Critical Comparison of McDonald’s Enterprise Agreement with the Fast Food Industry Award

This article critically compares McDonald’s Enterprise Agreement with the Fast Food Industry Award. It discusses the clauses in both agreements and their implications on the employer and employees. The article also provides insights on the minimum wages, working hours, and other allowances for employees.

Running head: Employment Relations 1
Critical Comparison of McDonald’s Enterprise Agreement with the Fast Food Industry Award
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Employment Relations 2
1.0 Introduction
McDonalds is a leading fast foods company with its headquarters in the United States of
America. The organization which started as a single entity has since grown in leaps and bounds
leading to its conversion as a franchise. Its good global performance has led to the establishment
of branches in various countries in Europe, Asia as well as the United Kingdom. The business
organization prominently deals with the sale of hamburgers, various types of chicken and
products, sandwiches in addition to numerous breakfast packages. In most of the markets around
the world, the chain restaurants offer salads and wraps in addition to other vegetarian items
(Acocella, 2010). The company was initially owned by Ray Kroc but after his death in 1984, the
company was owned by the wife. However, due to the formation of numerous branches in
various locations around the world, the organization is currently a public owned corporate entity
with Steven Easterbrook as the CEO and John Rogers as the majority shareholder. The nature of
work here involves cooking and professional preparation of the meals and serving the
consumers. There is also the bit on accounting which involves recording sales, purchases and
balancing of books. Ultimately, the higher individuals are charged with managerial
responsibilities. The industry award relevant to the operations of McDonalds is the Fast Food
Industry Award. In Australia, the organization currently operates under McDonald's Australia
Enterprise Agreement 2013 ("Agreement"). The key stakeholders, unions and government
officials were involved in the process of agreement negotiation (Ashforth & Kreiner, 2009).

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Based on the facts above, the Fast Foods award outlines the minimum wages that an
employee should get and divides the categories into three levels depending on the number of
individuals that one gets to interact with in addition to the working hours. The award highlights
the level 1 employee as one with the lowest weekly pay in addition to other allowances. The
minimum weekly wage for a level 1 employee is $394.95 and $418.70 for a level 2 employee. It
is however $425.15 for level 3 employee which indicates variations in minimum wages
depending on levels. This very award scheme forms the basis of payments in McDonalds
Australia. Furthermore, the employees are entitled to rewards based on overtime works which is

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calculated according to the number of overtime hours (Collings & Wood, 2009). This pay
changes with the increase in working hours. There is also a minimum wage offered for working
over the weekends and also during public holidays. It should be noted that these rates tend to
vary depending on the number of years an employee has spent in services as well as the terms of
employment.
On the other hand, McDonald’s Enterprise Agreement indicates variations in the
schedules for pay. According to Fox & Murray (2014), the minimum wages are set according to
the number of years that an employee has spent in service. For instance, a full time level 2
employee according to the agreement is entitled to an hourly pay of $ 9 while a part time
employee under the age bracket has a hourly pay of $11. This translates to a weekly pay of $359
for a level 2 full time employee who has worked for 16 years. The part time level 2 employee
under the same category gets approximately $ 372 per week. The agreement also provides for
allowances associated with overtime work and other aspects such as uniform of employees. The
agreement indicates that an employee is entitled to an additional $11 when the work goes 2 hours
beyond the scheduled time. The award and the brief are different in a number of ways. The most
notable aspect if the different in hourly and weekly rates based on employee levels, terms of
service and period of service. The agreement seems to provide a relatively lower rate. This
deviation benefits the company by reducing the costs related to employee pay (Blyton &
Turnbull, 2014). On the other hand, the employees benefit from the fact that the agreement
entitles them to additional allowances which are basically not provided for in the industry award.
This therefore creates a good balance. At the same time, the award has no specific provision for
flexibility while the agreement provides for flexibility by giving the employees various
exceptions without affecting their pay. To ensure there are no discriminatory cases, the

