As an employer, you may receive a request for an individual flexibility agreement. An individual flexibility agreement (IFA) is an agreement between an employer and an employee that introduces varied terms and conditions to the existing award or enterprise bargaining agreement. Although an IFA may vary the current employment agreement, minimum entitlements and protections still apply. Hence, you need to ensure you adequately compensate your employee. This article explains the law regarding IFAs.
What Are IFAs For?
The IFA aims to introduce flexibility in the workplace so that the employer’s and employees’ needs are met. This may include terms and conditions that better incorporate the business’ needs or the personal circumstances of an employee.
Who Can Request an IFA?
Awards and enterprise bargaining agreements are collective in nature. This means they apply to a group of employers and employees. Nevertheless, the Fair Work Act 2009 (Cth) requires both awards and enterprise agreements to have a clause relating to flexibility. This clause sets out the ability of both parties to the agreement – that being, employers and their employees – to agree on a variation of the existing arrangement through an IFA.
Continue reading this article below the formWhat Do IFAs Cover?
The IFA can refer to various clauses, but ultimately it will depend upon the flexibility clause outlined in the existing award or enterprise bargaining agreement. If an award covers your employees, the flexibility clause usually allows an IFA to vary:
- hours of work;
- rate of pay during overtime;
- leave loading; and
- allowances.
On the other hand, if an enterprise agreement covers your employees, the matters included in the flexibility clause can differ widely depending on what you and your employees have bargained for. For example, the flexibility clause might allow you to vary all terms and conditions of the enterprise agreement through an IFA. Alternatively, there may only be specific permitted terms and conditions that can be changed.
Who is Better Off Under an IFA?
An IFA must ensure that the employee will still have the minimum entitlements set down in their existing arrangement. Similarly to the enterprise bargaining agreement, the test is whether, under the IFA, the employee is “better off overall”.
To determine whether an employee is “better off overall”, it is beneficial to speak to an employment lawyer who can provide their opinion on whether your IFA arrangement would pass the “better off overall” test.
As an employer, understand your essential employment obligations with this free LegalVision factsheet.
How Does an IFA Work?
Put simply, an IFA transforms how provisions in an industrial instrument, such as an award or enterprise agreement, apply to employees.
For example, say the award that covers your employees states that their ordinary work hours are between 9 am and 5 pm. However, these hours do not suit your employee with family commitments after 3 pm daily. Hence, you and your employee implement an IFA that varies their ordinary work hours to be between 7 am and 3 pm. Meanwhile, the ordinary work hours for all other employees remain between 9 am to 5 pm.
Can I Terminate an IFA?
If both you and the employee agree in writing, you can terminate an IFA at any time. Otherwise, you or your employee can terminate the IFA by notifying the other party. For example, an award-based IFA can be terminated with 13 weeks’ notice. Nevertheless, the necessary notice will be specified in the registered agreement, although it cannot exceed 28 days.
Key Takeaways
An individual flexibility agreement (IFA) is an agreement between an employer and an employee that introduces varied terms and conditions to the existing award or enterprise bargaining agreement. Depending on the award or enterprise agreement that applies, your employees can request an IFA. Nevertheless, an IFA must ensure that the employee will still have the minimum entitlements set down in their existing arrangement.
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Frequently Asked Questions
An individual flexibility agreement is an agreement between an employer and an employee that introduces varied terms and conditions to the existing award or enterprise bargaining agreement.
The individual flexibility agreement can refer to various clauses, but ultimately it will depend upon the flexibility clause outlined in the existing award or enterprise bargaining agreement.
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