Hart v Coles Supermarkets [2016] FWCFB 2887

In the past, when the Fair Work Commission was assessing whether an enterprise agreement passed the better off overall test (the BOOT), the Commission typically made an overall assessment, on a global basis, whether employees were better off overall or not. Following the high-profile case of Hart v Coles Supermarkets, it appears the Commission will now take a line-by-line approach in assessing whether each and every employee is better off overall. As a result, satisfying the Commission that a proposed enterprise agreement passes the BOOT has become more difficult.

In early July 2015, the Commission approved Coles’ enterprise agreement that covered more than 77,000 employees. About two weeks later, a trolley collector, Duncan Hart, who had taken no part in bargaining and was a member of the SDA union (which had supported approval of the agreement), appealed the approval of the agreement, asserting it did not pass the BOOT.

A Full Bench of the Commission agreed with Mr Hart, finding that compared to the retail industry modern award, each and every employee was not better off overall under the Coles agreement. Critically, although the agreement did provide a higher hourly rate for employees (compared to the award), it provided lower penalty payments for evenings, weekends and public holidays.

And while the agreement provided a whole range of benefits that were either not in the modern award or not as beneficial in the modern award, such as penalties for ordinary hours, rest and meal breaks, blood donor leave, carer’s leave, redundancy pay, accident makeup pay, study support and domestic violence leave, the Commission said some of these benefits had limited application for the purposes of the BOOT. This was because they were not necessarily received by all employees.

For example, whether an employee accessed the blood donor leave was contingent on the employee choosing to give blood. Whether an employee accessed the additional carer’s leave was contingent on the employee’s circumstances. To say, as Coles asserted, the agreement passed the BOOT because the agreement provided these contingent benefits not included in the award was not accepted by the Full Bench. Coles had overvalued these benefits and could not provide evidence of the uptake or value of these benefits.

As a consequence of this decision, employers can expect a greater focus from the Commission in determining whether an agreement passes the BOOT. Unless your agreement provides benefits clearly in excess of all the provisions of the underlying modern award, employers are likely to be required to provide evidence to demonstrate employees are better off overall.

This has the potential to be particularly burdensome for employers and, as a Commissioner recently noted, ‘would be an illogical and impossible nightmare resulting in unacceptable delays [in the agreement approval process]’. Whether these final remarks indicate a move away from the burden imposed by the Hart v Coles decision remains to be seen.