Union complicit in Coles’ wages case

Coles3Analysing the Shop Distributive and Allied Employees Association’s role in the circumstances that led last week to the Fair Work Commission’s findings that some Coles employees were underpaid under a dubious wages agreement.

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The Fair Work Commission’s finding that some Coles employees were dudded under a wages agreement struck with the Shop Distributive and Allied Employees Association (SDA) says more about the hypocrisy of the union than the motives of the retailer.

Retailers have scarcely covered themselves in glory of late in regard to employee entitlements. However, the SDA’s complicity in the Coles wages agreement is extraordinary given the union’s refusal to moderate retail industry penalty rates and its role in shaping and enforcing the Labor Party’s industrial relations policies.

While there is logic in the attempt by Coles and other retailers to flatten penalty rates through increases in base wage rates, both Coles and the SDA know the law stipulates that no worker can be worse off under any new enterprise bargaining agreement.

Coles may have saved as much as $70 million on its payroll costs under an EBA struck with the union, while the SDA has used the cosy agreement involving most of the retailer’s 77,000 employees to influence Labor Party policies and to determine who should get seats in the federal, state and territory parliaments.

Gerard Dwyer, National Secretary of the SDA.

Gerard Dwyer, National Secretary of the SDA.

While the union has sought to defend the Coles EBA, the fact is that with union membership declining dramatically in recent years, the sheer weight of numbers of full-time casual and part-time employees in the retail sector has provided the right-wing, heavily Catholic-influenced shoppies union with significant political clout.

Just as other unions such as the AWU, the CFMEU and HSU have been found to be advancing the careers and or pockets of their leadership without too much regard for their members, the SDA has arguably also shown far more interest in politics than member entitlements. Case in point – where was the SDA in the 7-Eleven wages scandal?

And if reduced penalty rates are so inviolate that the union is pushing federal Labor leader, Bill Shorten, to enshrine them in legislation, how can the Coles EBA that left thousands of employees shortchanged on their wages be defended?

The landmark decision of the full bench of the Fair Work Commission to direct Coles and the SDA to revisit the EBA struck in 2015 has implications for other companies, including Woolworths and fast food giant, McDonald’s.

One employer organistion estimated close to 100 agreements struck by the SDA with major retail chains could be affected by the Fair Work Commission’s ruling.

Other major chains understood to have rolled penalty rates into higher base rates include Bunnings, Super Retail Group and Wesfarmers’ Kmart and Target DDS chains. However, these retailers are not expected to be as exposed as the supermarket and fast food chains because they have lower ratios of part-time and casual employees and less trading hours.

The Commission found in favour of a claim by part-time trolley worker, Duncan Hart, that he and other Coles employees had been underpaid up to $1700 a year under the Coles 2015 EBA, compared to what they would have earned before the agreement was struck.

One analysis of store rosters actually indicated the underpayment to some employees might be as high as $3500 a year.

The EBA had been presented and approved by the Fair Work Commission, which subsequently decided to review its decision when evidence was presented in 2015 with the Hart appeal of the large number of Coles employees adversely affected by the EBA.

The Commission had recognised there may be some Coles employees who would be worse off, but apparently failed to understand that only around 20 per cent of Coles’ shopfloor staff are full-time employees, a factor that significantly skewed the EBA’s penalty rate calculations.

Key policy divide as election looms

The timing of the Commission’s direction that Coles should rework the EBA by June 10 comes in the middle of an election campaign in which penalty rates are a key policy divide.

The decision is an embarrassment to Shorten, who is banging a drum on penalty rates, albeit not as loudly as the Greens, given that a current review of the rates by the Commission was facilitated by legislative changes Labor enacted when last in government.

The decision should be more embarrassing to the SDA, given that the union has been arguing so stridently against any reduction in penalty rates.

It seems that the SDA is a law unto itself when it comes to the issue of those penalty rates, arguing that despite lower take home pay for many casuals and part-time employees, its members are better off because the union in selected agreements was prepared to trade away penalty rates.

Never mind the law that states that no employee should be worse off under any new EBA or award, or its contradictory position in arguing in the Fair Work Commission against retail industry groups representing smaller and independent retailers against any change to penalty rates.

Bill Shorten, leader of the Australian Labor Party

Bill Shorten, leader of the Australian Labor Party

But then, of course, union membership is not so popular, nor mandated, by the independent retailers and most small retailers. As a result, union membership is not so much political currency when the SDA trots off to Labor conferences, pre-selections and closed door meetings to enforce the conservative political and social agenda of its key officebearers.

It seems the SDA is quite comfortable having two different types of employees in the retail industry and in adopting practices that discriminate and deliberately penalise casuals or part-time employees – and, of course, those who are not members – in favour of full-time union members.

Gerard Dwyer, the SDA national secretary, has been quick to defend the Coles agreement and a similar deal struck with McDonalds, which, like Coles, has a predominantly casual or part-time workforce who missed out on some of the benefit from a union trade-off of penalty rates for full-time staff.

In a 2013 EBA that has recently been exposed, and is also now likely to be reviewed by the Fair Work Commission, McDonalds is reportedly paying some employees $10.08 an hour, almost one-third less than the hourly rate applicable under the award.

The McDonalds EBA is estimated to have trimmed at least $50 million from the fast food giant’s payroll, mostly at the expense of the part-time staffers working late and weekend shifts.

Woolworths has a similar deal to both Coles and McDonalds, delivering lower wages to staff working at weekends and late nights.

Woolworths is currently negotiating a new EBA and has indicated it will address the issues raised in the Coles decision. But each of the retailers using agreements that leave some workers worse off on their wages as a result of penalty rate trade-off clauses could face back pay orders into the millions of dollars.

SDA fails to convince FWC

The law is explicit about the “no worse off” requirement and, despite its protests that its EBAs were good for the retailers and their employees, the union would clearly know their expedient trade-off agreements are not compliant if some workers have their pay packets cut.

The hypocrisy of the SDA is breathtaking, notwithstanding Dwyer’s argument in both the Coles and McDonald’s cases that the agreements should be read in terms of improved working conditions and not simply wages.

Dwyer claims the SDA has conducted “robust negotiations with the majority of major retailers” that have delivered material benefits to its more than 200,000 members in the sector.

He argues in the Coles instance that the average weekly rate for an employee is around $80 above the award rate, with further three per cent increases locked in for each of the next two years.

Dwyer contends that Coles workers have a range of superior conditions, including an additional holiday, other additional leave entitlements, superior rostering conditions and adult wage rates for employees aged 18 and above.

He also argues that 97 per cent of McDonald’s employees voted in favour of the 2013 EBA, which paid them, “$45-$66 a week higher than the Fast Food Award” and ensured that part-time workers received a minimum of 10 hours work a week.

While Dwyer is vigorously defending the EBAs, the Fair Work Commission is clearly not convinced that they comply with industrial relations laws. And neither it seems is the ACTU, or Shorten, who have ordered that the “mistakes” should be rectified, especially given the timing of the Commission’s finding in the middle of an election campaign.

Inside Retail Weekly understands that retailers and the union are taking legal advice on the Commission decision, a move which could complicate the issue for Shorten and further antagonise a union movement that is becoming increasingly angered by SDA demands and political tactics.

Both Dwyer and Coles said they were reviewing the tribunal decision, which has a deadline of next Friday June 10, to change the EBA or, at least, to provide an undertaking that underpaid employees will be compensated.

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