During the Covid-19 pandemic, many workplaces have transitioned their workforce to working from home, reduced or increased hours, or made changes to the roles that employees are performing. Many of these changes are considered a temporary variation to the employment agreement, and this flexibility has allowed many businesses to continue to operate during difficult circumstances.
Considering continuing flexible work arrangements for some of your employees?
As restrictions begin to lift, rather than return to the previous work arrangements, some employers and their employees are considering how these flexible arrangements, introduced in response to Covid-19, are actually working to the benefit of both the employee and employer.
The flexibility of working from home, working outside of normal business hours or other flexible employment arrangements, can lead to improved productivity and efficiency as your employees experience greater job satisfaction when their role accommodates other commitments in their lives.
Can employees work staggered days, outside of normal business hours, or on weekends and how can we account for overtime or penalty rates?
When looking at working times, consider the needs of the business, and those of the employee, and note that penalty rates and overtime are likely to apply for weekends and after hours work.
It is important that any changes to the employment agreement are documented, agreed to by both parties, and do not leave the employee worse off than they would be under the conditions of the applicable award.
An Individual Flexibility Arrangement (IFA) could be implemented by the employer and employee to change the effect of certain clauses in their award or enterprise agreement, for the benefit of all parties.
What is an Individual Flexibility Arrangement (IFA)?
IFAs are a useful tool for both employers and employees to introduce and record flexible arrangements that will benefit both parties. The IFA is a standalone agreement that sets out the specific agreed terms and conditions that vary from the employee’s contract, award or enterprise agreement.
Having a good understanding of the Awards that apply to your workplace (including flexibility terms) and being clear on the needs of both your business and your employees are key to achieving positive outcomes from a flexible working arrangement.
What employment terms are flexible?
Flexibility terms within modern awards will only allow IFAs to vary:
- arrangements for when work is performed such as working hours
- overtime rates
- penalty rates
- allowances
- leave loading.
It’s important to note that an IFA can’t be used as a way to reduce or remove any of the employee’s entitlements. When introducing an IFA, the employer has to make sure that the employee is better off overall with the IFA than without it compared to the award or enterprise agreement provisions. This can include consideration of financial and non-financial benefits for the employee, as well as the employee’s personal circumstances.
What are the steps to take to implement an IFA?
You may have been approached by an employee seeking to continue their current flexible arrangements or you may want to propose changing or continuing recently introduced working arrangements. Whatever the reason for wanting to put in place an IFA, these are some important steps to take:
- Consider the clauses of the Modern Award that are being changed and how they are being changed
- Document the details of how these changes result in the employee being better off
- Assess the rate of pay against the award provisions for overtime and penalty rates that may apply, ensuring they are better off overall
- Fully disclose and describe details about how the IFA can be terminated and what happens in this situation (usually the standard Award terms will apply)
- Discuss the proposed flexibility arrangements with the employee and make any reasonable amendments before finalising the document
- Make sure the IFA is signed by both the employer and the employee (or the employee’s guardian if the employee is under 18 years old)
- A copy of the IFA should be kept on the employee’s file and also given to the employee for their records
Other important considerations
IFAs cannot be offered as a condition of employment to new employees, usually the award will state how long an employee must be in their role before an IFA can be introduced. IFAs can be terminated and the way this can be done should be included in the document. The IFA must be genuinely agreed between the employee and employer and there are penalties under the Fair Work Act for employers who fail to implement an IFA properly.
Need help creating Individual Flexibility Arrangements?
Our team of HR specialists can assist in carrying out BOOT tests, make recommendations for items to include in your IFA, draft documents, meet with employees on your behalf or guide you through the process, and help you ensure this process is completed in line with Fair Work requirements. Get in touch with our team today for more information.