The Federal Government is currently considering changes to individual flexibility agreements. In Part 1 of this 3 part series we explain those changes.
Every award and enterprise agreement is required to contain a clause which allows employers and employees to vary the terms, by entering into an individual flexibility agreement (IFA).
The IFA must comply with the Fair Work Act 2009 and the relevant clauses of the award or enterprise agreement. Importantly, the employee must be better off overall under the IFA. This is known as the ‘better off overall test’ or BOOT.
Changes to IFAs
The Fair Work Amendment Bill 2014—which proposes changes to IFAs—is currently being considered by the Federal Government. The changes are:
- Any IFA—whether made under an award or an enterprise agreement—will need to contain a statement by the employee setting out why they believe it meets their genuine needs, and results in them being better off overall.
- Non-monetary benefits will be considered when conducting a BOOT. The preferences of the employee will be relevant in assessing the value of the non-monetary benefit.
- Any IFA will need to contain a term allowing either the employer or the employee to unilaterally terminate the IFA by providing 13 weeks written notice.
- An employer will not be prosecuted for a contravention of a flexibility term if they believe they complied with the term’s requirements. The belief must be reasonable, based on the facts and circumstances in existence at the time of making the IFA.
- A flexibility term in an enterprise agreement will be required to state that an IFA may be made in relation to the following clauses, as a minimum:
- arrangements about when work is performed
- overtime rates
- penalty rates
- allowances
- leave loading.
Employers and employees may also agree to include additional matters about which individual flexibility arrangements can be made in the flexibility term of the enterprise agreement.
We hope this information helps guide you through the proposed changes to IFAs, but please feel free to contact Peters Bosel Lawyers if you need further clarification.
In Part 2 of this series, to be published next week, we explain the correct process for entering into an IFA.