- What the BOOT measures — and what it does not
- The four mandatory terms every agreement must contain
- Undertakings: the safety valve under s 190
- Where the agreement continues to operate after the nominal expiry date
- Edge cases and carve-outs
- A worked BOOT calculation
- Where Artificer Legal can help you get the figures right
- Where the BOOT commonly fails
You have negotiated an enterprise agreement with your workforce, held a successful vote, and lodged the application with the Fair Work Commission. Before the Commission will approve the agreement, it must be satisfied that every employee covered — and every employee who could foreseeably be covered — would be better off under the agreement than under the relevant modern award. That assessment is the better off overall test (BOOT), and how it is applied will determine whether your agreement is approved as drafted, whether the Commission seeks an undertaking from you, or whether approval is refused.
The BOOT is the centrepiece of the enterprise agreement approval regime under the Fair Work Act 2009 (Cth). The Commission's obligation to apply it, and the standard it must reach, is set out in s 193 of the Act. The test is applied at the time the application for approval is lodged — not at the time the agreement was voted on — and it is applied to the terms as they will operate in practice, not just as they read on the page.
What the BOOT measures — and what it does not
The BOOT is a global test. The Commission does not compare the agreement line by line against the award and require every clause to exceed the award equivalent. Instead, it looks at whether each award-covered employee and each prospective award-covered employee would be better off overall under the agreement, taking the whole package of terms into account.
This means trade-offs are permitted: a lower penalty rate may be offset by a higher base rate, an annualised salary arrangement may trade granular overtime against a loaded flat rate, or a simplified classification structure may exchange pay-point progression for broader flexibility. What the Commission scrutinises is whether the net position of each affected employee and employee type — across the foreseeable patterns of work the agreement will govern — is better than the award floor.
Prospective award-covered employees matter too. An agreement may classify roles that have no incumbents at the time of lodgement. The Commission will assess whether employees who could be engaged under those classifications would pass the BOOT if and when they are hired.
The four mandatory terms every agreement must contain
Before the BOOT is even assessed, the Commission checks that the agreement includes four mandatory terms required under s 186 of the Fair Work Act 2009 (Cth). Missing any of these will block approval regardless of how well the agreement pays.
| Mandatory term | What it must do |
|---|---|
| Nominal expiry date | Set a date no more than four years from the date of Commission approval |
| Flexibility term | Allow employer and employee to make an individual flexibility arrangement (IFA) that varies the agreement to meet genuine needs |
| Consultation term | Require the employer to consult with employees about major workplace change and changes to regular rosters or ordinary hours |
| Dispute settlement term | Provide a procedure for settling disputes about matters arising under the agreement and in relation to the National Employment Standards (NES) — the procedure must allow the Commission or another independent party to resolve disputes, and must permit employee representation |
If the agreement contains a defective or absent flexibility term or consultation term, the Commission will insert the model terms from the Fair Work Regulations 2009 rather than accept an undertaking to fix them. For the dispute settlement term, defects may be cured by undertaking.
How the Commission applies the BOOT in practice
The Commission's analysis under s 193 involves three layers.
Identifying the relevant award
The comparison point is the modern award that would otherwise cover the employees. Where a workforce spans multiple awards — for example, a hospitality business covering both front-of-house and maintenance roles — each award is the benchmark for the employees it would ordinarily cover.
Modelling foreseeable working patterns
The BOOT is not applied to a hypothetical average employee. The Commission considers the range of working arrangements the agreement permits: shift patterns, overtime triggers, penalty rate windows, annualised salary calculations, and classification levels. The outcome must be better overall across those patterns, not just for the median case.
If the agreement includes loaded rates or annualised salaries that are intended to compensate for penalties and loadings in the award, the Commission will scrutinise whether the loading is sufficient to cover the penalty obligations it is intended to replace across the foreseeable roster of each classification.
Assessing the overall package
Advantages and disadvantages are weighed across the whole agreement. An agreement that pays above-award base rates but removes Saturday penalty rates will not automatically pass the BOOT — the Commission must be satisfied the above-award base rate more than compensates across the hours employees will actually work. If a particular classification or shift pattern falls short, the agreement will not pass in respect of those employees.
