In a decision that proves no employer is too big to fall foul of enterprise agreement regulation, a full bench has overturned the 2015 approval of an agreement covering more than 77,000 employees of a major supermarket chain.

The agreement originally approved in July 2015 was challenged by an employee in Queensland and one of the four unions covered by it shortly after, and was the subject of six days of oral argument in October and November 2015 and this February and April.

An enterprise agreement submitted to the Fair Work Commission for approval after the bargaining and voting process must pass the ‘better off overall test’ (BOOT), amongst other statutory tests and criteria. The commission must be satisfied that each employee would be better off overall if the agreement applied to them compared to their situation under the modern award.

The full bench noted “it is well established that the test requires the identification of terms which are more beneficial for an employee, terms which are less beneficial for an employee, and an overall assessment of whether an employee would be better off under the agreement.” In this appeal, there was a large volume of evidence and submissions put to the commission regarding whether the employees were in fact better off overall.

The agreement provided for higher hourly rates than the award but lower penalties for evenings, weekends and public holidays. The full bench noted the result of this was “…if an employee works predominantly at nights or on weekends, the higher base rate under the agreement will be counterbalanced by lower penalties payable under the agreement at these times.”

The full bench considered the benefits contained in the agreement including blood donor leave, defence service leave, accident makeup pay, emergency services leave, natural disaster leave and redundancy pay were not sufficient to offset the reduced penalties and in some circumstances would not necessarily received by all employees.

The full bench had regard to the workforce, noting, “…those who work primarily at times which attract lower penalty rates under the agreement when compared to the award, the loss in monetary terms is potentially significant. The potential loss is likely to be of significance for part-time and casual employees.” In light of this, the full bench confirmed “it would not be appropriate to attribute a value to these benefits on the assumption that all employees would access these benefits”.

The decision to overturn approval of the agreement demonstrates the complexities associated with the BOOT and the need to satisfy the commission that each employee and each prospective employee will be ‘better off’. Demonstrating a majority of employees will be better off overall will not be sufficient to satisfy the BOOT.

Understanding your workforce and how an agreement will affect existing and prospective employees can be difficult. The Victorian Chamber is here to assist you to understand the requirements of the BOOT and navigate your way through the approval process. Register now for our half-day training session on collective bargaining and enterprise agreement making on 22 June or contact our experienced team of workplace relations consultants on 03 8662 5222 for tailored advice any time.