Get ready for the Per Pay Run Better-Off-Overall Test (BOOT) for Salaried Employees

The Better-Off-Overall Test (BOOT) is already a legislated requirement for the creation of a business-owned enterprise bargaining tool

Initially, the BOOT was a process to ensure the agreement’s conditions did not, on average, reduce employees’ conditions compared to the award.

The BOOT was then required to be undertaken annually to enable a pay adjustment for each employee whose annual pay fell short of the award entitlements.

The BOOT is also used post the FWO EBA agreement if that agreement was found to create a disadvantage for the times the employees worked to the award conditions

https://prosperlaw.com.au/boot-test-explained-a-guide-for-employers/

Now the Coles case ruling by the Magistrates’ Court has created precedent where the BOOT should be undertaken each pay run without the opportunity of offsetting over- and under-pay runs; that is, if one pay period the employee’s hours worked created a shortfall in payment, these could not be offset against a previous overpayment period.

The Court Ruling on the Coles Case: Better-Off-Overall-Test (BOOT)

A court has ruled that the Better-Off-Overall-Test (BOOT) is required for each salaried employee’s every pay run, without the ability to offset one pay run against another.

The employees affected will require pay adjustments to any payrun where the employee’s pay is less than they would earn if on the award 

“The decision, handed down by Justice Michael Perram on 5 September 2025, found that Woolworths and Coles could not use broad annualised salary arrangements to offset underpayments in one pay period against overpayments in another. Employers must instead meet every award entitlement – including overtime, penalty rates and allowances – within each individual pay period.” Clyd & Co Industrial Lawyers

  • Employers relying on set-off clauses to offset any underpayments in one pay period against overaward payments in another pay period may be exposed to an underpayment claim. 
  • Paying an all-inclusive salary does not excuse employers from keeping pay and overtime records under the regulations. Employers cannot merely rely on employees to create their own overtime records using clocking data. 
  • Employers should not rely on policies and procedures to show an employee agreed to forgo an entitlement under an award. 
  • Employers must also be able to show that employees:
    • were aware of the entitlement; and 
    • agreed to forgo it. 
    • To meet the evidential burden, employers should have written evidence of the agreement with the employee. 

The Consequences of the Coles Ruling 

The BOOT will require the business to test their salaried employees’ pay against what they would have received if paid on the award and make restitution for the underpayment each payrun.

Offsetting of overpayment in one pay period to another will not be permitted.  

https://inzenius.com/2026/08/01/better-off-overall-test-bootimpact-on-payroll-compliance/

What Should Business Do Now

  1. Get advice as to the implementation of the BOOT rules in the awards the business is referenced against
  2. Ensure all salaried employees earning less than $191,100 per annum (2026 year) are keeping timesheets that, as a preference, are backed up with timekeeping records for evidence that will be required to show pay period working times were within the BOOT tests
  3. Test a sample of employees’ pay times worked against what they would have achieved under the award
  4. If necessary, adjust their salaries to ensure that they pass the BOOT test, or
  5. Prepare to run the BOOT each pay period and implement a pay adjustment for the periods where the salary shorts fall
  6. Test your compliance and plan to automate the process in the future
    1. Use the Inzenius’ currently available sample salary staff BOOT tester, such as is available at: inzenius.com
    2. If the pay was less than the award for the times worked, undertake a deeper forensic dive to identify the prevalence 

A tool was published late last month with over 400 tests of timesheets that have been created for businesses to put their mind at rest about their compliance, or not.

I had been struggling with a back pay project for ~12 months. The Inzenius team responded to my query and provided the requested data within a day – exceptional service and great software that will assist a lot of businesses! ” Bianca Toce, People & Culture Advisor, Save Group.Great software that will assist many businesses! Bianca Toce, People & Culture Advisor, Save Group.

Future Action If Required

Choose an award-compliant payroll system that will also help to facilitate ongoing per pay run compliance and remediation

“ Here we are now with not only a better overall system that delivers up to a 70% reduction in data duplication and entry across a number of systems in payroll processing time and effort, but we have also achieved additional improved functionality overall.” Grant Summers, CFO, Incognitus

A sample of a testing tool for salaried BOOT compliance is available on the Inzenius Web landing page at www.inzenius.com

 Questions and Answers

Is the BOOT needed for  all Awards and EBA’s

The BOOT is used at the registration of an EBA to ensure no disadvantage is identified

The BOOT can also be used to test the no disadvantage later on even if the EBA was approved by Fair Work

At this stage, the roll out of the per pay period BOOT will be progressively introduced in each award and EBA

Who polices compliance with the BOOT?

Accredited inspection of the payroll records can be undertaken by union delegates, members and the accredited FWO agents

Are timekeeping and timesheet records required for salaried employees?

In short, yes, to enable the calculation of the payroll requirements if  requested, and

For use as defence in the FWO hearing

As a minimum, a timesheet that has been authorised and accepted by each employee each pay period will be required  

If there is a shortfall in payment, what happens?

If the investigation uncovers underpayment, the business will be required to remedy the situation and undertake a deeper forensic analysis of salaried employees’ records going back as far as 6 years.

This will require the business to self-declare the shortfall identified for review by the FWO agencies and/or the union, as was the case with Coles