Better Off Overall Testing & Annualised Salaries Compliance: Does your organisation have the tools it needs to combat underpayments?
As the number of Australian organisations being found to have underpaid employees increases, how can you ensure your organisation remains compliant with changing working conditions and modern awards?
Australia has recently seen its fair share of high-profile organisations underpaying employees on both enterprise agreements and modern awards. As a result, organisations are trying to avoid similar situations which can lead to negative public sentiment, reputational damage, costly fines, and declining workplace morale leading to poor retention.
With recent changes to some modern awards and working conditions during the pandemic, there is an increased risk that organisations could inadvertently be underpaying their employees.
Changing conditions can catch organisations unaware
There are 121 modern awards in Australia, and most workplaces have at least some employee roles covered under one of the awards. Sixteen awards were updated in 2020, adding new rules about annualised salaries. These changes affect various roles across the financial services, local government, telco, pharmaceutical, mining, and manufacturing industries, just to name a few.
Changes to working conditions during the COVID-19 pandemic has also led many organisations to enter into new enterprise agreements or update their existing terms. These changes can shift the benchmark that agreements need to exceed through Better Off Overall Testing (BOOT).
What is BOOT?
Enterprise agreements were introduced in 2009 as part of the Fair Work Act to give employers and employees the freedom to bargain for better wages, greater flexibility, and better working conditions to suit their individual needs.
As part of the conditions for Fair Work Commission approval of an enterprise agreement, the agreement needs to pass the Better Off Overall Test (BOOT). This test checks which modern award an employee would be covered under and assesses if they are better off under the terms of an agreement than under that award.
However, BOOT should not be the only test used to check ongoing compliance.
Enterprise agreements can have conditions or entitlements that change over time. While an agreement may have passed BOOT at an earlier stage, the conditions can fall out of sync with an award over time. Employers are responsible for making sure their employees’ annual wages are high enough to cover award entitlements included in an award arrangement.
Non-compliance can occur from a variety of causes, including:
- Annualised salaries don’t always offset benefits from discrete entitlements, in particular if an employee is working large amounts of overtime that is not accounted for and paid
- Misclassification of employees under an award
- Errors in payroll configuration
- Lack of recorded work hours, including breaks
- Accrued leave incorrectly calculated
There are many situations in which organisations could be prone to inconsistencies, mainly through human error. Technology can overcome these to provide counter checks and comparisons to manage ongoing compliance related to annualised salaries, the interpretation of enterprise agreements and awards, and BOOT.
Technology reduces the risk of non-compliance
Technology such as the UKG Ready and UKG Dimensions solutions can help organisations minimise compliance risk by automating processes across time keeping, award interpretation, payroll, HR, and more.
UKG Ready, through the UKG time keeping and payroll modules, efficiently and accurately manages the interpretation and application of complex regulatory clauses. This includes clear reporting to compare the hours and amounts paid versus those worked. Any discrepancies are flagged and addressed, minimising exposure to compliance risk, and significantly improving the employee experience.
UKG Dimensions helps organisations prove employees are better off overall with their current conditions than they would be under the relevant modern award. Organisations can configure enterprise agreements and modern awards in the same system that apply by industry. Employees are able to review their recorded time and attendance to assist with audit, record-keeping, and approvals requirements.
With the right technology in place, organisations can reduce the risk of non-compliance and help ensure their employees are better off overall.
Learn how UKG Dimensions and UKG Ready can automate your compliance with BOOT and annualised salaries.