Swapping super choice for 1 cent an hour is not fair deal, umpire rules

A workplace deal that would have forced Kmart employees to pay their super into underperforming industry fund REST would have left them worse off than their industry award, the Fair Work Commission has ruled.

The commission on Monday struck down a deal negotiated between the department store and the main union representing its workers, the Shop, Distributive and Allied Employees Association (SDA) over issues to do with the voting process.

In an unusual move, commission deputy president Amanda Mansini flagged that even if the voting problems had not occurred she was not convinced workers would have been better off under the deal, which would take away the benefit of choosing a fund.

Workplace deals need to leave workers better off overall compared to the relevant award. This so-called BOOT test has become controversial after a landmark decision involving Coles found all workers, not just a selection, had to be better off.

The proposed deal would have seen some workers receive as little as 1¢ per hour more in wages but lose their ability to choose their super fund.

Ms Mansini said Kmart declined to provide evidence showing why workers would be better off having to put their super in the REST industry fund.

A voting bungle has meant Kmart's EBA application has been dismissed by the FWC.Credit: Penny Stephens

SuperRatings rates REST's balanced plan 34th among Australian funds for a five-year return, and 14th for a 10-year return.

The Retail and Fast Food Workers Union had raised issues about the agreement's choice of default superannuation fund in March, saying it would leave workers worse off as they would be limited in choice and forced to use an underperforming fund.

The retail union also slammed Kmart's proposal of compensating workers for the super fund lock-in with a 1¢ per hour wage benefit as "literally minuscule", with secretary Josh Cullinan saying Kmart's agreement had been marked with "a great big F for failure".

"It doesn't pass the pub test. Anyone looking at this would say the choice in fund is a benefit, and not having that choice and having to be dictated in the fund you pay contributions into is a detriment," he said.

The federal government has flagged legislation that would prevent enterprise deals stipulating one fund.

The SDA, which supported the deal, said it was disappointing a "popular" agreement had been rejected, but said it respected the FWC's decision.

A spokesperson for Kmart said the company was "very disappointed" with the decision and the company was still assessing its next steps.

"Kmart is carefully reviewing the reasons for the decision with our legal team and will determine our options and next steps once this review has been completed," they said.

Ms Mansini also ruled the proposed increase to workers' span of hours to 6am to midnight on any day of the week would not leave them better off as workers would not be able to refuse on the basis of unreasonable overtime.

The evidence before the commission shows that Kmart was aware that employees in this category should have been requested to vote.

Fair Work deputy president Amanda Mansini

Voting bungle scuppers deal

Overall, the Kmart deal was rejected by the FWC, though the decision largely hinged on the department store bungling the employee vote on the agreement.

The company's decision to close the voting role two days before the end of the voting period amounted to "intentional non-compliance", the FWC ruled, meaning the tribunal could not determine if all employees had agreed on the EBA.

Ms Mansini also pointed to several other issues around the treatment of casuals in Kmart's 32,000-strong workforce as she rejected Kmart's arguments that the problems with the process were minor or insignificant.

Some 443 staff whose employment had been terminated were permitted to vote with 125 of them participating in the ballot.

These errors meant the FWC was not able to be satisfied the EBA was "genuinely agreed", despite 91.7 per cent of the voting cohort endorsing the new agreement.

Kmart argued due to the overwhelming majority of voters who approved the EBA, the identified errors were "insignificant" and implored the commission to overlook them as "minor procedural or technical errors".

But Ms Mansini said the error around the early closure of the roll could not be considered minor as the overlooking of eligible employees' voting rights was "seemingly intentional".

"The evidence before the commission shows that Kmart was aware that employees in this category should have been requested to vote, it knew of its obligation to keep updating the Voter Roll during the vote period," she said.

Ms Mansini also criticised Kmart for repeatedly failing to provide explanations for its decisions.