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If you are an employer in the process of enterprise bargaining, you will inevitably encounter the better off overall test (BOOT) during your negotiations. In the context of an enterprise agreement, the BOOT is a mechanism the Fair Work Commission (FWC) uses to determine if relevant employees are better off under that enterprise agreement when compared with any applicable modern award. This article will explain the BOOT, its application to Australian employers and the effect of recent legislative changes.
What is the BOOT?
The FWC uses the BOOT to assess enterprise agreements against any relevant modern award. The BOOT considers:
- the terms of an enterprise agreement; and
- whether or not the terms are more or less beneficial to relevant employees compared to the terms in any applicable modern award.
The FWC does not conduct the BOOT as a line-by-line breakdown but rather as a holistic and overall analysis using those terms identified as more beneficial or less beneficial. This “global” test, as the FWC calls it, must satisfy the FWC that each award-covered employee, and any future award-covered employee, would be better off overall under that enterprise agreement than if that relevant award applied to the employee in question.
Moreover, the purpose of the BOOT is not to determine whether an employee is better off under an enterprise agreement in comparison with their current working conditions. Instead, the FWC makes the comparison with any relevant modern award.
The FWC will only approve enterprise agreements if they pass the BOOT at the test time. This was the point in time when the application for the approval of the relevant enterprise agreement was made. Further, enterprise agreements can apply to employees once it commences operation, which is after approval.
Changes to the BOOT
On 6 December 2022, the Federal Government passed the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 (‘the Act’) into law. The Act marks some significant reforms to Australia’s workplace relations system, including enterprise agreements and the BOOT. These amendments are intended to reduce the previous complexity surrounding the BOOT. The empower the FWC to:
- have a shortened approval process for enterprise agreements;
- simplify its use of the BOOT to increase flexibility and ensure a global analysis of relevant terms as outlined above;
- only consider reasonably foreseeable patterns of work (as opposed to hypothetical patterns of work or staff rosters) when applying the BOOT;
- have the ability to directly amend or remove a term in a draft enterprise agreement that fails to pass the BOOT; and
- have the ability to reassess the BOOT during the lifetime of a particular enterprise agreement if there have been material changes to any relevant circumstances or working arrangements.
As an employer, understand your essential employment obligations with this free LegalVision factsheet.
Key Takeaways
The BOOT requires employees to be ‘better off’ under an enterprise agreement compared to any relevant modern award that may apply. It is important to remember that the test:
- is used by the FWC to assess registered agreements against any relevant modern award;
- applies at the test time (the point in time when the application for the approval of the relevant enterprise agreement was made); and
- is a “global test,” meaning that the FWC does not conduct a line-by-line comparison but rather a holistic and overall comparison between the relevant terms.
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