The Fair Work Commission ruled the fast-food giant must negotiate with unions on pay and conditions
McDonald's has been ordered to negotiate employee pay and conditions with unions in a landmark decision under the government's multi-employer bargaining reform.
The Fair Work Commission (FWC) has ruled that it is "appropriate" for 18 South Australian franchisees of McDonald's and their employees to be covered by multi-enterprise bargaining as proposed by the Shop, Distributive, and Allied Employees' Association (SDA).
The FWC cited a variety of reasons for its decision, including the prevailing low rates of pay in the industry.
"The prevailing pay and conditions within the fast food industry are at or close to the minima provided for by the FFI (Fast Food Industry) Award, and low rates of pay prevail in the industry," the FWC said in its decision.
The Australian Industry Group (Ai Group) said the decision was "deeply disappointing" amid its potential impact on other employers.
"The decision highlights the risk for thousands of employers in the fast food, retail, hospitality and many other sectors, of being dragged into multi-employer bargaining by unions against their will and without the support of the majority of their employees," said Ai Group Chief Executive Innes Willox in a statement.
Willox urged the Federal Government to introduce "urgent amendments" in the Fair Work Act to reconsider the scope of the supported bargaining laws.
"The Australian Industry Group urges the Federal Government to introduce urgent amendments to the Fair Work Act to tighten up the scope of the supported bargaining stream, and to address the unintended consequences reflected in the FWC's decision," he said.
McDonald's is the first employer to contest a supported bargaining bid under the government's multi-employer bargaining reform introduced in 2023.
Its SA franchisees argued that they do not have clearly identifiable common interests, particularly in location, size, configuration, facilities, pricing, as well as business structure.
But according to the FWC, the franchisees are obliged to follow the "McDonald's System," which details requirements on menu items, food ingredients, cleaning standards, opening hours, employee uniforms, among others.
"These requirements mean that the SA Licensees' restaurants have a broad degree of similarity both in the substance of their operations and the way they are presented to the public. Even more significantly, it means that the work performed by employees across all the restaurants is fundamentally the same," the FWC said.
"The existence of clearly identifiable common interests as between the employers to be covered by the proposed agreement does not require that their interests, or the characteristics of their businesses, be identical, and the differences between the SA Licensees the subject of our findings are not of such a nature as to negate the common interests which can clearly be identified."
Shop, Distributive, and Allied Employees' Association South Australias secretary Josh Peak said the decision is a landmark win for fast-food workers in Australia.
"This decision sends a clear message: corporate America can no longer deny their low-paid Australian workers the right to bargain," Peak said as quoted by the Australian Financial Review.
The Australian Council of Trade Unions also described the situation as a "real David and Goliath struggle," where Australian values won over corporate America.
"McDonald's and its franchises are the largest employers in the country that have been refusing to negotiate directly with their workers," said ACTU president Michele O'Neil in a statement.
"Now they will have to, because their arguments that franchise owners don't share common interests have failed to stack up in the Fair Work Commission."
A spokeswoman from McDonald's told the AFR: "We will take the time to review and consider next steps."
