Australia: Flexibility and the Fair Work Act

Last Updated: 3 February 2010
Article by Andrew Tobin

Individual flexibility arrangements

The Fair Work Act 2009 seeks to promote workplace flexibility through the use of individual flexibility arrangements. These arrangements allow for variations to modern awards or enterprise agreements to meet the needs of employers and individual employees, while at the same time ensuring that minimum entitlements and protections are maintained.

Every modern award and enterprise agreement must include a 'flexibility term'. A flexibility term allows an employer and an individual employee to agree on an arrangement which varies the effect of the modern award or enterprise agreement to meet the genuine needs of the employer and the individual employee. If an enterprise agreement does not include a flexibility term when it is made by the parties, it will be taken to include the model flexibility term set out in Fair Work Regulations 2009.

If it is in relation to a modern award, an employer and employee can only agree to an IFA that varies:

  • arrangements for when work is performed, such as working hours;
  • overtime rates;
  • penalty rates;
  • allowances; and
  • leave loading.

If it is in relation to an enterprise agreement, an employer and employee can only agree to an IFA that varies those terms that are 'permitted matters' and that are included in the agreement. Permitted matters are:

  • matters pertaining to the relationship between the employer and employees covered by the agreement;
  • matters pertaining to the relationship between the employer and a union covered by the agreement;
  • deductions from wages for any purpose authorised by an employee covered by the agreement; and
  • how the agreement will operate.

When made, an IFA has effect as if it was actually a term of the modern award or enterprise agreement, and it can be enforced as such.

The Fair Work Ombudsman gives the following example of when an IFA may be used to create flexible work arrangements:

  • An enterprise agreement might provide for ordinary working hours between 9.00am and 5.00pm. If an IFA between an employer and an individual employee provides for ordinary working hours of between 7.00am and 3.00pm, the enterprise agreement will apply to the employee as if the agreement provided for ordinary working hours of between 7.00am and 3.00pm. The unvaried enterprise agreement will continue to apply to other employees unaffected by the IFA so that they have ordinary working hours of between 9.00am and 5.00pm.
  • Either an employee or employer can initiate a request for an IFA. However, an IFA can only be made after employment begins. An offer of employment cannot be made subject to an IFA being entered into by an employee. Employees cannot be forced to enter into an IFA and cannot be treated adversely or discriminated against for refusing to enter into an IFA. To an extent, then, the use of IFAs to achieve workplace flexibility is limited.

When an employer and an employee enter into an IFA, it must:

  • be genuinely agreed to by the employer and employee;
  • result in the employee being 'better off overall' than the employee would have been if no IFA was made; and
  • be signed by both the employer and employee (or be signed by a parent or guardian if the employee is under 18 years old).

A copy of the IFA must be provided to the employee within 14 days of the agreement.

IFAs do not need to be approved by Fair Work Australia. Instead, the employer is responsible for ensuring that:

  • the employee is better off overall than if there was no IFA. This assessment will usually involve comparing the employee's financial benefits under the IFA with the financial benefits under the applicable modern award or enterprise agreement. The employee's personal circumstances and any non-financial benefits which are significant to the employee can also be considered. The Fair Work Ombudsman gives the following example:
    • Dave is a full-time industrial chemist at Rosie Industries Pty Ltd. Dave's employment is covered by the Rosie Industries Pty Ltd enterprise agreement which includes a flexibility term allowing IFAs to be made about the hours an employee works within the agreement's span of hours. Dave wants to coach his son's football training on Tuesday afternoons. Dave makes an IFA with his employer allowing him to start and finish work half an hour early on Tuesdays without the usual penalty rate that would apply for the first half hour. Dave is better off overall because he can attend his son's training, something he values as a significant non-financial benefit.
  • the IFA is made correctly and meets all requirements of the Act. If an IFA is not made properly:
    • the terms of the IFA continue to govern the employee's terms of employment as if it was made properly. This ensures that the employee keeps any benefits to which they are entitled under the IFA; and
    • a corporate employer may be liable to a penalty of up to $33,000 and any individual involved liable for a penalty of up to $6,600.

Generally, an IFA may be terminated by agreement or by either party giving the required written notice (a maximum of 28 days). While it might suit an employer in some instances to terminate an IFA, in many instances the ability of an employee to simply 'change their mind' and terminate an IFA by giving the employer notice - if the reason they agreed to make it no longer suits them - will limit the effectiveness of IFAs as any kind of significant management tool. Clearly IFAs are designed with the interests of employees, rather than employers, in mind.

