The Chemist Warehouse case will be far reaching, says legal expert
The recent Fair Work Commission decision involving Chemist Warehouse has sent a clear signal to franchises and retailers across Australia: multi-employer bargaining is here, and it is expanding.
Earlier this year, the Fair Work Commission backed an application by the Shop, Distributive and Allied Employees’ Association (SDA) in South Australia to compel multi-employer bargaining across 18 McDonald’s restaurants.
For many in the sector, that decision rang alarm bells. The Chemist Warehouse outcome now confirms those fears were well founded, as it proved fast food was not an isolated target and that retail more broadly is also exposed.
According to Melini Pillay, principal at McCabes, this is a significant and concerning shift for employers who had understood multi-employer bargaining to be aimed at a very different cohort of workers.
Multi-employer bargaining – far from its original purpose
Multi-employer bargaining was promoted as a mechanism to help workers in sectors where pay is low and bargaining power is weak – classic examples being disability support and care services, where coordinated standards for pay and conditions were seen to lift baseline protections.
It was never meant to be a blunt instrument wielded across already heavily regulated sectors like retail, Pillay said.
“There is no reason why standard or single employer enterprise agreements (EA) would be unacceptable in the retail sector. There is no absence of EA's. There is no reason why the union should avoid confirming the majority of employees support or want to negotiate for an EA,” she said.
Pillay noted that the Labor Government’s own 2021 National Policy Platform framed multi-employer bargaining tightly around the low‑paid, low‑power context.
It stated that the Fair Work Act had “not adequately facilitated multi-employer collective bargaining” and highlighted this as “a particular issue for those industries where employees are low paid and where they lack industrial power.”
The commitment was that Labor would “improve access to collective bargaining, including where appropriate through multi-employer collective bargaining.”
When the reforms were moving through Parliament, the then Minister for Employment and Workplace Relations, Tony Burke, reinforced this policy intent. In November 2022, he described the changes as being “for the people who’ve been left out of bargaining,” explicitly indicating that if you were already on an enterprise agreement, you were not the target of the new streams.
“The retail industry was not contemplated by, nor does it meet these references for needing multi-employer bargaining,” Pillay added.
“If anything, this merely guarantees union agenda bargaining at a time when productivity is low.”
Why franchises should expect more to come
Asked whether more franchises are likely to be hit with multi-employer bargaining applications, Pillay said there was “no reason to suggest we won’t see more applications by unions.”
“It is well within the scope of the drafting, which of itself fails to reflect the reasons proffered to support the need for the provisions.”
In other words, the law as currently written gives unions ample room to push for multi-employer bargaining in sectors far beyond the low-paid care and disability sectors that were originally planned.
Once a pathway is established – as with McDonald’s and Chemist Warehouse – unions are likely to test its limits.
Unequal impacts and existential risks for smaller players
One of the most troubling features of multi-employer bargaining in the franchise and retail context is the way it flattens differences between businesses that in practice are anything but alike.
“Businesses irrespective of size, profitability, geographic location, demographic of clientele or specific business needs will be likened in a way that could impact their ability to exist,” Pillar said.
A multi-employer agreement can set terms and conditions that may be manageable for a large, high‑volume operator in a metro location, but deeply damaging for a small or regional franchisee with higher costs, lower turnover, or different customer demographics. Yet, in a multi-employer setting, those nuances risk being washed out.
Pillay noted that franchisees without an existing enterprise agreement – particularly those paying at or close to award rates – are especially vulnerable.
“Franchisees without an agreement, who may be paying on award rates or close to it, are susceptible to falling prey to a union agenda to bargain for increased pay, terms, and conditions.”
“That’s irrespective of the workforce composition, financial performance of the business or other considerations,” she warned.
Employers are worried – and many are unprepared
From Pillay’s perspective on the ground, concern among employers is both real and growing.
“We work with a number of franchisees who are relatively small in size and struggling with restrictions to their productivity,” she said.
“Which includes the new regulations, employee related matters, increased supplier costs, competition, delays, [and] cost of living spend.”
Bargaining is also something they are often ill-equipped for. Many franchisees excel at operations but lack experience with formal bargaining processes and the strategic, legal, and industrial skills needed to negotiate effectively with a union.
Preparing for multi-employer bargaining: what HR and employers should do now
For franchises and other retail employers, the key challenge is to prepare without overreacting – to be ready for the possibility of multi-employer bargaining while still running a sustainable business under current arrangements.
Pillay said the only real way to avoid being part of a multi-employer agreement is to bargain for a single employer agreement, however unfavourable that may be.
For businesses that decide to remain on the award, vigilance is key.
“It will be necessary to stay alert and engaged with the franchisor and other franchisee businesses through strong internal communication to ensure awareness of any union activity in this area,” Pillay said.
She also recommends ongoing benchmarking of pay and conditions to those in the same industry.
Could relief be on the horizon?
On 5 December, Minister for Employment and Workplace Relations, Amanda Rishworth, announced a review of the Closing Loopholes reforms, including the multi-employer bargaining.
For employers like those advised by Pillay, this review represents a crucial opportunity to realign the law with its original, stated intent.
“We can only hope some parameters are included in the drafting to ensure the provisions are limited to those industries it was intended for,” Pillay added.
Until then, franchises and retail employers face a period of elevated uncertainty. The decisions involving McDonald’s and Chemist Warehouse have demonstrated that unions are ready to use the current framework to drive sector-wide bargaining agendas.
For many smaller businesses, the implications of being swept into these arrangements could be huge.
With all the uncertainty, inaction is the biggest risk. Whether through pursuing a single-enterprise agreement, lifting internal capability around bargaining, or simply improving awareness and coordination across franchise networks, proactive preparation will be essential for any employer who wants to navigate the emerging multi-employer bargaining landscape on their own terms.
