14 April 2022
Better Off Overall Tests (BOOTS)
One of the first questions we’ll ask when talking about renumeration is – what do you pay? We know we are quite direct when asking this, but it helps us give you the right advice.
Whether you’re paying Award Rates or Above Award Rates, we’ll also be interesting in knowing what the “buffer” is. Whilst we try not to talk too technical, the buffer is the safeguard between what you’re paying and what the Award states you should pay. We’re interested in this as the smaller the buffer, the higher the likelihood that you have to monitor and pay close attention to the conditions your Employees are exposed to. And the higher the chance you might be caught out with an underpayment (think 7/11, George Calombaris, Coles, Woolworths etc.)
Obviously the higher the buffer, the more flexibility and freedom you have. It’s also important to know that the buffer is generally something that is applied to each person not a whole business as each Term of Engagement is different per Employee.
The buffer is made up of the difference of what you pay versus what the Award states you should pay. So, for a simple comparison, if the Award states it is $25 per hour and you pay $30 per hour. Over that 38-hour week your buffer is $190. That means that if your Employee works overtime or perhaps a weekend, that $190 buffer can be used against any potential overtime or penalties that you might owe them.
If the Employee just works a 38-hour week, then that amount is carried over until the next week. The buffer then accumulates effectively building each week. That means that in the circumstances an Employee might work one Public Holiday, having not worked any overtime in 6 months prior to the Public Holiday, the Employee would not be required to be paid specific Public Holiday rates, as the buffer has already awarded them this loading.
Obviously if during the time leading up to the Public Holiday there was not a sufficient buffer in place, then you could either pay Public Holiday Rates or be strategic and look forward and ensure that there is potential for that buffer to build up in the coming weeks so it can be offset against future time. This isn’t recommended as best practice however in some businesses it can be achieved quite easily.
When we provide advice around BOOTs, we often will look at 6 months’ worth of data to ensure that what we are working with is a typical pattern of work. It can be done with smaller amounts of data, but we would be recommending a review sooner.
This is also a useful exercise when the Award Rates increase each year. If you have not increased your wages or your buffer was small, you do not wish to be caught out. As best practice we recommended reviewing this at least annually if not sooner. This is also really important for salary employees to ensure that the hours they are working and the renumeration they are receiving is fair and reasonable.
If you’d like some help in this space – please reach out to [email protected]