Preferred hours clauses and flexibility

To allow for long term planning and workplace flexibility, employers have commonly included 'preferred hours' clauses in collective agreements to provide for flexibility in working hours. These clauses typically allow employees to request to work at particular times that would otherwise be outside their ordinary hours, for reasons to do with their personal circumstances, on the basis that they will be paid at the ordinary hourly rate, rather than at any overtime or other penalty rate that might otherwise apply. However, in the last month, Fair Work Australia has refused to approve two enterprise agreements containing preferred hours clauses on the basis that the clauses failed the 'no disadvantage' test (as was applicable before 31 December 2009).

In light of these decisions, employers might reconsider including preferred hours clauses in enterprise agreements and instead use IFAs to achieve similar outcomes. In doing so, employers will need to ensure that employees are 'better off overall' underneath an IFA when compared to the applicable modern award or enterprise agreement. However, as discussed above, IFAs do not necessarily provide employers with industrial solutions incorporating any reasonable degree of longevity and certainty. Unless and until there is some clarity from Fair Work Australia about the extent to which preferred hours clauses will be accepted, if at all, employers should consider not including these clauses in enterprise agreements. If they do, there is a risk that an agreement will be rejected by Fair Work Australia and the employer will have to amend the agreement, hold a new vote and re-lodge the agreement for approval, all of which will take additional time, effort and cost.

The National Employment Standards

The National Employment Standards came into effect on 1 January 2010. They introduce a new legislative entitlement for employees with children under school age or, in the case of disabled children, under 18 years old, to request a change in their working arrangements to help them care for their children. Examples of changes in working arrangements in the National Employment Standards include changes in work hours, changes in work patterns and changes in work location. However, these are only examples and the changes that might be made are really only limited by the confines of an employer's operational requirements.

A request for a change in working arrangements must be made in writing and set out the details of the change sought and the reason for the change. Employers must provide a written response to the request within 21 days, stating whether the request has been approved or refused. An employer can only refuse a request on reasonable business grounds and must provide details of the reason for refusal. The National Employment Standards also provide for an extended period of unpaid parental leave. As was the case previously, employees are entitled to 12 months of unpaid parental leave. However, employees may request that their employer agree to an extended period of unpaid parental leave of up to 12 months immediately following the end of the initial 12 month period.

Any request for an extended period of parental leave must be made in writing and be given to the employer at least four weeks before the end of the initial period of leave. The employer must provide a written response to the employee's request, stating whether they grant or refuse the request. The response must be given no later than 21 days after the request is made. As with a request for flexible working arrangements, an employer may refuse the request only on reasonable business grounds. If an employer refuses to agree to a request for flexible working arrangements or an extended period of parental leave, that decision will not ordinarily be reviewable by Fair Work Australia, although it could lead to a claim alleging 'adverse action' under the Fair Work Act or unlawful discrimination under anti-discrimination legislation. However, Fair Work Australia is able to deal with a dispute arising from a refusal to agree to flexible working arrangements or an extended period of parental leave if the parties have agreed that it has the power to do so in an employment contract, enterprise agreement or other written agreement.


While IFAs are designed to allow for workplace flexibility, they have their limitations. These include the following:

  • An IFA cannot be made before employment begins and an offer of employment cannot be made subject to the employee agreeing to make an IFA.
  • An IFA can be terminated by an employee at any time on giving notice of up to 28 days. Any flexibility gained by an employer under an IFA could be lost if an employee simply decides to terminate the IFA, making long-term business planning and structuring around IFAs almost impossible.

At this stage it is not clear whether the inclusion of preferred hours clauses in collective enterprise agreements offers a more viable alternative to the default IFA arrangements. Early indications are that Fair Work Australia will carefully scrutinise preferred hours arrangements proposed for inclusion in enterprise agreements, and in the future the terms of what will actually be permitted might be very limited. While the right to request flexible working arrangements or an extended period of parental leave under the National Employment Standards does not impose a mandatory obligation on employers to agree to such requests, it does impose an obligation to properly consider such requests when they are made. Ordinarily a decision to refuse these requests cannot be reviewed by Fair Work Australia. However, properly drafted employment documentation will permit disputes of this kind to be referred to Fair Work Australia for resolution, including through arbitration.

Failure by an employer to comply with the requirements of any flexibility option in the new system could result in various kinds of proceedings against the employer, including adverse action claims and the imposition of civil penalties of up to $33,000 per breach. Individuals involved in breaches, such as company directors or those with human resource management responsibilities, can also be penalised up to $6,600 per breach.

© HopgoodGanim Lawyers

Australia's Best Value Professional Services Firm - 2005 and 2006 BRW-St.George Client Choice Awards

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Andrew Tobin
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.