More than 300 retail staff at the stationery chain Kikki.K have for years been placed on an expired Work Choices-era “zombie” agreement by a labour hire firm, stripping them of their weekend penalty rates.
The agreement Kikki.K staff have been hired under has been described as “inferior” to current award conditions in Fair Work Commission proceedings, where the deputy president, Geoff Bull, said a standard award gave employees “better benefits” than the agreement.
However, the company said it would be moving staff employed on that agreement to a new enterprise agreement.
Kikki.K, which is embarking on a global expansion plan into Europe, has been outsourcing store members hired in stationery outlets through the labour hire firm Employment Innovations since 2009.
Store managers at the gift and stationery chain appear to be the first employees covered by an enterprise agreement who will directly face cuts as a result of the commission’s ruling on penalty rates.
But employment contracts seen by Guardian Australia reveal staff have already had their penalty rates stripped as a result of signing up to the outdated agreement.
The 2007 agreement the company uses is a collective agreement for HRO Initiatives Pty Ltd, a wholly owned subsidiary of the Employment Innovations Group.
Although the 2007 agreement has expired, there has not been any move to terminate it, which means it can still be legally used. These Work Choices agreements have been described as “zombie” agreements that continue to be valid well after their expiry, and have faced heavy criticism from employment advocacy groups owing to the difficulty of terminating them.
The chief executive of Employment Innovations, Shane Duffy, acknowledged that the outdated agreement was inferior “in some cases” but defended the conditions of current Kikki.K staff.
“Employees at Kikki.K are paid in line with the award Monday to Friday and receive more than double time for work performed on public holidays,” he said.
“We provide businesses with labour, HR, safety, payroll, legal and technology solutions. We were engaged by Kikki.K in 2009 and subsequently other fast-growing business to provide them with labour hire, safety and payroll services to help them scale. The HRO Initiatives agreement was used because it had been validly approved by the Workplace Authority and was within its nominal operating period.”
In a blog post Employment Innovations urged companies to move staff off expired Work Choices agreements after Bakers Delight faced criticism for using a similar agreement, also describing them as “zombie” agreements that “frequently exclude” penalty rates. The post said it was important to get on the front foot “rather than reactively dealing with an agitated RAFFWU seeking big above-award gains for your workers”.
Duffy said in regards to the blog post: “We encourage businesses to move away from expired agreements where it is practicable to do so, as we have done ourselves.”
In a statement the Kikki.K chief executive, Iain Nairn, said: “The adoption of the new Kikki.K EA represents a significant investment over and above the General Retail Industry Award and is one that we are committed to passing on to our team. To be absolutely clear, all current and future Australian retail team members will receive more favourable employment conditions overall than under the General Retail Industry Award.”
Unions have said use of the expired agreement raises serious concerns. The Retail and Fast Food Workers (RAFFWU) secretary, Josh Cullinan, said the Kikki.K case was “particularly pernicious”.
“These workers seem to be losing all their penalty rates and entitlements because of this old agreement,” he said. “The additional concern to everything else that we’re working on is the use of a labour hire agency to try and hold these workers at some form of arm’s length.”
“The government should legislate a process where the Fair Work Commission should go through these agreements and terminate them if they are leaving workers worse off.”
The Australian Council of Trade Unions president, Ged Kearney, said the case showed how broken Australia’s industrial relations system had become.
“While Kikki.K’s behaviour is obviously reprehensible, it is also a symptom of a much larger issue with the industrial relations framework, which has allowed the balance of power to swing toward employers,” she said.
“Employers simply should not be able to treat workers in this way. We need sweeping reform to ensure that labour hire is better regulated, and to protect the rights and pay of all Australian workers.”
The company suggested it would be moving staff members employed through Employment Innovations on to a new enterprise agreement.
But that agreement will also reduce some penalty rates for staff because they are tethered to award conditions, which were recently changed by the Fair Work Commission.
Duffy said Employment Innovations had “no intention of using the HRO Initiatives agreement beyond this”.
Other previous clients of Employment Innovations who used staff hired on the 2007 agreement include an IGA franchisee in Queensland and Delivery Hero, which later consolidated with Foodora. Both companies made applications to transfer staff on the HRO agreement on to awards, which the Fair Work Commission accepted.
A spokeswoman for Foodora said: “For any practice of Delivery Hero prior to the consolidation, you would have to get in touch with the original Delivery Hero mgt. As of the moment of consolidation, Foodora can confirm that no such practices exist.”
The IGA franchisee did not respond to requests for comment.
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