Inspire Success

If your employees are covered by a modern award, you are able to make an agreement with one or more of these employees to vary the application of modern award terms dealing with:

• working hours and days;
• overtime rates;
• penalty rates; and
• allowances and leave loading.

The flexibility agreement allows for variations to modern awards in order to meet the genuine needs of employers and individual employees while ensuring minimum entitlements and protections are not undermined.

Here are 5 things your award flexibility agreement must include to be considered legal:

1. It must outline exactly what has been agreed to, and how the terms of employment have been varied.
2. It must demonstrate how the agreement does not disadvantage the employee in their terms and conditions of employment.
3. It must state the date that the agreement will commence.
4. It must state that the agreement can be terminated by either party by giving 4 weeks written notice of termination.
5. It must be signed and dated by both you and the employee.

It is the employer’s responsibility to ensure that the employee is better off overall than if there was no award flexibility agreement. The employer’s ‘better off overall’ assessment will usually involve comparing the employee’s financial benefits under the flexibility agreement with the financial benefits under the applicable award or enterprise agreement. The employee’s personal circumstances and any non-financial benefits which are significant to the employee can also be considered.
After you have made an award flexibility agreement with an employee, you must keep a copy of it on file and also give a copy to the employee.

Remember, you cannot make the signing of an award flexibility agreement a condition of employment and you can only make an award flexibility agreement with an employee covered by a modern award. However you can't make an award flexibility agreement with an employee who is covered by an enterprise agreement.