BOOT Conflict

FWC Dissent over BOOT Application Deepens

Uncertainty surrounding the approval process of enterprise agreements continues to deepen, with the surprise resignation of Fair Work Commission Vice President Graeme Watson in recent weeks highlighting the tension within the Commission (FWC) itself.

Recent FWC decisions we have reported on (in articles on our sister website, demonstrated the extremely narrow approach to the application of the ‘BOOT’ (Better-Off-Overall-Test) taken by some individual FWC members when considering the approval of enterprise agreements.

However it seems that not all members of the FWC are content with this approach.

Different Commissioners, Different Approaches

On the one hand, some Commission members have taken the highly conservative approach that if any individual employee could theoretically be financially worse off – and whether that employee exists in reality – then the agreement will not be approved.

Vice President Watson himself was head of the Full Bench that found that the Coles Store Team Enterprise Agreement 2014-17 did not pass the Better-Off-Overall-Test (colloquially known as the ‘BOOT’) on the basis that some employees would be significantly worse off from the loss of penalty rates under the enterprise agreement.

However, the Full Bench provided Coles with the opportunity to provide undertakings to address the issue of employees working a proportionately higher number of hours for which they would receive penalties if they were under award conditions. Coles decided not to offer the undertakings sought.

The “black letter” approach is in contrast to that taken in the recent Beechworth Bakery decision where Deputy President Sams approved the Beechworth Bakery Employee Co Pty Ltd Enterprise Agreement. The union representing retail and fast food workers, the SDAEA, argued that the agreement failed the BOOT because simply paying higher pay rates to other employees during the week was no compensation for employees losing other award terms and conditions.

Deputy President Sams said that the BOOT is not a ‘line by line’ comparison, rather it was a balancing exercise, and stated that he did not want to engage with the parties any further over “illogical and fanciful what if scenarios”.

The Beechworth agreement was approved after the employer provided undertakings on matters including increasing rates of pays for managers and team supervisors, adjustments to provisions dealing with tradesperson’s starting times and increases for employees who only work on Sundays or public holidays.

With such disparate approaches to the BOOT being applied, seemingly simultaneously, it is not surprising that employer confidence in the consistent application of the BOOT test, continues to be eroded. 

Lengthy delays between lodgement and approval continue to be experienced, with some enterprise agreements held up by the Commission for over 6 months. This delay negatively impacts the businesses that are awaiting the Commission’s decision before implementing (in some cases to be able to win work), and confusion amongst the employees who have voted in support of these agreements.

VP Watson’s Blast

DP Sams may not be alone in his view that there has been an overly pedantic approach taken to the application of the BOOT. When resigning recently to work as an IR consultant, the then Vice President Graeme Watson attacked the ultra-conservative approach, stating “There is an increasing understanding in the business community that the Fair Work Commission is partisan, dysfunctional and divided”.

Pressure appears to be building within the business community for change, and perhaps within the FWC itself, with the lack of consistency currently being displayed in relation to the BOOT merely a symptom of a broader need for legislative reform. 

Whether the current federal Government has the capacity to focus sufficient attention on the issue in the short term remains to be seen. In the meantime, business efficiency will continue to suffer. 

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