Written by Alex Millman and Troy Wild, NRA Legal

After rigorous action by the Shop, Distributive and Applied Employees Association (SDA), bakery chain Beechworth Bakery has had the approval of its enterprise bargaining agreement in December 2016 overturned by a decision of the Full Bench of the Fair Work Commission.

Throughout the approval process Deputy President Sams, expressed concerns that the agreement did not pass the BOOT with respect to employee wage entitlements.

In response to this concern Beechworth made a number of undertakings to the Commission, the last of which read as follows:

“Where an Employee considers that over a four (4) month period they are not better off overall under this Agreement than under the applicable Award, they may request a comparison of the wages received for that roster cycle under this Agreement and the wages they would otherwise have been provided with under the Award. Any shortfall in wages which would otherwise be payable under the Award will be paid to the Employee in the next pay period after the review is completed.”

On the back of this undertaking, Deputy President Sams approved the Agreement. The SDA appealed this decision.

The Full Bench determined that this undertaking was insufficient to address the concerns raised by Deputy President Sams in two critical respects.

First, the undertaking did not grant an employee any form of enforceable right to payment, but a right to payment conditional on the employee requesting a comparison between the Agreement and the Award. As such, the undertaking operated as a ‘pay on complaint’ mechanism, with the possibility that an employee without the time, information or ability to avail themselves of this mechanism would never accrue the right to any “make good” pay.

Second, the undertaking only provided for an employee to ‘consider’ themselves not better off under the Agreement with reference to a four-month period – that is, the review requested by an employee may occur at most three times each year. The Full Bench was critical of a mechanism which inherently resulted in a delay in payment to an employee.

The Full Bench consequently referred the matter back to Deputy President Sams for re-consideration, which will likely involve either further discussions between all parties with respect to undertakings or in the worst case require Beechworth to recommence the approval process. Either of these is likely to result in substantial cost to Beechworth.

This decision makes clear that where undertakings are made to address concerns about the ability of an agreement to pass the BOOT, those undertakings must grant unconditional rights to affected employees and those rights must be capable of being swiftly exercised.

For further information on enterprise agreements and passing the BOOT, contact the National Retail Association Hotline and speak to one of our Workplace Advisors on 1800 RETAIL (1800 738 245).