Multi-enterprise bargaining allows two or more employers to create a single enterprise agreement with the employees working at each business. Generally, multi-employer bargaining is available to employers and employees in low-paid industries, such as disability support. Under the Fair Work Act 2009 (Cth) (FW Act), unions can apply to the Fair Work Commission (FWC) for a supported bargaining authorisation in respect of a proposed multi-employer. A supported bargaining authorisation allows the FWC to facilitate multi-enterprise bargaining for employers and employees who may otherwise have difficulty bargaining due to a lack of experience, skills, or resources.

The union representing workers at McDonald’s restaurants across South Australia has applied for a supported bargaining authorisation in relation to a proposed multi-employer enterprise agreement that would cover 52 McDonald’s restaurants operated by 14 franchisees. The union claims that the franchisees are “an exemplar of common interest”, making them the perfect candidates for a multi-enterprise agreement.

Union arguments

The union emphasised the low rates of pay in the fast-food industry, with workers making an average of $750.40 a week. The FW Act provides that if the prevailing rates of pay in an industry are low, meaning that they are near to award rates, this consideration will weigh in favour of a supported bargaining authorisation.

The union also suggested that each of the 14 franchisees have a clearly identifiable common interest. According to the union in its submission, each of the McDonald’s restaurants:

• is in South Australia;
• sells the “same menu of products at the same price under the same banner”;
• has similar conditions of employment;
• is covered by the same modern award; and
• employs staff to perform “fundamentally identical work”.

The union further highlighted the history of multi-enterprise bargaining by McDonald’s franchises in South Australia.

To demonstrate the difficulties in bargaining experienced by employees, the union emphasised that the workforce is young and inexperienced in industrial relations. The age and high turnover of workers seriously impacts the strength of the employees’ bargaining position. Ultimately, the union’s submissions suggested that the “industrially vulnerable” workers would be benefited by the process of supported collective bargaining under the FW Act.

McDonald’s franchisees arguments

The franchisees’ submissions state that “the only apparent reason for the [union’s] change of preference is … to sidestep the requirement to demonstrate majority support for bargaining”.

The franchisees contested the union’s claim that each of the employers share clearly identifiable common interests, highlighting several differences within the group, including corporate arrangements, restaurant type and geographical location within South Australia. These differences impact staffing levels, rostering, training and the bargaining interests of each franchisee. The divergent interests also limit the ability of the FWC to assess whether collective bargaining would be feasible.

The past success of bargaining at the enterprise level was another argument advanced by the franchisees to oppose the authorisation. The employers emphasised the history of effective bargaining between the union and employers within the McDonald’s franchise. The employers also pointed to the fact that none of the businesses consent to the supported bargaining authorisation, and highlighted the failure of the union to attempt bargaining with the franchisees before applying to the FWC.

Finally, the employers’ submission addressed the union’s claims about the low rates of pay in the fast-food industry. According to the McDonald’s employers, the fact that the pay levels are near to the award is unavoidable in a high-volume and low-margin industry.  

Watch this space

This case will provide an important insight into the intended operation of the supported bargaining stream created by the FW Act. The explanatory memorandum for the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Bill stated that “[the] proposed supported bargaining stream is intended to assist those employees and employers … in low paid industries such as aged care, disability care, and early childhood education and care”. Whether fast-food workers and franchisees are entitled to reap the benefits of this innovative form of bargaining remains to be seen.