Individual Flexibility Agreement. What are they and how are they created?

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Individual flexibility agreements are becoming more and more common amongst businesses. In the three years ending June 2015, nearly 14% of employers had entered into an individual flexibility agreement (“IFA”) with employees1. An IFA is an agreement between an employee and an employer that allows the terms of a modern award or enterprise agreement to be varied. Every modern award made under the Fair Work Act 2009 (Cth) contains a clause that allows employees and employers to vary certain terms of their respective award2. Clause 5 in the General Retail Industry Award 2020 governs individual flexibility arrangements which allows employees and employers to vary terms of the General Retail Industry Award 2020 that relate to:

» when work is performed; » overtime rates; » penalty rates; » allowances; or » annual leave loading3 . An example of an IFA may be if an employee is covered by an award that states that ordinary hours are worked between the hours of 8am and 4pm, however the employee enters into an IFA with the employer to alter their ordinary hours of work to be between the hours of 6am and 2pm. All other employees in the business will continue to have ordinary hours of work that are stipulated by the award (such as between 8am and 4pm). The employee in this example has requested the IFA to vary their ordinary hours in the award to allow them to pick their children up from school at 3pm. The employee will be better off overall by entering into this agreement as it allows them to spend more time with their family and attend to school pick ups which they otherwise would have been unable to do had they not entered into the IFA with the employer. Employers must ensure that the IFA is made after the employee commences employment with the employer4 and is made without coercion or duress. 5 There are certain requirements that must be met to ensure that an IFA is enforceable, including but not limited to the following: • the IFA must be in writing; • the IFA must result in the employee being better off overall at the time of the IFA being entered into than if the agreement had not been made; • the IFA must state the names of the employer and the employee; • the IFA must identify the award term or terms that will be varied;

• the IFA must state the date that the agreement will commence; • the IFA must be signed by the employer and the employee; and • the employer must keep the IFA as a time and wages record as well as providing a copy to the employee. An IFA can be terminated at any time by mutual agreement between the parties. Alternatively, if one party seeks to terminate the agreement, under the General Retail Industry Award 2020, they must provide 13 weeks’ notice in writing to the other party. If an employee requests an IFA, you can refuse this request on reasonable business grounds. For example, an employee may request that they wish to change their ordinary hours of work or reduce their days of work per week by working longer shifts. The business can refuse this request if there will be an unjustifiable burden on the business, such as needing the employee in question to be available for the busy periods of customer service hours in order to ensure the business can respond to customer queries and services at the relevant times.

If you wish to discuss implementing an IFA, please contact the legal and IR team on (03) 98324 4111 (option 1).

1 Employment Law Practical Handbook, what is an individual flexibility agreement, (Web

Page) < https://employmentlawhandbook. com.au/topic/what-is-an-individual-flexibilityagreement/>. 2 Fair Work Ombudsman, Individual flexibility arrangements, (Web Page) < https://www. fairwork.gov.au/employee-entitlements/ flexibility-in-the-workplace/individualflexibility-arrangements>. 3 Fair Work Commission, General Retail

Industry Award 2020, MA000004, 20

November 2020, cl 5. 4 Ibid cl 5.3. 5 Ibid cl 5.2. 6 Ibid cl 5. 7 Ibid cl 5.11(a). 8 Ibid cl 5.11(b). 9 Ibid cl 6.2(c).