Master the Better Off Overall Test (BOOT) for Enterprise Bargaining Success

Common defects that can cause an agreement to fail the BOOT or require undertakings include:

Reduced or Omitted Award Entitlements:
– Lower casual or part-time minimum engagement periods or overtime provisions.
– Omission or reduction of specific allowances or penalty rates.
– Inadequate safeguards for cashing out annual leave.

Issues with Loaded/Flat Rates:
– Failing to ensure all employees (especially casuals) are better off across all their work patterns.
– Not including adequate reconciliation terms to cover any shortfalls compared to the award.

Insufficient Detail in Form F17:
Not clearly explaining how the agreement ensures employees are better off overall compared to the relevant award.

Read more at FWC website

Yes, superannuation should be included in BOOT calculations. The Fair Work Commission (FWC) conducts a global assessment when evaluating the Better Off Overall Test, meaning they consider the total value of all employment conditions together rather than comparing individual entitlements in isolation. This comprehensive approach ensures employees receive an overall package that leaves them better off than under the relevant modern award.

As superannuation is a National Employment Standard (NES) under the Fair Work Act 2009, it forms part of the minimum safety net and represents a quantifiable monetary benefit. Excluding superannuation from BOOT calculations would result in an incomplete assessment.

“Reasonably foreseeable” work patterns are:
– The realistic types of employment (e.g., full-time, part-time, casual).
– The probable working arrangements (e.g., typical shift patterns, likelihood of overtime, weekend work) that are expected to occur under the agreement at the time it is made.

Impact on BOOT Assessment:
The Secure Jobs, Better Pay Act clarified that the Fair Work Commission’s global assessment for BOOT must focus on these foreseeable patterns.
This means:
– The assessment is less about purely hypothetical or unlikely scenarios.
– Employers need to demonstrate the agreement leaves employees better off across all probable working arrangements relevant to their workforce.

The FWC conducts a global assessment, considering all terms:

Emphasis on Financial Benefits:
While non-financial benefits (e.g., increased flexibility, extra leave) are considered, the FWC places substantial weight on tangible financial entitlements.

Offsetting Detriment:
Significant financial detriment compared to the award is unlikely to be offset by non-monetary terms unless those terms are of considerable value and genuinely accessible to the employees affected.

Scrutiny of Non-Financial Terms:
Contingent, discretionary, or not widely utilised non-financial benefits may be viewed critically if used to justify lower financial terms.

Overall Outcome:
The goal is to ensure employees are genuinely better off overall, with a strong focus on their financial position.

See Case Examples

Yes, predictive analytics and sophisticated scenario modelling can play a valuable role, provided the methodology is transparent and the assumptions are reasonable.

Defining “Reasonably Foreseeable”:
The Secure Jobs, Better Pay Act amendments direct the FWC to consider patterns of work that are “reasonably foreseeable.” Predictive analytics, based on historical data, business forecasts, and industry trends, can help define these patterns with more objectivity than simple assumptions.

Modelling Multiple Scenarios:
Instead of just a few static roster examples, scenario modelling can generate a wider range of potential work patterns and their financial outcomes under both the award and the proposed agreement. This can provide a more comprehensive view of potential BOOT impacts.

Identifying Edge Cases:
Analytics might help identify less obvious but still foreseeable work patterns where certain employees could be disadvantaged, allowing employers to address these proactively.

FWC’s View:
Transparency is Key:
The FWC would likely view such approaches positively if the underlying data, assumptions, and methodology are clearly explained and robust. “Black box” analytics without clear justification would be less persuasive.

Evidence-Based:
It strengthens the employer’s assertion that they have thoroughly considered all reasonably foreseeable circumstances.

Not a Replacement for Global Assessment:
While helpful, analytics support the global assessment; they don’t replace the FWC’s overall judgment. The outcomes still need to be common-sense checked.

Supporting Form F17:
The outputs can be powerful supporting evidence for the claims made in Form F17.
Using such tools can demonstrate a higher level of diligence in assessing BOOT compliance.

The FWC’s new model terms (effective February 26, 2025) provide standardised clauses for:
* Individual Flexibility Arrangements (IFAs)
* Consultation
* Dispute Resolution

Benchmark Clauses:
While parties can draft their own terms that meet legislative minimums, these model terms act as a benchmark.

