Australia’s Fair Work Commission has introduced the Better off Overall Test with effect from 1 January 2010 to monitor the registered agreements of enterprises against awards. The BOOT test investigates each company agreement in relevance with industrial award to make it certain that in the registered pact the employee passes the better off overall test in order for the agreement to be granted (Stewart et al. 2014).
The Fair work Commission is a special tribunal set up to look after the industrial relations of Australia. It was a reformative venture of Australian government as a part of Fair Work Act 2009, the same Act that has passed the better off overall test. The Fair Work Commission of Australia is the successor of Australian Industrial Relations Commission and is responsible to monitor irregular industrial awards, fixation of minimum wage rates, enterprise agreements approval and dealing with complaints regarding unfair dismissal (Bray and Stewart 2013). The better off overall test has been introduced as a tool for enforcing these on the enterprises. Being an independent government supported body, the Fair Work Commission possesses the authority to control and implement provisions in regards to employment conditions, minimum wages, industrial action, enterprise bargaining and termination of employees (Capuano 2016). The better off overall test enables the FWC to impose the national regulations in the above-mentioned areas and if any enterprise is found to be disregarding these rulings and fails the test, FWC has complete authority to disapprove a proposed agreement of any company. The better off overall test permits conditions of industrial award though not the conditions of National Employment Standards (Ananian-Welsh and Gover 2015). The test is, however, based on the related modern award covering the employees who are to be covered under the agreement proposed by the particular enterprise.
Indeed the Fair Work Commission and the Better off Overall Test have been introduced with a noble intention of creating a national structure to regulate the Australian industrial regulation. However, there are several issues in the better off overall test and for those the Australian companies have been facing challenges. As a manager of a reputed business enterprise, I would like to address those areas that, according to me require modification. Since the better off overall test is the obligatory approval for any single enterprise doing business in Australia to pass their agreement, from a company perspective there are some disadvantages of the test.
This report is intended to address some key discussion points on Fair Work Commission and the Better off Overall Test. The report is to suggest some possible and necessary changes in the BOOT test along with to explore the impact that the legislation Fair Work Act 2009 has on Australian business industry. Finally, the report covers some important issues with examples of prominent enterprises that had suffered earlier due to the implementation of the Better off Overall Test.
The national tribunal of Australia maintaining workplace relations is known as the Fair Work Commission. This tribunal body was previously known as Fair Work Australia and commenced its operations from 1 July 2009 as the descendant of Australian Industrial Relations Commissions (abc.net.au 2017). Under the Fair Work Act 2009, the tribunal was created as the part of reformative actions of the Australian Rudd Government. This committee is an independent tribunal body with the responsibility to bring off an array of functions necessary to control the employee relations and administer the workplace relations in the industrial sector (actu.org.au 2017). The functions of Fair Work Commission entail the following aspects:
Source: fair work education seminar 2017. 2009 Fair Work Education Seminar. [online] Slideshare.net. Available at: https://www.slideshare.net/stevefanner/2009-fair-work-education-seminar [Accessed 10 May 2017].
The members of present Fair Work Commission had previously been a part of Australian Industrial Relations Commission. The commission hierarchy is structured into a President and several Commissioners and Deputy President. The General Manager of the commission is responsible for supervising all the activities and administration and is entitled to report to the President (Desir 2017).
The Fair Work Commission starts its proceedings when a complaint is lodged through the proper Commission form, following its procedures and according to the rules of Fair Work Commission drafted in 2013. The Commission, however, initiates reviews in accordance with annual wage and modern awards. The commission also ensures fair hearings providing equal opportunity to all the parties to put forward their complaints and offers impartial case dealings as per the law (abc.net.au 2017). Being under the Fair Work Act 2009, the Commission requires to strictly adhere to the Act in terms of being just and fair, taking prompt action, being informal and avoiding redundant technicalities, being transparent and last but not the least promoting cooperative and harmonious workplace relations.
The Better off Overall test has been introduced by the Commission to look after some of the particular responsibilities of FWC such as monitoring whether each of the employees are better off overall when they come under the proposed agreement (fwc.gov.au 2017). The test enables the FWC to investigate employee classes while applying for the Better off Overall Test. It will be assumed by the FWC, when the evidences are absent in contrary, that an Australian employee covered under industrial award is likely to be better off overall provided that their group of employees are likely to be better of overall comparing to the related modern award (fairwork.gov.au 2017). This test needs every employee covered under the award and the employees covered under prospective award to be better off overall when the test is being taken. The Better off Overall Test time refers to that point of time when a negotiating representative submits application to Fair Work Australia in order to get the approval of the agreement.
