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April 2019

Individual flexibility agreement survives despite defects

Robinson v K&S Freighters Pty Ltd (2018)

The Case

K&S Freighters Pty Ltd (K&S) employed Mr Robinson as a fuel-tank driver. As part of the offer of employment with K&S, Mr Robinson accepted an Individual Flexibility Agreement (IFA). The IFA altered the provisions concerning pay rates, allowances, ordinary hours of work and rostering in the Road Transport and Distribution Award 2010 (the Award).

Mr Robinson later resigned. He commenced proceedings against K&S alleging the IFA was defective, that he had been unpaid and should have been paid in accordance with the Award but at the over-award IFA rate.

Mr Robinson argued the IFA was defective because:

  • it was entered into before he had commenced employment with K&S;
  • it did not comply with the Award requirements for flexibility given it was a condition of his employment to agree to the IFA; and
  • therefore, he had not genuinely agreed to the terms of the IFA, which breached the Fair Work Act 2009 (Cth) (FW Act).

The Verdict

The Federal Circuit Court (FCC) dismissed Mr Robinson’s underpayment claim. It held that:

  • the IFA had not been entered into after Mr Robinson commenced employment – despite one variation being made to the IFA on the day employment commenced, the parties agreed prior to the commencement of the employment that the IFA would apply;
  • Mr Robinson did enter into the IFA and did not exercise his right to terminate it, which he had the option to do. Had he done so, the FCC held that the over-award IFA rate of pay would have applied. K&S had not made it clear if the IFA was not agreed to the Award rate would apply;
  • while the IFA did have defects, via the operation of s 145 of the FW Act, “the arrangement has effect as if it were an individual flexibility arrangement” despite this; and
  • the IFA applied to Mr Robinson’s employment.

The Lessons

IFAs can be used to vary certain terms of modern awards. If you and your employee genuinely agree to enter into an IFA, the terms of the IFA apply as if they were terms of the modern award. While all care should be taken to ensure all the legal requirements of the IFA are met, this case supports the possibility that the IFA may nevertheless apply if there are defects.

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