In a landmark decision, the Fair Work Commission has recently determined that an EBA can pass the Better off Overall Test (“BOOT”) even whilst containing provisions allowing employees to be prosecuted and fined for misconduct.
Employers all across Australia previously faced the impossible situation of trying to convince unsafe employees to take their safety obligations (and their colleagues’ safety) seriously. Hopefully, this decision paves the way for employers sick of employees ignoring safety protocols.
How did the clause allow employees to be penalised for safety breaches?
The Enterprise Agreement, at cl 4.1, imposed an obligation on employees to comply with a range of the Employer’s directions, policies and procedures (including safety policies and procedures). Including this obligation as a term in the Agreement allows the company to prosecute employees for breaching the term (such as in the event of a serious or persistent safety breach). Financial penalties can then be imposed on an employee who breached the agreement.
The CFMEU argued that this clause meant the new Agreement could not pass the BOOT, because it made it likely that employees would be penalised for something which was not subject to a penalty under the relevant Modern Award (the Black Coal Award 2010).
Does a financial penalty automatically spell doom for a proposed EBA at the BOOT test?
Commissioner Saunders accepted that clauses making compliance with directions, policies and procedures “a term liable to a penalty for a breach” were “less beneficial” than the award. However, Saunders C noted that such requirements to comply with safety policies and procedures would apply even without express reference in the EBA. Accordingly, the FWC ruled that the mere fact that an EBA expressly required an employee to comply with reasonable directions and follow policies (or be prosecuted and pay a financial penalty) would not be given a significant negative weight when applying the BOOT. This is a ‘breath of fresh air’ for employers sick of good employees being exposed to unsafe conditions due to one or two employees breaching safety policies.
Noting the importance of giving weight “in an overall BOOT assessment to the flow-on effects of higher rates of pay“, Saunders C concluded that the significantly higher income which could be earned under the proposed Agreement outweighed any negative impact from a clause allowing employees to be financially penalised for their safety breaches.
Important takeaways for employers
The FWC’s decision approving the Moolarben EBA emphasises that an expertly written EBA may pass the BOOT with a variety of clauses and requirements which assist the employer, so long as the employee is better off overall when assessed from a broad perspective.
However, the decision also highlighted the importance of having an industrial relations expert on hand to guide you through responding to unions, even if your enterprise agreement is going to be negotiated with just a small workforce which does not want the union involved.