As I pointed out on Monday (The coming shake-up of Australian supermarkets, June 6), when it threatened to overturn the 2014 agreement, the Fair Work Commission presented Coles with three alternatives.
The first was to pay the extra shift allowances at the weekend, so that Coles employees would not be worse off. Coles has rejected this solution.
The second choice was to change the rosters so that people working on the weekend would take a weekday shift and similarly employees working during the week could take on more weekend work.
On the surface this looked like a simple solution but many of Coles’ employees who work on weekends are students and they don’t like working during the week. And many weekday workers also don’t want to work on the weekend.
Therefore the Fair Work Commission’s second alternative was a recipe for staff chaos given that Coles has around 75,000 employees.
The third alternative offered up by the Fair Work Commission was for Coles to go back to its 2011 agreement.
What Coles has done is to take the base rate in the 2011 agreement and to increase it to what is being paid as a base rate in 2016. Moreover, it has also guaranteed that the wage rise promised in the now defunct in 2014 agreement will be honoured.
Given that the penalty rates in the 2011 agreement were almost the same as in 2014, in theory this should leave Coles still in breach but there is an importance difference between the two agreements.
The 2011 agreement did not include the modern test that every staff member had to be better off. Instead, it had a “better off” test that was related to the old Coles enterprise award.
The current pay rates that are being paid to weekend workers meets the “better off test” when compared to the old Coles enterprise award.
It was the modern version of this test in the 2014 agreement that tripped up Coles as weekend employees were clearly not better off under the deal.
And so Coles now plans to continue the 2011 agreement for as long as possible because any new enterprise agreement will need to include the modern definition of the ‘better off’ clause.
It’s an amazing twist.
Woolworths faces exactly the same situation, except that it has already begun to negotiate an agreement.
And, if a new agreement is reached, it will also have to include the modern definition of the “better off” clause, which will mean that Woolies will have to pay weekend workers a higher rate than Coles unless there is some other adjustment in the base rate.
But there is also a downside to Coles’ 2011 agreement.
Meat workers were then employed on state agreements and the meatworkers union was involved. Under this new deal, Coles will revert to that situation.
Given the left-wing nature of the meatworkers union, it is dangerous to have these people in supermarkets. But if the going gets rough sometime in the future, Coles could revert to supplying packaged rather than fresh meat.
I’m not sure that those seeking to overturn the 2014 agreement understood the loophole that Coles had in its 2011 agreement.
The Fair Work Commission’s third option has given Coles a perfect way out.
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Coles believes that it has averted a major threat to its weekend wage structure by going back to the 2011 enterprise agreement.