Would you like a class action with that? McDonald’s franchisees in hot water after allegations employees were denied the 10-minute paid breaks they’re entitled to.
The actions of a rogue McDonald’s manager have uncovered a potentially systemic case of employee rights breaches across some of the fast-food giant’s 980+ Australian stores.
An investigation into McDonald’s franchises – headed up by the Retail and Fast Food Workers Union (RAFFWU) and Shine Lawyers – has lead to a potential class action after allegations that around 250,000 current and former employees could have been denied the 10-minute breaks outlined in their enterprise agreement (EBA) and Fast Food Industry Award 2010 (the Award).
Under the EBA and Award, employees who work between four and nine hours are legally entitled to a ten-minute, paid break. If the shift is longer than nine hours, employees are entitled to two 10-minute breaks.
Some McDonald’s employees were allegedly told they had to work more than four hours to qualify for a 10-minute break, when the EBA and Award clearly stated breaks were allocated for shifts between four and nine hours. So if an employee worked for four hours and 15 minutes, for example, they are legally entitled to a 10-minute break.
At the time of the allegations, a McDonald’s spokesperson said all employees were given their legally required breaks, however considering hundreds of employees have already registered to be involved in the class action, according to the Sydney Morning Herald (SMH), it will be interesting to see if Shine and the RAFFWU have a winning case on their hands.
Blatantly denying these breaks to workers is in direct contradiction of McDonald’s legal obligations to its workers. So how did these franchisees get away with it? Until now, that is.
The background
The potential class action is coming off the back of a Federal Court ruling made earlier this year in relation to a Brisbane-based McDonald’s franchise, Tanex Holdings Pty Ltd, that misled employees about when they were entitled to a break and when they could use the bathroom or have a drink of water.
HRM covered this story in 2019 when the allegations were first made. Following Union pressure to give employees the breaks they were entitled to, a manager of this particular McDonald’s store told employees if this was to be implemented, it would be their only time to use the bathroom or have a glass of water.
In a private Facebook post one of the managers said: “If you work longer than 4 hours, you become eligible for a ’10 minute break’. So for [sic] majority of crew [sic] you actually probably don’t ever qualify for a ’10 minute break’.
“What this means is that if we implement this over our current situation, on your shift – this 10 minute break would be the only time you would ever be permitted to have a drink or go to the toilet. So I hope to god you don’t get thirsty on your next shift because we just wouldn’t be able to allow a drink. Fair is Fair right?”
After the post went virtual, the case made its way to the Federal Court. In August 2020, it ruled in the employees’ favour, clarifying that workers were allowed to take toilet and water breaks throughout the day, outside of their allocated break time. This was the first ruling in Australian history to stipulate that employees could take toilet/water breaks at any time – it had to rely on a precedent set in Ohio, America. This is, perhaps, due to the fact that most employers wouldn’t take issue with this.
However, this ruling didn’t put the case to bed. There’s still the question of denying staff their break time to be answered. That’s where this potential class action comes in.
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The deep roots of the issue
SMH reports that the secretary of the RAFFWU, Josh Cullinana, calculated the potential reach to encompass 250,000 workers. This, he says, is based on the fact that McDonald’s currently employs 100,000 people across Australia, with an average tenure of 1.6 years and a turnover rate of 40 per cent.
Australia’s industrial relations system is complex, but this points to a larger issue, says Michael Byrnes, partner at Swaab law firm.
“This isn’t a case of [EBAs and awards] being ambiguous or difficult to interpret. This is just a case of not complying with something that’s stated unambiguously in the enterprise agreement.
“[This issue] is fixed to a culture where the particular employers are almost indignant at the idea of employees questioning whether or not they’re being treated in accordance with their rights,” he says.
It’s likely that the franchisees felt they could get away with misrepresenting the legal rights outlined in the EBA and Award as they’re dealing with a predominantly young workforce – what 14 year-old is going to question their boss when the ‘rules’ are laid out for them?
“They don’t necessarily have the maturity and sophistication to find out what they’re entitled to,” says Byrnes.
The answer might be to simplify employee rights outlined in relevant Awards and enterprise agreements. Older workers might benefit from this too.
Some of the unions do try to simplify this information, says Byrnes, but he thinks they could do more.
“We need to make the information more accessible and easy to understand, and put it in a very, very basic form so young people in high school or working at a McDonald’s… can readily understand what their entitlements are.
