SDA’s shock deal with retailers to secure fee deductions

The Australian, September 11, 2017

The ALP’s biggest union affiliate, the shop assistants union, has been paying 10 per cent of members’ dues in commissions to Coles and Woolworths under an extraordinary arrangement that generously compensated the supermarket giants for deducting union fees from the pay of thousands of workers.

The commissions, which originate from an agreement struck between the ACTU and employers in 1971, have been paid despite advances in technology reducing the cost to employers of deducting union dues.

Coles, Woolworths and the Shop, Distributive and Allied Employees Association have refused to divulge the amounts in dollar terms paid by the union to the companies under the arrangement.

In answers provided to a Senate inquiry, the union confirmed for the first time that the commission paid to Coles and Woolworths had been an unusually high 10 per cent of union members’ dues.

It pays a lower 2.5 per cent commission to KFC and no payment is made to McDonald’s to deduct union fees.

In a statement to The Australian yesterday, union national secretary Gerard Dwyer admitted the arrangement need to be ­reviewed, while Woolworths ­revealed the fee charged to the union would finally be reduced following the introduction of a new payroll system.

Despite the union finally ­acknowledging the percentage amount, Coles and Woolworths have continued to refuse to reveal the commission rate.

Employment Minister Michaelia Cash yesterday attacked the companies and the union over the arrangement.

“Union members would be rightly outraged to know their employer is receiving such a significant payment for the deduction of union membership fees,” she told The Australian.

“It is yet another example of collusive behaviour between big business and big unions.”

The union has been under scrutiny over controversial pay deals with big employers, including Coles and Woolworths, that contain zero or below-award penalty rates.

The Woolworths deal covers 95,571 employees, and the company told the Senate penalty rates inquiry that 47 per cent — 44,918 union members — have their fees directly deducted from their pay.

Coles declined to provide a figure but has a similar percentage of membership, meaning about 37,484 employees have fees ­deducted.

SDA members pay annual union fees of between $205 and $509. Australian Electoral Commission records show Woolworths and Coles passed on union dues totalling $7.95 million to the union’s Queensland branch in 2015-16, which would suggest the companies received $790,000 in commission fees from the union branch in that financial year alone.

The deduction ­arrangement makes it easier for the union to ­retain its 207,000-strong membership, at a time when other ­unions are suffering declining membership. Maintaining its large membership base allows the conservative union to have influence on ALP policy debates.

The union, the second biggest in the country, is one of the Labor Party’s biggest donors, contributing more than $1m in 2015-16.

Mr Dwyer said yesterday the arrangement, first reported by the media in 2015, needed to be examined. “We recognise that there need to be a review of the current structure to ensure it is reflective of the contemporary business ­environment,’’ he said.

Following questions from The Australian, Woolworths said it had recently completed a review of the arrangement with the union. “We have advised the SDA that as a result of significantly ­reduced processing costs following our transition to a new payroll system, the administration fee for the current financial year will be in the region of $20,000,’’ a spokesman said

Mr Dwyer said the deduction scheme had been in place for many years and reflected the ­“industrial standard when put in place”.

“It should be noted that there are complexities around levying union dues for members who work fluctuating weekly hours,’’ he said. “Casual members in particular value payroll deduction ­facilities as it ensures if they don’t work at all in a week they don’t pay any dues.”

Coles declined to comment.