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Individual Flexibility Agreement (Agmt Covered)

Version 1.0 Updated 19 Sep 2017
Contract Manage
Who can use this agreement?
This agreement can only be used by National System Employers.
Commentary
What is an Individual Flexibility Agreement? 

An Individual Flexibility Agreement (or 'Flexibility Agreement') is a useful tool for employers who have employees covered by an Enterprise Agreement. From 1 July 2009, all Enterprise Agreements are required to include terms which facilitate Flexibility Agreements with individual employees, when the Enterprise Agreement is made by Fair Work Australia. Failure to include such a term in the Enterprise Agreement will result in the model flexibility term in the Fair Work Regulations applying. 

 

Flexibility provisions within Enterprise Agreements allow employers and an individual employee to enter into an arrangement, whereby the effect of certain terms of the Enterprise Agreement are modified to meet the individual circumstances of the employment relationship. Before considering using a Flexibility Agreement, employers must:

  • Ensure that the Enterprise Agreement referred to in the Flexibility Agreement applies to the individual employee; and
  • Consider the flexibility provisions contained in the Enterprise Agreement, and determine which terms may be modified by way of a Flexibility Agreement. If the Enterprise Agreement does not contain flexibility terms, you will need to consult the Fair Work Regulations, and apply the 'model flexibility term'.

How do Flexibility Agreements work?
Flexibility provisions in Enterprise Agreements, which allow for the making of Flexibility Agreements, specify a number of terms of the Enterprise Agreement the effect of which may be varied by a Flexibility Agreement (for example, hours of work, overtime, penalty rates etc.). It is only those terms that are stated in the flexibility provisions of the Enterprise Agreement (or in the model terms in the Regulations) that the effect of may be altered by arrangement.

As each Enterprise Agreement contains different clauses which may be altered, it is important that the flexibility provisions in the relevant Enterprise Agreement is properly analysed when entering into a Flexibility Agreement with an employee.

How do I vary the effect of terms of the Enterprise Agreement by using a Flexibility Agreement?
Within the Workplace Flexibility Agreement, Workplace users can identify the terms of the Enterprise Agreement of which they wish to vary the effect. Once doing so, the Flexibility Agreement will need to identify, with sufficient detail, how the effect of that particular Enterprise Agreement term is being modified by the Flexibility Agreement. For example, it will be necessary to show that a particular entitlement has been removed, altered, or even increased.

In addition, Workplace users must ensure that the Flexibility Agreement results in the employee’s terms and conditions of employment being better off overall than if the Flexibility Agreement didn’t apply. Therefore, users must also ensure that the Flexibility Agreement identifies in sufficient detail how it ensures the employee is better off overall, as compared to the Enterprise Agreement. For example, it will be necessary to show what benefits or entitlements an employee will receive (such as an increase in their wage) for entering into the Flexibility Agreement.

How do I implement a Flexibility Agreement?
Attached to the front of the Flexibility Agreement is a Proposal Form, which should accompany the Flexibility Agreement given to employees for consideration. As stated in the proposal, employees should be given ample time to consider the terms of the Flexibility Agreement, and to request clarification if they are unsure of any terms.

Employers should ensure that employees who may have difficulties understanding the terms of the Flexibility Agreement are given access to the agreement in terms that they can understand. This may include engaging an interpreter where the employee has language difficulties. Employers should ensure that they document all reasonable attempts to accommodate individual employee circumstances.

In addition, if the employee who is party to the Flexibility Agreement is under 18 years of age, they are required to have a parent or guardian witness their signature.

It is important that the employee is not put under any pressure or duress to sign the Flexibility Agreement, as this could result in the Flexibility Agreement being declared invalid, or even a civil penalty being imposed. The signing of the Flexibility Agreement must not be contingent on any other person signing the Flexibility Agreement.

An employer cannot enter into a Flexibility Agreement with a prospective employee. A Flexibility Agreement can only be agreed upon after a person has commenced employment with the employer.

Duration of the Flexibility Agreement
Whilst a Flexibility Agreement has an indefinite term, the following events will cause the cessation of the Flexibility Agreement:

  • The employer and employee agreeing to terminate the Flexibility Agreement;
  • Either the employee or employer unilaterally terminating the Flexibility Agreement, by giving the notice required under the Enterprise Agreement, usually at least 28 days written notice; or
  • The underlying Enterprise Agreement no longer applying to the employee’s employment. This will occur, for example, if the Enterprise Agreement has been terminated if the employee no longer performs work that is covered by the Enterprise Agreement. As the Enterprise Agreement no longer applies, the Flexibility Agreement also ceases to apply.


Other relevant factors to consider
The Flexibility Agreement, which is essentially an extension of the relevant Enterprise Agreement, does not regulate all the terms and conditions of employment of the employee subject to the agreement. It is recommended that all employees are still provided with a letter of offer or contract of employment, which will operate alongside the Enterprise Agreement and the Flexibility Agreement.

Employers should ensure that the contract of employment, the Enterprise Agreement, the Flexibility Agreement, and the National Employment Standards (NES) do not conflict with each other. If unsure of the interaction between each of these instruments, it is recommended that you seek further advice.

 

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