IFA “BOOT-like” Test:
The model flexibility term specifically requires that any IFA made under it must leave the individual employee better off overall than if no IFA were agreed to. This is a BOOT-like assessment at the individual IFA level.

Overall Agreement BOOT:
The existence of these model terms does not fundamentally change how the FWC applies the BOOT to the entire enterprise agreement. However, ensuring that the agreement’s flexibility, consultation, and dispute resolution terms (whether model or custom) meet all legislative requirements is essential for the overall agreement’s approval, which includes passing the BOOT.

Read more here: Fair Work Commission – FWC Bulletin Volume 3/25

When seeking approval for an enterprise agreement (using Form F16), employers must also submit Form F17 (Employer declaration).
Key aspects of Form F17 include:

Identifying Relevant Awards:
Clearly stating the modern award(s) that would cover the employees.

Outlining Comparisons:
Detailing how the agreement’s terms are more beneficial than the award(s).
Specifying any terms that are less beneficial than the award(s).
Identifying any award conditions omitted from the agreement.

Supporting Documentation:
Often, employers are expected to provide supporting documents like detailed pay modelling spreadsheets to substantiate their claims that employees are better off overall.

Correct Form Version:
Ensure the correct version of Form F17 is used as it can vary based on specific circumstances (e.g., greenfields agreements).

See FWC Form selector

For enterprise agreements made on or after June 6, 2023, the Fair Work Commission (FWC) has the power to reconsider whether an already approved agreement passes the BOOT.

Circumstances for Reconsideration:

1. A particular pattern or kind of work, or a specific type of employment, was not properly considered by the FWC during the initial approval process.

2. There has been a material change in working arrangements or circumstances since the agreement was approved that is relevant to the BOOT assessment for certain employees.

Process:
An application for reconsideration can be made by an affected employee, an employer covered by the agreement, or an employee organisation covered by the agreement. To apply for an application for reconsideration, used Form F85.

If, upon reconsideration, the FWC has concerns that the agreement does not pass the BOOT for certain employees, it may seek undertakings from the employer or amend the agreement to address those concerns.

For Greenfields agreements (made for a new enterprise before any employees are hired), the BOOT is applied prospectively. The Fair Work Commission (FWC) assesses whether the terms of the agreement would make prospective employees better off overall compared to the relevant modern award(s) that would cover them.

Key considerations include:

Anticipated Workforce:
The FWC considers the likely classifications of employees to be hired and the types of work they will perform.

Relevant Awards:
The agreement is compared against the modern award(s) that would apply to those prospective roles.

Comprehensive Terms:
The agreement must still provide for terms and conditions that are, on balance, more beneficial than the award minima. This
includes pay rates, allowances, hours of work, leave entitlements, and other conditions.

No Actual Employee Detriment (Yet):
Since there are no current employees whose conditions can be directly compared, the focus is purely on the terms of the agreement versus the award for future hires. The employer must still convincingly demonstrate that these future employees will be better off.

Maximum Term:
Greenfields agreements made directly with a union generally have a nominal expiry date of up to four years. However, if made without union involvement (after a notified negotiation period), they may have a shorter maximum term, and the BOOT assessment remains critical.

For loaded or all-inclusive rates to pass BOOT, they need careful construction and robust justification:

Transparency and Clarity:
The agreement must clearly identify which specific award entitlements (e.g., specific penalties, allowances, overtime rates) are incorporated into the loaded rate. Vague “all-in” rates without itemisation are problematic.

Comprehensive Coverage:
The loaded rate must be high enough to ensure all employees, including casuals and part-timers, are better off across all reasonably foreseeable work patterns (including various shifts, overtime scenarios, and public holidays they might work).

Buffer/Margin:
Prudent employers build a sufficient buffer into the loaded rate above the aggregate award entitlements to account for variations in work patterns and future award rate increases during the life of the agreement.

Detailed Modelling:
Employers must provide comprehensive modelling demonstrating the loaded rate’s superiority against the award for all classifications and work scenarios.