Undertakings: the safety valve under s 190
If the Commission identifies a BOOT shortfall, approval is not automatic refused. Under s 190 of the Fair Work Act 2009 (Cth), the Commission may accept a written undertaking from the employer that commits to something additional — such as topping up a particular rate, increasing a loaded salary, or adding a payment for a specific scenario. The undertaking becomes a legally binding part of the agreement.
Undertakings are subject to two limits:
- The undertaking must not cause financial detriment to any employee covered by the agreement.
- The undertaking must not result in substantial changes to the agreement.
The Commission will consult known bargaining representatives before accepting an undertaking, and will not accept one that fundamentally rewrites what the employees voted on.
Where the agreement continues to operate after the nominal expiry date
A point that catches many employers: an enterprise agreement does not lapse on its nominal expiry date. The agreement continues to operate and govern the employment terms of covered employees until it is either replaced by a new agreement approved by the Commission or terminated by the Commission on application. This is true even if bargaining for a replacement has stalled or not yet commenced.
The practical consequence is that pay rates, penalties, and conditions locked in at approval continue to apply indefinitely unless action is taken. For agreements approved with rates set well below current award levels — or where the award itself has been updated — continued operation post-expiry may create compliance exposure if the agreement terms have fallen below the NES floor or if employees could successfully argue a different instrument should apply.
Edge cases and carve-outs
| Scenario | Consequence |
|---|---|
| Greenfields agreements | Apply to new enterprises with no employees yet. The BOOT comparison still applies, but the test is assessed against the award that would cover the roles to be created. |
| Multi-enterprise agreements | Cover two or more businesses. Each employer's workforce is assessed separately against the relevant award for their industry or occupation. |
| Agreements with loaded rates | The Commission will check whether the loaded rate actually covers the award penalties it is intended to replace across foreseeable rosters — a round-number loading set years ago may no longer pass. |
| NES minimums | No term in an enterprise agreement can exclude or undercut the National Employment Standards. The BOOT is in addition to NES compliance, not a substitute for it. |
A worked BOOT calculation
A retail employer covered by a relevant retail award introduces an enterprise agreement with a flat rate for all hours of AUD 28.50 per hour for a full-time sales assistant, intending the rate to cover weekday, Saturday, and Sunday shifts without separate penalties.
To assess BOOT for Sunday work, the Commission would compare:
- What the employee would receive under the award for the same Sunday shift — the base rate plus the applicable Sunday penalty loading.
- What the employee receives under the agreement — AUD 28.50 flat.
If AUD 28.50 exceeds the award base plus Sunday loading for that classification, the BOOT is satisfied for that scenario. If it does not — for example, if the Sunday penalty loading takes the award figure above AUD 28.50 — the employee working Sundays fails the BOOT, and the agreement cannot be approved as drafted unless an undertaking is provided or the rate is revised.
The same analysis would be run for Saturday shifts, overtime, and any other penalty scenarios within the foreseeable roster.
Where Artificer Legal can help you get the figures right
Running a BOOT analysis before lodgement requires modelling the actual pay outcomes across your specific roster configurations, classification levels, and penalty scenarios — compared against the correct version of the applicable award. Artificer Legal's employment practitioners work through that modelling with you before the agreement is finalised, identifying shortfalls that would prevent approval and advising on the least disruptive fix — whether that is revising a rate, restructuring a loading, or preparing a targeted undertaking. We also advise on the four mandatory terms, access period compliance, and how to manage obligations once the nominal expiry date passes and bargaining recommences.
Where the BOOT commonly fails
The most common reason a BOOT analysis fails is not that the employer has tried to underpay — it is that the penalty comparison has not been done for the tail end of the roster: the Sunday shifts, the overnight rates, the double-time triggers on public holidays. A flat or loaded rate that comfortably covers weekday and Saturday work can still fail the BOOT for those marginal scenarios, and a single classification falling short can block approval for the whole agreement.
The BOOT under s 193 of the Fair Work Act 2009 (Cth) is a global test applied at the time of lodgement: it assesses every award-covered and prospective award-covered employee across the full range of foreseeable working arrangements. The mandatory terms — a nominal expiry date of no more than four years, a flexibility term, a consultation term, and a dispute settlement term — must also be present and compliant before approval can be granted. Undertakings under s 190 can address BOOT shortfalls, but only where the fix does not cause financial detriment to any employee or substantially change what was voted on. And once approved, the agreement continues in force past the nominal expiry date until it is replaced or terminated — a detail that deserves a place in any forward employment strategy.