Employees have a number of rights and entitlements under certain agreements and laws. For example, if they are entitled to paid leave or how much they should be getting paid. 

These entitlements are usually set out in either:

  • A modern award, or
  • A registered agreement

There are different awards for different industries, however, some employers may opt for a registered agreement instead. In this case, it can be difficult to determine whether the employee’s rights under that agreement are as fair as those under modern awards set out by Fair Work Australia

This is where the better off overall test comes in. 

In this article, we’ll go through the purpose of the better off overall test. But first, let’s go through how modern awards work. 

How Do Modern Awards Work?

Modern awards set out the minimum entitlements for employees in a specific industry. You can use Fair Work’s Award Finder Tool to see which award applies to your industry. 

Penalties apply for employers who do not meet their obligations to employees under the relevant award, so be sure to seek legal advice if you’re unsure about whether you’re compliant. 

What Is The Better Off Overall Test?

In some cases, employers may have a registered agreement with their employee instead of using the modern award that applies to their industry. 

As we mentioned earlier, it can be difficult to see whether this would be fair under Australian workplace laws. So, Fair Work Australia created the better off overall test to assess the agreement against the relevant modern awards .

The main test here is to see whether the employee is ‘better off overall’ under the registered agreement. Once this is satisfied, the registered agreement can be approved. 

Jobs And Skills Summit: Proposed Changes

In early September 2022, the Jobs and Skills Summit was held in Canberra, discussing a number of underlying issues in the area of employment. 

The summit aimed to improve the workforce, specifically targeting shortcomings around equal opportunities and job security. 

One of the proposed changes referred to an improved better off overall test. More specifically, they agreed that the test should be made more “simple, flexible and fair.”

The summit also made some key changes around the validity of zombie agreements and what employers need to do if they are still under zombie agreements

What This Means For Employers

These changes mean some significant improvements will be made to the workforce in favour of employees. So, what does this mean for employers?

Well, employers need to be proactive in light of this news. The changes following the summit mean that you need to keep an eye out for the specific changes that will be made, as this will affect your agreements and whether a new award will apply to your employee. 

As an employer, it’s wise to do your research on the relevant modern award that may apply to your industry. These changes may mean that the agreement your employee is under will no longer be valid, and you want to have a plan in case this happens. 

You want your employees to be kept safe and protected under the law, and you also want to avoid penalties. It’s worth speaking to a legal professional who can advise you on which award may apply to your industry and how you can comply with your relevant modern award

Need Advice?

If you need help understanding your employer obligations and what steps you need to take following these recent changes, we suggest chatting to our team of expert lawyers. 

We can chat with you on your options moving forward. More specifically, we offer an Award Compliance package where we advise you on how to comply with the relevant modern award. 

Alternatively, if you’re looking for some more general advice, we offer an Employment Law Consult package to answer any questions you might have as an employer. 
If you would like a consultation on your options going forward, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.

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