Inzenius will be able to automate the BOOT test and calculate any employee adjustment for underpayments of pay necessary to ensure compliance on each pay run
What Is the Better Off Overall Test (BOOT)?
Employers who pay employees an annual salary often assume this simplifies compliance with workplace laws. But when a registered enterprise agreement sets the salary terms, the Fair Work Commission applies a critical assessment known as the Better Off Overall Test (BOOT). This test compares the agreement against the relevant modern award to ensure each award-covered employee is better off overall under the agreement. For payroll teams, understanding the BOOT is essential because the test affects how salary packages are structured, how data is captured, and how compliance is demonstrated at lodgment.
When Registering EBA Agreements
The Better Off Overall Test is a requirement used by the Fair Work Commission to assess registered agreements against the relevant modern award. Its purpose is to confirm that every award-covered employee, and every prospective award-covered employee, is better off overall under the proposed agreement than they would be under the award. The test is applied at a single point in time: when the application for approval of the agreement is lodged with the Fair Work Commission. This means that the agreement must pass the BOOT on that date, not retrospectively or continuously after approval. The Fair Work Commission determines the outcome, not the employer, so businesses must prepare their case carefully before lodging.
It is a common misconception that the BOOT compares the proposed agreement against the existing enterprise agreement. In reality, the comparison is always against the relevant modern award. This distinction matters because award conditions set the minimum benchmark. An agreement may reduce certain award benefits, provided those reductions are offset by other benefits that leave employees better off overall.
Global Assessment vs Line-by-Line Comparison
The Fair Work Commission applies the BOOT as a global test. This means the Commission considers all the advantages and disadvantages of the proposed agreement together, rather than conducting a line-by-line comparison of each individual term. For example, if the award provides a particular penalty rate for weekend work but the agreement reduces that rate, the Commission will look at whether other terms of the agreement, such as a higher hourly base rate or additional annual leave, offset that reduction. As long as the overall outcome for the employee is better under the agreement than under the award, the BOOT can be satisfied.
This global approach allows employers to design salary packages that suit their business needs while still ensuring employees are not worse off. However, it also places a burden on payroll teams to model the total remuneration under the agreement versus the award for each relevant employee classification. Without reliable data on actual hours worked, including overtime and shift patterns, it is difficult to build a credible case that the agreement passes the BOOT.
BOOT and Salaried Employees: Key Considerations
Salaried employees are often paid a flat annual amount that is intended to cover all hours worked, including overtime, penalties, and allowances that might otherwise be payable under an award. When an enterprise agreement sets out salary arrangements, the BOOT requires the Fair Work Commission to assess whether that salary, combined with all other entitlements in the agreement, leaves each employee better off overall than they would be under the award for the work they actually perform.
Because the BOOT is a global assessment, it does not require every individual term of the agreement to be more favourable than the corresponding award term. A salary package that reduces penalty rates might still pass the test if it provides a higher base rate, additional leave, or other benefits that compensate for the reduction. However, payroll teams must be able to demonstrate that, in practice, the salary arrangement passes the global test for each employee classification covered by the agreement. This is where accurate timesheet data becomes important.
Annual Audits of Salaried Employee Pays
Subsequently introduced was the requirement for the business to undertake an annual salary comparison with what the employee would have received under the award; this allowed a total comparisn of over- and under-offsets for the year for each employee.
Per Pay of Salaried Employees: BOOT Audits Court Decision
A recent court decision will require the BOOT test to be undertaken each pay run, without the ability to offset overpaid pay with underpaid pay from prior pay runs.
https://hhr.com.au/the-new-pay-period-boot-what-the-landmark-ruling-means-for-employers/
Global Assessment vs Line-by-Line Comparison
Enterprise Agreement BOOT Test
For employers with salaried employees covered by enterprise agreements, the 2023 changes reinforce the importance of preparing thorough evidence at lodgment. The test time remains the date of lodgment, so any changes to working patterns or salary structures after that point do not affect the BOOT assessment. But the evidence submitted must be robust enough to satisfy the Commission that the global test is met for each award-covered employee. Payroll records, including timesheet data showing typical hours worked over a relevant period, form a key part of that evidence.
Why Payroll Teams Need Accurate Timesheet Data for BOOT Compliance
When an agreement sets salary rates for employees who are covered by an award, payroll teams must be able to compare the total remuneration under the agreement with what the award would require for the same work. This comparison depends on knowing how many hours employees actually work, when they work, and which classifications apply. Timesheet data provides the factual basis for this analysis. Without accurate time records, an employer cannot demonstrate that the salary package meets the BOOT for employees who work overtime, night shifts, weekends, or public holidays.
