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Award pricing for the better off overall test

The premium an agreement needs, roster by roster.

Before an enterprise agreement is negotiated or renewed, each employee’s pay under it has to be compared with the award for the better off overall test. We price every roster against the award, so the premium the business takes to the negotiation is set from the numbers, not an estimate.

The business and its lawyer know what each roster needs, what each option costs a year, and how much is saved against the first estimate, before the first meeting.

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Reducing the cost of an agreement

Retail group, 2,400 employees. The cost a year of each way to set the premium over award rates, A$m.

First estimate: A$21.4ma year, 20% on every roster
A rate for each roster: A$8.5ma year, 8% on average
Saving: A$12.9ma year, compounding with every pay rise

Option	Cost a year	Saving a year
The first estimate20% on every roster	21.4
One rate, set by the roster that needs the most14.9% on every roster	15.9	5.5
A rate for each roster8% on average, 1.6% to 14.9% by roster	8.5	12.9

Each option leaves every roster better off overall, as priced against the award.The saving compounds, because every future pay rise applies to the lower base.The business and its lawyer choose the option and take it to the negotiation.

Illustrative figures.

We price every roster against the award before an agreement is negotiated, so the business knows the premium each group of employees needs and what it costs. It is a project, agreed in a written scope.

A single premium set by estimate can be too high for most rosters and too low for one. Pricing each roster, penalty by penalty, shows the lowest premium that leaves every employee better off overall, and what each choice costs as pay rises compound. We calculate, and the lawyer advises.

Who it is for

Employers and their lawyers bring us in before the first offer is made, while the premium is still a choice.

Employers negotiating an agreement

The business needs the cost of each premium option, a year and over the life of the agreement, before it sits down with employees or their representatives.

Lawyers preparing the better off overall test

Each employee’s pay under the proposed agreement is compared with the award, roster by roster, in dollars, for the lawyer’s review.

Employers renewing an agreement

Rates under the current agreement are checked against the award as it stands now, so the renewal starts from where each roster really is.

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What you get

Roster pricing workbook

Every roster priced under the award, penalty by penalty, and under the proposed agreement, so the difference can be checked line by line.

Agreement comparison

Pay under the agreement and under the award, roster by roster, in dollars, for the better off overall test review.

Premium options

The cost of each way to set the premium, a year and as pay rises compound, and the saving against the first estimate.

Methodology note

It sets out the method, the data and its limits, for the lawyer and for anyone who has to check it.

How it works

Timing depends on the number of rosters and the state of the records, and we agree it in the written scope.

First
Confirm
The lawyer confirms the award, the classifications and the terms proposed for the agreement.
Then
Price
The business exports its rosters and pay data, and we price every roster under the award and under the proposed terms.
Next
Options
We cost each way to set the premium and show which rosters each option leaves better off.
Last
Handover
The business and its lawyer receive the workbook, the comparison and the methodology note, and we reprice options while the negotiation runs.

What it looks like

This example follows the structure of work we have delivered. The names and figures are illustrative.

Enterprise agreement pay negotiations

Retail group, 2,400 employees. Premium over award rates by roster, %.

Original estimate: 20%a rough figure, assumed to leave staff better off
Modelled premium: 8%on average, 1.6% to 14.9% by roster
Value generated: A$12.9ma year, compounding with every pay rise

Premium needed by roster
Roster	Premium needed	Employees
Full time, evenings and weekends	14.9%	320
Part time, weekends	12.5%	420
Part time, every Saturday	8.3%	520
Full time, some weekends	7.0%	520
Full time, mostly weekdays	2.2%	320
Part time, weekdays	1.6%	300

Illustrative figures.

What it is not

We calculate, the lawyer advises, and the business negotiates.

Not legal or industrial relations advice

The lawyer advises on the agreement, the award and the test. Our work is a working paper for the lawyer.

Not the negotiation

The business and its representatives negotiate. We price the options they take into it.

Not the approval

The Fair Work Commission decides whether an agreement passes the better off overall test.

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Partner, commercial law firm

“Responsive, commercial, and easy to work with. Martin quickly understood the brief and delivered exactly what was needed.”

Partner, chartered accounting practice

Tell us what you need

Tell us the decision in front of you. An acquisition, a development, a remediation process, a liquidation claim or a family office’s investment reporting.
We set out the work that answers it. The model or report we would build, and what we need from you.
The scope and fee are agreed in writing before work starts. Preparing them costs nothing and commits you to nothing.