I have acted for several businesses that have had claims made
against them from an employee for under payment including
penalties, overtime and leave loading. In each of these matters,
the businesses were paying the employee above the award rate and in
some cases were also paying the employee a "bonus".
However, as our clients did not have Individual Flexibility
Agreements ("IFA") in place to vary the requirements
under the award to make a "loaded" single rate to their
employees which rolled in overtime rates, penalty rates,
allowances, leave loading and/or hours, the businesses were subject
to claims from their former employees for under payment.
While the businesses thought the employees were being
"opportunistic" they were legally entitled to make the
claims. Without implementing properly drafted IFAs these businesses
have been put in a position where they have had to either defend a
claim made against them for under payment of entitlements or
negotiate a settlement with their employees.
In most cases, our clients have decided to settle the matter as
this was a commercially viable decision for their business. These
are good examples of the importance of implementing IFAs in your
business and the risks associated with not paying your employees
the correct entitlements.
What you need to know:
The Fair Work Act 2009 (the "Act") seeks to promote
workplace flexibility through the use of IFAs. IFAs allow for
variations to modern awards or enterprise agreements by
implementing a flexible term in order to meet the genuine needs of
employers and individual employees while ensuring minimum
entitlements and protections are not undermined.
The Act ensures these arrangements do not undermine minimum
employee entitlements by requiring the employer to ensure the
employee covered by the IFA is better off overall on the IFA
compared to the modern award or enterprise agreement that it
An IFA has the effect as if it were actually a term of a modern
award or enterprise agreement and can be enforced. IFAs can vary
modern awards in relation to the following:
Arrangements for when work is performed such as working
As IFAs do not need to be approved by the Fair Work Commission,
it is the employer's responsibility to ensure that the IFA is
made correctly, and meets all of the requirements of the Act.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Long experience representing many of Australia's leading employers has taught us that in employment litigation the identity of an employee's representative is a major factor in how employee litigation runs.
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