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What are Individual Flexibility Agreements and are they legal?

As an employer or employee you may have heard of the term individual flexibility agreement (IFA) or currently use individual flexibility agreements in your workplace. For others, this may be a new concept and you may find yourself wondering what individual flexibility agreements are and are they really legal?

IFA’s in a nutshell

The Fair Work Act allows certain terms of the Modern Awards to be varied. Individual flexibility agreements are an agreement between an employee and employer that presents varied terms and conditions to the existing Modern Awards or Enterprise Bargaining Agreement (EBA). This allows work conditions to be tailored to suit the individual requirements of employees (or employers), so long as overall, the employee is “better off”. There is no requirement to register an IFA. However, employers need to be mindful that even though they may differ the current Award, minimum entitlements still apply as per the National Employment Standards.

When and why would I use an IFA?

The Fair Work Act recognises that everyone’s situations are different and that Modern Awards and EBA’s may not always align with the best interests for all employees or employers. IFA’s allow both parties to have their needs met in regards to the requirements of the business and/or the personal circumstances of the employee. IFA’s can have an overall positive effect on the business through amplified staff satisfaction leading to staff retention and higher efficiency in the workplace.

In Awards and EBA’s you can use an IFA to vary certain clauses, this will be outlined in the Award or EBA relevant to the specific industry. In an Award, the flexibility clause usually allows an IFA to vary hours of work, rate of pay during overtime, leave loading and allowances.

How do I enter into an IFA?

Both the employer and employee must agree to the IFA. The IFA must be in writing, include the start date and be signed by both parties and a copy kept by each. The IFA must state each term of the Award that is to be varied, how it is varied and detail how the employee is better off overall.

What is BOOT or better off overall?

As an employer it is essential that the employee is better off overall with the IFA than without it compared to their Award or EBA. You should always consider the employee’s personal situation plus the financial and non-financial benefits to the employee.

An example of this is paying a higher hourly flat rate that incorporates average overtime as long as the employee is ultimately paid more than under the relevant Award arrangements. This would mean they are “better off overall”.

If you would like Individual Flexibility Agreements for your employees contact HR Gurus today on 1300 959 560.

Written by Resident HR Guru Natalie Bol

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