Background
The Shop, Distributive and Allied Employees Association (SDA) successfully applied to the Fair Work Commission (FWC) for a “supported bargaining authorisation.” This order compelled 18 separate McDonald’s franchisees in South Australia to bargain together for a single multi-enterprise agreement covering their combined 4,500 employees. The authorisation was made under new provisions of the Fair Work Act, introduced by the Secure Jobs, Better Pay Act 2022, which were designed to make multi-employer bargaining easier to access, particularly in lower-paid sectors.
The franchisees, who are unrelated corporate entities operating under franchise agreements with McDonald’s Australia, opposed being forced to bargain collectively. They preferred to continue applying the minimum pay and conditions set by the industry award. Arguing that the FWC had made significant legal errors, the franchisees applied to the Federal Court of Australia for judicial review, seeking to quash the FWC’s decision.
The Court’s Holding
The Full Court of the Federal Court of Australia dismissed the franchisees’ application, finding that the Fair Work Commission had not made a jurisdictional error. The court upheld the FWC’s decision to issue the supported bargaining authorisation, confirming that it was legally valid to compel the 18 franchisees to negotiate a single enterprise agreement with the union.
The court systematically rejected the franchisees’ six grounds of review. It held that the FWC had correctly applied the statutory test in s 243 of the Fair Work Act. The FWC was entitled to determine that it was “appropriate” for the employers and employees to bargain together, having regard to mandatory factors like the prevailing low rates of pay in the fast food industry and the “clearly identifiable common interests” of the franchisees (e.g., their shared geographical location, brand, and business model). The court noted the franchisees’ own position that they would not bargain voluntarily was a key factor justifying the FWC’s intervention to facilitate the objects of the Act.
Key Takeaways
- The “supported bargaining” stream in the Fair Work Act is a powerful mechanism that can compel unwilling, non-related employers to bargain together for a single enterprise agreement.
- In deciding whether to issue a supported bargaining authorisation, the FWC can give significant weight to the prevalence of award-reliant, low-paid work in an industry and whether employers would otherwise refuse to engage in enterprise bargaining.
- Franchisees of the same brand operating in a similar area are likely to be found to have “clearly identifiable common interests,” making them susceptible to multi-employer bargaining orders, despite operational differences between their individual businesses.
Why It Matters
This decision is a major affirmation of the multi-employer bargaining provisions introduced by the Secure Jobs, Better Pay Act. It solidifies a pathway for unions to pursue enterprise agreements across multiple businesses in industries like fast food, retail, and aged care, where bargaining has historically been fragmented or non-existent. The ruling signals that employer preference to stick to minimum award conditions is not a sufficient reason to avoid a supported bargaining order if the statutory criteria are met.
For businesses operating within franchise or similar networks, this case clarifies their vulnerability to being roped into collective negotiations. It underscores a significant shift in Australia’s industrial relations framework, empowering unions and the FWC to initiate bargaining on a broader scale, potentially leading to improved and more consistent wages and conditions across entire sectors rather than on a workplace-by-workplace basis.