BOOT WAGE ANALYSIS OF COLES EBA By Josh Cullinan. 23 May 2015

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1 BOOT WAGE ANALYSIS OF COLES EBA 2015 By Josh Cullinan 23 May 2015 In May 2015, Coles conducted a ballot of its employees working in its retail supermarkets asking them to approve an Agreement. On 7 May 2015, Coles purports those employees voted to approve the Agreement. This analysis compares the Coles & SDA Agreement rates of pay to the Award. It is noteworthy the Agreement imposes a new rate (an increased rate) upon the vote of staff to approve the Agreement. This means the Better Off Overall Test (BOOT) would appear to be applied against an Agreement rate which will only have affect for a matter of days prior to the next Agreement increase on 1 July It is manifestly likely that an Award increase will occur on 1 July 2015 and the community is awaiting the Decision of the Fair Work Commission in relation to the minimum rates review. The BOOT will be conducted at the time of the Approval consideration. If it were to be conducted on or after 1 July 2015, it is likely the BOOT will be against a slightly higher EBA rate and a significantly higher Award rate. If this were the case, the Award rates in this paper will be higher and the detriment to workers by the EBA even greater. The charts below identify: Many 17 year olds will be worse off. This includes all non-casual 17 year olds who work at least a small percentage of their hours after 6pm on a weeknight or on a weekend. All casual 17 year olds will be worse off. Many 18 year olds will be worse off. Particularly non-casual 18 year olds who work at least a small proportion of their hours outside the hours of 7am to 6pm on a weekday. The more hours performed at night or on weekends, the worse off an 18 year old non casual. Many 18 year old casual staff will be worse off, particularly those who work most or all of their hours during the day on Saturday or Sundays. Many adult non-casual staff will be worse off. Whilst the EBA rate is higher during the day on weekdays, any adult non-casual staff member who works half or more of their hours on a weekday night or on a weekend will likely be worse off under the Agreement. In addition to the charts, an analysis of the rates impact on May 2015 rosters from a suburban Melbourne Coles department of 16 non managerial staff provides startling results. Certain assumptions had to be made of age and casual status. Coles reports 65% of staff are non-casual. For the 16 staff, we allocated 6 staff a casual status. The age estimate was done by colleagues and where they were entirely unknown an adult age was awarded. The three weeks were assumed to replicate throughout the year to annualise outcomes. That analysis shows: 11 of 16 are worse off; On average, the 11 are 7% worse off; Taking in all 16, they are on average 3.4% worse off, delivering an annual benefit to Coles of over $4000 for the one department; Extrapolating the $4 000 across non-managerial staff delivers almost a $20 Million annual benefit to Coles; and It is manifestly clear many staff are not better off overall under the Agreement. These large retail companies also use sophisticated roster software such as E-tivity (used by Kmart) which use a staff members availability, combined with their competencies (manager, supervisor, etc) and the wage cost through age and casual status. The software automatically allocates shifts to those workers who are available, competent and cheapest. This would drive adult casual staff away from weekday day shifts and drive 17 year olds into weekend shifts. Such rostering systems further enact the disadvantage. 1

2 Axis Vertical Right is the dollars lost in wages under the EBA compared to the Award as a % of the total wages earned. Vertical Left is the hours worked during the day on a weekday as a percentage of the total hours worked. Horizontal is the 16 persons coded as a letter (A to Q). 2

3 1. The period in which there is a higher weekday EBA rate between 7am and 6pm is generally school hours for those under 18 and often university hours for The vast majority of hours in a Coles store are worked before 12am and after 5am negating the effect of the EBA loading (which apart from Sunday is higher under the Award in any event.) 3. It is clear substantial loss occurs for a 17yo non-casual on weeknights and during the day on Saturday and Sundays. These times are likely to be when the predominant shifts for 17 year olds are worked. 3

4 1. The period in which there is a higher weekday EBA rate between 7am and 6pm is generally university hours for 18 year olds 2. The vast majority of hours in a Coles store are worked before 12am and after 5am negating the effect of the EBA loading (which apart from Sunday is higher under the Award in any event.) 3. It is clear substantial loss occurs for an 18yo non-casual on weeknights and during the day on Saturday and Sundays. These times are likely to be when the predominant shifts for 18 year olds are worked. Some offsetting may occur for those workers who also work weekday hours during the day. 4

