The Requirement of the Better-Off-Overall Test (BOOT) to Pay Your Salaried Staff Correctly
How is the BOOT being applied?
The BOOT is applied to test business payroll compliance, regardless of the instrument used, including EBAs and award-structured business-specific pay conditions, in the business’s own interpretation of its payroll conditions and rates. The test is initially considered when EBAs or other employment agreements are approved or not by the Fair Work Commission at its discretion and when a case is brought to it for wage underpayments.
The BOOT test is also considered when a case is brought to the FWO for wage underpayments.
Who is covered by the BOOT?
The BOOT process is applied to measure what employees will or are paid as compared to what they would have earned for the time worked under the appropriate industry award and level of activities. In 2026, the max annual salary and benefits cut-off, excluding Statutory Superannuation, is $191,100, after which BOOT is not a consideration
The BOOT has primarily been considered for both hourly and annualised salaried employees annually where the total earned for the year was less than the employees would have received for the year under the appropriate award and level, requiring the business to top up their salary for the year with any over- or under-work times that were able to be offset against each other.
The BOOT test is not only considered when EBAs or other employment agreements are approved or not by the Fair Work Commission at its discretion it will also be considered when a case is brought to it for wage underpayments.
What changed in June 2026 with the application of the BOOT?
The Coles case on wage underpayment ruled that the BOOT needs to be applied in a certain manner as below, which will have a profound impact on the calculation of the level of underpayment and the repatriation costs and penalties to be applied. The big issue is the requirement to undertake the test each pay run as no offsets will be permitted
Summary of the Coles Study of Underpayment of Salaried Employees
The Coles and Woolworths case highlights the potential impact of failing to pay your salaried staff.
- The Issue: Salaried store managers and department managers were paid annual salaries, but these did not cover the actual overtime and penalty rates owed under the General Retail Industry Award 2010.
- “Set-off” Ruling: The Federal Court ruled in September that supermarkets cannot use “set-off” clauses (averaging high pay over a year to cover overtime) to negate entitlements in individual pay periods.
- Case Status (March 2026): Justice Nye Perram expressed frustration over 2,500 pages of submissions, with the litigation expected to continue, potentially lasting several more years.
Repayments and Liability of Underpaying Salaried Employees
- Woolworths: Had already repaid over $300 million to employees by October 2025.
- Coles: Had made remediation payments of over $7 million by October 2025, but faces a significantly higher total liability from the ongoing court action.
- Total Cost: The total bill is expected to exceed $1 billion when combining ongoing class action penalties, interest, and unpaid entitlements.
The Requirement of Underpaying Salaried Employees
Salaried employees earning less than are required to be tested to ensure their pay passes the Better Off Overall Test (BOOT)
The impact of this requirement is:
- Every employee, including those paid under the threshold, will need a timesheet record kept for each pay period as required by the Fair Work regulations
https://www.fairwork.gov.au/pay-and-wages/paying-wages/record-keeping
- The BOOT comparison will need to be undertaken each pay run for the salaried employees.
- The employee will need to receive the appropriate pay top-up each pay run where their pay would have been less than they would have received on the appropriate award and level
- This will increase the workload, $costs and complexity for payroll
https://www.fwc.gov.au/better-off-overall-test
As of May 2026, the key threshold for salaried employees is the High Income Threshold, which from 1 July 2025 to 30 June 2026 is $191,100 per annum.
As of January 1, 2025, in Australia, intentional wage theft is a criminal offence under the Fair Work Act 2009. Penalties include up to 10 years in prison for individuals and fines up to $8.25 million for corporations, or three times the underpaid amount. This applies to deliberate underpayments of wages, superannuation, and entitlements.
Key Penalties for Criminal Wage Theft (From 1 January 2025)
- Individuals (Managers/Directors): Up to 10 years imprisonment and/or fines up to \(\$1,650,000\) (5,000 penalty units) or 3 times the underpayment.
- Companies (Body Corporate): Fines up to $8,250,000\) (25,000 penalty units) or 3 times the underpayment, whichever is greater.
Criminalising wage theft law
The offence will apply to employers who intentionally engage in conduct that results in the underpayment of their employees. It will apply to employee entitlements under the Act or a fair work instrument (such as a modern award or enterprise agreement), but not to solely contractual entitlements.
The offence will cover intentional underpayments of superannuation contributions where they are required by the Act, a fair work instrument or a transitional instrument, to the extent of the Commonwealth’s legislative power. All employers will still be required to comply with their superannuation obligations under taxation law and industrial instruments.
The wage theft offence will carry a maximum of 10 years’ imprisonment, and/or a maximum fine of the greater of: · 3 times the amount of the underpayment, if the court can determine that amount, or · for an individual: 5,000 penalty units ($1,565,000); or for a body corporate: 25,000 penalty units ($7,825,000).A
The Solution to simplifying the BOOT under these changed conditions
A process that will duplicate the salaried employee pays based on their timesheet and interpreted under the award and level conditions for a pay adjustment at the next pay instance for those employees impaced with underpayments.
Questions and Answers
How do I test if I am possibly underpaying my Salaried employees?
Take a free BOOT test for a sample of your salaried staff working times hhtp//inzenius,com
It is as simple as selecting your award and adding the employee timesheet for the test week(s)
Cost and save the report as a PDF or Excel file to compare with the pay they received. You can recalculate multiple weeks or fortnights for right periods to sum the amount for the month if required.
The results will not be saved by Inzenius to maintain your confidentiality
Can I do the boot test without the timesheet recorded?
No, you will need all employees except those earning more than the statutory cap wage (2026 of $191,100)
Who can institute an investigation that will create the need for the BOOT test?
The employee can log onto the Fair Work Ombudsman website and advise that they may have been underpaid
The approved representative from the FWO, like union delegates, union reps or state and federal agencies
The business can self-declare
What is the common process of the FWO in a dispute?
Initially, they will request a forensic analysis of the underpayment paid by the business
The FWO representative/union will then undertake a review of the results
Based on the result, the FWO will enter into an enforceable undertaking with the business to rectify the situation
://www.fairwork.gov.au/about-us/compliance-and-enforcement/enforceable-undertakings