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McDonald’s cut off cash to ‘Shoppies’ union ahead of Fair Work hearings

Young people are expected to be the hardest hit by the COVID-19 recession, so why is the union movement selling them out? Investigations reveal big corporations like McDonald’s wield such control over union membership fees that workers can get shafted.


McDonald’s cut off payroll deductions for Australia’s largest retail union – the Shop Distributive and Allied Employees Association (SDA) – ahead of Fair Work Commission (FWC) hearings this month which seek to cut pay and conditions for some of the country’s youngest and lowest paid workers.

This week the FWC rejected an urgent bid by employers led by McDonald’s, supported by the SDA and ACTU, to change the fast food award to waive overtime rates and relax strict roster requirements for part-time workers, the AFR reported.

It comes after some of the biggest employers in the country including McDonald’s, Coles and Woolworths have been forced in the last four years to replace their enterprise agreements, made with the blessing of the unions, which left hundreds of thousands of workers each being paid hundreds of dollars a week less than they would have been under the award safety net.

The Liberal-dominated FWC argued this week that there was no evidence that businesses like McDonalds were struggling during the pandemic, and the employers, represented by the Australian Industry Group, have been given until Tuesday evening to present more evidence.

The SDA, with support from the Australian Council of Trade Unions (ACTU), has had a long history of doing deals with Australia’s biggest employers to strip workers of penalty rates and conditions (such as set rosters) that are contained in the award.

But why would unions sell out workers? Voice of Action understands that SDA derives its political power and financial muscle from its huge membership base (claimed over 200,000 workers), which can only be maintained if the major employers agree to drive new member recruitment through staff inductions/contracts, and allow for payroll deductions for union membership fees.

McDonald’s, the main company behind this week’s attempt to change the fast food award, in February this year decided to no longer allow payroll deductions for SDA members, according to an email sent to members by the SDA which has been obtained by Voice of Action.

This reveals the way in which the major employers are able to exercise power over the union leadership, and why SDA might have been inclined to agree to deals which left hundreds of thousands of workers worse off than the award safety net.

A union leader, who spoke on condition of anonymity, told Voice of Action the SDA “are more afraid of the bosses than the workers” due to their revenue being controlled by the major corporations, who can cut off access at any time.

SDA National Secretary Gerard Dwyer on Friday confirmed McDonald’s had stopped payroll deductions but denied that SDA had consistently sold out workers interests or that it was beholden to the big employers.

Excerpt from SDA’s email to members in February this year

SDA is the largest affiliated organisation to the Labor Party; it wields significant influence over the ALP and the ACTU via funding and supporting candidates.

The more members it has the more influence it has over parliaments and policy, and an investigation by The Age found it has often used that influence to push socially conservative policy around issues such as same sex marriage and abortion.

“They are entirely dependent on the recruitment and payroll deductions supplied by bosses,” said Josh Cullinan, secretary of the rival Retail and Fast Food Workers Union (RAFFWU).

“[SDA] are at inductions, they attend first shifts, bosses give membership forms with the kit of other employment forms, payroll deductions are guaranteed.”

SDA was even paying employers millions of dollars a year in commissions (up to 10%) until this was exposed publicly.

Cullinan said McDonald’s used its cosy relationship with the SDA “to save hundreds of millions of dollars and destroy job security”.

In February this year, RAFFWU helped bring all that crashing down when the Fast Food Industry Award replaced the old SDA deal which had abolished penalty rates on weeknights and weekends.

Xzavier (centre) applied to terminate the McDonald’s enterprise agreement demanding over $250M in backpay

RAFFWU was behind the challenge against the changes to the fast food award this week, arguing they were an attack on workers’ rights and did not offer anything to workers, while there was no proof the businesses in question were heavily impacted by COVID-19.

Cullinan told Voice of Action he believes SDA agreed to the new deal with McDonald’s because they don’t want to be cut off when it comes to payroll deduction and membership recruitment.

“Their churn is enormous, they turn over half their staff every year, they need induction kits, they need a page in the employment contract which says ‘do you consent to join the SDA’ … there needs to be all that work done by the employer for the SDA to maintain that membership,” said Cullinan.

Cullinan was the first to expose the cosy deals between the SDA and Coles to underpay staff in 2015 and was vindicated by a Fair Work decision terminating the agreement in 2016. He describes that as “the breakthrough moment”.