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agreement outlines the employment terms while clearly indicating the associated benefits
depending on age, terms of service and duration of service. The industry award however sticks to
a standard procedure for remunerations which is intended to apply to all companies under the
industry. As such, there is no vivid provision that hinders discriminatory cases. The business
negotiated the agreement because its implementation would see a drastic change in the
workplace environment through employee satisfaction and motivation. The change in quality of
service delivery would in turn bring the company a good return on investments implying the
agreement would come with benefits to each of the involved parties. It was a carefully thought
procedure anchored on sound decision hence the outcome was not necessarily as a result of
pressure from any party (Cully & O’Reilly, 2011).
2.0 Industry Research
As noted by Thomas & Pederson (2014), the business has over 37,000 outlets distributed
in various parts across the world. According to the statistical records by the end of 2017, the
business currently has over 235, 000 employees. Despite the fact that most of these individuals
are employed on permanent basis, about 25% of this population comprises casual workers. The
company has no specific inclination on the type of employees that it factors into its fold. The fact
that it is a multinational company implies the operations take place in various business
environments which are equally characterized by varying dynamics in terms of human resource
management. The employment policies in different countries also vary. However, slightly over
50% of the employees are males. In terms of union subscription, most of the permanent
employees are attached to worker unions which also differ in dynamics depending on the
location of the franchise. This implies that over 80% of the workers at McDonalds are subscribed
to a union. Between 2016 and 2017, the average wage for the organization was $9 per hour. The

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management has however revised this stand hence the current average wage lies at $10 per hour
but varies depending on terms of service, level and period of service. With the ever dynamic
nature of the corporate world, the business continues to expand its wings and has consistently
established new franchises in areas which were formerly unoccupied (Dubin, 2009). This has led
to the creation of more job opportunities. Similarly, the fact the website has a continuous update
of available job opportunities indicates that it is a competitive labor market. The products and
services have gained popularity among many consumers around the world. The fact that the
business has enjoyed a relatively stable market for its products in different parts of the world
confirms that it is a competitive product market. This explains its consistent performance in the
various environments in which the franchises are established.
Through the union websites and other relevant platforms, it has been possible to deduce
certain industrial strategies involving grievances against the business. In the past years, the
workers have staged strikers citing issues with pay. The statistical records from these sites
indicate that the company pays its employees at a rate that is much lower than the standard
regulations. This has led to employee grievances in some quarters fueled by the support of the
unions. In addition, the employees have also expressed dissatisfaction with the working
environment noting the absence of effective safety standards and protective gear. There have also
been allegations that the company does not offer adequate employee training. Employee training
and exposure is a crucial step towards achieving worker motivation and a corresponding
improvement in the quality of output (Edmiston, 2010). The organization may need to observe
these grievances and address them appropriately. This strategy may need to involve a critical
revision of the current enterprise agreement.

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3.0 Summary of Clauses in Award
The award has various clauses; however there are a number of clauses relevant to the
business. To begin with, there is the clause on consultation and dispute resolution which
encourages adequate internal interaction between the employer and employees in addition to
internal resolution of disputes before third parties are involved. The employment terms also
outline the wage brackets based on the nature of employment. The average minimum wage for
level 1is 721 and level 2 is 764. This may have implications on the business especially in times
of financial constraints, it may be practically impossible to reach the threshold. The minimum
working hours is 38 as per the standards which confines the organization to increasing number of
employees instead of number of hours. This may come with cost implications to the employer
but works to the advantage of the employee (Etzioni, 2015).
In the award, there are clauses that can be deemed to be particularly relevant to the
employees. For instance, the clauses on consultation and dispute resolution have a direct impact
on the workplace environment hence factors in the concerns of the employee. The clause on
employment terms is particularly important for the employees as it outlines to the contractual
aspects that they have to contend with while accepting employment. The regulations on
termination and issue of notice are another aspect of the award that is relevant to the employee.
The most important clause however touches on minimum wages based on age, level and duration
of service. The clause also outlines the necessary exceptions and indicates the pay rates for
holidays and overtime. The arrangements for leaves, flexibility and prohibition of discriminatory
acts are also covered in the award.

