The recent Full Bench decision of the Fair Work Commission on the issue of loaded rates of pay, confirmed that when applying the Better Off Overall Test (BOOT) to the Enterprise Agreement (EA) loaded rates, not only must every current and prospective employee be better off overall, but the Commission is also interested in whether employees will be better off overall under all of the types of roster arrangements that are possible under the EA (as opposed to only the ones currently being worked).
This means that the hours an employee theoretically could work under your EA could be the matter which sinks the EA below the award safety net.
WHAT CAN YOU DO IF YOU WANT TO IMPLEMENT A SINGLE LOADED RATE OF PAY?
Consider adapting these practical measures to facilitate a smooth approval process:
- Limit arrangements for when rostered hours of work are performed. If it is not necessary to have a long span of hours, or ordinary weekend hours, seek to reduce how these can be rostered under the single loaded rate arrangements. It is better to limit the scope for application so that a BOOT test of loaded rates of pay does not include shifts that are rarely or never worked.
- Limit the amount of overtime hours to be worked. If employees are required to work a maximum of three hours overtime per week, then consider including this (with a buffer) in the EA. By limiting the number of overtime hours that can be worked without penalty, BOOT calculations become more favourable.
- Provide sample rosters. If you can demonstrate that, in a particular business, the same regular roster has been universally and consistently worked, gather comprehensive evidence of this to put before the Commission. If a long standing and consistent rostering approach can be demonstrated, the Commission will be more likely to apply the BOOT to the rosters worked in the business, as opposed to the hours that can be theoretically worked by employees.
- Don’t rely on non-monetary or ‘contingent’ benefits. The Commission has demonstrated a reluctance to consider nonmonetary benefits when assessing whether employees are better off overall under an EA. The same applies to contingent benefits like paid parental leave, additional personal leave and redundancy pay. The Commission cannot assume all employees will benefit from these entitlements and will accordingly pay them little regard in applying the BOOT.
- Front end your ‘on commencement’ pay increase if absolutely necessary. The Commission assesses whether the EA passes the BOOT at the time the test is conducted. The Commission pays less regard to wage increases in the future, as future award increases are unknown. If your EA is borderline, moving an increase forward to the approval date can really assist.
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