Thursday, February 28, 2013

Individual Flexibility Arrangements in Australia

What are individual flexibility arrangements, you ask? These are arrangements between an individual employee and employer that vary the effect of one or more terms in a modern award or enterprise agreement with respect to that employee. The aim of these arrangements, according to then Minister Gillard in a speech in the House of Reps in 2008 was to enable employers and individual employees to make arrangements to meet their genuine needs so long as the employee is not disadvantaged.

Recently, the Fair Work Commission has released its report into the extent to which individual flexibility arrangements (IFAs, or ‘iffas’ to those in the know) have been agreed to. Essentially, the answer is not much: FWA’s survey results indicate that less than 10 per cent of employees and employers in 2012 have used IFAs since their inception, although the exact proportions are hard to determine because of some confusion amongst respondents about what constitutes an IFA. The low usage of IFAs had already been indicated in the report for the Fair Work Act Review.
So why aren’t IFAs more widely used? Several reasons were suggested in submissions to the FW Act Review; the Fair Work Commission report puts some numbers on how common these reasons are, at least for employers. According to the survey, the main reason is that employers haven’t found a need to use them; with over 50 per cent of employers surveyed who had not made an IFA saying it was because there was no identifiable need for IFAs. Another third said it was because employees had not requested IFAs. Then there’s another 15 per cent that said they use unwritten or verbal agreements with staff to vary conditions of employment, while about the same percentage said they use individual agreements (e.g. common law contracts) instead.
Arguably then, one might say that, for the most part, IFAs aren’t widely used because employers and employees often don’t have a need to make a flexible arrangement that meets a specific individual’s needs, or if they do, they sometimes either just use some informal way of doing it or they use individual contracts. Whether that changes going forward (assuming IFAs continue to exist) will be seen when the Fair Work Commission reports again in three years time.

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