Employers join appeal over flexibility ruling

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Employers join appeal over flexibility ruling

The Australian Industry Group has applied to intervene in the Federal Government’s appeal against an FWA ruling that states flexibility arrangements cannot vary the terms of an enterprise agreement.

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The Australian Industry Group (Ai Group) has applied to intervene in the Federal Government’s appeal against an FWA ruling that states flexibility arrangements cannot vary the terms of an enterprise agreement.
 
FWA Commissioner Ryan ruled in the TriMas case that flexibility arrangements could only vary the ‘effect’ of the enterprise agreement, not the agreement itself.
 
Cmr Ryan also cast doubt on the legality of an example of how flexibility arrangements should work in the Explanatory Memorandum that accompanied s22 of the Fair Work Act 2009.
 
Ai Group said the memorandum gives the example of an enterprise agreement with a spread of hours between 8 am and 6 pm, with hours outside of the spread attracting penalty rates.
 
No penalty rates
 
An employee named Josh wishes to start at 7.30 am and finish earlier on two nights of the week so that he can coach a children's football team in the afternoon. In this example, an IFA is entered into varying the terms of the agreement relating to hours of work and penalty rates, as they apply to Josh, allowing Josh to start at 7.30 am without penalty rates.
 
In his ruling, Cmr Ryan said this was ‘clearly an IFA which varies the terms of the enterprise agreement. But is this permitted by the specific terms of the Act? …’.
 
‘What significance should be given to the phrase “the effect of which may be varied” appearing in both s.144(4)(a) and 203(2)(a) and the corresponding phrase “varying the effect of” appearing in both s.144(1) and 202(1)(a)?’
 
Cmr Ryan then ruled that that an IFA cannot vary the terms of an agreement, but rather only ‘the effect of the terms’ though he accepted this was difficult to define.
 
‘Got it wrong’
 
Heather Ridout, Ai Group chief executive, said her organisation would argue that Commissioner Ryan got it wrong in deciding that Individual Flexibility Arrangements (IFAs) cannot vary the terms of an enterprise agreement.
 
‘IFAs were devised by the Federal Government to provide flexibility for employers and individual employees to agree to vary the terms of an enterprise agreement, as it relates to an employee, provided that the employee is better off overall, and subject to a set of safeguards,’ he said.
 
‘Every enterprise agreement made under the Fair Work Act is required to include a provision which permits the making of an IFA. A similar provision is included in every modern award.’
 
‘During the development of the Fair Work Act, industry opposed the abolition of Australian Workplace Agreements (AWAs) which had been a feature of the national workplace relations system for over a decade. IFAs were designed to provide the flexibility for agreements to be reached between employers and individual employees, in the absence of AWAs.’
 
Uncertainty
 
Ridout said the decision creates a great deal of uncertainty and threatens the validity of a large proportion of the IFAs already made.
 
‘The appeal is listed for hearing before a Full Bench of FWA on 21 April the same day that Ai Group's appeal against Commissioner Ryan's decision in the Dunlop Foams case will be heard by a different Full Bench,’ she said.
 
‘Ai Group continues to take an approach to the new Fair Work Act where we will actively monitor how the legislation is being applied and interpreted, and will seek to pursue appeals or intervene when decisions are made which are contrary to the intent of the Act and damaging to the economy.’
 
‘Given that the legislation is new and wide ranging, it is to be expected that some interpretation issues will arise.’
 
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