The Coles Supermarkets Enterprise Agreement 2017 (Agreement) has been approved by the Fair Work Commission (Commission) and will come into effect on 30 April 2018. The nominal expiry of the Agreement is 30 April 2020.

Background

In 2015, Coles Supermarkets and the retail workers’ union, the Shop Distributive and Applied Employees’ Association (SDA), agreed on terms of an enterprise agreement (Initial Agreement). The employees endorsed the Initial Agreement in a vote and it was submitted for approval. The Commission found that the Initial Agreement passed the Better Off Overall Test (BOOT) and approved it.

The BOOT

Before approving an enterprise agreement, the Commission must be satisfied that the agreement passes the BOOT. The BOOT requires that each award covered employee, and each prospective award covered employee, would be better off overall if the agreement applied rather than the relevant modern award.

Appeal and application to terminate

The decision to approve the Initial Agreement was appealed by Mr Duncan Hart, a trolley worker at Coles, and the Australian Meat Industry Employees Union (AMIEU). On 31 May 2016, the Commission found that the Initial Agreement did not pass the BOOT.[1] The Commission indicated that the impact on individual employees should be considered as part of the BOOT. The Commission stated that “the failure to pass the BOOT could be remedied by an undertaking that provided for an adjustment in payments to employees who work a sufficiently high proportion of penalty shifts as to suffer a financial disadvantage of the type demonstrated”.[2]

In a separate application, Ms Penelope Vickers applied to terminate the Initial Agreement. There were numerous decisions in the course of this matter. Ultimately, Ms Vickers discontinued her application, indicating to the Commission that the discontinuance was part of a settlement agreement.[3]

Amended agreement

In February 2018, Coles employees voted in favour of a further, revised enterprise agreement (New Agreement).[4] On 23 April 2018, the New Agreement received approval from the Commission, subject to written undertakings from Coles.

Key aspects of the New Agreement include a one off pro-rata payment of $475 to eligible full time employees[5] and the provision of additional benefits that are not available under the General Retail Industry Award 2010 (Award), such as paid natural disaster leave[6] and two days paid domestic violence leave.[7]

The Commission raised a number of concerns about the terms of the New Agreement, including:[8]

  • The entitlement to personal leave being expressed in hours and not in days, which is inconsistent with the Fair Work Act 2009 (Cth) (Act) which provides a full-time entitlement of 10 days per annum.
  • The New Agreement not providing for a liquor licence allowance, an entitlement that exists under the Award.
  • That Supported Wage System (SWS) employees who are not entitled to the one off cash payment, may not be better off overall under the New Agreement, because the New Agreement does not provide for a laundry allowance which is contained in the Award and the majority of more beneficial terms under the Agreement do not apply to SWS employees.
  • It is unclear how certain provisions of the New Agreement are to apply to trainees that may be covered by the National Training Wage (NTW).
  • The classification mapping that Coles had undertaken, and in particular that some indicative job titles listed in the Agreement were matched at a lower level of the Award than that which was likely to apply.

Undertakings

Coles made a number of undertakings, which satisfied the Commission. Some of the undertakings included:[9]

  • With respect to personal leave being specified in hours and not days, Coles has undertaken that the personal leave clause of the Agreement shall be applied in accordance with section 96 of the Act.
  • In respect of the liquor licence allowance, Coles made an undertaking that any employee that holds a liquor licence will be paid a flat amount of $25.08 per week.
  • To ensure that SWS employees are better off overall under the Agreement, Coles has undertaken that it will change the minimum rate of pay for an SWS employee to $90.50 instead of $84, which will make this rate of pay higher than the combination of the minimum rate and the laundry allowance under the Award.
  • In response to the trainee issues raised, Coles undertook to pay these employees the higher of the relevant wages under the New Agreement, or the relevant NTW plus an additional $0.47 per hour. The Commission considered how this would impact a part-time trainee working a shift that is a minimum of three hours, and determined that they would be better off under the Agreement than the NTW.
  • In respect of the concerns regarding the classification mapping, Coles made an undertaking to amend the wording in the classification for Level 3 team members.

Conclusion

The Commission’s assessment of the BOOT appears to be more detailed and comprehensive, following the Coles proceedings instituted by Mr Hart, the AMIEU and Ms Vickers. Employers should consider undertaking wage modelling for individual employees or groups of employees, rather than comparing the entitlements in a proposed enterprise agreement and underlying award on a “global” basis. Employers should also pay particular attention to the relevant award levels assigned to particular agreement levels, as this is likely to be scrutinised by the Commission.