Individual flexibility arrangements

Early Childhood Education and Care Worker Retention Payment

The Australian Government is funding a 15% above award wage increase for all eligible early childhood education and care (ECEC) workers through the ECEC Worker Retention Payment.

To be eligible for this payment, ECEC providers must satisfy certain criteria to be eligible to receive it. This includes that a provider must have a legally enforceable workplace instrument (like an individual flexibility arrangement) in place as well as meet other criteria.

To find out more, go to Early Childhood Education and Care Worker Retention Payment.

Learn how employers and employees can make an individual flexibility arrangement (IFA).

What an IFA is

An IFA is a written agreement used by an employer and employee to change the effect of certain clauses in their award or registered agreement (like an enterprise agreement).

All awards and other registered agreements have to include an IFA clause. If they don’t include one, the model clause from the Fair Work Regulations 2009 will apply (see source reference).

An IFA is used to make alternative arrangements that suit the needs of the employer and employee. The purpose of an IFA is not to simply reduce or remove an employee’s entitlements.

An employer has to make sure that the employee is better off overall with the IFA than without it, compared to their award or registered agreement at the time the IFA was made. To do this, the employer should look at factors including the:

  • financial and non-financial benefits for the employee
  • employee’s personal circumstances.

The IFA clause in an award or registered agreement will set out additional requirements.

Tip: IFAs and flexible working arrangements

IFAs are different from ‘flexible working arrangements’.

Flexible working arrangements are a different type of workplace flexibility that comes from the National Employment Standards (NES). Eligible employees who can request these arrangements include pregnant employees, employees with disability and employees over 55 years of age. Length of service rules apply. Find out more at Flexible working arrangements or complete some quick online learning: Workplace flexibility.

IFAs change the effect of clauses under an award or registered agreement. They’re different from requests for flexible working arrangements made under the NES.

What an IFA can do

An IFA can change how certain clauses in an award or registered agreement apply to the employee and employer.

The purpose of an IFA is to meet the genuine needs of the employee and employer.

An IFA is specific to an individual employee and their employer. It won’t apply to other employees within a business.

Change the effect of award clauses

In awards, employees and employers can use an IFA to vary the effect of clauses about:

  • arrangements for when work is performed, such as working hours
  • overtime rates
  • penalty rates
  • allowances
  • leave loading (like annual leave loading).

Example: Changing allowances using an IFA

Harry works part-time and is covered by an industry award.

Harry’s award provides for a daily fare allowance of $25 when he travels to work in his own vehicle. He regularly drives his own vehicle to work 3 days per week and occasionally on a fourth day. This means that each week Harry is entitled to either $75 or $100 for the daily fare allowance.

To make payroll processing easier and ensure Harry is paid the same amount each week, his employer proposes that they enter into an IFA. The IFA increases Harry’s hourly rate by $4 per hour in exchange for the daily fare allowance no longer being paid.

Based on Harry’s weekly roster of 32 hours, this change means he receives an additional $128 per week.

As $128 is higher than the maximum $100 daily fare allowance amount that Harry would be entitled to in any given week, Harry is better off overall under the IFA.

Example: Changing leave loading using an IFA

Katya works full-time. The award that applies says that 17.5% annual leave loading is payable on annual leave payments.

Under the award, Katya is paid $30 per hour or $1140 per week.

Whenever Katya takes annual leave, she expects to receive a $35.25 hourly pay rate (her hourly pay rate plus the annual leave loading). As she is eligible for 4 weeks paid leave each year, the total of $798 represents the amount of annual leave loading she would be paid if she took all 4 weeks.

Katya and her employer, Sue, agree to an IFA which will increase Katya’s wage by $1 per hour. This is on the condition that annual leave loading isn’t payable when annual leave is taken.

The hourly increase totals $1824 per year.

As $1824 is higher than the minimum annual leave loading amount for the year, Katya is better off overall under the IFA.

Katya and Sue agree to review the IFA in line with any increases to Katya’s wage. This is to ensure that the amount of $1824 remains sufficient to compensate her for not being paid annual leave loading.

Change registered agreement clauses

The flexibility clause used in a registered agreement will say which clauses of that agreement can be changed.

To find a registered agreement (like an enterprise agreement), search the Fair Work Commission website: Find an enterprise agreement.

Example: Changing working hours using an IFA

Amir works full-time. He’s been employed at his current workplace for 6 months and is covered by an enterprise agreement. His enterprise agreement states that dayshift hours are 7 am to 4 pm, with overtime rates payable for work outside those hours.

Amir has a daughter at school who he needs to start picking up at 3 pm each day due to changes in his partner’s working arrangements. He’s not yet eligible to request flexible working arrangements, as certain criteria apply.

