Salaried employees need to be paid at least the amount they would have received under the award
Salaried employees need to be paid at least the amount they would have received under the award rates for the levels required by their roles and responsibilities; this is the Better-Off-Overall-Test (BOOT) regulation and law.
Inzenius is here to help and will enable you to conduct your own confidential test of a sample of salaried employees’ pay, as if they were on the appropriate award and level for the hours they worked over a week or fortnight, to compare with what they were actually paid for the period.
The Inzenius BOOT test is simple: you only need to select the Award and Grade Level for the comparison and add the worktimes for each shift they worked in the timesheet provided for the pay period(s).
You will have the comparison using the Inzenius compliant Award Interpreter configured to the requirements of the Fair Work award conditions for the Award and Level selected.
The BOOT Process
The BOOT process is a legislated condition that requires you not to pay less than the award for any salaried or other position to avoid being in breach and potentially facing an investigation, back pay, and fines across your entire company.
A key part of the BOOT is maintaining timesheet data in accordance with the FWO rules and regulations.
https://www.fairwork.gov.au/pay-and-wages/paying-wages/record-keeping
Recordkeeping is a must in today’s IR environment. In not keeping required records, as highlighted in the Federal Court ruling in the Coles and Woolworths Annualised Salaried case, with a reported $2B+ cost ruling. Woolworths and Coles did not keep records of entitlements owed under the General Retail Industry Award 2010. This led to a dispute over whether the annual salaries paid were sufficient to cover all award entitlements, such as penalty rates, overtime, and allowances.” Bede Gahan
Inzenius has also added an efficient process to maintain the required records to undertake the Better-Off-Overall-Test (BOOT) for each pay run in its Rostering, Timekeeping, Timesheet, and Award Interpreted Payroll system.
The Inzenius BOOT system will be able to compare the employee’s pay to what they would have earned under the award for the same hours worked each pay period. This facilitates the simple pay adjustment for the employee where required.
The Published Ruling by the Court
DECISION FROM THE FEDERAL COURT:
The case concerns four separate actions—two brought by the Fair Work Ombudsman (FWO) and two by employees as class actions—all heard together due to similar allegations of underpaying employees in store-based management roles at Woolworths and Coles.
A core issue in each proceeding was that employees were paid an annual salary under their contracts, but the employers, Woolworths and Coles, did not keep records of entitlements owed under the General Retail Industry Award 2010. This led to a dispute over whether the annual salaries paid were sufficient to cover all award entitlements, such as penalty rates, overtime, and allowances.
Justice Perram made several key findings, particularly concerning the use of annualised salaries and “set-off” clauses designed to absorb award entitlements.
The court addressed the central issue of whether the contractual clauses allowing employers to “set off” annual salaries against award entitlements were lawful.
***Set-off is limited to a single pay period***
The court found that the employers’ clauses, which attempted to pool over-award payments over a 26-week period to satisfy award obligations, were ineffective. The court held that a payment from an employer can only discharge a corresponding obligation to pay an entitlement under the award within the same pay period (e.g., fortnightly or weekly), and the annual or 26-week pooling arrangement was an “accounting abstraction”.
The court also rejected the argument that “over-award” payments made in some pay periods could be used to offset underpayments in other periods. The court emphasised that compensation aims to restore the employee to the position they would have been in “but for the contraventions”. This means that an employee who was underpaid for overtime in one period is still entitled to that payment, even if they received more than their minimum entitlements in other periods. Payments from bonus plans were also considered a separate entitlement and could not be used to reduce an employer’s liability for underpayments unless a causal link could be established.
***Record-keeping obligations***
The court found that paying an all-inclusive annual salary does not relieve an employer of its obligation to keep specific records of entitlements as required by the Fair Work Regulations. The employers’ argument that their set-off clauses meant employees weren’t “entitled to be paid” certain amounts, and thus no records were needed, was rejected. This failure to keep records could also trigger a reversal of the burden of proof, requiring the employers to disprove the FWO’s allegations of underpayment.