Pizza Hut are now required to pay its workers fast food industry award rates including higher penalties after their union was successful in terminating 30 old enterprise agreements.
Most of the agreements were negotiated at least a decade ago and whilst the agreements did not include penalty rates in return for higher pay, the agreements have since fallen below the award.
In coming to the decision to terminate the agreements, Deputy President Peter Sams said he had “taken into account the views of the employees and the employer as well as the likely effect on both” and concluded that this “appears overwhelmingly positive”.
Even though the agreements have now come to an end and those agreements did not include penalty rates, there is still scope for businesses to use enterprise agreements to offset certain award obligations (in this case, penalty rates) into overaward loaded rates.
There are many advantages in having loaded rates including the administrative benefits. Administratively for the business it may be easier to just have one rate of pay that applies. It may also be easier for employees to understand how their remuneration is paid if they are receiving a loaded rate.
In order to have an enterprise agreement approved by the Fair Work Commission, the business will need to demonstrate how the percentage increase applies and how it allows for every employee to be better off overall under the agreement. As a result of the loaded rates case last year, there may also be some additional evidentiary requirements which need to be met before an agreement can be approved. Other alternatives to enterprise agreements include individual flexibility arrangements and individual employment agreements.
If you are interested in discussing how your business can improve efficiencies and in understanding minimum award entitlements, enterprise agreements and other workplace agreements please do not hesitate to get in touch with our employment law team.
Rachel Derrico, Senior Associate