“Sometimes that information is buried in other stuff, like the importance of joining a union (which is important) or it’s mixed in with other information… but it’s probably worthwhile stripping some of that stuff out and just keeping it really simple.”
“[This issue] is fixed to a culture where the particular employers are almost indignant at the idea of employees questioning whether or not they’re being treated in accordance with their rights.”
It’s not just that some of the workers are too young to fully comprehend their rights. There’s another cultural driver at play, one that says a strong work ethic is what equals success.
“These employees are taught about the importance of teamwork and pulling together; work hard and give it your best. This is good in some ways, but for some people actually asserting a right like a break can be seen as inconsistent or incompatible with that mentality.
“[Some] young workers are, understandably, taught to be respectful and deferential. They don’t want to be seen as being militant or a troublemaker.”
Age is just one of the factors at play, says Byrnes. Another is the fact that for most McDonald’s workers, their job is seen as a means to an end rather than a career. So they might not be as inclined to rock the boat.
“It’s not their career ambition. They’re not necessarily going to be standing up or asserting their rights in a way they might if it was their long-term career and they thought it was a benefit or entitlement they’d get for years to come. They just sort of roll with the punches because it’s for a short period of time.”
As an interesting aside, Byrnes points out that there’s a bit of a “union feud” going on in the fast food industry.
“There’s the more traditional union, which is the Shop, Distributive Allied Employees Association – you might describe them as the more conservative, entrenched union. Then there’s the Retail and Fast Food Workers Union, which is considered the more radical union and I don’t mean this in a pejorative way. The RFFWU is more proactive in challenging the status quo.”
That’s good news for these disgruntled workers.
What’s next?
Shine Lawyers and the RFFWU are now in the preliminary stages of the class action. They’re assessing how far-reaching this could be and encouraging workers, former and current, to step forward.
The next step, says Byrnes, is to gather evidence and then they might bring proceedings against McDonalds and its franchises. The desired outcome, he suggests, would be back-pay for the affected workers, potential penalties against the employer for breaching the EBA and coverage of the legal costs associated with the case.
“Employers in the past may have relied on the power imbalance between an individual employee who is young and may not have many resources at their disposal versus a large employer.”
“I don’t think there will be any contention that employees were entitled to those breaks – it’s set out in the enterprise agreement,” says Byrnes. “It’s about whether or not they were actually given those breaks.”
And that could be difficult to prove. As Byrnes points out, this particular class action is a little more complicated than some because it’s not just going after one behemoth employer; the McDonald’s franchisees are all technically employers within their own right.
“Some of those stores are owned by the head office, so McDonald’s is the employer in that case. But there are going to be a whole lot more, as I would understand, that there are separate entities – the franchisees. That could complicate things because you’re dealing with a whole lot of different sets of facts. The practice in one store might be different to the practice in another.”
Compliance needs to be baked in
We will see a rise in workplace-related class actions, Byrnes suggests. Coles and Woolworths, for example, have already been dragged for widespread underpayment allegations, and we’ve recently seen Adelaide-based supermarket Drakes and 7-Eleven in the same boat.
The more class actions that are taken up and publicised in the media, the more likely employees working in less than desirable conditions are likely to educate themselves on their rights and stand up to their employers.
If there’s ever been a time to ensure your organisation is compliant, it’s now. With more law firms willing to take on class action suits, it’s going to become much easier for employees to fight back.
“Employers in the past may have relied on the power imbalance between an individual employee who is young and may not have many resources at their disposal versus a large employer. They’ve taken comfort in that imbalance and think these workers wouldn’t litigate the matter.
“But a class action addresses that imbalance because you’ve got a law firm and a union getting together to combine forces [and resources]. This makes litigation more possible than for a single employee who is seeking a modest amount in back pay – once the costs are deducted and the risks are factored in,” he adds.
What does this mean for employers and HR professionals? You need to make sure compliance with EBAs and Awards is understood and acted upon at all levels of your organisations, not just at the top. Because, as this case shows, the actions of a one manager can lead to much more dire and expensive consequences.
“HR professionals need to know what’s going on at the coalface,” says Byrnes. “You need to make sure EBA obligations aren’t being ignored.
“Part of the HR manager’s role in an environment like that is not only advising but also educating and informing, and in effect undertaking internal enforcement to ensure that the practice reflects the obligations in the industrial instrument.”