Report: Recommendations to BOOT
3rd May 2017
The Honorable Justice IJK Ross AO,
President Fair Work Commission,
Fair Work Commission,
GPO Box 539, Canberra City,
Dear Justice Ross,
Requisition to amend the Better Off Overall Test parameters.
This is regarding the current system of Better Off Overall Test. We would like to put forward a request to amend the parameters of BOOT as we feel that there are certain shortcomings because of which it may impact the current unemployment and poverty trends in Australia.
A report has been attached to this letter for your perusal. We have tried to highlight the positive points of BOOT and some concerns as well. We have tried to present certain recommendations as well for your consideration.
Looking forward to a positive action on behalf of your esteemed self to consider it and help us, the youth with better amendments.
Better off Overall Test or BOOT is used by Fair Work Commission to approve or disapprove a proposed enterprise agreement against rewards. The registered agreement is compared to the relevant award under BOOT to ensure he is better off with the registered agreement. The agreement is then approved.
Better off Overall Test has its roots in Fair Work Act 2009 – Sect 193. It laid the foundation for the Better off Overall Test. It laid down certain foundations for Greenfields agreement. A Greenfields agreement is an agreement between a new employer who does not have any employees yet and one or many unions for establishing a new business venture (Forsyth and Stewart, 2009). It is mandatory to seal the agreement before any employees are hired.
As opined by Culbert (2017), in order for FWA (Fair Works Australia) to approve such an agreement, there were conditions. Such as:
Upon release of the ACT, it was further noticed that section 175 & 177 were missing. The Fair Work Bill Act 2008 set out that the combination of 175 & 177 could be potent as they would entitle each of the unions as bargaining representatives for the agreement with the enterprise and also under it employers would be under obligation to notify all unions who have eligibility to cover the vocations covered under the Greenfields Agreement. It was hence decided that the amendment would come with attachment of a ‘safety valve’ that if the negotiations are not fruitful between the union and enterprise i.e. if the Greenfields agreement failed, then FWA could intervene, on its own or by request from a party, conduct a limited arbitration. Also, a clause of ‘good faith bargaining’ to be included. Earlier, enterprise agreements were assessed against the no-disadvantage test (NDT), post 1/2010 onwards BOOT has replaced the NDT. It ensures that the minimal pay is as per the modern awards and compliant to National Employment Standards (Waterhouse and Colley, 2010, p. 154)
The objective of BOOT is to provide a structure or framework for the enterprises to enter into an employment agreement. It assists in enterprise bargaining power of the employees. Enterprise bargaining is the process involving the employee, employer and the bargaining representatives with the goal of making an enterprise agreement. The Fair Works Act with BOOT establishes clear rules on how the process is to be conducted, rules on bargaining, what the agreement content should be, how the agreement needs to be made and most importantly be approved.
Enterprise agreements could be either:
BOOTS ensure that the offer made to the employee for employment has a minimum base pay rate as per the modern standards set under the National Employment Standards. They check that the offer made to the employee is better in every respect and are better off overall rather to be employed by the agreement itself than as per the relevant modern award. The BOOT is a point in time test. That means that at the test time each prospective agreement covered employee and each award covered employee are better off overall. Test time being the time when the bargaining representative submits request for approval to FWA. Though, sometimes, there may be possibility that base pay rate falls below the modern award system but the FWA would not roll it back if it is against the public interest (McRostie and Giles, 2017, p. 34). This system allows award conditions (non-NES conditions) to be traded off or excluded provided the total remuneration and may be the benefits received by the employee leave them better off than if the conditions remained the same.
The scope and function of the Better off Overall Test remains contested (Miller and Orchard, 2016) It definitely shows that labor has given up a lot of ground though. The FWA with the new act, provides enterprises a lot of power to decide on the award contents. However, the scope of BOOT may be discussed as (Healy, 2016, p. 311),
2.0 The BOOT
2.1. Concept & Definition
BOOT or Better off Overall Test is a provision in the new enterprise agreement launched n 1/2010 which requires every enterprise agreement to be approved by the FWA. It is part of the National Minimum Wage Order 2016 (Heron and Charlesworth, 2012, p. 214). It sets the minimum compensation an employee could get in an enterprise agreement or a modern award. The National Minimum Wage order lists the following:
The enterprise agreement put forward by the employee and which is not a Greenfields agreement, need to conform to the above set guidelines when proposing an offer of employment to a prospective employee for approval by FWA.
As discussed by Hampton, (2016, p. 16), The Better off Overall Test, though controversial have certain pros. Some of them for discussion would be:
3.0 Concerns with BOOT
Australia’s unemployment rate as of March, 2017 is steady at 5.9%. Unemployment is on rise in this continent and as of today, Better off Overall Test stands to be a good enough barrier to employment of youth in sectors like retail, fast-food etc. similar industries. As per former FWC VP-Mr. Graeme Watson, immediate reforms needed to be made to minimum rates of pay to tackle the problem of youth unemployment (Buchanan and Oliver, 2016, p. 796). He pointed that along with high minimum wage rates, they also had high minimum skilled employees above the minimum rate which was unusual by international standards (Cook et al. 2017, p. 49). He also added that all sorts of add-ons such as penalty rates and allowances are unusual as per international standards as well. He clearly pointed out that the employment safety net needed a major overhaul.
