Kmart pay deal after union superannuation demand dropped

Kmart pay deal for thousands of employees approved after it agrees to drop demand they join a union super fund.

Kmart employees Emilia Pacchiarotta, Mary Ann Zammit and Christine Zammit in the Blacktown store. Picture: AAP

The Fair Work Commission has approved Kmart’s pay deal covering 32,000 workers after the company agreed to no longer force employees to use the union’s industry superannuation fund and allow them to switch to a fund of their choice.

A commission full bench on Monday upheld an appeal by Kmart and unions and quashed a decision by deputy president Amanda Mansini rejecting the proposed agreement.

She found the proposed agreement’s hourly pay rates across more than 10 employee classifications were as little as 1c to 5c above the legal award minimum.

Assessing the agreement against the Fair Work Act’s better off overall test (“BOOT”), Ms Mansini expressed concern the pay rates were not enough to compensate them for two less beneficial terms - the requirement for employees to use the REST superannuation fund and the span of ordinary hours that could be worked.

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The full bench said the agreement clause not giving employees a choice over their superannuation fund was less beneficial than the comparative award clause and “gives rise to a concern” that the deal does not pass the BOOT.

It said the concern was not due to the relative performance of different superannuation funds, but because two thirds of Kmart’s employees were casuals.

“Our assessment, having regard to the general characteristics of employment in the retail industry, is that it is likely that a significant proportion of such casual employees have previously had other casual employment or have a second job,’’ it said.

“In that context, a choice of funds may be a benefit so that the casual employee can seamlessly remain in a single superannuation fund rather than having two or more funds arising from different jobs with all the inconvenience and additional administration costs that this involves.”

During the appeal hearing, Kmart gave an undertaking that while REST would remain the default fund, employees could nominate an alternative fund.

“Our provisional view is that the proposed undertaking would address our concern and not be likely to cause financial detriment to any employee covered by the agreement or result in substantial changes to the agreement,” the full bench said.

But the full bench rejected deputy president Mansini’s concern the agreement’s span of ordinary hours was detrimental to employees compared to the award.

“Financial modelling undertaken by the commission’s staff (which was before the deputy president) demonstrates that the pay of employees under the agreement will be more than under the award on any pattern of hours that may be worked,” the full bench said.

Shop, Distributive Allied and Employees Association national secretary Gerard Dwyer welcomed the full bench overturning the commission’s “shocking rejection” of the proposed agreement.

He said the union welcomed the decision to give employees the flexibility over their superannuation arrangements, and allow workers to opt out of the default fund if they wished.

“The agreement strikes the right balance between shifting to a penalty rates structure which reflects full award penalties while protecting existing Kmart workers’ higher wages and delivering pay rises for all,” he said.

“We’re particularly pleased that the agreement locks in two days paid domestic violence leave with additional access to unpaid leave when requested.”

“Importantly, this new agreement maintains hard won above award conditions such as superior rostering provisions, voluntary work on public holidays, additional public holidays and picnic days in certain states, as well as securing better leave provisions.”