Better Off Overall Test: Enterprise Agreements vs Modern Awards

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The better off overall test ensures that, from an employee’s perspective,
enterprise agreements are better than modern awards.
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Introduction
Employment issues have arguably played a prominent role in our life, particularly if
the matter at hand is related to wages and other fundamental conditions of an employee. The
laws have covered major aspects of these considerations .However, some of the more
fundamental laws regarding enterprise agreement and modern awards have received a
significant space in various discussions. The award system in Australia has introduced
standards of employment that would safeguard employees. The enterprise agreement creates
a safety net on matters concerning pay rates and certain conditions of employment. However,
the enterprise agreement introduced new abilities for employees to make an agreement to
different terms and conditions of employment. Therefore, I agree with the statement that the
better off overall test ensures that, from an employee’s perspective, enterprise agreements are
better than modern awards. In order to be ratified by the FWC, enterprise agreement must
pass the 'better off overall' test (BOOT). A contract often passes the test of every award
protected employee, and every potential award-covered worker would be better off overall
under the contract compared to the pertinent modern award.
Discussion and Analysis
The Fair Work Act (FWA) allows both employees and employers to develop binding
enterprise agreements that are achieved when the majority of staffs who have validly voted,
supported an agreement and follow the provisions under S. 182 of the FWA. It is important to
note that once the enterprise agreement is put to effect, a modern award cannot be applied
and thus the enterprise agreement prevails as indicated in s 57 of the FWA. A modern award
can be described as documentation which provides the least possible terms of engagement
above the National employment standards. Enterprise agreement on the other hand sets out
the least possible terms and conditions of employment below the National employment

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standards (Oliver, 2010). Moreover, modern awards are applicable to all workers under the
national workplace association schemes. Therefore, Modern awards are simply occupational
based frameworks that are only applicable to both employers and employees who conduct
their work under unions or other work groups. This simply shows that some employees such
as senior managers among other higher income employees might not be covered by a modern
award regardless of the policy being applied to the industry in which they work. Therefore, to
some extent, the modern award never provides an explicit outline for all employees and
employers.
Fontana, et al., (2015) indicates that if a business is covered by a registered
agreement, it is often that the conditions of a modern award are never applicable or relevant
altogether. However, if the bases of payment rates in an enterprise agreement are much lower
than those provided under the modern award, the modern award might be applicable.
However, this does not guarantee that all employees would be protected by the award. When
an employee is not protected by an award, they are often considered to be award and
agreement free. In such circumstances, the national minimum wage and the National
employment standards are often used to set the minimum terms of employment. This clearly
shows that the agreement will always replace awards as it is designed by both the employer
and the employee and not the industrial relations commission (Penning, 2009).
The establishment of the modern award back in early 2010 imposed new and
challenging employment conditions on many employers. The idea is that most of the
conditions are not suited for most business. Therefore, the majority of employer perspective
consider that enterprise agreement as a better way of addressing these problems, as it suitably
replaces the relevant modern award (Creighton, & Forsyth, 2012).
The introduction of the enterprise agreement by an employer as a centrepiece of
industrial relations has placed significant emphasis on employers and employees handling the