For example, consider a salaried employee who works a mix of ordinary hours and overtime across weekdays and weekends. Under the award, overtime rates and weekend penalties would apply. Under the agreement, the salary might be intended to cover all those hours. To show that the employee is better off overall, payroll must calculate what the award would pay for the same hours and compare that to the salary and any additional benefits provided by the agreement. This calculation can only be performed if the employer has reliable timesheet records that capture start and finish times, breaks, and the classification of each hour worked.
Automated time-and-attendance and timesheets systems that integrate with payroll software can streamline this process. By capturing clock-in and clock-out data via biometric devices, mobile apps, or phone systems, employers can generate accurate records for each pay period. These records support the BOOT analysis by providing a clear picture of actual working patterns. They also help payroll teams identify any employees whose salary arrangement might not pass the test, allowing adjustments to be made before an agreement is lodged.
Beyond the initial lodgment, maintaining accurate timesheet data supports ongoing compliance. Even though the BOOT is assessed not only at lodgment but also annually and as predicted per pay run, teams need to ensure that salary payments under the agreement are processed correctly each cycle. Timesheet records help verify that employees receive all entitlements they are owed and that no underpayments occur. This is particularly important for salaried employees whose agreements include set-off provisions that rely on accurate hours data to function properly.
The Role of the Fair Work Commission in BOOT Determinations
It is the Fair Work Commission, not the employer, in the initial registration of the EBA that ultimately determines whether an enterprise agreement passes the Better Off Overall Test. When an employer lodges an application for approval of an agreement, the Commission reviews the agreement’s terms alongside the relevant modern award. The Commission may request additional information or evidence from the employer to support the claim that each award-covered employee is better off overall. If the Commission is not satisfied, it may refuse to approve the agreement, amend or remove problematic terms, or offer the employer an opportunity to reconsider the application under the new 2023 pathway.
If a case is brought to the Fair Work Commission of potential underpayment, subsequent to the initial approval by an employee union or through the Fair Work’s own investigation, the BOOT will be applied
For payroll professionals, this means the evidence prepared for the BOOT must be thorough and defensible. The Commission expects employers to demonstrate how the test is met, not just assert it. Comprehensive payroll data, including timesheets, pay calculations, and modelling that compares agreement and/or actual outcomes with award outcomes for each classification, helps build a credible case. Relying on assumptions or incomplete records increases the risk that the Commission will reject the agreement or require renegotiation, which can delay approval and create uncertainty for employees and the business.
Frequently Asked Questions
Does the BOOT apply to salaried employees who are not covered by an award?
No. The BOOT applies only to employees covered by a modern award or who would be covered by an award if no agreement existed. Salaried employees who earn more than $191,000 (2026) and are award-free are not subject to the BOOT l. However, employers must still comply with the National Employment Standards and any applicable employment contracts.
Can an employer rely on a single salary figure to pass the BOOT for all employees?
Yes, provided the global assessment shows that each award-covered employee is better off overall under the agreement than under the award. A single salary rate may pass the BOOT if it is high enough to offset any reductions in award benefits such as overtime, penalties, or allowances. Employers must support this claim with evidence, typically timesheet data and pay modelling, for each relevant classification.
The annual BOOT assessment must also pass. With the latest court ruling, we may need to undertake the test on each pay run
What happens if the Fair Work Commission finds that an agreement fails the BOOT?
The Commission may refuse to approve the agreement. Under the 2023 amendments, the Commission can also amend or remove terms that cause the failure, or provide a reconsideration pathway for the employer to revise the application. Employers should consult with workplace relations advisors to understand their options if an agreement is at risk of failing the test.
Do timesheet records need to be kept after an agreement is approved?
While originally the BOOT was assessed only at the time of lodgment, employers now must continue to keep accurate employee records, including timesheets, for general compliance with the Fair Work Act, and undertake their annual BOOT review. These records are necessary to ensure the correct payment of wages and entitlements under the agreement. They may also be relevant if the Commission later reviews the agreement or if an employee raises a dispute.
Understanding the Better Off Overall Test is essential for any employer that uses enterprise agreements to set salary arrangements for award-covered employees. The test requires a global assessment that considers all advantages and disadvantages of the agreement compared to the relevant modern award. Payroll teams play a central role in gathering the evidence needed to demonstrate compliance, particularly accurate timesheet data that shows actual hours and working patterns. By preparing thorough records and modelling award outcomes against agreement terms, employers can increase their confidence that the agreement will pass the BOOT at lodgment and support ongoing payroll accuracy.
Inzenius is Here to Help
Inzenius will be able to automate the BOOT test and calculate any employee adjustment for underpayments of pay necessary to ensure compliance on each pay run