Since then McDonald’s and Domino’s replaced their enterprise agreements with the fast food award, while a plethora of other companies replaced their enterprise agreements with new agreements that restored pay and conditions to at least the award level.

These companies include Coles, Woolworths, Big W, Officeworks, Kmart, BWS, Dan Murphy’s Super Retail Group, KFC and Hungry Jack’s.

The changes to bring the agreements back in line with the award would have cost the major employers hundreds of millions of dollars a year.

“The grand bargain [between SDA and the major employers] was literally a massive financial windfall derived from the unpaid low wages of workers, and industrial compliance … and in return the SDA had these employers recruit for it and process all of the membership fees for it,” Cullinan told Voice of Action.

Construction union CFMEU has come out in support of RAFFWU on its Facebook page, condemning the SDA and ACTU as “stooges” and “un-Australian” for trying “to reduce penalty rates for already low-paid, hard-working and vulnerable workers”.

Loukas applied to terminate the Woolworths enterprise agreement demanding over $1B in backpay

RAFFWU has won millions in extra pay for workers since the alternative retail union was created in 2016 out of frustration with the SDA selling out its members.

“For 50 years the SDA hasn’t acted in support of or on behallf of working people,” said Cullinan.

RAFFWU has previously squared off with McDonald’s and SDA over cuts to penalty rates/conditions and “churning” of its workforce as they grow older to bring in cheaper younger staff.

From February this year McDonald’s was forced to start paying out penalty rates costing tens of millions of dollars in higher wages; it was previously paying a majority of its workers less than the fast food award under a deal struck with the SDA in 2013.

RAFFWU secretary Josh Cullinan

Cullinan said this week’s case with the FWC was McDonald’s attempt to reheat the previous agreement under the cover of COVID-19.

He said the application to the FWC was an “ambush”, prepared in secret between the SDA and the employers and workers were not consulted. The RAFFWU only found out through a notification from the FWC and had just 36 hours to file its submissions to the FWC.

“That’s the scandal of this in that they would use Covid to try and reintroduce the casualisation of part-time work and some other changes,” said Cullinan.

“We had McDonalds through their employer group AIG do a deal with the SDA and the ACTU to smash the rights of young workers. 80% of McDonald’s workers are under 21, more than half are under 18.”

Cullinan said these were already some of the lowest paid workers, with the very young earning about $8.50 an hour

The Age won Walkley Awards for its reporting on the SDA selling out young workers. The paper’s investigations found that the SDA typically traded away penalty rates (in full or part) for a small increase in hourly rates.

Those who worked late or on weekends ended up being underpaid in the agreements, which should never have been approved because they failed the “better off overall” legal test in the Fair Work Act.

SDA’s Dwyer said it was always SDA’s priority to best represent its members “during a period in which unions are more legally constrained than at any time since the early 20th Century”.

“It should also be noted that Australia’s retail workers are among the highest paid in the world,” said Dwyer.

“In 2018, the SDA won increased penalty rates for casuals on Saturdays and weeknights. Along with United Voice, the SDA invested millions of dollars in defence of penalty rates which were eventually cut by the FWC.”

Greens leader Adam Bandt, who has previously called for changes to the Fair Work Act to protect workers from SDA-style wage deals that trade away penalty rates with inadequate compensation, says young people are expected to be the hardest hit by the COVID-19 crisis.

“Before the corona crisis hit nearly 1 in 3 young people either had no job or didn’t have enough hours of work,” Bandt told Voice of Action.

Greens leader Adam Bandt says we must ensure we don’t have a “lost generation” after the crisis

Conservative modelling released by the Greens shows a young worker entering the workforce in the COVID-19 downturn will have a mean 6% reduction in annual earnings each year for a decade.

The latest economic data reported by Guardian Australia shows young people are suffering the highest job losses as the industries most hit by the COVID-19 shutdown are ones that tend to employ young people.

Young people, who have been applying for early access to their super in droves, can miss out on the Jobkeeper wage subsidies offered by the government because they tend to be in casualised work, often without the minimum 12 months of service needed to qualify.

Modelling by the Brain and Mind centre predicts a 25% rise in suicides with 30% of these being Australians aged 15-25, The Australian reported.

“I’m really worried that … young people for years will now face not only high levels of debt from the crisis but low levels of income and high levels of unemployment,” said Bandt.

“If past recessions are anything to go by we know they hit the young really hard and the effects last for years, so we need a recovery plan that is especially focused on making sure we don’t have a lost generation coming out of this crisis.”

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