As the ice cream war at Streets gathers pace, HRM looks at the Fair Work Commission’s interventions in scrapping enterprise bargaining agreements – and the lessons for employers.
Forgive the pun but the dispute between parent company Unilever and workers at the Streets ice cream factory in Minto, NSW has reached meltdown. Unilever has applied to the Fair Work Commission to terminate the current enterprise agreement, which the unions say could leave 140 workers with a pay cut of up to 46 per cent.
In retaliation, the unions have launched the ‘Streets-Free Summer’ campaign.
“We are calling on every Australian to stand up for fairness. If Streets won’t do what’s right, we won’t take a bite,” said AMWU NSW Secretary, Steve Murphy.
ACTU Secretary, Sally McManus, accused Unilever of exploiting the “broken” bargaining system.“They couldn’t force these massive cuts through a fair ballot and are now opting for the ‘nuclear option’ of agreement termination to blackmail these workers,” she said.
In the war of words, general manager of ice cream at Unilever Australia, Anthony Toovey, says: “If anyone has their finger on the nuclear button here it is the union and all a boycott will do is hurt workers and local manufacturing.”
The company has said it wanted to keep making Streets locally, but that production at the Minto factory currently lacked the flexibility needed to run a seasonal business.
“We cannot continue with the current situation as it’s simply not sustainable,” Unilever stated. “It’s currently almost 30 per cent cheaper to import a Magnum Classic ice cream made in Europe than to make the same ice cream at Minto, even when you include the 16,000 kilometres of frozen transport.”
Unilever rejected the claims that it would, or may, reduce employee wages by 46 per cent.
“If the FWC decides to terminate the agreement, we have already committed to preserve a range of benefits under the existing EA – including maintaining rates of pay – until 30 April 2018 (or earlier if a new agreement is reached) while we have discussions with employees and the AMWU to reach a mutually agreeable solution,” it said.
The union campaign comes on the back of a number of successful consumer boycotts, including that of Carlton and United Breweries last year. Victoria’s AHRI Employee Relations/Industrial Relations group convenor, Nick Ruskin, says it’s a tactic that employers will need to be more wary of in future.
“Reputation is a very big thing in the marketplace at the moment. It’s all about reputation. We used to have brands that were so strong and solid that their reputations were harder to impact,” says Ruskin, who specialises in labour relations and employment law and is a partner at K&L Gates.
On the other side of the ledger, he notes that employers have every right to terminate agreements in the event of a stalemate once an agreement has expired.
“It’s becoming something that companies are more ready to do because the Commission has approved it in a number of circumstances – employers are follow precedent and saying: ‘Well if the FWC can allow us to do it, we will use it as a tactic in bargaining’.
“It’s a perfectly legitimate tactic to use – others have successfully used it before, and others have failed to use it.”
Last year, the Fair Work Commission agreed to scrap workers’ EBAs at the Griffin Coal mine that was struggling financially. The decision affected around 70 workers in south-west WA and meant wages could be cut legally by around $50,000 by reverting to the Black Coal Award, after the company argued it was impossible to turn a profit.
And at James Cook University in September, the administration threatened to scrap its existing enterprise agreement if staff did not vote ‘yes’ to a new proposal.
The enterprise bargaining battle comes after the Fair Work Commission ruled that Murdoch University in WA was allowed to tear up its existing agreement after stalled discussions with the union over pay.
Ruskin says that, as the economy gets tighter, we’re likely to see more conflict when it comes to achieving bargaining outcomes. “Everyone will be using the tactics available to them to reach an enterprise agreement,” he says.
“Taking industrial action is one tactic which can be legitimately used, taking employer response action (locking out) will be used, terminating an expired enterprise agreement will be another tactic.”
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