Koko Black and Subway ‘gaming the system’ in penalty rate deals: union

“Enterprise bargaining should be about lifting wages and conditions, not employers duping workers into agreements that undercut their minimum rights,” he said.

“We don’t believe these new Subway agreements are being properly explained to workers, many of whom are young and vulnerable.”

Last Friday the SDA requested the commission delay approving further Subway agreements pending the outcome of its appeal of a SA franchisee’s deal that the union claims was done behind its back.

‘Radically flexible’

The agreement does not include pay rises, has “radically flexible” conditions that treat part-timers like casuals, does not factor in award leave loading or allowances and leaves uncertain how it will pay penalty rates, the SDA says.

Subway deals awaiting approval are setting weekend rates at dollar amounts, rather than as percentages of the base rate. This means penalty rates will fall below the award each year there is a minimum wage increase.

The new deals were lodged after a series of Subway agreements were axed this year because of Labor’s sunsetting laws for “zombie agreements”, which involve expired WorkChoices-era deals that pay below the award.

The SDA argues some workers did not have a “genuine understanding” of what they were voting on with the new agreements.

Subway, which was recently sold to private equity firm Roark Capital Group, did not respond to requests for comment before publication.

Under the Fair Work Act, employers must ensure their agreements are better than the award minimum at the time of approval.

But after that point, they only have to pay the award base rate as a minimum and can legally pay other conditions, like penalty rates, below the award until another agreement is negotiated.

Mr Peak said the Subway deals were “specifically designed to erode penalty rates, leave loading and other allowances”.

“They’ve relied on zombie agreements to undercut wages for over a decade and now that that has become unlawful, they are doing it again,” he said.

“Subway’s behaviour is a disgrace and must be called out.”

Retail dominates Koko Black sales

Koko Black’s agreement lodged for approval has similar dollar-value penalty rates, assuring workers will get paid $5.85 an hour extra on Sundays for example.

The company also seeks to pay staff under the lower-paying restaurant award given some stores have bars and tables.

The SDA argues Koko Black’s business is retail and the higher-paying retail award should apply.

“Some of their stores have a cafe operation, but that does not make them a restaurant,” Mr Peak said.

“We have told Koko Black what they are seeking to do is wrong, and we have the evidence to show that a majority of their sales are retail sales.”

Koko Black and Mr Crowe were contacted for comment but did not respond before publication.

Koko Black struck the four-year deal, with pay rises of 1 per cent a year, after the company opened several new stores over the past 12 months.

Workers will at least get a significant wage boost in the first year as their previous four-year agreement had no pay increases and their hourly rate must be increased to allow the deal to pass the better-off-overall test.