New agreements and BOOT — what is compared?

Q&A

New agreements and BOOT — what is compared?

As those agreements that were made before the Fair Work legislation commenced start to expire, the issue of the Better Off Overall Test arises in the drafting of new agreements. The question of what is the relevant instrument for comparison arises — is it the provisions in the old agreement (transitional instrument) or those in the relevant modern award?

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As those agreements that were made before the Fair Work legislation commenced start to expire, the issue of the Better Off Overall Test (BOOT) arises in the drafting of new agreements. The question of what is the relevant instrument for comparison arises — is it the provisions in the old agreement (transitional instrument) or those in the relevant modern award?
 
This question was recently put to WorkplaceInfo.
 
We currently have a collective agreement with a nominal expiry date in September 2010. The current agreement contains a casual loading, shift penalties and weekend penalty rates that are significantly lower than the relevant provisions of the applicable modern award.
 
The applicable modern award contains transition provisions with respect to casual loading, shift and other penalties.
 
At this stage, the company has no intention of terminating the agreement because of the more favourable provisions (from the company’s perspective) currently contained in the agreement, however, we understand that after the nominal expiry date has passed either party can terminate the agreement.
 
If the employee representatives to the agreement are able to terminate the agreement after September 2010, we presume any proposed agreement will be subject to the BOOT.
 
In comparing the casual loading, shift penalties and other penalties in the applicable modern award, is the comparison against the actual modern award provision or the transitional provisions amounts?
 
An enterprise agreement passes the BOOT if FWA is satisfied, as at the test time, that each award-covered employee and prospective award-covered employee for the agreement would be better off overall if the agreement applied to the employee rather than if the award applied to the employee.
 
If the employee was covered by the award, the transitional provisions would apply, consequently the BOOT would be a comparison against the applicable ‘transitional provision’ amount provided by the modern award.
 
It should be noted that the minimum wage rates prescribed by the applicable modern award will prevail over the wage rates of an existing agreement if the rates in the agreement are less beneficial to the employee, as modern award wage rates form part of the ‘safety net’ (including the NES) under the Fair Work Act 2009.
 
Source: Paul Munro, IR Consultant.
 
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