Many employers – particularly those running small businesses – are becoming increasingly frustrated with the lack of flexibility provided by the Fair Work laws. The complex rules and regulations imposed by the 122 Modern Awards that apply to specific industries and occupations are particularly problematic.
If these issues sound familiar to you, I’m pleased to say there may just be a solution. They’re called Individual Flexibility Arrangements (IFAs) and they’re a very handy – and extremely under-utilised – option for businesses employing workers covered by Modern Awards.
Here’s a quick 5 point summary of what you need know:
1. IFAs allow you to vary the Award
Properly drafted IFAs allow you to vary 5 key terms of employment governed by the Modern Awards:
- â€¢ Hours of work arrangements
- â€¢ Overtime rates of pay
- â€¢ Penalty rates
- â€¢ Allowances, and
- â€¢ Leave loading
If any of these areas are costing your business money, an IFA might be just what you need.
2. Employees must be Better Off Overall
While an IFA must result in the employee being ‘Better Off Overall’, this doesn’t mean they must be ‘financially’ better off. Instead, you might agree to create more flexible start and finishing times and, as a trade-off, the employee agrees to forego their right to receive penalty rates for early starts or late finishes. That’s a win/win.
3. IFAs must be carefully drafted
IFAs must be drafted very carefully and contain all of minimum information required by the current laws. For example, the IFA must specifically set out what parts of the Modern Award (such as penalty rates) are varied by the IFA.
4. IFAs are getting better
Right now, all IFAs can be cancelled by either the employer or employee giving 4 weeks notice. Under new arrangements that will apply shortly, new IFAs will allow longer notice periods of up to 13 weeks. This will give both employers and employees much greater certainty around their longer-term working arrangements and costs.
5. IFAs can also be used in Enterprise Agreements
If you’re considering a new enterprise (collective) agreement for your business, it’s worth remembering that an IFA clause must be included. However, unlike IFAs for Modern Awards that are limited to only the 5 areas mentioned above, an IFA term in an enterprise agreement can be drafted to allow parties to vary any term (apart from the ten National Employment Standards) in the Agreement. This can be a very effective way to create much, much more flexibility in your workplace.
Published: Friday, November 15, 2013