Recently we have been involved in the process for modernising the Pizza Hut – SDA National Employee Relations Award 2000 on behalf of Yum! Restaurants Australia ('Yum').
The Shop Distributive and Allies Employee Association ('SDA') have opposed this application. One of the first objections raised, which the Full Bench of Fair Work Australia ('FWA') decided to deal with as a separate matter, was a jurisdictional challenge on the basis that Yum and various franchisees of Pizza Huts did not operate a common enterprise.
The SDA contended that a franchisor could not carry on a single enterprise with itself and its franchisors. Yum asserted that it and Pizza Hut franchisees are employers who carry on a business, project or undertaking within the meaning of Schedule 6 Item 3, Sub-Item (2) of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 ('the Transitional legislation').
Relevantly, the Transitional Legislation provides that an enterprise award-based instrument is an award-based transitional instrument if the award or State reference transitional award covers employees in a single enterprise, one or more enterprises (if the employers all carry on similar business activities under the same franchise), franchisees of the same franchisor and related bodies corporate.
If two or more employers carry on a business, project or undertaking as a joint venture or common enterprise, the employers are taken to be one employer.
The Full Bench found that the evidence established that Pizza Hut franchise agreements grant a right to use the systems, manuals, trade marks and names of Pizza Hut and further that Yum has a real interest in the success of the franchisee's business as its income is tied to sales achieved by franchisees.
The Full Bench then applied the test in Australian Softwood Forest Pty Limited v Attorney General (NSW); Ex Rel Corporate Affairs Commission2. In that case Justice Mason found:
The Full Bench dismissed the jurisdictional objection, and the matter proceeded to hearing on the basis of the substantive issues raised in the application.
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