Employer groups are pressuring the federal government to reform the Fair Work Act’s Individual Flexibility Arrangements so they resemble pre-WorkChoices Australian Workplace Agreements.

In their submissions to the Fair Work Act review; the Australian Chamber of Commerce and Industry, Australian Industry Group, Business Council of Australia, pro-employer think tanks and law firms, the Australian Metal and Mines Association (AMMA) want IFAs deregulated so they cover a greater range of employment matters. AMMA wrote in its submission to the review:

“As the inflexibilities of the current system become increasingly apparent, strong support has emerged in AMMA’s membership for a return to the flexibilities afforded by a form of individual statutory agreement … A form of statutory individual agreement in the form of an individual flexibility arrangement (IFA), underpinned by the Better Off Overall Test (BOOT) and the National Employment Standards, should be introduced to facilitate workplace flexibility.”

An flexible agreements are in some way a ghost of Howard’s AWA — a individual statutory contract between an employer and a single employee. Unlike AWAs, IFAs can only derogate a very narrow range of employment matters against an award or agreement — working hours, overtime rates, penalty rates, allowances, and leave loading. By contrast, WorkChoices AWAs  that could cover virtually any aspect of the employment relationship, so long as it met five national employment standards. So the more work conditions an IFA can cover, the more it starts to resemble an AWA.

Industry submissions did not detail precisely what employers wanted added to the ambit of an IFA. Though the BCA said in its submission, as a “point of principle they believe that there should be a full menu of employment options for employers and employees in IFAS”.

The business groups also want IFAs reformed so, like AWAs, they can be offered as a condition of entry into employment. Indeed, it is difficult not to see the IFA proposals as a way of expanding individual statutory agreements without using the tarnished AWA brand.

Before 2005 only 2.4% of the Australian workforce were covered by AWAs, but the rate of uptake doubled after the WorkChoices amendments. The mining sector had by far the highest proportion of employees on AWAs compared with other industries.

While WorkChoices famously removed the no-disadvantage test for AWAs, the terms of an IFA must leave an employed “better off overall” against the relevant award or agreement. The Fair Work Act’s “better off overall test” in provides greater employee protections than the no-disadvantage.  Although, IFAs do not have to be registered, so the “better off overall test” only really applies if an employee or union raises the issue with Fair Work Australia. Perhaps, wanting to fan away the WorkChoices stench — business groups say if IFAs are expanded they should retain BOOT or at least bring back the no-disadvantage test.

“Individual flexibility agreements require significant amendment, within the framework of a no-disadvantage test. They have failed to deliver the individual tailoring promised, and failed to deliver the flexibility promised. As a substitute for the former AWA system, they have been grossly inadequate,” said ACCI’s submission.

AIG says it wants enterprise agreements, which currently must have more than one employee to be certified, to also cover individual employees and a single employer. “Over 80% of our members with more than 500 employees want the act to be amended to permit some form of statutory individual agreement to be reached,” the submission said.

Former Howard minister Peter Reith has criticised opposition leader Tony Abbott’s reluctance to push expansion of individual statutory contracts in the workplace. Reith has also warned against making IFAs de facto AWAs. “If you redefine the operation of an IFA to make it like an AWA (however it is named), the Senate will block it. If it walks like an AWA and quacks like an AWA then it is an AWA,” he said.

There isn’t much room to compromise either. Unions oppose IFAs and argued against their inclusion in the Fair Work Act. The ACTU submission to the review said:

“We saw with AWAs why it is so dangerous to leave ‘flexibility’ (i.e. opting out of award protections) to individual bargaining between employers and workers … We acknowledge that the act contains many safeguards to prevent IFAs being used like AWAs. However, we have had many reports of employers (unlawfully) making entry into an IFA a condition of employment … without explaining to the employee that they are not obliged to sign the IFA.”

Last year, cleaners’ union United Voice took action against cleaning company Spotless Group over two suspect IFAs. Spotless allegedly threatened workers with reduced overtime pay and Sunday shifts if they did not sign the new agreement. Spotless denies the allegations.

Despite the growing calls for reform, it is unlikely this review will lead to significant change to IFAs. Section 3(c) of the Fair Work Act says the legislation is designed to ensure wages and working condition are not undermined “by the making of statutory individual employment agreements of any kind given that such agreements can never be part of a fair workplace relations system”.

The Fair Work Act review is being conducted by Reserve Bank board member John Edwards, former Federal Court Judge Michael Moore and noted legal and workplace relations academic professor Ron McCallum AO. The May 31 deadline for the review has been extended and is now due out sometime within the next month.

Peter Fray

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