The challenging art of union renegotiation

by Contributor07 Jul 2016
A deal struck between a union and employers is a chance to bring certainty to the wages bill and employ more people, but what happens when the deal is renegotiated?
 
The question is a live one in the food industry as the existing wages and employment deal between Domino’s Pizza and the Shop Distributive and Allied Employees Association (SDA union) comes due for renegotiation this year.
 
The deal was struck in 2009 before the national award and minimum standards. It removed the need for Domino’s to pay most penalty rates, including for weekends and late nights. The deal technically expired in 2013. A similar deal was done between the SDA union and other large employers such as Coles, Woolworths and McDonalds.
 
The deal reduced the cost of employment, with the savings to Domino’s being around $32m per year according to financial analysts. The deal meant most Domino’s workers are paid less than if the standard award was in place.
 
Deutsche Bank has warned of a wage bill blowout for Domino's, when the penalty rates are reinstated in the new deal. Analysts predict a return to standard penalty rates will cost Domino's an extra $32m in wages and reduce profit by around 25%.
 
While Domino's has legally operated on its existing agreement, workplace agreements in Australia must pass the "better off overall test" and the Fair Work Commission has already found that the similar deal between Coles and the SDA union failed the "better off" test.
 
Domino’s Pizza Enterprise Ltd. has “been fully aware and prepared” that the wages deal must be renegotiated, said the company. It confirmed it is in negotiations with the SDA union and in the interim will move ahead on a new wages and entitlements deal that covers Domino’s and its 300 franchisees.
 
“The company is committed to delivering a modern agreement which will provide more beneficial working conditions for all Domino’s team members,” the company said in a statement. The company has set up a hotline and email service to keep employees up to date.
 
“Negotiations between Dominos and the SDA will continue over the coming months.”
 
Domino's Pizza managing director Don Meij recently acknowledged to Fairfax Media that the total cost of paying penalty rates was unknown. "We have known about this for years and we have been working towards this date, there is no surprise in it at all.”
 
Meij said renegotiating a deal with the union had been difficult with the issue being played-out in the media.
 
"We were very close to an agreement but with all the media around Coles and McDonald's and all the different organisations that have been in the media with the SDA, that just stalled our agreement," he said.

 
By Mark Abernethy

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