Robust Reconciliation (if used):
If a reconciliation mechanism is included (to periodically check and pay any shortfall against the award), it must be clear, auditable, occur at reasonable intervals (e.g., quarterly or annually), and ensure prompt payment of any identified shortfall. It must guarantee employees are made better off, not just “no worse off.”

Employee Understanding:
Evidence that employees understood which entitlements were being absorbed into the loaded rate is beneficial

This scenario adds complexity, but the fundamental BOOT principles still apply:

Separate Comparisons:
The FWC will generally need to assess the agreement against each of the relevant modern awards that would otherwise apply to different classes of employees covered by the agreement.

Class-by-Class Assessment:
Each class of employees (e.g., administrative staff previously under the Clerks Award, operational staff previously under a Manufacturing Award) must be better off overall under the single agreement compared to what they would have received under their respective modern award.

No Cross-Subsidisation Detriment:
An agreement cannot make one class of employees significantly better off at the expense of another class being worse off than their individual award entitlements.

Employer Justification:
The employer (typically via Form F17 and supporting documents) must clearly identify all relevant awards and demonstrate how each group of award-covered employees is better off under the proposed single agreement. This may require more extensive modelling and comparison tables.

FWC Scrutiny:
The FWC will carefully check that no group of employees is disadvantaged by the consolidation into a single agreement structure.

Read more: Fair Work Commission Enterprise Agreements Benchbook

The FWC expects comprehensive and transparent financial modelling. While there isn’t a single mandated template, effective submissions generally include:

Individual Employee Analysis:
Ideally, modelling should demonstrate the impact on various individual, representative, or sample employees, rather than just broad averages. This should cover different classifications, pay levels, and employment types (full-time, part-time, casual).

Award Comparison:
A clear line-by-line comparison of each relevant pay component under the proposed agreement versus the applicable modern award. This includes:
– Base rates of pay.
– Overtime rates for various scenarios (daily, weekly, weekend, public holiday).
– Penalty rates (weekend, public holiday, shift penalties).
– All applicable allowances (e.g., leading hand, first aid, meal, travel).
– Leave loading.

Roster Scenarios:
Modelling across a range of “reasonably foreseeable” roster patterns, including typical, low-intensity, and high-intensity (e.g., peak season) work patterns.

Payable Hours & Earnings:
Calculations showing total earnings under the agreement versus total earnings under the award for identical roster patterns over a typical pay cycle or year.

Clear Assumptions:
Any assumptions made in the modelling (e.g., average overtime hours, shift distributions) must be clearly stated and justifiable.

Summaries:
A summary table showing the net financial outcome (e.g., dollar difference, percentage difference) for each scenario/employee modelled.
The FWC page “Check an agreement can pass the BOOT” emphasizes identifying more/less beneficial terms and detailing these in Form F17. Robust spreadsheets are the common method to provide this evidence.

Read More:
Fair Work Commission – Check an agreement can pass the BOOT
Fair Work Commission – Loaded rates of pay

A data-driven approach can significantly strengthen a BOOT strategy:

Before Bargaining:
Payroll & Roster Data:
– Analyse current work patterns: distribution of hours, overtime frequency and amounts, shift patterns (day, evening, night, weekend), public holiday work.
– Break this down by employee classification, employment type (FT, PT, Casual), and potentially department or location.
– Calculate current earnings under the award for representative employee groups based on this actual data.

Leave Utilisation:
Understand patterns of leave usage (annual, personal, long service).

Allowance Payments:
Track frequency and amounts of various allowances paid under the current award or EA.

Employee Demographics:
Age, length of service, employment status – can help understand the potential impact of different clauses on different cohorts.

During Bargaining (for Modelling & Strategy):
Projected Work Patterns:
If operational changes are planned, model how these will affect work patterns and thus BOOT calculations.

Costing Proposed Clauses:
Use the collected data to model the financial impact of proposed agreement clauses versus current award conditions for various scenarios.

Sensitivity Analysis:
Test how changes in assumptions (e.g., a 10% increase in weekend work) might affect BOOT outcomes for different employee groups.

Identifying “At-Risk” Cohorts:
Analytics can help pinpoint groups of employees who might be at risk of not being better off under proposed changes, allowing for targeted adjustments.

This data provides an evidence base for Form F17 and demonstrates due diligence in ensuring BOOT compliance.