The Australian House of Representatives passed the Fair Work Amendment Bill 2015 on 11 November 2015 (hrlegal.com.au 2017). As the amendments state, the negotiation on greenfields agreements i.e. bargaining for projects yet to be started where the employers have employed none at present will not be regarded as good faith bargaining. In order to make the agreement, the employers need to present the agreement of the employee unions representing majority of the employees.
The FW Bill proves to be advantageous for the employers as it provides them with realistic timeframes at the time of negotiation and enable the employers to send their projected greenfields agreements to FWC to get approval even if no agreement had been arrived within the six months period of negotiation (hrlegal.com.au 2017). In the initial bill, this period was only six months.
The employer and employee relation is dealt with the Fair Work Act 2009. The Act aims to endow the employees with a safety net pertaining minimum working condition, makes the working arrangement flexible, ensures fairness in work practice and prevents any sort of discriminatory occurrence against employees (rcsa.com.au 2017). The Fair Work Act allows the Australian states to refer matters and issues to the federal government of Australia and the greatest impact of this Act is that a national system of workplace relations has been possible to form. Previously, there was no harmony in the workplace rules followed by the Australian organizations and mostly they were administered by individual states. This Fair Work Act 2009 is intended to create a central system for industrial relation regulation in Australia and when a state decides to pass on its powers to the national system of industrial relations; all the employees employed in that state are covered by this Act (Blewett 2017).
The Fair Work Act was implemented in two parts; its first part commenced on 1 July and the second part was put into effect in the next year. The Fair Work Act 2009 not only focuses on the employee relations in the Australian industrial sectors but also the labor hiring procedures as well as the contracting sectors comes under this act. In these matters, a company has to adhere to all the resources and references of the Fair Work Act available in the guides prepared by the Australian Government (Kollmorgen and Naughton 2009). The act intends to cover major part of the Australian workforce and especially the employers of ‘national system’ that include employers of a constitutional business firm, the Commonwealth or an authority of Commonwealth itself, employers employing flight crew offices, employees of maritime, workers working at overseas or interstate commerce or trade, a corporate body integrated in an Australian Territory. In addition, it the act also covers the employers who provide work in connection with some governmental, commercial or any other kind of activity undertaken by the employer in that Territory. Besides, the Act even applies to the trusts that are owned by a trustee belonging to the corporate world. However, the partnerships and sole-traders, excluding in Victoria and Northern Territory are not covered by the Act (Cameron, 2017). The Act, with its commencement, incorporated new eligibilities for unfair dismissal and its procedures, new laws for ‘transfer of business’, new and restructured ‘general protection’ regulations for independent contractors as well as regular employees, new workplace agreement system, newer bargaining rulings for proposed agreements and several other essential things related to business and industry.
Its one of the most viable feature is the inclusion of the provisions for ‘Safety Net’ that was facilitated in the second part of the Fair Work Act. This ‘Safety Net’ recommended that the Modern Award proposed by the Act would replace all the existing present awards and NAPSAS’s. The Australian Fair Pay and Conditions Standard is to be replaced by a single National Employment Standard and the minimum wage was also to be decided through Fair Work Australia.
The Australian supermarket Coles, a few times back was rejected of an agreement that they proposed to the Fair Work Commission of Australia because they have failed in the better off overall test. The Full Bench of FWC gave their decision against the favor of Coles where they had proposed an agreement in place of the applicable Award. The proposed agreement by the enterprise intended to reinstate a range of existing ones and cover around 77000 employees. The employees of that enterprise majorly voted the agreement and initially the agreement was approved too as it provided some undertakings by Coles that raised concerns regarding the BOOT test to address (Winckworth 2016). However, while BOOT required each award covered and even prospective award covered employee to become better off overall if the new agreement comes into effect substituting the Modern Award, the Coles’ proposed agreement did not seem to satisfy this. The major problem with Coles’ proposed agreement was although it looked after the interest of the majority of employees, it did not cause advantage for all. Even though the number of disadvantaged employees was very few in comparison, the BOOT had to reject the agreement, as some employees were not better off overall (actu.org.au 2017).
