Flexibility term

See Fair Work Act 2009 sections 202–204

An enterprise agreement must contain a term that allows an employee and their employer to make an individual flexibility agreement (IFA) which varies the effect of terms of the agreement in order to meet the genuine needs of the employer and the individual employee.[1] This is known as a flexibility term.

A flexibility term must meet a number of requirements, including that it must:

• set out the terms in the enterprise agreement the effect of which may be varied by an IFA[2]
• require the employer to ensure that any IFA only be about matters that would be permitted matters if included in an enterprise agreement
• require the employer to ensure that any IFA agreed to would not include a term that would be an unlawful term if included in an enterprise agreement
• require that any IFA be genuinely agreed to by the employer and employee
• require the employer to ensure that any IFA agreed to under the flexibility term must result in the employee being better off overall than the employee would have been if no IFA were agreed to
• not require any IFA to be approved or consented to by another person (that is, someone who is not the employer or the employee)
• require the employer to ensure that any IFA is able to be terminated by either the employer or the employee giving written notice of not more than 28 days, or at any time if both the employer and employee agree in writing to the termination
• require the employer to ensure that any IFA is agreed to in writing by the employer and employee (and by a parent or guardian if the employee is under 18 years of age), and
• that a copy of any IFA is given to the employee within 14 days after it is agreed to.

Related information

• What are 'permitted matters'?
• Unlawful terms
• Flexibility and consultation terms – common defects & issues

If an employee or employer contravenes a term of an IFA they would be contravening a term of the agreement – so the IFA can be enforced as a term of the enterprise agreement.[3]

Where no flexibility term is included in the enterprise agreement, or one is included but it does not meet all the requirements, the model flexibility term set out in the Fair Work Regulations is taken to be a term of the agreement.[4]

Where the Fair Work Commission approves an enterprise agreement and the model flexibility term is taken to be a term of the agreement, that fact must be noted in the decision approving the agreement.[5]

Model flexibility term NOT included

Inclusion of model flexibility term overturned on appeal

Re Minister for Employment and Workplace Relations [Trimas] [2010] FWAFB 3552 (Giudice J, Harrison SDP, Blair C, 19 May 2010), [(2010) 195 IR 138].

This was an application by the Minister for a review of one aspect of a decision approving an enterprise agreement. At first instance, the Commission decided that the flexibility term in the enterprise agreement did not meet the requirements of a flexibility term because it varied the terms of the enterprise agreement, rather than varying the effect of the terms of the enterprise agreement. Accordingly, the Commission decided that the model flexibility term would be part of the agreement.

The Minister submitted that the distinction drawn by the Commission between the variation of a term and the variation of the effect of a term was not a valid distinction. The practical effect of an individual flexibility arrangement made under a flexibility term was to vary the terms of an enterprise agreement in relation to the employer and the individual employee.

The Full Bench found that an individual flexibility arrangement made pursuant to a flexibility term in an enterprise agreement does not vary the terms of the agreement but the arrangement alters the legal rights of the parties to it in the relevant respects. That is, an individual flexibility arrangement alters the effect of a term of the enterprise agreement, rather than the term itself.

The failure to use the precise language of the Fair Work Act does not mean that a flexibility term is not a flexibility term within the meaning of the Fair Work Act as it is not appropriate to apply such high standards when interpreting enterprise agreements. An approach which takes the purpose of the provision into account is to be preferred and a liberal approach to the construction of the flexibility term was appropriate in light of the language of the model flexibility term.

However, a term which does not provide for change in the effect of any of the terms of the agreement cannot be a flexibility term.

(regulation 2.08)

Model flexibility term

1. An employer and employee covered by this enterprise agreement may agree to make an individual flexibility arrangement to vary the effect of terms of the agreement if:
   1. the agreement deals with 1 or more of the following matters:
      1. arrangements about when work is performed;
      2. overtime rates;
      3. penalty rates;
      4. allowances;
      5. leave loading; and
   2. the arrangement meets the genuine needs of the employer and employee in relation to 1 or more of the matters mentioned in paragraph (a); and
   3. the arrangement is genuinely agreed to by the employer and employee.
2. The employer must ensure that the terms of the individual flexibility arrangement:
   1. are about permitted matters under section 172 of the Fair Work Act 2009; and
   2. are not unlawful terms under section 194 of the Fair Work Act 2009; and
   3. result in the employee being better off overall than the employee would be if no arrangement was made.
3. The employer must ensure that the individual flexibility arrangement:
   1. is in writing; and
   2. includes the name of the employer and employee; and
   3. is signed by the employer and employee and if the employee is under 18 years of age, signed by a parent or guardian of the employee; and
   4. includes details of:
      1. the terms of the enterprise agreement that will be varied by the arrangement; and
      2. how the arrangement will vary the effect of the terms; and
      3. how the employee will be better off overall in relation to the terms and conditions of his or her employment as a result of the arrangement; and
   5. states the day on which the arrangement commences.
4. The employer must give the employee a copy of the individual flexibility arrangement within 14 days after it is agreed to.
5. The employer or employee may terminate the individual flexibility arrangement:
   1. by giving no more than 28 days written notice to the other party to the arrangement; or
   2. if the employer and employee agree in writing – at any time.