Staff at one of Australia’s largest stationery companies, Kikki.K, will have their public holiday and Sunday penalty rates cut without any opportunity to renegotiate when the Fair Work Commission’s new ruling comes into force under a newly formed workplace deal with their employer.

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.

The Australian Council of Trade Unions president Ged Kearney said the agreement showed the risks to employees covered by enterprise agreements.

The deal was struck without the involvement of any union or employee bargaining representatives and was put in place directly between the company and staff.



Ordinarily, in enterprise agreements, penalty rates would be set at a fixed amount that would continue for the length of the agreement. The Kikki.K agreement instead says that the penalty rates in the agreement will be tethered to the rates set out in the retail award, which is set by the commission.

Sunday and public holiday rates for staff covered “will be mirrored in clauses ... of the agreement accordingly and will take effect in the agreement from the first full pay period following the change in the award taking effect”.

Kearney said the “mirroring clause” allowed for future cuts to penalty rates to flow down to workers “without the agreement having to be renegotiated.”

“Australian Unions have argued that the cuts to penalty rates and public holiday pay for award workers would also drive down the wages of agreement-covered employees. More than 700,000 workers in hospitality and retail are covered by enterprise agreements and this Kikki.K decision exemplifies the risk to these other employees,” Kearney said.

“Most alarmingly, it shows how, before the penalty rates decision has even been implemented, some employers are champing at the bit to take advantage of cuts to award penalty rates and have them flow through into enterprise agreements being approved now.”

The commission has ruled that public holiday penalty rates for retail staff will be cut from 250% to 225% from 1 July 2017, which Kikki.K staff will now be subject to.

Full-time and part-time staff at Kikki.K will also face cuts to penalty rates on Sundays from 200% to 150% at a later date once the commission determines how to phase in the changes.

The Fair Work Commission’s deputy president, Geoff Bull, wrote it would have been preferable for the potential changes to penalty rates to be more clearly brought to the attention of staff in information packs about the agreement, but ultimately ruled that overall workers would be better off under the deal struck.

“I am satisfied that the beneficial terms afforded by the agreement, including the higher base rates of pay when accepting the undertaking to increase the base rates, together with the undertakings relating to the working hours of part-time employees, the payment of the evening work penalty after 6pm as per the award and the limitation to the working of mutually agreed hours at ordinary rates outweigh the terms which may be considered detrimental to employees,” he wrote.

The company and staff began negotiating the new agreement well before the Fair Work Commission’s ruling.

“When Kikki.k commenced work on its new EA in June 2016, it did so on the principle that its staff would enjoy better terms and conditions than they would under the Australian General Retail Industry Award,” a spokesman for the company said.

“Recent announcements regarding penalty rates were made after the new EA had been submitted for approval. Kikki.k is currently considering the implications of the decision should it proceed.

“We remain committed to ensuring our team members are better off overall.”

Kearney said the agreement also showed the risks to employees who were not represented by unions in the negotiating process.

“In this case, the fact that Sunday penalty rates could go down automatically in future under the agreement was not explicitly explained to kikki K’s workforce. The employees had no union representing them and the company relied on the fact that no one asked questions in arguing that the Fair Work Commission should find the agreement was ‘genuinely agreed’ to,” he said.

The Kikki.K agreement will apply largely to management staff, including assistant store managers, store managers and cluster managers. These staff members are made up of part-time and full-time staff.

Store team members are currently contracted by a third party not currently subject to the agreement.

Unions have consistently warned that the penalty rate cuts will further reduce conditions for workers and that the cuts reduce the overall bargaining position of unions and the staff they represent.