An IFA1 can be used to vary specific modern award or enterprise agreement terms for an individual at the request of the employer or the employee2. IFAs can be beneficial to both parties as they allow certain terms to be varied to meet the needs of both. For example, under an IFA an employee may choose to work longer hours two days per week as ‘ordinary hours’ so their employer doesn’t have to pay overtime, and in return, the employer allows them to finish early two days per week and pick their children up from school.
The FWO does not have a role in assessing the entitlements under an IFA. Under the FW Act it is the obligation of the employer to make sure the employee is better off overall compared to the relevant award. An employee does not have to sign an IFA if they believe they are not better off overall.
The Inquiry identified that three businesses had employees on IFAs, and for all three businesses, the IFAs failed to fully meet the award flexibility requirements set out in clause seven of the modern award3. Once an IFA is made it still applies even if it doesn’t meet these requirements, but it is also still considered to have breached the legislation. The FWO has taken enforcement action against all three businesses as a result. Two businesses have been issued Letters of Caution, and the third is the subject of legal action in relation to IFA and other contraventions4.
It is important that businesses entering into IFAs with their employees ensure they meet all the requirements set out in the FW Act and the relevant modern award/enterprise agreement.
- Individual flexibility arrangements page
- FW Act section 144 and section 202
- Security Services Award
- Refer to footnote 2 on the Executive summary page