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McDonald's underpaying employees up to 30% below award

If you've been following the 7-Eleven wage scandal in the news, you may have understandably concluded that paying workers below the minimum Award rate is against the law.

Well, in most cases you'd be right.

However, there appear to be some Australian workplaces where paying workers below the minimum Award wage is not only allowed, it's actually been endorsed by the very unions who claim to represent the workers.

No, I'm not talking about some on-the-side and off-the-record deal done by an obscure employer with some unheard-of union. I'm talking about the country's second largest employer - McDonald's - and one of the nation's most powerful unions - the Shop, Distributive and Allied Employees Association (often referred to as the SDA or just 'the shoppies').

And the deals I'm referring to are legally-binding and fully-enforceable Enterprise Agreements (EAs) which have been negotiated between the unions and the employer, and ultimately approved by the Fair Work Commission (FWC) in accordance with the Fair Work Act 2009.

According to recent press reports, some of the EAs negotiated and endorsed by the SDA in recent years have resulted in workers being left hundreds - and in some cases thousands - of dollars worse off than they would otherwise be had they remained covered by their applicable Modern Award. There are two reasons why this is the case:

Once an Enterprise Agreement is approved by the FWC, it effectively replaces the otherwise applicable Modern Award. Put another way, each employee's terms and conditions of employment are governed by the EA and not the Award.

The FWC approves EAs if they pass the so-called 'Better Off Overall Test' (BOOT). Importantly, this test doesn't require every employee to necessarily be better off financially under the EA as opposed to the Award.

And so it seems that thousands of Aussies - plenty of them very young workers - are missing out on the penalty and overtime rates that are guaranteed by their Modern Award because the union-negotiated EAs either don't contain those clauses, or make certain employees ineligible to receive those payments.

Now don't get me wrong - these EAs are great for those employers who have managed to negotiate them and thereby reduce and simplify their payroll-related obligations. 

However, it's clear from the newspaper reports that many workers - including some who are presumably fee-paying union members - aren't too thrilled to discovered their union EAs cut their take home pay. 

It's a very bad look for unions charging minimum wage earners membership fees upwards of $700 a year, and whose member numbers have (understandably) been in freefall for decades.

(Please note: many McDonald's outlets are privately owned franchises and employment arrangements accordingly vary from store to store).

Published: Wednesday, May 25, 2016

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