Fast food franchisor Domino’s has ditched plans to introduce a new enterprise bargaining agreement voted for by employees and will instead retain the Modern Industry Award.
Uncertainty over whether the agreement would pass the Fair Work Commission’s Better Off Overall Test (BOOT) has pushed the pizza giant to abandon its plans.
More than 18,000 Domino’s workers have been on the Award since the company’s old EBA expired in January, which is expected to materially increase Domino’s labour costs.
While the company said on Monday that labour cost increases as a percentage of sales were under its previous guidance it did not elaborate on the impact of the change to its bottom line specifically when contacted.
Wages for entry level employees will be similar under the Award, but part time workers will now not receive extra guaranteed hours each week.
“Strategic initiatives and a concentrated area of focus” on labour costs were expected to temper increases, the company said.
Domino’s Australia and New Zealand CEO Nick Knight said that the decision was driven by a desire to eliminate uncertainty rather than cost.
“We are proud to be the first large company in our industry to be on the Modern Award, which ensures Domino’s is a rewarding place to work – whether people are looking for their first job, or are hoping to build a career,” Knight said.
“Today’s announcement gives certainty to team members, who will continue to receive wages among the highest in our industry, and to franchisees,” he said.
“We are still strongly committed to achieving additional benefits and security for our employees but believe this can be achieved more efficiently through input into the current four-yearly review of the modern award.”
Domino’s had been negotiating with the Shop, Distributive and Allied Employees Association (SDA) on a new enterprise agreement throughout 2017 and had agreed with the union on a proposal that would deliver part time workers 15 hours of guaranteed work per week, compared to three under the Award.
The SDA’s national secretary Gerard Dwyer said in a statement on Monday that he was “extremely disappointed” by Domino’s withdrawal.
“The withdrawal of the application means that additional benefits, including leave provisions and access to higher guaranteed hours will not be available in the short term,” Dwyer said.
Australian Retailers Association executive director Russell Zimmerman said Domino’s decision is likely a reflection of the difficulties employers are facing getting EBA’s through the FWC.
“Generally, the bar is now far too difficult,” he said. “This needs to change, we need to have more flexibility.”
But an ongoing dispute between the SDA and Josh Cullinan of the Retail and Fast Food Workers Union (RAFFWU) was also a factor in making Domino’s EBA process more difficult, Zimmerman said.
Cullinan, secretary of RAFFWU successfully moved for a delay to the worker vote on the proposal in January with the FWC, claiming that Domino’s had not negotiated with it in good faith.
It also filed objections with the FWC earlier this month claiming that the deal did not satisfy the BOOT test, criticising the SDA for approving the deal.
RAFFWU, which was representing four Domino’s employees, criticised the proposal for only offering entry-level workers an hourly rate two cents above the award ($20.08).
The proposal was also criticised for a provision that would stop part-time employees for receiving fixed start and finish times.
Cullinan was confident in January that the deal would not pass the FWC’s BOOT test and celebrated a move back onto the award at the time.
“From 24 January full penalty rates (including 25 per cent Saturday, 45 per cent Sunday (50 per cent for managers) and full 25 per cent casual loading kicks in – as well as free uniforms, superannuation choice and other rights,” RAFFWU said in January.