An Australian Compliant Award Interpreter is required for the Per Pay Run BOOT
Overall BOOT is required for all Salaried Employees
The Better-Off-Overall Test (BOOT) is now a legislated requirement for salaried employees earning more than $191,100 per annum
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 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 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.
The Consequences of the Coles Ruling
The BOOT will require the business to test its 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?
- Get advice as to the implementation of the BOOT rules in the awards the business is referenced against
- 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 at
- Test a sample of employees’ pay times worked against what they would have achieved under the award at https://inzenius.com
- If necessary, adjust their salaries to ensure that they pass the BOOT test, or
- Prepare to run the BOOT each pay period and implement a pay adjustment for the periods where the salary shortfalls fall
- Test your compliance and plan to automate the process in the future. Use the Inzenius’ currently available sample salary staff BOOT tester, such as is available at: inzenius.com If the pay was less than the award for the times worked, undertake a deeper forensic dive to identify the prevalence
- Ongoing Boot will be able to be automated by comparing the salary paid against what would have been earned if on the award for the same working times
Frequently Asked Questions
How often will the BOOT need to be undertaken?
When an EBA is approved by Fairwor and on every salaried employee’s payroll instance?
How will the automated BOOT tester work?
After payroll is committed, the employee’s timesheet will be used to re-run pay with the selected award level, compare the difference and enable a pay adjustment to be added to the next payrun or a manual pay to pay the difference
Can we offset an over-worked pay period with shorter periods?
The Coles court case has already ruled that under periods cannot offset over periods ad]nd each needs to be assessed on their own and adjusted accordingly
What will be the actions by Fair Work if unpaid pay periods are identified?
Fair Work will require the business to go back up to 6 years to identify the shortfalls and most likely require an enforceable undertaking to be agreed to to repay past and current employees the difference.
If the employer has not maintained timekeeping records in defence of a claim, the court usually accepts the employee’s evidence.
Can the business just increase the employee’s salary?
Yes, but the cost may be prohibitive, as if records are not available to dispute the occurrence, the highest hours worked period may be adopted for the comparison