Coles rebuffs Fair Work call for penalty rates

A dodgy enterprise agreement signed by Coles and the Shop, Distributive and Allied Employees Association (SDA) has been overturned after an appeal to the Fair Work Commission.

A full bench of the commission found that the 2015 Coles agreement did not pass the “better off overall test”, because workers who miss out on award standard penalty rates can be substantially worse off under the agreement.

It dismissed the arguments offered by Coles and the SDA that access to rarely used entitlements like Defence Force leave and blood donor leave compensated for the loss of penalty rates.

Rather than immediately strike out the deal, the commission gave Coles the option of implementing a “reconciliation clause” to compensate financially employees who were disadvantaged by the agreement’s inferior pay rates. On 9 June, Coles responded with a flat-out refusal. This will mean that the current Coles agreement will be quashed.

Coles has refused workers our right to receive at least the award rate – what should be the legal minimum.

Most Coles workers will now revert to a 2011 enterprise agreement that was in force immediately prior to the recent agreement being signed. The 2011 agreement also cut penalty rates but was not part of this appeal.

Coles’ decision is a dog act. It has refused workers our right to receive at least the award rate – what should be the legal minimum.

While it is difficult to nominate an exact figure – because Coles refused to provide complete evidence during the appeal – we can conservatively estimate that more than 60 percent of Coles workers will continue to be worse off than if they were paid under the award.

Nonetheless, the case is a victory in the struggle to maintain penalty rates and award conditions in the retail industry. The decision of the commission is a clear repudiation of the idea that workers can be better off under agreements that “trade off” penalty rates for a marginally higher base rate of pay.

It has major implications for every large employer in the retail and fast food industries, such as Woolworths, McDonald’s, Big W, K Mart, Target and Bunnings. All have signed agreements with the SDA that are similar to the Coles deal.

Woolworths has already delayed negotiations on its new agreement, which expired in July last year, while awaiting the result of this appeal. It is hoped that the decision will create a legal barrier to sell-out deals like this being signed in the future.

However, that Coles has now thumbed its nose at the commission and can legally avoid paying penalty rates by reverting to an older enterprise agreement shows that, for workers, legal victories can take us only so far.

There is one group of workers who will benefit unconditionally from the agreement being quashed: meatworkers in WA, SA, Victoria and Tasmania. These workers weren’t covered by the 2011 national enterprise agreement and will revert to separate meatworkers’ agreements that pay penalty rates in full.

The rest of Coles’ national workforce of more than 70,000 now has to negotiate a new agreement with the company. The SDA will remain the primary negotiating party. Even if the union had the will to try (and there is no indication that it does), it is unlikely that it will be able to force Coles (or Woolworths, or any other major company) to sign an agreement that is better than the award. One way or another, retail workers would need to organise industrially, if we are to have any real strength when bargaining with our bosses.

It is likely that Coles will now sit on the outdated agreement, and drag out whatever “negotiations” occur interminably. This opens up the possibility of a further legal challenge to the 2011 agreement being mounted to break the stalemate.

Despite Coles’ refusal to respect workers’ rights to award wages, the recent decision may represent a turning point for retail workers and a step towards the reclamation of penalty rates in our industry.