Starting from June 6th, 2023, the Secure Jobs Better Pay Act is revising how employers and employees bargain and make agreements under the Better Off Overall Test (BOOT).
What is the Better Off Overall Test (BOOT)?
Within the business world, the word BOOT does not refer to your shoe, your car boot, or the re-boot of your favourite TV show. BOOT is an acronym that stands for the Better Off Overall Test and is used when reviewing an employee’s workplace entitlements.
Facilitated by the Fair Work Commission, the BOOT’s purpose is to ensure each employee covered by a registered agreement is better off overall when compared to their modern award.
To achieve this, the BOOT reviews an employee agreement, identifies the advantages and disadvantages of the agreement to the employee, and then completes an overall assessment to determine whether an employee is ‘better off’ under the agreement rather than under their relevant award.
The BOOT is only passed if the Fair Work Commission are satisfied that each employee, current and prospective, would benefit from the agreement compared to if the employee’s relevant modern award was applied.
For more information on what the BOOT is, please refer to the Fair Work Commission website.
Registered Agreement vs. Modern Award
When undergoing a BOOT, it is important to understand the difference between a registered agreement and a modern award.
When talking about a registered agreement we are referring to either an:
- Enterprise Agreement (EA);
- Collective agreements;
- Greenfields agreement (Not applicable for BOOT);
- Certified agreement;
- Australian workplace agreement (AWA); or a
- Individual transitional employment agreement.
Not all employers will have the above so when this is the case, we must refer to a modern award.
A modern award is the minimum that needs to be met for employee entitlements; these minimums are legislated rules set as per the Fair Work Act (2009) Cth. The modern awards outline the minimum payrates, conditions, entitlements (such as leave), and overtime, and are generally related to a specific industry.
Please note – some arrangements such as employees on an individual flexible agreement are omitted for the BOOT because it can be assumed the employee has been able to negotiate their working conditions.
If an employer wishes to have a registered agreement, certain criteria must be met when determining BOOT; below is a simple test example that is accessible from the Fair Work Commission website.
|Example||Does this pass the BOOT?|
|1. A majority of employees would be better off under the agreement.||No. All employees must be better off overall.|
|2. All employees will have the same benefits as the award.||No. The agreement must make employees better off overall.|
|3. The agreement reduces some entitlements but increases or adds other benefits.||Possibly. The new or increased benefits must make the employees better off than the award.|
|4. An entitlement in the agreement is less beneficial or more restricted than the same entitlement in the award.||Possibly. The Commission will assess the other entitlements in the agreement. If they provide enough compensation overall, the agreement may pass the BOOT|
|5. The agreement makes employees better off than the award but not better off than the current agreement.||Yes. The BOOT compares the agreement to the relevant award, not the current working arrangements.|
Remember – for the BOOT to be met the Commission must be satisfied that all employees are better off under the proposed agreement, and if not, amendments need to be made to the agreement or the agreement will be denied.
What Amendments Are Being Made to BOOT?
As of June 6th, 2023, the Fair Work Commission have made several changes to simplify the operation of the BOOT.
Amendments to the BOOT will allow the Fair Work Commission to:
- Change an agreement after it has been lodged (if the Fair Work Commission believes it does not pass the BOOT); and/or
- Reassess an agreement, even after it was approved, if circumstances have either changed or were not considered in the initial BOOT.
Additionally, the Fair Work Commission will have to consider the following factors when completing a BOOT:
- The advantages and disadvantages of the registered agreement compared to the employee’s modern award;
- The patterns, kinds of work, and employment types, that are relevant when the registered agreement is made; and
- The views of all parties (including employers, employees and any bargaining representatives), especially if the parties agree about whether the agreement passes the BOOT.
The Fair Work Commission has identified that the complexity of the BOOT may have resulted in long BOOT approval timeframes and a decrease in enterprise bargaining. By introducing these changes, the Fair Work Commission is hoping to provide clarity about how the BOOT is applied while simultaneously protecting employees.
For further information on the changes made to the BOOT, please refer to the Fair Work Commission website.
What Action Can I Take?
The BOOT predominantly is used for employees who are in the process of bargaining a new Enterprise agreement. However, as an employer you still need to make sure you are meeting the BOOT requirements with all your employees and perspective employees to avoid any repercussions.
If employers or employees are after additional information, here are some additional helpful links:
- The Department of Employment and Workplace Relations (DEWR) – provides information on Workplace Reform, Workplace Rights, Workplace Safety, and International engagement on labour issues.
- The Fair Work Commission website – provides information on enterprise agreements and additional information on the BOOT.
Contact Our Team
From a compliance stance, our team will continue to support you and make sure your employees are receiving the appropriate conditions and pay as per the minimum. If you have any questions regarding the BOOT or any of the other topics covered in this article, we are here to help! Please contact our offices on (03) 5221 6399 or at firstname.lastname@example.org.
This article was written by Auditor Miriam Hickey-Humble.
Disclaimer: this information is of a general nature and should not be viewed as representing financial advice. Users of this information are encouraged to seek further advice if they are unclear as to the meaning of anything contained in this article. Davidsons accepts no responsibility for any loss suffered as a result of any party using or relying on this article.
Fair Work Ombudsman, https://www.fairwork.gov.au/taxonomy/term/407
Fair Work Commission, https://www.fwc.gov.au/better-off-overall-test