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22 Dec 2009

Workplace flexibility takes on an industrial flavour

by Joe Catanzariti

The introduction of the Act will require employers to be more vigilant when it comes to how they manage the provision of flexible work arrangements.

Issues dealing with workplace flexibility have by and large been addressed (at least through legislative means) in the form of anti-discrimination legislation. Therefore, much of the focus to date in the case law dealing with flexibility has been on issues surrounding an employee's return to work after maternity leave.

However, with the commencement of the new Fair Work Act 2009 it can be expected that in the future litigated cases dealing with flexibility are likely to take on more of an industrial flavour.

Notably, employers should be aware of the following few key changes in the Act.

National Employment Standards

On 1 January 2010, the National Employment Standards (NES) come into effect. Some of the NES will enhance the safety net in areas such as parental leave and flexibility.

In particular, unpaid parental leave will increase to 12 months, with an additional right to request an extension.

There will also be a brand new safety net provision, that is, the right to request flexible working arrangements if an employee is a parent or has care or responsibility for a child under school age or under 18 with a disability.

While the right to request is not a substantive right to flexible work, employers that do not follow certain procedural requirements under the NES as to the manner in which a request is to be dealt could be at risk of court proceedings.

An employer could also be the subject of an adverse action claim if an employee is treated adversely in respect of a workplace right, in circumstances where the right to request NES is a workplace right.

Individual Flexibility Arrangements

The Act also enables employers and employees to tailor enterprise agreements and modern awards to suit their particular circumstances through an "individual flexibility arrangement" (IFA).

A Best Practice Guide on "Use of individual flexibility arrangements", released by the Fair Work Ombudsman, sets out how employers and employees can use IFAs to create flexible work practices.

The guide also provides an example of when an IFA may be used to create flexible options:

"For example, an enterprise agreement might provide for ordinary working hours between 9am and 5pm. If an IFA between and employer and an individual employee provides for ordinary working hours of between 7am and 3pm, the enterprise agreement will apply to that employee as if the enterprise agreement provided for ordinary working hours of between 7am and 3pm. The unvaried enterprise agreement will continue to apply to other employees unaffected by the IFA so that they have ordinary working hour between 9am and 5pm."

However, employers should also note that there are only some matters on which an IFA can be made.

If it is in relation to a modern award, employers and employees can only agree to an IFA that varies:

  • arrangements for when work is performed;
  • overtime rates;
  • penalty rates;
  • allowances; and
  • leave loading.

If it is in relation to an enterprise agreement, employers and employees can only agree to an IFA that varies those terms which are "permitted matters" and are included in the enterprise agreement. "Permitted matters" are:

  • matters pertaining to the relationship between the employer and the employees covered by the agreement;
  • matters pertaining to the relationship between the employer and the union covered by the agreement;
  • deductions from wages for any purpose authorised by an employee covered by the agreement;
  • how the agreement will operate.

It is also important to note that an IFA can only be made after the employee has commenced employment and therefore become entitled to the benefit of the relevant modern award or an applicable enterprise agreement. This means in practical terms an employer cannot make an offer of employment conditional upon an employee accepting an IFA. An employer who does make such a conditional offer could be in breach of the new adverse action provisions under the Act and subject to a workplace prosecution. This is because the adverse action provisions apply not only to existing employees but also prospective employees.

In a press release on 17 September 2009, the Minister for Employment & Workplace Relations, the Hon Julia Gillard, stated that an analysis of IFAs contained in the first 81 enterprise agreements lodged showed that most had adopted the model flexibility clause set out in the Act. However, in the press release it also provided that while the Act "provides a model clause for enterprise agreements… it is expected that employers and employees will agree on arrangements, including family friendly arrangements, which best suit them and their workplace".

What lies ahead

It is clear that the introduction of the Act will require employers to be more vigilant when it comes to how they manage the provision of flexible work arrangements. This is particularly so where a failure to do so may result in ligation of an industrial kind. It is also clear that the issues dealing with workplace flexibility are broader than those which have traditionally been traversed by the anti-discrimination laws.

Thanks to Nicholas Allan for his help in writing this article.

This article was written when Joe was a partner at Clayton Utz and does not necessarily reflect his views as Vice-President of the Fair Work Commission.

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.