You may have heard of “Individual Flexibility Agreement” (IFA). You mave already use them in your workplace. For others, this will be a new concept. You may be wondering what individual flexibility agreements are. And if they are really legal?
IFAs in a nutshell
An IFA is between an employee and employer to tailor work conditions to suite the employee (or the employer). The IFA varies some of the terms and conditions in the existing Modern Awards or Enterprise Bargaining Agreement (EBA). The Fair Work Act allows certain terms of the Modern Awards to be varied.
Overall, the employee must be “better off” as a result of the changes. There is no requirement to register an IFA.
The minimum entitlements in the National Employment Standards still apply. So employers need to be mindful of this, even though the IFA may vary the current Award.
When and why would 1 use an IFA?
The Fair Work Act recognises that everyone’s situation is different. Modern Awards and EBAs may not always align with the best interests of all employees or employers. IFAs allow both parties to have their needs met in regards to:
- the requirements of the business and/or
- the personal circumstances of the employee.
IFAs can have a positive effect on the business through amplified staff satisfaction. This can lead to improved staff retention and higher efficiency in the workplace.
In Awards and EBAs you can use an IFA to vary certain clauses. The Award or EBA relevant to the specific industry will set this out. In an Award, the flexibility clause usually allows an IFA to vary:
- hours of work
- rate of pay during overtime
- leave loading
How do I enter into an IFA?
Both the employer and employee must agree to the IFA. The IFA must:
- be in writing
- state each term of the Award that is to be varied
- state how the Award is varied
- detail how the employee is better off overall include the start date
- be signed by both parties.
Each party must keep a copy of the IFA.
What is BOOT or “better off overall”?
The employee must be 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. The employee would be ‘better off overall”, as long as the employee is ultimately paid more than under the relevant Award arrangements. .
If you would like Individual Flexibility Agreements for your employees contact HR Gurus today on 1300 959 560.
Written by resident HR Guru Emily Jaksch