Source: Aitken 2017. Employment Contracts & The Importance of Getting them Right. [online] Slideshare.net. Available at: https://www.slideshare.net/ElizabethAitken1/employment-contracts-the-importance-of-getting-them-right [Accessed 10 May 2017].
In another case of an agreement proposed by the leading Swedish fashion brand H&M, the issues with BOOT test came into the light. The agreement put forward by H&M proposed lesser penalty rates for public holiday and weekend compensated by higher penalty rates on weekdays (Tredwell and Silcock 2016). However, proposition did not go well with the Fair Work Commission as they found it to be highly unfair for the employees who prefer to work for extended hours on Sundays and weekend in general. They also mentioned that this would cause no benefit to the casual employees in comparison to the Modern Award i.e. the General Retail Industry Award 2010 (Izzo 2016). After these concerns raised and validated by FWC, the company announced a range of undertakings to address them but eventually, the Deputy President of FWC found them insufficient and rejected the agreement. As for the undertakings, the FWC objected to them stating that those would cause, for casual employees financial detriment. This case clearly shows that any underpayment without sufficient compensatory arrangement cannot pass BOOT. Even the revisions and extensive negotiations will not help the enterprises to pass their agreements (Desir 2017).
Conclusion
Considering all the facts, it can be said that BOOT test has been introduced essentially to ascertain the professional security and suitable work condition for each employee of organizations. This ensures a safe and shielded working environment to all the Australian employees so that they can work without any worries and being concerned as there is BOOT to ensure that the members and staffs of the organizations are better off overall as by the agreements of the enterprises. From the two discussed above some important points can definitely be concluded.
In the Coles case, the negotiation on the part of employers show that it is important to ensure that every employee becomes better of overall if the proposed agreement takes place in comparison with the relevant and existing Modern Award. The failure of Coles to pass their agreement in BOOT clearly shows that FWC will not allow sacrifice of any small group of employees in front of the interest of the majority. The other case, with H&M there were extensive undertakings to mend the agreement so that it passes the BOOT. This was mainly because, in the first place while proposing the agreement to FWC, they might have overlooked the finer details of the rules and regulations of the BOOT. In addition, the case of H&M also helps to conclude that BOOT looks after the interests of all the employees so stringently that no underpayment lacking sufficient compensatory arrangement will be approved by BOOT.
The strengths of BOOT lie in that this has become a circle of protection for the Australian employees and provide them a sense of workplace security looking after to their rights. The failed cases of negotiations from influential business employers have proved that FWC is considerably stringent about any agreement or proposed change to the Modern Award regulations. However, it has some drawbacks also at least if viewed from an employer’s perspective. In the first place, FWC insists the application of the Modern Award to each organization and any changes to it i.e. the agreements have to pass the BOOT. Now, it may be the case that different enterprises may have different requirements as per changing business situations and their share of profit and loss. In those cases, an enterprise has to make amendments to awards to sustain the business. However, BOOT’s presence do not allow that and hence, the enterprise may have to go through rough phase. Secondly, the very rigid nature of BOOT have drawn criticism from the business houses because despite negotiations, at times it becomes difficult for the enterprises to pass the test.
However, if these perspectives are set aside, BOOT is supportive for the employees and provides a protecting shield to them in the industrial relations.
As per the adversities faced by the enterprises, I hereby would like to make some recommendations for BOOT. As a manager of a reputed business house, I feel the test should be a balanced one where the employers’ and the employees’ point of view will be equally taken care of. Besides, I feel that the test should incorporate enough provisions for the ongoing undertakings in order to make necessary amendments in the agreements. Where I admit that the employee’s interest comes at the top for employees, it is also a fact that the Modern Award policies are not possible for every employer to adhere irrespective of business situations. Therefore, I would like to recommend that the business situation of the enterprise should be taken into the consideration by FWC though for a temporary period with the guarantee to re-implement the Modern Award whenever the situation recovers.