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By engaging the details of the award, it is a fact worth noting that the contents tend to
address the employee concerns more than they do the concerns of the business. The clauses
actually provide the effective guidelines on how the business is supposed to handle the
employees. Employee grievances can therefore be based on these clauses especially in cases
where the company is unable to adhere to the standard terms. In a nut shell, the employees at
McDonald benefit more from the award scheme (Flanders, 2010).
4.0 Summary of clauses in the Enterprise Agreement
The clauses in the agreement are more or less similar to those in the award. There is the
clause on individual flexibility arrangement where the business makes individual arrangements
on various exceptions that would be attached to the main contractual terms. The other important
clause is the highlight on the need for submission and consultation. In addition, the clause on
classifications and wage rates is instrumental in providing the employee a clear picture of the
stated standards with respect to salaries and remunerations. The agreement also details the
ordinary working hours in addition to indicating the average hourly wages for the different
categories of employees. The last item is the provisions in case of leave and public holidays.
Each of these clauses are beneficial to the employer as they play a pivotal role in enhancing the
quality of service provision. For instance, consultation and submission implies the employer is
always in good control of the employees hence initiating them to the organizational culture is
easy (Fox & Murray, 2014). By comparing the classifications and wages rates of the award with
the provision in the agreement, the later indicates lower rates an arrangement which works to the
benefit of the employer. By reducing the wage rates, McDonalds is able to bring in more
employees hence increase the labor worth without necessary escalating the related procedure

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costs. This therefore implies that the agreement tends to benefit the employer more than the
employee.
The clauses in this case that are of a particular benefit to the employees include the aspect
of flexibility arrangement as the business gives room for paid leaves and occasional time offs. At
the same time, the business has a provision for pressing individual or family issues such as
sickness and death. An employee, under these exceptions may be allowed time off work without
the weekly wage being affected. The other important clause for the employees is the aspect
which addresses the ordinary working hours. This protects the employees from exploitation and
in case they have to work beyond the scheduled time brackets, they are entitled to an overtime
pay which is approximately $11 for every 2 hours (Gomez-Mejia & Robert, 2008).
By comparing benefits from the two points of view, it can be established that the
employer tends to benefit from the agreement more than the employee. The employee is more
covered in the award. The agreement indicates a lesser wage rate compared to the standard rates
which is an advantage to the employees. For instance, according to the award scheme, the
average pay for any shift within the scheduled working period is $ 11 for a level 2 who has
worked for 16 years. This level can be used to deduced the correlation across different other
levels. The award scheme therefore implies that an employee in this level who works for 4 hours
a day is entitled to a daily pay of $ 44. However, with the agreement, calculations reveal that this
rate is likely to be lower. Working with an average hourly pay of $10 as per the agreement, the
same employee, level 2, 6 years working for 4 hours a day will now earn $ 40 which is a
difference of $4 less than the expected amount. In a month, the employee loses $1200 which the
business is able to utilize on other fronts of operation (Johnason, 2009).

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5.0 Workplace and Stakeholder Diversity
In both cases, there are specific provisions which play a crucial role in enhancing the
diversity of stakeholders. To begin with, the provision that allows room for union members
offers a good environment for the employee to make informed choices on the parties from whom
they would require support especially during dispute resolution. The provision that prohibit
discriminatory acts is essential in enhancing diversity since it allows the business to bring into its
fold individuals from various backgrounds, academic skills and personal attributes. The other
provision that enhances stakeholder diversity is the arrangement that allows employees to attend
events that have got cultural value. In these events, the stakeholders and employees are able
interact with people from various corners, exchanging ideas and cultural values. This is a
strategy which allows the stakeholders to identify and appreciate other cultures hence
encouraging diversity. Enhancing a good work environment comes with benefits not only to the
employees but also to the employers. The flexibility arrangements give room for the employees
to attend to their pressing needs without worrying about their pay. Additionally, there are the
leave allowance and provision to attend events of value. Each of these aspects go a long way in
enhancing motivation among the employees (Klerck, 2009). A motivated workforce is likely to
stay committed to the organizational goals and objectives since there is a direct correlation
between employee motivation and effective work output. Improvement in output in turn
improves the sales for the employer thereby increasing the return on investment. The costs that
would have been incurred while implementing the provisions are therefore recovered from the
profit margins arising from sales.

