The Full Bench was required to deal with 15 applications to vary the ‘model’ award flexibility provision in 10 modern awards. This safe approach has been evident in a number of recent modern award reviews - including penalty rates in the Retail and Fast Food sectors - see related articles - our opinion and another blog item on the penalty rates decision on our sister site, ER Strategies.
In an effort to improve the reliability and certainty of IFA’s (and reduce an obvious disincentive to their implementation), FWC has chosen to accept the Fair Work Act Review Panel's recommendation to extend the notice period for terminating IFA’s - from the current 28 days up to 13 weeks.
The FWC refused the request of many employers and employer associations to expand the provisions that IFA’s can be applied to. Of the five provisions specified in the current model clause, only one - ‘arrangement for when work is performed’ - was accepted to be ambiguous and needing review.
ERS Comment - the highest usage of IFA’s (according to the FWA Employer Survey 2012) related to arrangements for when and how work could be performed. The same survey also found that 51% of employers who were aware of IFA have found no identifiable reason to implement them, potentially due to the restrictions on which terms they can apply to.
Some Good, Some Bad
The Full Bench decided that minimum engagement periods under relevant awards would not be permitted to be varied under IFA’s, which could be interpreted as further limiting their use and relevance.
The matter of ‘preferred hours’ - where employees are able to nominate to work varied or additional hours without receiving a penalty or overtime rates - was scrutinised in some depth as part of this review. The Full Bench rightly acknowledged that such arrangements could potentially be made under the existing arrangements, however granting an employee’s request didn’t automatically mean that the better off overall test requirement was met, indicating some other offsetting benefit was required.
Employers achieve a small victory with the Full Bench providing clarity that IFA’s need only to be assessed (against the BOOT) at the point in time of being made - and not during the life of the arrangement.
However, the Full Bench has ensured that IFA’s cannot be a condition of employment by modifying the model clause to specify that they can only be entered into once the employee has commenced employment. This change was deemed necessary due to reasoning that an employee cannot have ‘genuinely agreed’ to the terms at the time of their employment.
Proposals for annual reviews of IFA’s and calls for the FWO and/or FWC to approve IFA’s were rejected.
ERS Comment - Whilst a longer termination notice period does improve the reliability and certainty of IFA’s, it also means that employers need to be certain of their labour needs for a longer period to avoid locking in an inefficient arrangement. With it looking likely that a Coalition Government - should they be victorious in September - will seek to further extend the notice period of termination of IFA’s, now is a great time to analyse how IFA’s could benefit your business.
ER Strategies is able to provide employers with advice on what the best arrangement is for your business, whether an IFA, an enterprise agreement or alternatively through careful use of common law arrangements. Call us on (02) 8907 3838 to speak with one of our experienced consultants.