5 1. The vast majority of hours in a Coles store are worked before 12am and after 5am negating the effect of the EBA loadings overnight (which apart from Sunday is higher under the Award in any event.) 2. It is clear substantial loss occurs for an adult non-casual on weeknights and during the day on Saturday and Sundays. Whilst some adult ongoing staff will offset weekend loss with higher rates under the EBA during the day on weekdays, it is likely the shift patterns will see at least some adults worse off than the Award. This is likely to be the case for those 21 and over who: a. Are at University; b. Have a full time normal hours job and perform work for Coles as a second job; and c. Those who have full time carer responsibilities whilst a partner works a normal hours job and work at Coles outside that time. 5

6 1. These charts assume overtime does not apply to casual staff under the Award which is incorrect but the current Ombudsman advice. 2. During the day on weekdays, the Award is higher than the Agreement rate. 3. The vast majority of hours in a Coles store are worked before 12am and after 5am negating the effect of the EBA night loading (which will be higher under the Award if overtime applies.) These times are generally only allocated to adults (18+). 4. It is clear substantial loss occurs for a 17yo casual staff on during the day on Saturday and Sundays. These times are likely to be when the predominant shifts for 17 year olds are worked. 5. All 17 year old standard retail casual staff will be worse off. 6

7 1. These charts assume overtime does not apply to casual staff under the Award which is incorrect but the current Ombudsman advice. 2. An 18 year old casual attracts a higher weekday rate (during the day and at night) under the EBA. 3. The vast majority of hours in a Coles store are worked before 12am and after 5am negating the effect of the EBA night loading (which may be higher under the Award if overtime applies.) 4. It is clear significant loss occurs for 18yo casual staff working during the day on Saturday and Sundays. These times are likely to be when the predominant shifts for 18 year olds are worked, or at least for a subset being those finishing secondary school or at University. 7

8 1. These charts assume overtime does not apply to casual staff under the Award which is incorrect but the current Ombudsman advice. 2. An adult casual attracts a higher weekday rate (during the day and at night under the EBA. 3. The EBA and Award rates for adult casual staff have negligible difference. 4. The vast majority of hours in a Coles store are worked before 12am and after 5am negating the effect of the EBA night loading (which may be higher under the Award if overtime applies.) 5. It is clear some loss occurs for adult casual staff working during the day on Sundays. This time may be offset by shifts worked during weekdays. It is likely the shift patterns will see at least some adults worse off than the Award. This is likely to be the case for those 21 and over who: a. Are studying at University; b. Have a full time normal hours job and perform work for Coles as a second job; and c. Those who have full time carer responsibilities whilst a partner works a normal hours job and work at Coles outside that time. 6. Coles has said through the media its adult staff are much more likely to be ongoing than casual. 8

9 Assumptions Overtime in the non-casual Award rate is left at 150% whereas after 3 hours of overtime it shifts to 200%. This is event dependent and not included in these charts (to the detriment of the argument Award is better than EBA.) Public Holidays are not considered at all. The Fair Work Ombudsman currently erroneously advises casuals are not entitled to Award based overtime. Whilst this is wrong the charts and calculations in the example do not include any overtime rate rights for Award dependent casuals (to the detriment of the argument Award is better than EBA.) This analysis is not of unusual or unique rates that might apply to saved or transitional provisions. The rates used are: o The most basic Award rate for the lowest grade Retail Employee Level 1 as at 4 May 2015 o The EBA basic retail rate for a Store Team Member as at a positive vote listed in the EBA o 15 year old and 16 year old rates are the same proportion of the adult rate in the Agreement and the Award. This means the adult charts can be used as an indicator of the differences. The dollar values don t apply for the lower ages, but the proportional difference between the award and agreement are the same. The analysis doesn t consider rest or meal breaks at all. The example (16 persons) does have roster breaks and they are inconsequential to the analysis. The likely minimum wage increase for 1 July 2015 has not been included at all and will probably make the position in favour of the Award even stronger. 9