Ways to pass the Better Off Overall Test

Note: these are for guidance only. They do not show every possible example. The employer may take different action to fix a problem.

XYZ Pty Ltd (XYZ) lodges an application for a single enterprise agreement. A Member assesses the application and sees that:

• the rates of pay in the agreement are 5% above the minimum rates in the relevant award.
• the entitlements in the agreement are the same or more beneficial than the award.
• the agreement has a reduced Saturday penalty rate of 110% compared with 125% in the award.

Why this does not meet the BOOT

Under the agreement, it is normal for employees to work between Monday and Saturday. The rate of pay is 5% above the award but the penalty rate for Saturdays is lower. Employees who work mostly or only on a Saturday will not be better off overall.

Action

The Member invites XYZ to provide an undertaking to address this issue.

Proposed and alternative undertakings

XYZ provides the following: ‘XYZ undertakes that all employees required to work on a Saturday will be paid a penalty rate of 125%. This penalty rate replaces the penalty set out in Clause X.’

The Member accepts this undertaking.

Other options the Member may accept:

• ‘XYZ provides an undertaking that increases the base rates of pay’.
• ‘XYZ provides an undertaking that increases the Saturday penalty rate to 120%’.

They also place a limit on how many Saturday shifts an employee can work in a pay period.

The Member cannot accept an option that would make employees worse off, such as:

• ‘XYZ provides an undertaking that decreases the base rates of pay but increases the Saturday penalty rate’.

DEF Pty Ltd (DEF) lodges an application for a single enterprise agreement. A Member assesses the application and sees that:

• the pay rates for Junior Apprentices are less than the minimum apprentice rates in the relevant award.
• all other entitlements in the agreement are the same or more beneficial than the award.

Why this does not meet the BOOT

DEF employs Junior Apprentices. These Junior Apprentices are not better off overall, as their rates of pay are below the award minimum.

Action

The Member invites DEF to provide an undertaking to address this issue.

Proposed undertaking

DEF provides the following undertaking:

‘Notwithstanding Schedule X (which contains the rates of pay for Junior Apprentices), Junior Apprentices will be paid according to the following table:

The Member accepts this undertaking. It gives Junior Apprentices rates of pay at least 10% above the award minimum.

GHI Construction Enterprises Pty Ltd (GHI) lodges an application for a single enterprise agreement. The agreement covers employees working in the building and construction industry. The relevant modern award is the Building and Construction General On-site Award 2020 (Building Award).

A Member assesses the application and sees that:

• the agreement offers rates of pay that are 10% above the award minimum.
• the agreement incorporates the Building Award and most entitlements are the same or more beneficial than the award.
• under the agreement, employees are only entitled to overtime after they have worked 50 hours in any one week.

Why this does not meet the BOOT

Employees engaged by GHI regularly work beyond 38 hours a week. Under the Building Award, employees would be entitled to overtime payments for hours in excess of ‘ordinary hours’ (38 hours per week).

Under the terms of the agreement, employees can work an additional 12 hours at ordinary pay before they are entitled to overtime pay.

If an employee works between 38 and 50 hours a week, they do not receive an overtime payment. In this industry, employees often work beyond their ordinary hours on a regular basis. The pay rates in the agreement are not high enough to compensate for the absence of an overtime payment.

The Member is concerned that the employees are not better off overall.

Action

The Member invites GHI to provide an undertaking to address this concern.

Proposed undertaking

GHI provides the following undertaking:

‘Notwithstanding Clause X, all time worked beyond an employee’s ordinary time of work as specified in Clause X (i.e. 38 hours per week) will be overtime and must be paid for at the appropriate overtime rates in the Building Award.’

The Member accepts this undertaking because the whole agreement makes employees better off overall.

GHI Construction Enterprises Pty Ltd (GHI) lodges another application for a single enterprise agreement. It covers their administration employees who are covered by the Clerks – Private Sector Award 2020 (Clerks Award).

A Member assesses the application and sees that:

• the agreement offers rates of pay 5% higher than the award minimum.
• the rates of pay under the agreement include all allowances that otherwise would have been payable under the Clerks Award.
• all entitlements except allowances are the same or more beneficial than the award.

Why this does not meet the BOOT

The Member is concerned that the pay rates may not compensate employees for including allowances.

Action

The Member invites GHI to provide a formal response (‘submission’) or undertaking to address this concern.

GHI provides a written submission. It says that for its operations:

• allowances for first aid, higher duties and meals are relevant.
• allowances for clothing and footwear, vehicle, living away from home and transport reimbursement for shiftwork are not relevant.

Therefore, employees would not be entitled to all these allowances under the Clerks Award.

The Member accepts GHI’s submission. They invite GHI to provide an undertaking in respect of the first aid, higher duties and meal allowances.

Proposed undertakings

GHI provides the following undertakings:

Employees are entitled to payment of the following allowances in accordance with the provisions of the incorporated Clerks Award:

• First aid allowance (Clause 19.2)
• Higher duties allowance (Clause 19.3)
• Meal allowance (Clause 19.5)

This undertaking supersedes the provisions of Clause X (which provides that the rate of pay is inclusive of all allowances in the award).’

The Member accepts the undertaking. They are satisfied that employees are better off overall with the undertaking plus the 5% increase in rates of pay under the agreement.