Amir asks his employer, Loz, if he can start his day shift earlier each day and finish work earlier, so he can collect his daughter on time. Loz says she is open to this arrangement and it would also suit the needs of the business, however it would be outside the span of ordinary hours in the enterprise agreement. Loz explains that an IFA could be used to vary Amir’s ordinary hours so that he starts at 6 am, meaning he could finish earlier each day and overtime rates would not be payable for work he performed before 7 am.

Amir considers this proposal and reviews our information on making individual flexibility arrangements. Amir considers that although he would not be entitled to overtime rates payable for starting work earlier, his ability to meet his childcare commitments means that he is better off overall.

Loz and Amir both agree on an arrangement where Loz rosters Amir from 6 am to 2 pm each day. Loz prepares an IFA changing Amir’s ordinary day shift hours set by the enterprise agreement. Amir reviews and agrees to sign the IFA.

Best practice guidance on IFAs

Want more detailed information on IFAs? Check out our Use of individual flexibility arrangements best practice guide.

The guide has information for employers and managers on working at best practice for IFAs. It also has practical tips and case studies to help better understand them.

We also have a library article with more technical FAQs answered: Individual flexibility arrangements.

How an IFA is made

An employer or employee can ask the other to enter into an IFA.

An IFA can be made at any time after the employee has started working for the employer.

An employee’s right to refuse to agree to an IFA is protected by general protections laws. This means that an employee can’t be discriminated against or treated adversely for refusing to agree to one.

Requirements for an IFA

Below are the requirements for an IFA:

Must be in writing

When an employee and employer have agreed on what arrangements they want to make, an IFA has to be put in writing and signed by both the employer and employee.

Must specify the terms being changed

The IFA must specify the terms of the award or registered agreement that are being varied. For example, leave loading or arrangements for when work is performed.

Both must genuinely agree

Both an employee and employer must genuinely agree to an IFA. An employee can’t be forced to sign an IFA to get a job.

Records must be kept and a copy given

The employer must keep a copy of the signed IFA as an employee record (that is, for 7 years) and give a copy to the employee.

Under 18s must have a signature from a parent or guardian

If the employee is under 18 years old, it has to also be signed by their parent or guardian.

Rules on how an IFA may be terminated

A flexibility arrangement must also set out how the agreement may be terminated by the employee or the employer.

Sets out any other requirements

The IFA clause of the award or registered agreement may set out additional requirements that need to be met.

Example: Making an IFA

Sarah is 21 years old. She works part-time 6 hours per day, 3 days per week.

Sarah’s employer usually requires employees to work from 9 am to 5:30 pm. This is the span during which ordinary hours can be worked under the enterprise agreement that applies to employees.

Sarah wants to make changes to her usual working hours so she can better manage her university commitments.

Sarah approaches her boss, Mark, about starting and finishing work later so she can attend online classes in the mornings before work. The pair talk about the options available to them and they discuss making an IFA under which Sarah would work her ordinary hours from 1 pm to 7:30 pm.

Mark explains that changing Sarah’s ordinary hours would mean she is no longer entitled to the penalty rates payable past 5:30 pm under the enterprise agreement. Mark is happy for Sarah to work until 7:30 pm as he trusts her to work without supervision and some of Sarah’s duties can be done outside of normal business hours.

Sarah goes home and reads our information on this page and considers the proposal. While Sarah wouldn’t receive penalty rates for working past 5:30 pm, she believes the change leaves her better off overall as she can better manage her university studies.

Sarah talks with Mark again and agrees to the IFA. Mark prepares an IFA that changes Sarah’s ordinary hours set by the enterprise agreement, which Sarah agrees to.

In the future, Sarah will work 1 pm to 7:30 pm each shift.

The agreement is signed by both Mark and Sarah. Each person keeps a copy.

Other considerations

If an IFA doesn’t meet the requirements set out in the Fair Work Act, it will still apply to the employee. However, this may result in the employer:

  • breaching the terms of a registered agreement or award, or
  • contravening the general protections provisions of the Fair Work Act.

An IFA doesn’t need to be approved or registered with us (the Fair Work Ombudsman) or the Fair Work Commission (the national workplace relations tribunal).

How an IFA is ended

An IFA may be ended at any time by written agreement between an employer and employee. Otherwise, the IFA can be ended by giving the other party appropriate notice.

An IFA made under an award can be ended with 13 weeks notice.

A registered agreement will say how much notice is required, but it can’t be more than 28 days. If an IFA doesn’t meet the requirements set out in the Fair Work Act, either party may end it with 28 days notice.

Source reference: Fair Work Act 2009 ss.144 and 202 and Fair Work Regulations 2009 r.7.11 Sch. 2.2.

Tools and resources

Related information

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Check out our Fixing a workplace problem section for practical information about:

  • working out if there is a problem
  • speaking with your employer or employee about fixing the problem
  • getting help from us if you can't fix the problem.

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