The Case

The Coles Store Team Enterprise Agreement 2014–17 (Coles EA) was approved by Commissioner Bull of the Fair Work Commission (FWC) in July 2015.

Mr Hart, a part-time employee of Coles, appealed the decision to the Full Bench of the FWC, alleging that the Coles EA did not pass the better off overall test (BOOT) and should not have been approved. Using his roster as an example, he showed that he and other employees would be worse off under the Coles EA than under the General Retail Industry Award 2010 (the Award).

The Verdict

The Full Bench held that the Coles EA did not pass the BOOT as the agreement was financially detrimental to many part-time and casual employees. To satisfy the BOOT, every award-covered employee and prospective award-covered employee must be better off overall under the Coles EA as opposed to the Award.

While the Coles EA paid employees a higher hourly rate, it reduced penalty rates for night shifts, weekend and public holiday shifts. This resulted in some employees being financially disadvantaged because of their rostering arrangements.

Coles argued that the Full Bench should take into consideration additional monetary and non-monetary benefits provided by the Coles EA, such as additional penalty rates, rest and meal breaks, and other leave entitlements.

The Full Bench indicated that caution needed to be exercised when taking these additional benefits into account, as such benefits would not be accessed by all employees. For example, not all employees would use the defence service leave and the utility of the additional rest breaks was dependent on an employee’s shift. As such, these additional benefits did not outweigh the monetary loss the Coles EA would cause to part-time and casual staff.

The Full Bench invited Coles to provide undertakings to rectify the financial detriment that would be suffered by staff, warning that if satisfactory undertakings are not provided, it will overturn Commissioner Bull’s decision.

The Lesson

While you and your employees can reach agreement on the terms and conditions in an enterprise agreement, it is ultimately the FWC that has the task of approving the agreement. It will only do this if it is satisfied that all employees will be better off overall under the agreement than under the relevant award. The FWC has indicated that it will closely scrutinise the provision of non-monetary benefits, but these will not overcome the problems with monetary shortfalls.

Please note: Case law is reported as correct and current at time of publishing. Be aware that cases in lower courts may be appealed and decisions subsequently overturned.