“I’m [not] lovin’ it” – McDonald’s fined $92,000 for denying employees toilet and drink breaks

In the recent decision of Retail Fast Food Workers Union Incorporated v Tantex Holdings Pty Ltd (No 2) [2020] FCA 1644, Justice Logan of the Federal Court of Australia (Federal Court) held that Tantex Holdings Pty Ltd (Tantex), one of Australia’s largest McDonald franchise operators, had unlawfully denied employees from taking 10-minute work breaks. Justice Logan found Tantex’s failure to provide employees with work breaks was in contravention of the Fair Work Act 2009 (Cth) (FW Act) and imposed pecuniary penalties against Tantex amounting to $92,000. The decision is the first major action of its kind against McDonald’s in the Federal Court.

Facts

Tantex operates six McDonald’s restaurants in Brisbane. Ms Chiara Staines, the second applicant in this case, was employed at Tantex’s Queen St location. Ms Staines’ employment was governed by the McDonald’s Australia Enterprise Agreement 2013 (Enterprise Agreement).

Pursuant to clause 29 of the Enterprise Agreement, Tantex employees were entitled to a 10-minute drink or toilet break for every four (4) hour shift worked.

Ms Staines alleged, which was admitted by Tantex, that she was not provided with a drink or toilet break on various shifts where she worked more than 4 hours.

Tantex’s business model utilised Facebook as their primary means of communication with employees. A Facebook post by Tantex’s business manager stated that the 10-minute toilet and drink break, would be the only time employees could have a drink or go to the toilet. The General Manager also wrote on the Facebook page, “I hope to god you don’t get thirsty on your next shift because we just won’t be able to allow a drink. Fair is fair right?”.

Further, Tantex prohibited employees from calling in sick after 10:00pm the day prior to their rostered shift if they were rostered on the morning shift. Tantex also prohibited employees from swapping shifts or calling in sick on public holidays (including on Christmas and Boxing Day).

Notably, there was evidence of passive aggressive messages from Tantex to employees reprimanding them for taking sick leave or requesting breaks on shift. Screenshots of these posts were sent to the Retail and Fast Food Workers Union Incorporated (Union), the first applicant in the matter.

The Union filed a claim in the Federal Court that Tantex had not provided employees with the 10-minute toilet and drink break in breach of clause 29 of the Enterprise Agreement. The Union submitted that Tantex had made misrepresentations about workplace rights and had breached (among other clauses), section 345 of the FW Act.

Decision

Justice Logan held that Tantex had contravened clause 29 the Enterprise Agreement and breached the terms of FW Act by failing to provide 10-minute paid toilet and drink breaks to Ms Staines for her shifts of four (4) hours or more.

Justice Logan held that Tantex’s misrepresentations about employee entitlements was a reckless act amounting to a “false representation about the rights of its employees”, including not accepting sick calls past 10:00pm which was in contravention of employee entitlements to paid personal leave. He ruled that “there is an element of cruelty in a threat that entails denying to a worker on a shift of up to and including 4 hours duration no opportunity either to take a drink or to go to the toilet outside a designated 10 minute break.”

Justice Logan held that Tantex’s reckless and false misrepresentations prohibiting the taking of 10-minute breaks was an intentional act by Tantex to prevent employees from exercising their workplace rights.

In deciding what pecuniary penalties should be ordered, Justice Logan considered that McDonalds was not a “9-to-5” business, with a workforce that was largely comprised of adolescents, and there was a complex system of rostering requiring a particular crew composition for each shift. Justice Logan indicated that these circumstances presented certain managerial issues and a greater need for worker consistency and may “explain Tantex’s conduct but they do not excuse it”.

However, Justice Logan indicated that Tantex ultimately had a responsibility to correctly apply the relevant legislation regarding employee entitlements, and to make accurate statements about its statutory obligations, all of which Justice Logan held it failed to do.

In determining the appropriate penalty to impose on Tantex, Justice Logan considered the contrition of Tantex, the significant media attention which was adverse to Tantex’s interests, and a voluntary payment of compensation from Tantex to Ms Staines. Notwithstanding, Justice Logan concluded that the severity of the breach and the impact on the employees meant that imposing no penalty was not a suitable option. On this basis, Justice Logan ordered a total sum of $92,000 in penalties against Tantex.

Take Home Messages

This decision demonstrates that even one of the largest fast-food corporations in the world is not exempt from complying with their legal obligations and rights to employees.

The case serves as a timely reminder for employers that there are significant penalties for taking an action which contravenes employees entitlements prescribed under governing industrial instruments such as enterprise agreements and infringing workplace rights pursuant to the FW Act regardless of whether the employee is state or federal based.

Further, employers are reminded that they have a duty of care under work health and safety legislation to ensure that the health and safety of employees is not put at risk of harm and that a safe work environment is maintained. While this decision does not deal with work health and safety, it is arguable that Tantex’s actions may be in breach of work, health and safety regulations.

For more specific information on any of the material contained in this article please contact Virginia Liu on +61 8 8210 1279 or vliu@normans.com.au or Thomas Tagirara on +61 8 8217 1337 or ttagirara@normans.com.au.