UNDERSTANDING THE BETTER OFF OVERALL TEST (BOOT)
The Better Off Overall Test (BOOT) is commonly misunderstood in enterprise bargaining. With the recent introduction of the Fair Work Legislation Amendment (Secure Jobs Better Pay) Act 2022, there are a number of changes proposed to the BOOT. The purpose of this article is to assist those involved in enterprise bargaining to better understand the practical impacts of the BOOT in enterprise bargaining negotiations.
What is the BOOT?
The Better Off Overall Test (BOOT) is designed as a safeguard in the Australian workplace relations system to ensure workers don’t receive entitlements in enterprise bargaining that are less than what they would receive under the relevant modern award. The BOOT requires an employer who is submitting an enterprise agreement for approval to the Fair Work Commission (FWC) to identify terms in the proposed new agreement that are either more or less beneficial than those under the relevant modern award. The FWC will only approve an enterprise agreement if it is satisfied that each award covered employee and each prospective award covered employee would be better off overall if the agreement applied to the employee than if the relevant modern award applied to the employee.
Common misconceptions that arise regarding the BOOT in enterprise bargaining
Despite the key role the BOOT plays in the Australian workplace relations system, it is regularly misunderstood or confused in bargaining by both employers and bargaining representatives. Here we explore the top 3 misconceptions that arise around the BOOT in enterprise bargaining and some key practical takeaways that can assist those involved in enterprise bargaining to ensure everyone has an accurate understanding of the BOOT in practice.
1. The BOOT is not a comparison against the existing enterprise agreement
The BOOT being referred to as a comparison against the existing enterprise agreement would be one of the most regular misunderstandings that arise. This often leads to protracted negotiations, as the BOOT being compared against the existing enterprise agreement can produce a very different outcome when comparing it correctly against the relevant modern award. Comparing against the existing enterprise agreement to the proposed terms of the new enterprise agreement, leads to an erroneous view that both employers and employees cannot trade-off, amend or reduce the terms and conditions included in the enterprise agreement. It provides a false understanding that terms in an existing enterprise agreement can never be changed, as the incorrect view is held that employees cannot receive less than the terms they currently receive under the existing enterprise agreement. This misconception limits genuine enterprise bargaining, as it may be the case that current terms and conditions are no longer relevant or valued by employees and need to be traded-out in favour of more beneficial terms in a new agreement.
KEY TAKEAWAY: Ensure that the BOOT is understood as a comparison between the existing enterprise agreement and the relevant modern award, so genuine bargaining is not restricted or limited by practical misunderstandings of the BOOT.
2. The BOOT does not require all terms and conditions proposed in a new enterprise agreement to be more favourable than the relevant modern award
The BOOT is a global assessment that compares the terms of the relevant modern award to the proposed enterprise agreement to ensure that on balance, those terms are more favourable to employees overall. This may mean that for example, employees receive a higher hourly rate of pay in comparison to the award, but they may not receive penalty rates that they may be eligible for if engaged under the relevant award. The higher hourly rate of pay, on balance, provided it is substantial enough, will mean that employees receive more favourable terms engaged under the proposed new enterprise agreement then they would if they were only employed under the relevant modern award.
KEY TAKEAWAY: Ensure that the global nature of the BOOT test assessment is understood to enable flexibility in the way terms and conditions are negotiated in enterprise bargaining.
3. The employer does not determine the BOOT
The BOOT is not determined by the employer, which is a misunderstanding that regularly arises in bargaining. The commonly held misconception is that the employer will approach the BOOT as something they have responsibility for determining as the final decision-making power or authority. The BOOT is an assessment undertaken by the Fair Work Commission (FWC), with the employer responsible for facilitating that assessment by providing the FWC with relevant information regarding the terms and conditions of employment in the proposed new enterprise agreement against the relevant modern award. The ‘test time’ for the BOOT is the time that the employer lodges the application for approval of a new enterprise agreement to the FWC. The BOOT is not a continuous test that remains the responsibility of the employer indefinitely. However, the BOOT should always serve as a reference point when employers approach decision-making in relation to terms and conditions of employment (ie: it may be relevant for example when entering into an Individual Flexibility Arrangement (IFA) with an employee).
KEY TAKEAWAY: Ensure that the employer understands that the decision-making power in determining the outcome of the BOOT is held and made by the Fair Work Commission.
Changes to the BOOT scheduled for 6 June 2023
The Fair Work Legislation Amendment (Secure Jobs Better Pay) Act 2022 proposes a number of changes to the BOOT, many that have been implemented last year and take effect from 6 June 2023:
Emphasise the existing provisions of the Act that the FWC is to undertake the BOOT as a global assessment, not an item-by-item or line-by-line comparison;
The FWC only needs to apply the BOOT to reasonably foreseeable patterns or types of work under the proposed new agreement, removing the risk that a remote example or scenario of work could compromise the approval of the entire agreement;
The FWC is provided the powers to amend or remove terms included in the proposed agreement if they don’t meet the BOOT, avoiding the need for employees to vote multiple times on an agreement if there are changes required; and
A new pathway for reconsideration of the BOOT has been established, to enable new employees engaged after the agreement has already been made to apply for a review of the BOOT.
Employers will need to consider the BOOT process carefully before they submit an enterprise agreement to reduce the risk of changes being made during the FWC approval process. Most importantly, it will be essential that those involved in bargaining have a good understanding of the purpose and impact of the BOOT, so misunderstandings do not get in the way of a well-managed, productive and genuine approach to enterprise bargaining.
Are you preparing for enterprise bargaining? Access a copy of our complimentary guide as a free digital download - Preparing for Enterprise Bargaining here: https://www.humanifyhr.com.au/hr-resources/p/a-guide-preparing-for-enterprise-bargaining
More information
If you enjoyed reading this article you might find some of our other (mostly FREE!) HR tools and resources available for download on our website of value, including:
· Guide: Preparing for Enterprise Bargaining
· Checklist: Preparing for Enterprise Bargaining
· Calendar: Workplace Relations Changes Calendar 2024
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Important Disclaimer: The material contained in this article is provided as general information only. It is not, nor is intended to be legal advice. If you wish to take any action based on the content of this article we recommend that you seek professional advice.