References
abc.net.au 2017. Better Off Overall Test. [online] ABC News. Available at: https://www.abc.net.au/news/2017-04-04/better-off-overall-test/8415436 [Accessed 30 Apr. 2017].
actu.org.au 2017. Australian Council of Trade Unions; Submission to the Australian Industrial Relations Commission. [online] Available at: https://www.actu.org.au/media/285616/ACTU%20Submission%20-%20supplementary%2018%20Febraury%202009.pdf [Accessed 30 Apr. 2017].
Ananian-Welsh, R. and Gover, K., 2015. Commonwealth v Director, Fair Work Building Industry Inspectorate. Sydney L. Rev., 37, p.417.
Blewett, C. 2017. Learning from H & M’s BOOT Failure – IR Simplified. [online] IR Simplified. Available at: https://irsimplified.com.au/learning-h-ms-boot-failure/ [Accessed 30 Apr. 2017].
Bray, M. and Stewart, A., 2013. From the arbitration system to the Fair Work Act: The changing approach in Australia to voice and representation at work. Adel. L. Rev., 34, p.21.
Cameron, C. 2017. UNDERSTANDING THE FAIR WORK ACT In Recruitment, On-hire & Contracting IT Industry. [online] Available at: https://www.rcsa.com.au/documents/Fair_Work/Overheads%20-%20RCSA%20Fair%20Work%20%20Education%20Briefings%20IT%20Specific.pdf [Accessed 30 Apr. 2017].
Capuano, A., 2016. Giving Meaning to’Social Origin’in International Labour Organization (‘ILO’) Conventions, the Fair Work Act 2009 (Cth) and the Australian Human Rights Commission Act 1986 (Cth):’Class’ Discrimination and its Relevance to the Australian Context.
Desir, B. 2017. H&M enterprise agreement fails BOOT – National Retail Association. [online] National Retail Association. Available at: https://www.nra.net.au/hm-enterprise-agreement-fails-boot/ [Accessed 30 Apr. 2017].
fairwork.gov.au 2017. Welcome to the Fair Work Ombudsman website. [online] Fair Work Ombudsman. Available at: https://www.fairwork.gov.au/about-us/legislation [Accessed 30 Apr. 2017].
fwc.gov.au 2017. How the Commission works. [online] FWC Main Site. Available at: https://www.fwc.gov.au/disputes-at-work/how-the-commission-works [Accessed 30 Apr. 2017].
hrlegal.com.au 2017. Changes to the Fair Work Act and Greenfields Agreements. [online] Hrlegal.com.au. Available at: https://www.hrlegal.com.au/news-detail.php?Changes-to-the-Fair-Work-Act-and-Greenfields-Agreements-67 [Accessed 10 May 2017].
Izzo, L., 2016. Employment: The casual conundrum: Casual employment in the fair work world. LSJ: Law Society of NSW Journal, (21), p.82.
Kollmorgen, S. and Naughton, R. 2009. “The BOOT” Practical Operation Of The Better Off Overall Test – Employment and HR – Australia. [online] Mondaq.com. Available at: https://www.mondaq.com/australia/x/79602/employee+rights+labour+relations/The+BOOT+Practical+Operation+Of+The+Better+Off+Overall+Test [Accessed 30 Apr. 2017].
rcsa.com.au 2017. OVERVIEW OF FAIR WORK AUSTRALIA AND THE FAIR WORK OMBUDSMAN. [online] Available at: https://www.rcsa.com.au/documents/Fair_Work/Overview%20of%20FWA%20and%20FWO.pdf [Accessed 30 Apr. 2017].
Stewart, A.J., Bray, M., Macneil, J. and Oxenbridge, S., 2014. ‘Promoting cooperative and productive workplace relations’: exploring the Fair Work Commission’s new role.
Tredwell, K. and Silcock, J. 2016. Major Australian retailer struggles to give employees ‘better off overall’ under new agreement – Hall & Wilcox. [online] Hall & Wilcox. Available at: https://www.hallandwilcox.com.au/major-australian-retailer-struggles-to-give-employees-better-off-overall-under-new-agreement/ [Accessed 30 Apr. 2017].
Winckworth, J. 2016. Coles – the BOOT needs to fit all feet (not just the majority) – Knowledge – Clayton Utz. [online] Claytonutz.com. Available at: https://www.claytonutz.com/knowledge/2016/august/coles-the-boot-needs-to-fit-all-feet-not-just-the-majority [Accessed 30 Apr. 2017].
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