Making the Award Work for You: The Role of Individual Flexibility Arrangements

Clubs often ask whether they can pay a club employee a higher flat rate of pay or salary instead of any applicable penalty rates or overtime. Individual flexibility arrangements (IFAs) provide a practical way for clubs and employees to tailor particular modern award conditions to better suit their individual circumstances.

What Is an IFA?

An IFA is a written agreement between an employer and an individual employee that varies how certain modern award clauses (or an applicable enterprise agreement) apply to that particular employee. Unlike the modern award or enterprise agreement itself, which applies collectively, an IFA operates on an individual basis and does not affect other employees. Clause 5 of the Award provides for IFAs.

What Is the Purpose of an IFA?

The purpose of an IFA is to allow the parties to tailor working arrangements to meet their genuine needs, providing flexibility that a standard award framework may not accommodate. This is particularly relevant in the clubs industry, where operational requirements can vary significantly due to trading hours, events and workforce availability.

What Are IFAs Used For?

In practice, IFAs are a tool for practical flexibility in workplaces covered by a modern award. Common uses include:

• Trading off penalty rates, allowances or annual leave loading for a higher base rate of pay;
• Adjusting start and finish times to accommodate personal commitments; or
• Altering rostering arrangements to better align with business needs and employee availability.

For example, a club employee may agree to work a more regular roster with a higher flat rate of pay instead of receiving variable penalty rates, provided they are demonstrably better off overall.

What Can an IFA Cover?

Under the award flexibility model, IFAs can only vary specific types of Award provisions. These include:

• Arrangements for when work is performed;
• Overtime rates;
• Penalty rates;
• Allowances; or
• Annual leave loading.

This limitation is important. IFAs cannot be used to alter all aspects of the Award, nor can they undermine minimum entitlements set by legislation such as the National Employment Standards.

Key Legal Requirements

For an IFA under the Award to be valid, several strict requirements must be met:

• Genuine agreement: The arrangement must be genuinely agreed to by both the Club and employee, without coercion or duress;
• Better Off Overall Test (BOOT): The employee must be better off overall under the IFA than they would be under the Award;
• Written agreement: The IFA must be in writing and signed by both parties;
• Individual application: It applies only to the individual employee and cannot be imposed more broadly; and
• Transparency: The IFA must clearly identify the Award terms being varied and explain how the employee is better off overall. 

Additionally, an IFA cannot be a condition of employment. It can only be entered into after employment has commenced and with genuine consent.

Risks and Considerations

While IFAs can be beneficial, they also present compliance risks if not implemented carefully. The most common issues include:

• Failing to properly assess whether the employee is better off overall;
• Using IFAs primarily to reduce labour costs rather than meet genuine needs; and
• Poor documentation or lack of clarity in the agreement.

Given these risks, IFAs should be used cautiously and supported by clear records and a defensible BOOT assessment.

Should you have any questions or are considering entering into an IFA, please contact the ClubsNSW Workplace Relations Team via ClubASSIST on 1300 730 001.