The Commission assesses all new or varied agreements to check they meet the requirements in the Fair Work Act. The agreement must make employees ‘better off overall’.
To apply the Better Off Overall Test, the Member looks at:
- every term in the agreement that is more beneficial and every term that is less beneficial
- whether the agreement restricts how an employee may access any entitlement compared to the award
- whether there are any additional entitlements in the agreement
- whether any award entitlements are not included in the agreement.
The Member then decides whether every employee will be better off under the agreement.
The test does not have a set formula. The Member looks at the details of each agreement independently. They look at the impact of the agreement on:
- each award-covered employee
- each future ('prospective') award-covered employee
- anyone else the agreement covers including each employee who is not covered by any award ('award free').
The Commission must be satisfied that the agreement makes employees better off overall than if the relevant modern award applied.
When you apply using Form F17, you must show how the agreement compares to the relevant award(s).
These simple examples show when an agreement may pass the test.
|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.|
If your agreement does not pass the BOOT
If a Member believes the terms of your agreement may cause it to fail the BOOT, they may:
- ask you for further information to help them assess your agreement
- ask for a formal submission in writing to respond to a query
- invite you to provide an undertaking to address the issue
- dismiss your application.
You need to start bargaining again if the Member dismisses your application.