BOOT Doesn’t Always Need to Fit

Sunnyhaven Limited [2012] FWAFB 9086 (1 November 2012)

Normally, the “better off overall test” (BOOT) has to be applied, and passed, before Fair Work Australia can approve an enterprise agreement. This is done by comparing and contrasting the proposed agreement with the modern award that otherwise would apply. But what to do when there is no award?

A full bench of FWA has overturned a commissioner’s decision to reject such an agreement. The commissioner believed without an award, there could be no test; and without a test, she could not approve the agreement. But the full bench disagreed. In particular, the bench said “Nothing in the Act prevents the making of enterprise agreements which cover, in whole or in part, employees who are not award covered employees or prospective award covered employees.”

The bench went on point out specific parts of the Act which clearly contemplated such a situation, and dismissed the commissioner’s concerns completely. The correct view, the bench said, “is the better off overall test has no application in applying the statutory tests for approval of an agreement of that type.” The test, they said, “is directed to protecting the terms and conditions of award covered employees.”. This simply didn’t arise in this case.

The bench checked the agreement against the National Employment Standards and, apart from one minor change, approved the agreement as it had been presented. This is an important decision because it clarifies that award free employees can still have an enterprise agreement and that could prove very useful to bed down entitlements and obligations of award-free employees.