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McDonald’s Enterprise Agreement rejection illustrates need to follow careful process

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Case Summary: McDonald’s Australia Pty Ltd – Application for Approval of a Single Enterprise Agreement

Issue

  • On 23 December 2009, McDonald’s Australia applied to Fair Work Australia (FWA) seeking approval of the proposed McDonald’s Australia Enterprise Agreement 2009 (the Agreement).  The Agreement was intended to cover McDonald’s Australia and licensee operators of McDonald’s retail food outlets across Australia.
  • Of the approximate 80,000 staff members to whom the Agreement would apply:
    • 65,600 were under 21 years of age
    • 64,456 were casual
    • 28,800 were from a non-English speaking background
    • 44% cast a vote in the ballot for the Agreement
  • Of those who voted, approximately 90% voted in favour of the Agreement. Despite the favourable ballot, Commissioner McKenna of FWA held that she could not approve the Agreement, citing deficiencies in the application and McDonald’s failure in meeting pre-approval requirements

Legal Issues

The key factors taken into account were as follows:

  • In its application to FWA, statutory declarations were deemed as incomplete and inaccurate in significant details.  McDonald’s were considered to have provided misleading and inaccurate information relating to the proposed Agreement to its employees
  • Not all employees were given notice in regards to their voting rights within the required time under the Fair Work Act
  • McDonald’s did not provide all employees with the proposed Agreement
  • McDonald’s did not sufficiently explain the terms of the Agreement to employees taking into account the particular circumstances and needs of the relevant employees. (eg. explaining to employees from culturally and linguistically diverse backgrounds; inviting elder representatives to attend information sessions with young employees)
  • McDonald’s did not provide employees with a copy of the National Employment Standards or the underpinning award
  • Procedural deficiencies aside, the Agreement failed the No Disadvantage Test as employees were overall more disadvantaged compared to what they would have been entitled to under the underpinning awards

MST Recommendations

  • Any proposed enterprise agreement must be carefully constructed to ensure that it considers underpinning award entitlements that will be considered as part of the better off overall test, the successor to the no-disadvantage test
  • Take a careful and strategic approach to complying with the Enterprise Agreement pre-approval requirements.  From the commencement of bargaining, records should be made of all discussions held with any employee, whether as part of a formal meeting or informal chat in the tea room
  • Extra steps must be taken to ensure that young employees and employees from a non-English speaking background sufficiently understand the effect of the proposed agreement
  • As each step of the process will be closely scrutinised by FWA, employers are strongly encouraged to seek legal advice prior to undertaking the exercise

Mason Sier Turnbull has experience in assisting its clients with the above matter.  Please contact a Workplace Relations lawyer for further information.

Author:  Chao Ni and Katie Sweatman