Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 – ‘Better off overall test’

*Note the information in this Alert takes account of the passage of the Bill on 2 December 2022 and subsequent Royal Assent.

The Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 (Act) changes the way that the Fair Work Commission (FWC) conducts the ‘better off overall test’ (BOOT). Changes to the BOOT come into effect from 6 June 2023, or earlier if a date is fixed by proclamation.

The main changes to the BOOT are summarised below:

1. Power to amend: If the FWC has ‘a concern’ that an enterprise agreement (EA) does not pass the BOOT in an application to approve or vary an EA, the FWC may specify an amendment to the EA to address that concern and approve the EA with that amendment.

2. BOOT changes: When applying the BOOT, the FWC is required to undertake a ‘global assessment’ of whether employees concerned and ‘reasonably foreseeable employees’ are ‘better off’ under the proposed EA than the applicable modern award. This is assessed by having regard to the terms of the EA which are more and which are less beneficial. The FWC must also give ‘primary consideration’ to a common view (if any) expressed by the bargaining representatives as to whether the EA passes the BOOT.The FWC may now only have regard to ‘reasonably foreseeable’ patterns or kinds of work or types of employment when assessing the BOOT at test time. In determining what work is ‘reasonably foreseeable’, regard must be had to the views expressed by employer(s), award covered employees and in any case, the bargaining representatives, as well as the nature of the enterprise(s) to which the EA relates.

3. Reconsideration applications: An application may be made to the FWC to ‘reconsider’ whether an EA passes the BOOT at the test time or a later time, in circumstances where the pattern or kinds of work or types of employment worked by one or more employees under the EA has changed and were not given consideration by the FWC when it initially assessed the BOOT.

How does this impact employers?

All bargaining strategies should be reviewed in light of these changes and there are some administrative wins, but complexities to consider too. The FWC is no longer required to consider hypothetical or worst-case working arrangements when applying the BOOT, that are not reasonably foreseeable. However, the FWC can now also reconsider whether an EA passes the BOOT if working arrangements do change because the employer wishes to introduce new types of employment or patterns of work during the life of the EA. Employers may need to satisfy the FWC that its EA still passes the BOOT if an application for reconsideration is brought.