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6.0 Discussion and Conclusion
A series of research projects have been conducted in line with the concept of industrial
relations. The outcomes of these research ideas often indicate a clear disparity between the award
schemes and the enterprise agreements. The review of contextual arguments by other authors
reveals the fact that award tends to provide an umbrella for the employees. However, the
enterprise agreements often involve finer discussion and tacit conclusions which are often aimed
at establishing a common ground for both the employee and the employer. Despite the fact that
the employee needs to have their rights adequately addressed, it is important to note that the
business organizations also get into ventures with the main aim of getting good returns on
investment (Stone, 2015). Consequently, the employers are often keen to settle on terms that
would be beneficial not only to the workers but to the employer as well.
The outcomes above effectively emphasize the earlier argument that agreements come
more benefits to the employer more than the employee. It is however a fact worth noting that the
needs of the employees are often factored in as well hence the agreements focus on enhancing a
practical balance in relations between the employers and the employers. From the study, it was
deduced that employee grievances have escalated across various industries owing to the inability
of the employers to honor their parts of the contract. Complaints regarding unpaid dues, lack of
training and exposure in addition to pathetic working conditions is a clear indication that most
employers are keener on their interests and not necessarily those of the employees. This reveals
the crucial place of worker unions in the industry (Thomas & Pederson, 2014). They do not only
help champion for the rights of the employs but also play a crucial role in supporting them in
times of disputing resolution. In summary and based on the evidence from the discussions above,
the employers continue to thrive in various industries at the expense of the employees who

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continue to live in deplorable states with low rate pays and minimal increments (Wood, 2014).
The main reason behind this scenario is the industry’s lack of commitment to the award
regulations with more attention shifted to the agreement which in most cases work to their
advantage.

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7.0 References
Acocella, N. (2010). Social pacts, employment and growth: Heidelberg: Springer Verlag
Ashforth, B. & Kreiner, G. E. (2009). How can you do it? Dirty work and the challenge of
constructing a positive identity. Academy of Management Review, 24(3), pp. 413-434.
Collings, D. & Wood, G. (2009). Human resource management: A critical approach. Human
resource management: 2(1), pp. 1-16
Blyton, P and Turnbull, P. (2014). The Dynamics of Employee Relations. Basingstoke:
Macmillan.
Cully, M. & O’Reilly A. (2011). The Workplace Employee Relations Survey: First Findings.
London: Routledge.
Dubin, R. (2009). The World of Work: Industrial Society and Human Relations. Englewood
Cliffs: Palgrave.
Edmiston, K. (2010).The Role of Small and Large Businesses in Economic
Development. Economic Review. 1, pp. 1–93.
Etzioni, A. (2015). A Comparative Analysis of Complex Organisations. New York: Free Press.
Flanders, A. (2010). Management and Unions. London: Faber.
Fox, W. & Murray, M. (2014). Do Economic Effects Justify the Use of Fiscal
Incentives. Southern Economic Journal. 1(1), pp. 23.

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Gomez-Mejia, R. & Robert, L. (2008). Management, People, performance and Change. New
York: McGraw Hill
Johnason, P. (2009). Human resource management in changing organizational contexts. Human
resource management. 2(1), pp. 19-37
Klerck, G. (2009). Industrial relations and human resource management. Human resource
management. (1), pp. 238-259.
Stone, R. (2015). Human Resource Management. Milton: John Wiley
Thomas, D. & Jay P. Pederson, D. (2014). "McDonald's". International directory of company
histories. New York: St. James Press.
Wood, J. (2014). Organisational Behaviour: A Global Perspective. Milton: Wiley.