Australia: The future of BOOT and loaded rates in enterprise agreements

Around one-third of all employees in the Australian labour market are covered by enterprise agreements.1

Enterprise bargaining is a central feature of the Fair Work Act 2009 (Cth) (FW Act), and is regulated by Part 2-4. The objects of the Part include to provide a simple, flexible and fair framework that enables collective bargaining in good faith, and to enable the Fair Work Commission (FWC) to facilitate good faith bargaining.2

Between 2011 and 2013, the FWC had 15,652 applications for approval of enterprise agreements. Of those, 14,921 were approved. Only 608 applications were withdrawn.3

Contrast this with the figures between 2014 and 2015, where there were 11,451 applications for approval, and 1,002 of those applications were withdrawn. 4


In October 2014, the FWC piloted an agreement triage process, which the FWC said was to promote greater consistency and improve timeliness in enterprise agreement approval decisions.5 The triage process involves a team of administrative staff analysing agreements, including by completing a checklist developed by FWC members for the purposes of the BOOT.

Initially, the triage process was confined to enterprise agreements in a few industries and states, but was progressively expanded. By the end of November 2016, the triage process was applied to all applications for approval of agreements.

However, more often than not issues with approvals of agreements are related to the "Better Off Overall Test" (BOOT). The BOOT provides a wider scope for the FWC to reject agreements at the approval stage when compared with the former "no-disadvantage test", because it requires an employer to show the agreement passes the BOOT.


Before approving an enterprise agreement, the FWC must be satisfied that the agreement passes the BOOT.6 An enterprise agreement passes the BOOT if the FWC is satisfied, as at the 'test time', that each award covered employee, and each prospective award covered employee, would be better off overall if the agreement applied to the employee than if the relevant modern award applied to the employee.7

The High Court has held that the BOOT requires an overall assessment to be made. This requires the identification of terms which are more beneficial for an employee, terms which are less beneficial, and an overall assessment of whether an employee would be better off under the agreement.8

The BOOT has recently come under scrutiny where loaded rates in enterprise agreements are concerned. Loaded rates of pay generally appear as compensation for benefits under the relevant modern award that are not separately provided for by the agreement.Typical award benefits that could be incorporated into a loaded rate include:

  • shift allowances;
  • weekend penalties;
  • payment for reasonable additional hours;
  • payment for overtime (which may include overtime rates for work performed in addition to the total of ordinary hours to be worked under the award each week and for work outside the span of ordinary working hours under the award); and
  • work-related allowances.

How do you apply the BOOT where loaded rates are used?

On 28 June 2018, the Full Bench handed down its decision in the Loaded Rates Case.9 In short, the Full Bench confirmed that it is only possible in some circumstances for loaded rate structures to pass the BOOT.  

Helpfully, the Loaded Rates Case set out several principles regarding the operation of the BOOT in respect of loaded rates in enterprise agreements, and as a result the position is well settled. The principles set out by the Full Bench are summarised as follows.10

