Mixed reactions from business groups to FWC flexibility changes

A Fair Work Commission decision which will change the notice period for termination of individual flexibility agreements has been received with a mixed response by business groups.

A decision was made by the FWC yesterday to extend the length of time before an employee or an employer can terminate an individual flexibility agreement (IFA) from four to 13 weeks.

IFAs are formed between individual workers and their employer and can be used to change certain terms of modern awards or enterprise agreements, so long as the employee is better off under the changes.

Council of Small Businesses of Australia executive director Peter Strong told SmartCompany this decision limits the flexibility of employers and workers and is a step backwards.

“The FWC should go and look up the words ‘technology’ and ‘change’. The workplace is changing far more quickly than they are and flexibility is needed in the workplace. I get the impression the people running the FWC are living in the 1980s.”

“This sounds like a big business problem and they are out of touch with the changing world. If you start building long-term impediments on change management than businesses and employees will suffer,” he says.

IFAs can be used to alter working hours from the standard 9am to 5pm to hours which better accommodate for working mothers or fathers who need to care for young children.

IFAs are enforced as though they are modern awards or enterprise agreements and before they are binding must be signed in writing by the employer and employee. If the worker is under 18 years old, it must also be signed by the child’s guardian.

The Australian Industry Group, the Australian Chamber of Commerce and Industry, and the Australian Mines and Metals Association have been calling for IFAs to be in place for up to four years.

The AMMA’s IFA submission to the FWC also says “the arrangements should be able to be terminated at a time with 28 days’ notice only by mutual agreement”. AMMA chief executive Steve Knott said in a statement to SmartCompany current IFAs are an “illusion to genuine flexibility in the workplace” as they remain “under union control”.

“Regardless of whether they can be terminated in 16, 30 or 90 days, IFAs are of no value to employees and employers who wish to enter into mutually beneficial working arrangements.”

“There is no reason why the 87% of private sector workers who are non-union members should not be able to enter into genuine flexible working agreements with an employer for up to four years, subject to the employee being better off overall all than the union collective agreement provisions.”

In its decision, the FWC said extending the notice period to 13 weeks would “enhance the operational effectiveness of the model term and is consistent with modern awards objectives”.

Australian Industry Group chief executive Innes Willox said in a statement further changes are needed, but the decision by the FWC was a “step in the right direction”.

“Today’s decision of a full bench of the FWC to amend the award flexibility clause in modern awards will increase the utility of individual flexibility arrangements made under awards for employees and employers.”

Willox says changes are needed to the Fair Work Act to improve the framework of IFAs, including allowing IFAs to be in existence for up to four years.

Ai Group has also recommended employees preferences be taken into account when applying the “better off overall test” and limiting the ability of unions to insist on clauses which do not offer “meaningful flexibility”.

Further changes to the award flexibility clause regarding leave flexibility will be determined by the FWC at a full bench hearing on April 22, 2013.