, the FWC must consider the views of the following covered by the agreement:
(a) the employees (unless there are no employees covered by the agreement);
(b) each employer;
(c) each employee organisation (if any).
Note: The President may be required to direct a Full Bench to perform a function or exercise a power in relation to the matter if any of the employers, employees, or employee organisations, covered by the agreement oppose the termination (see subsection 615A(3)).
(4) In deciding whether to terminate the agreement (the existing agreement), the FWC must have regard to:
(a) whether the application was made at or after the notification time for a proposed enterprise agreement that will cover the same, or substantially the same, group of employees as the existing agreement; and
(b) whether bargaining for the proposed enterprise agreement is occurring; and
(c) whether the termination of the existing agreement would adversely affect the bargaining position of the employees that will be covered by the proposed enterprise agreement.
(5) In deciding whether to terminate the agreement, the FWC may also have regard to any other relevant matter.
Consideration
The Applicant, Australian Fast Foods and the Franchise Partners have embraced a cooperative approach to the proposed termination of the Agreement. In concert, they have consulted with relevant employees and thereafter conducted a survey to gauge employee support for the termination. From those employees who responded to the survey, a majority support the termination of the Agreement.
The Applicant submitted that the Agreement is now over nine years beyond its nominal expiry date. Referring to the decision of Energy Resources of Australia Ltd v Liquor, Hospitality and Miscellaneous Union,[28] the Applicant observed that an enterprise agreement is not to continue indefinitely and that the longer after the expiry date of an enterprise agreement, the stronger the case for termination.
It is evident that the termination of the Agreement would not impact on the achievement or otherwise of the objective of the Act or on the objects of Part 2-4 of the Act. Further, given that the Award would cover the relevant employees on termination of the Agreement and an Undertaking has been provided to protect some terms and conditions in the Agreement that proved to be better than the Award, I am of the view that the termination of the Agreement would not affect the maintenance of proper industrial standards.
There is no evidence before me suggestive that the parties are engaged in bargaining for a new enterprise agreement. It follows that the termination of the Agreement would not have any detrimental impact or result in a shift in bargaining power, in relation to enterprise bargaining, for the Applicant or other relevant party.
Further, the evidence does not point to the termination of the Agreement having any detrimental impact on employment levels within the businesses of the Franchise Partners and Australian Fast Foods. There is no evidence before me to suggest that Australian Fast Foods or the Franchise Partners will reduce labour hours offered or employment levels generally, as a result of the termination.
Conclusion
Given the consent of the parties and the absence of any demonstrated proper reason why termination should not occur, I am satisfied that it is appropriate in all the circumstances to terminate the Agreement. For the sake of fulsomeness, it is noted that in all the circumstances s 226A of the Act is irrelevant. The Applicant and Australian Fast Foods have provided cogent reasoning behind why the termination of the Agreement should operate on and from 5 February 2023 and I see no reason for deviating from the position they have advanced. Accordingly, and as already noted, pursuant to s 226 of the Act, the Agreement is terminated, with the termination to take effect on and from 5 February 2023.[29]
DEPUTY PRESIDENT
Annexure A
[1] AE875152 (Agreement).
[2] Witness Statement of Kathryn Elizabeth Farnell [1] (Farnell Statement).
[3] Ibid.
[4] Ibid [3].
[5] Ibid.
[6] Ibid [7].
[7] Ibid.
[8] MA000003.
[9] Farnell Statement (n 2) [9].
[10] Agreement (n 1) sch A.
[11] Australian Fast Foods Pty Ltd [2010] FWAA 2556, [6]
[12] Farnell Statement (n 2) [10].
[13] Ibid [19(a)].
[14] PR749498.
[15] Farnell Statement (n 2) [10].
[16] Ibid [11].
[17] Ibid [12].
[18] Ibid [13], annexure KF1.
[19] Ibid [13], annexure KF2.
[20] Ibid [19].
[21] Ibid [19(a)].
[22] Ibid.
[23] Ibid.
[24] Ibid [19(b)].
[25] Ibid.
[26] Ibid [21].
[27] Statutory Declaration of Tavis Armstrong, 14 December 2022; Statutory Declaration of Rodolfo Delmo, 19 December 2022; Statutory Declaration of Jasmine Clayton, 16 December 2022.
[28] [2010] FWA 2434.
[29] PR749498.
Printed by authority of the Commonwealth Government Printer
<AE875152 PR749497>
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