When looking at it from perspective of employers, the BOOT stands as a deterrent to hiring more people, no matter if they are freshers. Industries such as aviation, fast food, retail require high number of ground staff and stand as major employment avenues as first jobs for youth. To gain a little bit of experience and move on to greener pastures, however, with BOOT’s enforcement, things are becoming difficult for them to get a job and the employer to trust the system for excuses. Poverty and unemployment both are linked and may get affected if number of organization opting to provide employment shut their gates to fresh hires. It would not only affect business but hit industries and economy as a whole as well (Freyens and Gong, 2017, p. 125). Also, as it turned out in the case of AeroCare Flight Support Pty Ltd. Case FWC was not approving an enterprise agreement simply because it mandated there be at least 4-hour minimum start. This further limits the options of employers as they may think 3 hours start may be appropriate but to get an approval from FWC, AeroCare had to fight the Bench. BOOT has provided the trade union a ‘seat’ on the table and this is again something that employers are not happy about. Weaknesses in the system could impede service quality and quick responses to consumers in long run. In times of economic slow-downs or stymie innovations, the system could severely impact the unemployed (Grayson, 2016, p. 14). It is safe to say that there is scope of improvement in the BOOT mechanism
It is hereby recommended that certain amendments be made in FW ACT and specifically BOOT mechanism.
It is evident that Better off Overall test is a bane and boon for the Australian work community. While the workforce of an organization may be inclined to accepting Enterprise Agreements in some ways as was evident through the Coles case, some aspects of it may be unfair and needed to be altered for the overall betterment and welfare of employees at ground levels. In the name of employment, it is easy for organization to doll up fancy employment agreements showing interested prospective employees what they may getting is better than Model Awards but organizations need to keep the societal welfare of the employees in mind and draw up functional agreements that not only are better than Model Awards but are beneficial for long term welfare of the employees. Better off Overall System may have severe impacts on economic development of nation if it is not balanced appropriately with the rising unemployment rates and underemployment rates? It is safe to say that the recommendations cited may prove to be beneficial for FWC to consider and make suitable amendments to help the situation rather than threat the employing of youth with high minimum wages. As it is the skill level of employable youth is not at an appreciable standard and with imposing tough standards it may pose a hindrance to offer of employment. Youth mostly takes up their first jobs at retail, aviation, fast food chains as their first stops to gain some exposure and further move on to better roles with experience and skill upliftment. It is hereby concluded that by repairing the Model Awards scheme, they help the upliftment of work community as a whole for Australia. Also, that they make the regulations simple and address the troublesome points on thematic basis instead of replacing them.
6.0 Reference List
Culbert, S.A., 2017. Good People, Bad Managers: How Work Culture Corrupts Good Intentions. Oxford University Press.
Forsyth, A. and Stewart, A. eds., 2009. Fair work: The new workplace laws and the work choices legacy. Federation Press.
Buchanan, J. and Oliver, D., 2016. ‘Fair Work’and the Modernization of Australian Labour Standards: A Case of Institutional Plasticity Entrenching Deepening Wage Inequality. British Journal of Industrial Relations, 54(4), pp.790-814.
Cook, K., Corr, L. and Breitkreuz, R., 2017. The framing of Australian childcare policy problems and their solutions. Critical Social Policy, 37(1), pp.42-63.
Freyens, B.P. and Gong, X., 2017. Judicial decision making under changing legal standards: The case of dismissal arbitration. Journal of Economic Behavior & Organization, 133, pp.108-126.
Grayson, A., 2016. A how to guide to the Fair Work Commission. Precedent (Sydney, NSW), (135), p.14.
Hampton, P., 2016. The role of arbitration in disputes before the fair work commission. Bulletin (Law Society of South Australia), 38(7), p.16.
Healy, J., 2016. The Australian labour market in 2015. Journal of Industrial Relations, 58(3), pp.308-323.
Heron, A. and Charlesworth, S., 2012. Working time and managing care under Labor: whose flexibility?. Australian Bulletin of Labour, 38(3), p.214.
McRostie, S. and Giles, M., 2017. Footy coach's' unfair dismissal'gets the boot. Proctor, The, 37(1), p.34.
Venn, D., Carey, G., Strazdins, L. and Burgess, J., 2016. What explains trends in Australian working-time arrangements in the 2000s?. Labour & Industry: a journal of the social and economic relations of work, 26(2), pp.138-155.
Waterhouse, J. and Colley, L., 2010. The Work-Life Provisions of the Fair Work Act: A Compromise of Stakeholder Preference. Australian Bulletin of Labour, 36(2), p.154.
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