  • The BOOT requires every existing and prospective award covered employee to be better off overall under the agreement for which approval is sought than under the relevant modern award. If any such employee is not better off overall, the agreement does not pass the BOOT.
  • Section 193(7) of the FW Act permits the FWC to assume that if a class of employees to which a particular employee belongs would be better off under the agreement than under the relevant modern award, then the employee would be better off overall absent evidence to the contrary. However, it will only be of utility if the agreement affects the members of the class in the same way such that there is likely to be a common BOOT outcome. If the FWC is not satisfied on the evidence that an existing or prospective award covered employee is not better off overall, the FWC cannot approve the agreement, at least not without undertakings or in the confined circumstances set out in s 189 of the FW Act.
  • The application of the BOOT to a loaded rates agreement will, in order for a meaningful comparison to be made, require an examination of the practices and arrangements concerning the working of ordinary and overtime hours by existing and prospective employees that flow from the terms of the agreement. This will likely require classes to be identified based on common patterns of working hours, considering evening, weekend and/or overtime hours worked.
  • The starting point for the assessment will necessarily be an examination of the terms of the agreement in order to ascertain the nature and characteristics of the employment for which the agreement provides or permits. For example, if an enterprise agreement makes express provision for employees to be required to work ordinary hours on weekends, those provisions cannot be ignored for BOOT purposes simply because the employer asserts it does not currently utilise those working hours or roster patterns.
  • In the case of existing employees, this may involve an examination of existing roster patterns worked by various classes of employees as at the test time. An effective comparison method could be to use sample rosters to compare remuneration produced by a loaded rates pay structure compared to the modern award. There may be objective evidence that a particular pattern of working hours or roster pattern permitted by an enterprise agreement is not practicable, or cannot or is unlikely to be worked.
  • In the case of prospective employees, the assessment will involve conjecture. With an enterprise operating at a defined workplace or workplaces, the FWC may be in a position to make sensible predictions about the basis upon which prospective employees might be engaged based on the roster patterns worked by existing employees. However, if a business is small and/or still at the development stage, or the agreement would cover a wider range of classifications, work locations and/or roster patterns not in existence as at the test time, useful predictions may not readily be drawn from how the existing workforce operates. In that situation the assessment will require an examination of the terms of the agreement in order to ascertain the nature and characteristics of the employment which the agreement provides for or permits.
  • If the information concerning patterns of working hours needed to assess whether a loaded rates agreement passes the BOOT is not contained in the employer's Form F17 statutory declaration accompanying the approval application, it may be necessary for the FWC to request or require the production of such information.
  • The BOOT involves making an overall assessment as to whether an employee would be better off under the agreement, which necessitates identification of the terms in the agreements which are more and less beneficial to the employee than under the relevant award.
  • The overall assessment required will be a mathematical one where the terms being compared relate directly to remuneration. The assessment will be more complex where the agreement contains superior entitlements which are non-monetary in nature, accessible at the employee's option or which are contingent upon specified events occurring.
  • In respect of non-monetary, optional or contingent entitlements in an agreement, the assumption cannot readily be made that they have the same value for all employees. With a contingent benefit, it will be necessary to make a realistic assessment about the likelihood of the benefit crystallising during the period in which the agreement will operate.
  • Where a loaded rates agreement results in significant financial detriment for existing or prospective employees compared to the relevant award, it is unlikely that a non-monetary, optional or contingent entitlement under the agreement will sufficiently compensate for the detriment for all affected employees such as to enable the agreement to pass the BOOT.
  • The Full Bench noted the BOOT becomes more difficult for casual employees. Principally this is because the casual loaded rate must account for the theoretical possibility a casual could be required to work weekends only.In those circumstances, unless the casual ordinary loaded rate matches the weekend penalty rates (which would be uneconomical), the agreement will not pass the BOOT. 


It is fair to say the statistics already show a decline in enterprise bargaining. The Loaded Rates Case demonstrates the difficulties with agreements that load up rates of pay to account for award penalty rates.

With the FWC's application of the BOOT becoming increasingly technical, there has never been greater uncertainty over the utility of enterprise bargaining. If your business is on the "enterprise bargaining merry go round", it may be time to consider, is there another way?


1 ABS 2016 Employee Earnings and Hours survey December quarter 2017

2 FW Act s 171

3 Fair Work Annual Report 2012-2013, page 25

4 Fair Work Commission submission to Education and Employment References Senate Committee Inquiry into penalty rates, page 18

5 Fair Work Annual Report 2016-2017, page 57

6 FW Act s 186(2)(d)

7 FW Act s.193(1). In the case of a greenfields agreement the test is applied only in respect of each prospective award covered employee for an agreement (s.193(3))

8 Re Armacell Australia Pty Ltd (2010) 202 IR 38 at [41], confirmed by the High Court in Aldi v SDA [2017] HCA 53 at [92] (Aldi)

9 Loaded Rates Agreements [2018] FWCFB 3610

10 Ibid at [115]

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions