, Australia

Why Marginal Fast Food Agreement fails BOO-Test hurdle

By Steve Champion

In a recent decision an agreement approval application was refused by Senior Deputy President (SDP) O’Callaghan, due to concerns that the employees to be covered by the proposed agreement had not genuinely understood and agreed to the terms.

The proposed enterprise agreement (ENM Group Pty Ltd AG2013/5581), which would have applied to 7 employees at one fast food site, provided marginally higher rates of pay to the relevant modern award and a casual loading and penalties in line with the transitional provisions.

Due to the Better Off Overall Test (BOOT) being a point-in-time test, this meant the proposed agreement would pass the BOOT this year, however the entitlements would fall below the relevant modern award conditions in subsequent years. Of the 7 employees to be covered, five were casual and six were under 21 years of age – likely a significant factor in O’Callaghan SDP’s decision.

The Commission was provided with statutory declarations from some of the employees to be covered, which stated that they had genuinely agreed to the proposed agreement.

The Company however declined O’Callaghan SDP’s request to present the employees as witnesses, on the basis that as the majority of their employees were university and secondary students, it was not feasible for them to provide evidence. By not facilitating provision of evidence by employees, the employer left sufficient concern in O’Callaghan SDP’s mind that the employees had not genuinely understood the terms of the agreement (and their operation).

Despite the Company’s representative providing a number of examples where similar agreements had been approved by the FWC, the agreement application was ultimately refused – with O’Callaghan SDP cautioning both the Company and their Employer Association representative that any proposed agreement, which may result in a reduction of award terms, needed to be supported by substantial evidence that the employees to be covered had knowingly and genuinely agreed to the terms.

The Company will need to commence bargaining again if they wish to have an enterprise agreement apply to their site.


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