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Award Interpretation Software BOOT Test in Coles Court Case Legal Decision
Current conditions – Chat GPT response. – Is the BOOT test used to compare the employees’ pay with what they would have earned under their EBA or the award?
In Australia, the BOOT (Better Off Overall Test) is used to assess whether each award-covered employee would be better off overall under an Enterprise Bargaining Agreement (EBA or Enterprise Agreement) than they would be under the relevant modern award.
The Fair Work Commission considers factors such as:
- Base rates of pay
- Penalty rates
- Overtime
- Allowances
- Loadings
- Leave entitlements
- Hours and patterns of work
- Other monetary and non-monetary benefits
The test is not simply a comparison of total pay. An employee generally can’t be worse off in one area (such as weekend penalties) just because they’re paid more in another area, unless, when you look at the agreement as a whole and the employee’s likely working arrangements, they are still better off overall.
Award Interpretation Software BOOT, in short:
- The BOOT compares what an employee would receive under the Enterprise Agreement with what they would receive under the relevant modern award.
- The comparison is based on the employee’s reasonably foreseeable work patterns and entitlements, not just their hourly rate or annual salary.
Is it used for salaried employees?
The BOOT applies to employees who are covered by both:
- a proposed enterprise agreement, and
- a relevant modern award.
Whether an employee is salaried does not determine whether the BOOT applies. The key question is whether they are award-covered.
For example:
- If a salaried employee is covered by a modern award, the BOOT applies. Their salary and conditions under the enterprise agreement are compared with what they would likely receive under the award for their reasonably foreseeable work patterns.
- Salaried employee who is award-free (for example, because of the nature of their role): No, the BOOT does not apply to them because there is no modern award against which to compare the agreement.
Many salaried professionals, supervisors, and managers are still covered by a modern award, while some senior managers and certain professionals are award-free.
Published Coles BOOT Court Case LinkedIn Article by Edawards HR
What the Recent Coles and Woolworths Case May Mean for Employers Paying Flat Rates and Salaries?
https://www.linkedin.com/pulse/what-recent-coles-woolworths-case-means-employers-cmicc/
The Court decision involving Coles and Woolworths
The decision may have widespread implications for employers who pay flat rates or annual salaries.
Background
In the past, employers took mixed approaches to assessing whether employees paid flat rates and salaries were “better off overall”. Many employers used an employment contract set-off clause to balance payments over a period — such as several weeks, months, or even annually — to demonstrate compliance with award entitlements.
The recent Coles and Woolworths decision has now clarified this position. Employers must assess compliance for each pay period, ensuring employees receive payment for all applicable award entitlements — such as overtime, penalties, and allowances — in the pay period they are due.
What the Case Found
The decision confirmed that employees must receive all minimum entitlements owing under the relevant award in each pay period. This includes overtime, penalties, allowances, shift loadings, travel and other award entitlements. Employers can no longer rely on a “all-up” or “averaging out” approach over time to demonstrate compliance.
What This Means for Employers?
If you currently pay employees a flat rate, loaded rate, or annual salary (or other all-up arrangement) that is intended to compensate for overtime, allowances, penalties and the like, you will need to carefully review your arrangements.
Key considerations include:
- How employees are paid – Are they on an annualised salary arrangement under the award, an annual salary with a set off clause or simply a flat hourly or weekly rate?
- Fluctuating entitlements – Do working hours or entitlements vary from week to week? If so, you may be at risk of underpayment in certain pay periods.
- What’s included? – Exactly which entitlements are built in to the rate/salary and how is this documented?
- Monitoring entitlements – Are we monitoring hours worked and working circumstances against what the rate/salary covers each pay period?
- Individual Flexibility Agreements (IFAs) – If you rely on IFAs to offset award conditions, they must be properly drafted, genuinely agreed to, and ensure the employee remains better off in each pay period.
Next Steps
Now is the time to:
- Review pay structures and contracts for employees on flat rates and salaries;
- Conduct a reconciliation now to ensure employees are receiving all applicable award entitlements each pay period;
- If hours and/or entitlements vary from pay period to pay period, audit these scenarios frequently to ensure employees are receiving all award entitlements each pay period;
- Seek advice before continuing or implementing new arrangements.
Every business will be affected differently depending on its workforce and pay practices.
Frequently Asked Questions
When will the Per Pay Boot test be required?
The per pay boot test has already been legislated and can be added to the award from now
If you fail to undertake the BOOT test, what will happen?
You could be before the Fair Work Commission to answer a claim of underpayment, as was the case with a single store manager going to the Commission to investigate, which may lead to the business needing to undertake a forensic analysis of the past 6 years of similar underpayment cases.
This could lead to a substantial amount of back payments and penalties if the business did not have timesheet records to dispute the employee’s contention of time worked
The regulations require employers to maintain timesheet records for all employees, including salaried if they earn less than $191,100 (2026) a year
What should the business do today?
- Have all employees keep timesheet records
- Take the sample Boot Test published on the front page of this website
- Rectify the underpayment of wages that have fallen short for the employee category by modifying worked time or increasing salary accordingly
Is there potential for action against the company for underpayment that cannot be defended against?
If, after undertaking the required investigation and you notify the FWO, an enforceable undertaking for remediation may be enforced .