IR Reforms: Changes to the BOOT Test

What has changed?

As part of the process of creating an enterprise agreement, the Fair Work Commission (FWC) applies what is known as the “Better Off Overall Test” (BOOT). The BOOT is used to compare the terms in a proposed enterprise agreement with the terms in the relevant modern award.

The Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 (Act) has simplified the operation of the Better Off Overall Test (BOOT) by clarifying that the BOOT is a global assessment, rather than a line-by-line analysis. That means that the FWC must take a global view of the proposed enterprise agreement when assessing whether an employee is better off overall under the proposed enterprise agreement as compared to their position if their employment was governed only by the applicable modern award.

These changes, in effect as of 6 June 2023, require the FWC as part of the BOOT assessment, to:

• only have regard to reasonably foreseeable patterns or kinds of work or types of employment, taking into account the nature of the enterprise to which the proposed enterprise agreement relates; and
• consider any views of the employer, employees and bargaining representatives noting if the common view is that the proposed enterprise agreement passes the BOOT, this must be afforded primary consideration.

The FWC may also amend an enterprise agreement during the approval process where it is necessary to address concerns the agreement does not satisfy the BOOT. Additionally, the FWC may amend or reconsider the enterprise agreement once in effect if relevant factors (such as other patterns or kinds of work) were not properly considered during the approval process or circumstances during the approval process have changed.

What does this mean for employers?

These changes provide employers with greater clarity on the application of the BOOT. It simplifies the enterprise bargaining process by enabling the FWC to amend proposed enterprise agreements without employees having to vote again. It also allows the bargaining parties to take a more global approach to the benefits of an enterprise agreement than was previously accepted by the FWC.

However, employers should be mindful of any terms in an enterprise agreement that could give rise to the FWC amending or reassessing it retrospectively.

This is article is part of DLA Piper’s IR reforms series.