Flexibility agreements: how do they work?

Q&A

Flexibility agreements: how do they work?

What award conditions can be altered by a flexiblity agreement and what records should a business keep? Paul Munro explains.

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What award conditions can be altered by an award flexiblity agreement and what records do we need to keep?

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Q Our company is investigating the usefulness of flexibility agreements under the modern awards that operate in our workplaces. What kind of details and employment records need to be kept in relation this type of agreement and what award conditions could be altered by an award flexibility agreement?

A Modern awards contain an ‘award flexibility’ clause that allows certain conditions prescribed by the award to be altered by agreement between an employer and an individual employee. An individual flexibility agreement can only be entered into after the employee has commenced work with the employer. Generally, the terms an employer and an individual employee may agree to vary are those concerning:
  • arrangements for when work is performed
  • overtime rates
  • penalty rates
  • allowances, and
  • annual leave loading.
The terms must result in the employee being better off overall at the time the agreement is made.

The agreement must also be:
  • be in writing, name the parties to the agreement and be signed by the employer and the individual employee and, if the employee is under 18 years of age, the employee’s parent or guardian
  • state each term of the award that the employer and the individual employee have agreed to vary
  • detail how the application of each term has been varied by agreement between the employer and the individual employee
  • detail how the agreement results in the individual employee being better off overall in relation to the individual employee’s terms and conditions of employment; and
  • state the date the agreement commences to operate.

Terminating the flexibility agreement

Generally, the agreement may be terminated:
  • by the employer or the individual employee giving 13 weeks’ notice of termination, in writing, to the other party and the agreement ceasing to operate at the end of the notice period
  • at any time, by written agreement between the employer and the individual employee.
The employer must give the individual employee a copy of the agreement and keep the agreement as a time and wages record.

Award conditions that may be varied by a ‘facilitative provision’

Some modern awards also contain a ‘facilitative provisions’ clause in addition to the ‘award flexibility’ provisions. Modern awards with a facilitative provision include Graphic Arts, Printing and Publishing Award 2010 and Manufacturing and Associated Industries and Occupations Award 2010. Generally, the following conditions can be varied by the parties in the relevant awards:

Facilitation by individual agreement

The following provisions can usually be utilised by agreement between the employer and an individual employee:
  • minimum engagement of part-time employees
  • variation to hours of part-time employees
  • minimum engagement for casuals
  • annualised salary arrangements
  • make-up time
  • meal break
  • time off in lieu of payment of overtime
  • rest period after overtime
  • rest break

Facilitation by majority or individual agreement

The following provisions can usually be utilised by agreement between an employer and the majority of employees in the workplace or a section or sections within it, or an employer and an individual employee:
  • period for casual election to convert to full-time or part-time employment
  • payment of wages
  • ordinary hours of work for day workers on weekends
  • variation to the spread of hours for day workers
  • methods of arranging ordinary working hours
  • variation to the spread of hours for shift workers
  • working in excess of five hours without a meal break
  • substitution of public holidays

Facilitation by majority agreement only

The following facilitative provisions may only be utilised by agreement between the employer and the majority of employees in the workplace or a section or sections of it:
  • ordinary hours of work, continuous shift work
  • ordinary hours of work, non-continuous shift work
  • 12-hour shifts
  • public holiday shifts
  • conversion of annual leave to hourly entitlement and annual close down

Arbitration by the Fair Work Commission

The Fair Work Commission determined that an employee only has the power to enter into negotiations over alternative work arrangements — there was no guaranteed entitlement to have them changed.

However, where the parties could not reach agreement, there was a role for arbitration.

In a particular matter, while the employee’s request clearly met the spirit of the flexible hours request provisions, the employer had provided extensive evidence that it would incur significant extra costs if it was approved. This outweighed the personal circumstances of the employee.

The issue of potentially setting a precedent for other employees was considered less important, as it was not proven. The commission’s role did not extend to advising employers how to structure their businesses.

However, the commission also noted the employee’s intention to retire in the near future, and suggested that the parties continue to try to reach some other agreement satisfactory to both. The 28-day termination notice period in IFAs negotiated under the enterprise agreement would serve as a safeguard if the arrangements didn’t work out.

See Australian, Municipal, Administrative, Clerical and Services Union v Western Water [2013] FWC 6060.

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