Introduction
We assess all new or varied agreements to check they meet the requirements in the Fair Work Act. The agreement must make employees ‘better off overall’.
Content
To apply the Better Off Overall Test, a Commission 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. It is a global assessment where we consider whether any reasonably foreseeable employee is better off under the enterprise agreement than if the modern award applied.
We are required to consider factors such as:
- the more and less beneficial terms of the agreement compared to the relevant modern award
- the patterns or kinds of work, or types of employment, that are reasonably foreseeable at the time the agreement is made
- the views of the employer(s), employees and bargaining representatives, including giving primary consideration to a common view (if any) of bargaining representatives about whether the agreement passes the BOOT.
The Commission member must be satisfied that the agreement makes employees better off overall than if the relevant modern award applied.
Note: For agreements made before 6 June 2023 the previous BOOT test applies which requires the Commission Member to be satisfied, as at the time the application for approval was made, that each award covered employee, and each prospective award covered employee, would be better off overall under the agreement than under the relevant modern award.
When you apply using Form F17, you must show how the agreement compares to the relevant award(s).
Examples
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
- amend the agreement after seeking the views of the parties
- dismiss your application.
You need to start bargaining again if the Member dismisses your application.