Individual flexibility agreements

What is an individual flexibility agreement?

An individual flexibility agreement (IFA) is an agreement made between an employer and an employee who are covered by an award or enterprise agreement. An IFA changes the way certain terms of the award or enterprise agreement operate for the individual employee.

All awards contain a standard flexibility clause setting out the requirements for making an IFA.

Enterprise agreements also include clauses setting out the requirements for making an IFA, but these clauses vary from agreement to agreement. It’s therefore important for employers and employees covered by an enterprise agreement to check the specific requirements in the enterprise agreement before starting the process of making an IFA.

This article focuses on the requirements and process for making an IFA under an award.

Requirements for making an IFA under an award

Under the award flexibility clause, an IFA:

• must meet the genuine needs of the employer and the employee,
• must be made without coercion or duress,
• can only be made once an employee has started employment - an employer can’t require an employee to sign an IFA as a condition of starting employment,
• must result in the employee being better off overall than if the award applied without any variations,
• must be in writing and signed by the employer and employee (and a parent or guardian if the employee is under 18), and
• must not require the approval or consent of a person other than the employer and the employee (except where the employee is aged under 18).

Which parts of an award can an IFA change?

An IFA can vary award terms relating only to the following:

• arrangements for when work is performed,
• overtime rates,
• penalty rates,
• allowances, and
• annual leave loading.

For example, an employer and an employee could make an IFA to change when the employee works to allow the employee to finish early one day per week and work extra hours on other days to enable the employee to coach their child’s sports team.

Information that must be included in an IFA

An IFA must include the following information:

• the names of the employer and the employee,
• the award term or terms that will be varied by the IFA – i.e. the award clause numbers and (if applicable) names,
• an explanation of how the award term or terms will be varied,
• an explanation of how the IFA results in the employee being better off overall, and
• the date the IFA will start.

Process for making an IFA

If an employer initiates the IFA process, then the following requirements apply:

• the employer must give the employee a written proposal about the IFA, and
• if the employer is aware that the employee has limited understanding of written English, they must take reasonable steps (including providing a translation) to ensure that the employee understands the proposal.

Employees are entitled to refuse an IFA proposed by their employer. Employers are prohibited from taking adverse action against an employee who refuses to enter into an IFA.

If an employee initiates the IFA process, it’s advisable, although not a requirement, for the employee to put their request for an IFA in writing.

Regardless of who initiates the IFA process, the IFA must be in writing and signed by the employer and employee (and a parent or guardian if the employee is under 18).

Under the Fair Work Act and Fair Work Regulations, an employer must:

• give a copy of the IFA to the employee and
• keep a copy of the IFA for seven years.

How can an IFA be ended?

An IFA can be terminated:

• at any time if the employer and employee agree in writing, or
• by the employer or employee giving four weeks written notice to the other party.

What are the alternatives if an IFA isn’t the right option?

IFAs are only one way that an employer and employee can achieve workplace flexibility.

If an IFA isn’t the right option, for example, because the employer and employee want to make a change to a condition that isn’t listed in the award or enterprise agreement clause, or the employee isn’t covered by an award or enterprise agreement, then they can consider:

• changing the employee’s employment contract to implement agreed changes, or
• if the employee is eligible, making a flexible work arrangement under the National Employment Standards in the Fair Work Act 2009 (see below for more information on the difference between IFAs and flexible working arrangements).

Whichever method is used, it’s important to remember that in most cases, changes to employment conditions can only be made by agreement between the employer and employee.

Are individual flexibility agreements the same as flexible work arrangements?

While ‘individual flexibility agreement’ and ‘flexible working arrangement’ are similar terms, they refer to different kinds of arrangements for implementing flexibility in the workplace.

Entitlements in relation to flexible working arrangements come from the National Employment Standards, not from awards or enterprise agreements.

There are eligibility criteria that an employee must meet before they are entitled to request a flexible working arrangement, including:

• a minimum employment period of 12 months, and
• the existence of one of the circumstances specified in the NES (including that the employee has a disability, is pregnant, is aged over 55 or is the parent or carer of a child of school age or younger).

Employers must comply with certain requirements for responding to requests for flexible working arrangements.

Flexible working arrangements can cover a broader range of matters than IFAs.

Key takeaways

• An IFA may be a good option if an employer and employee would like to vary specified award conditions to provide greater flexibility.
• If an IFA isn’t suitable, there are other options to implement workplace flexibility, such as varying the employment contract or making a flexible work arrangement (if the employee is eligible).
• The Fair Work Ombudsman’s website has extensive information about IFAs and flexible working arrangements.