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The number of Modern Awards in Australia that have Individual flexibility options

 

In all modern awards, there is a flexibility clause at the beginning of the award typically with the wording “despite anything else in this award, an employer and an individual employee may agree to vary the application of the terms of this award in order to meet the genuine needs of both the employee and the employer”.

What does this mean? Put simply, you can pay an above award rate and/or agree to vary the application of some of the following award conditions:

 i) arrangements for when work is performed

ii) overtime rates

iii) penalty rates

iv) allowances

v) annual leave loading

There are various obligations you as the employer must meet prior to entering into the flexibility arrangement, as well as during the life of the agreement. Most importantly, an agreement can only be entered into after the employee has commenced employment with you and the agreement MUST result in the employee being better off overall. And, the employee and employer must genuinely agree to the variation, without undue coercion or duress.

 What are the benefits?

There are many benefits to individual flexibility arrangements for both the employee and employer. IFA’s can help to retain great talent, increase motivation and output and provide for a greater sense of you as the employer giving a crap about your people. From a payroll perspective, it will mean quicker and less complex payroll runs (if you are varying overtime/penalty/allowances and annual leave loading) for your employees on IFA’s. At the end of the day, the flexibility is there to help you run your business the way it needs to run to be successful, and as a result you and your employees are better off!

 Modern awards require IFA’s to:

  • Identify the terms of the award that will be varied by the IFA
  • Be a genuine agreement between the employer and employee
  • Ensure the employee will be better off overall than they would have been pre IFA
  • Provide details surrounding the termination of the agreement
  • Be in writing and kept as a record of time and wages

We hope this brief article helps you to understand what IFA’s are and how they can be used. If you would like to learn more about what you are required to do under the applicable award you adopt in your business prior to getting started, or would like a template agreement, please get in touch with us now – xavier@nextgenhr.com.au