If the Boot Fits – Part 3: IFAs or Enterprise Agreements? Which is the Best Fit?

In the final of this 3 part series, we discuss whether IFAs or enterprise agreements are the better option for your organisation.

Modern awards are created as minimum standards for the relevant industry or position, and may not be ideal for all businesses or employees. We regularly encounter employers who do not strictly comply with the terms of an award. Even in situations where the employer’s terms are better than those under an award, a failure to comply may result in a prosecution and a hefty penalty.

Employers can register an enterprise agreement or enter into individual flexibility agreements (IFAs) with their employees—which must include the Better-Off-Overall Test, or BOOT—to avoid the strict application of a relevant award. But which agreement is better for your organisation?

To help you decide, here is a summary of the main conditions for each option:

Enterprise Agreements

Individual Flexibility Agreements

covers all employees—or a specific group of employees—in an organisation all employees covered by the agreement must be better off overall, compared to the award can vary any condition under an award must be registered with the Fair Work Commission has a nominal termination date of four years from the start of the agreement can only be replaced or terminated with the approval of the Fair Work Commission.

can only be entered into with individual employees the employee must be better off overall compared to the award an employee cannot be forced to enter into an IFA can only vary conditions in relation to when work is performed, overtime rates, penalty rates, allowances and leave loading can be terminated by either party by giving 13 weeks written notice must not be a condition of employment is not assessed by, or registered with, the Fair Work Commission.

So which agreement is better for you?

Before implementing an enterprise agreement or an IFA, it is important to consider what you are trying to achieve.  Regardless of which agreement you choose, you should ensure the agreement is drafted correctly and the proper process is followed for its implementation.