Application by National Retail Association - [2013] FWCFB 2170

1

[2013] FWCFB 2170   

DECISION
Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 
Item 6, Sch. 5—Modern awards review

Modern Awards Review 2012—Award Flexibility 
(AM2012/8, AM2012/51, AM2012/172, AM2012/177, AM2012/178, AM2012/179, 
AM2012/180, AM2012/199, AM2012/204, AM2012/210, AM2012/228, AM2012/240, 
AM2012/245, AM2012/250, AM2012/287)

JUSTICE ROSS, PRESIDENT
SENIOR DEPUTY PRESIDENT WATSON
COMMISSIONER GREGORY MELBOURNE, 15 APRIL 2013

Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 - Transitional 
Review - award flexibility - model flexibility term varied - better off overall assessment is at 
the time the IFA is made - IFAs can only be entered into after employee has commenced 
employment - notice of termination extended from 4 weeks to 13 weeks - penalty rates and 
public holiday decisions distinguished on the basis that s.145 was not part of the legislative 
framework during the award modernisation process.

CONTENTS Page Paragraph
1. Introduction and Background 4 1

1.1 The legislative context 4 3
1.2 The award modernisation process 7 14

2. Workplace Flexibility 13 33
2.1 General 13 33
2.2 The Review Report 16 45
2.3 The 2012 IFA Report 19 54

3. Consideration of the Applications 24 81
3.1 Scope of award terms which may be subject to an IFA 25 86
3.2 Machinery Matters 36 150

(i) The better off overall test 36 151
(ii) Termination provisions 37 160
(iii) External approval of IFAs 42 189
(iv) Annual review of IFAs 46 203

4. Conclusion 46 207


AUSTRALIA FAIR WORK COMMISSION




 



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ABBREVIATIONS

2012 AWALI Report Work-Life balance in South Australia

2012 IFA Report General Manager’s report into the extent to which individual flexibility 
arrangements are agreed to and the content of those arrangements: 2009-
2012

AAA Accommodation Association of Australia

ABI Australian Business Industrial

ABS Australian Bureau of Statistics

ACCI Australian Chamber of Commerce and Industry

ACTU Australian Council of Trade Unions

AFEI Australian Federation of Employers & Industries

Ai Group Australian Industry Group

AIRC Australian Industrial Relations Commission

AMWU Automotive, Food, Metals, Engineering, Printing and Kindred Industries 
Union 

BOOT Better off overall test

Bupa decision Re Bupa Care Services Pty Ltd [2010] FWAFB 2762

Business SA South Australian Employers’ Chamber of Commerce and Industry t/as 
Business SA

CFMEU Construction, Forestry, Mining and Energy Union

Commission Fair Work Commission

DEEWR Department of Education, Employment and Workplace Relations

FW Act Fair Work Act 2009 (Cth)

FWA Fair Work Australia

FWO Fair Work Ombudsman

GFC global financial crisis

HBIA Hair and Beauty Industry Association

HIA Housing Industry Association

IFA individual flexibility arrangements

June 2008 Full Bench 
decision

Award modernisation decision [2008] AIRCFB 550

June 2012 Full Bench 
decision

Modern Awards Review 2012 - Preliminary Issues decision 
[2012] FWAFB 5600








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Master Builders Master Builders Australia

Master Plumbers Master Plumbers and Mechanical Contractors Association of New South 
Wales

NAPSA Notional agreement preserving State awards

NDT no disadvantage test

NES National Employment Standards

NRA National Retailers Association

OECD Organisation for Economic Co-operation and Development

On-site award Building and Construction General On-site Award 2010

Panel Fair Work Act Review Panel

Plumbing Award Plumbing and Fire Sprinklers Award 2010

Qld Audit Report Qld - Pharmacy Industry Audit Program Report

Restaurant Award Restaurant Industry Award 2010

Review Report Towards more productive and equitable workplaces

SDA Shop, Distributive and Allied Employees Association

Transitional Provisions Act Fair Work (Transitional Provisions and Consequential Amendments) Act 
2009

Transitional Review Modern Awards Review 2012

VECCI The Victorian Employers’ Chamber of Commerce and Industry

WR Act Workplace Relations Act 1996 (Cth)








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1. INTRODUCTION AND BACKGROUND

[1] This decision deals with 15 applications to vary the standard award flexibility 
provision in 10 modern awards. A list of the applications and relevant awards is set out at 
Attachment 1. The applications are made in the context of the review of all modern awards 
required by the Fair Work (Transitional Provisions and Consequential Amendments) Act 
2009 (the Transitional Provisions Act). We refer to that review as the Transitional Review. 

[2] We propose to deal first with two contextual matters - the legislative context and the 
award modernisation process. We will then turn to deal with the broader issue of workplace 
flexibility and other matters which are relevant to the determination of the applications before 
us.

1.1 The legislative context

[3] The legislative context for the Transitional Review was comprehensively dealt with in 
a Full Bench decision of 29 June 2012 (the June 2012 Full Bench decision).1 We adopt that 
decision and have applied it to the matters before us. For present purposes we only propose to 
deal with the legislative context in summary terms. 

[4] The principal legislative provision in respect of the Transitional Review is Item 6 of 
Schedule 5 to the Transitional Provisions Act:

“6 Review of all modern awards (other than modern enterprise awards and State 
reference public sector modern awards) after first 2 years
(1) As soon as practicable after the second anniversary of the FW (safety net provisions) 
commencement day, FWC must conduct a review of all modern awards, other than modern 
enterprise awards and State reference public sector modern awards.

Note: The review required by this item is in addition to the annual wage reviews and 4 yearly 
reviews of modern awards that FWC is required to conduct under the FW Act.

(2) In the review, FWC must consider whether the modern awards:

(a) achieve the modern awards objective; and

(b) are operating effectively, without anomalies or technical problems arising 
from the Part 10A award modernisation process.

(2A) The review must be such that each modern award is reviewed in its own right. 
However, this does not prevent FWC from reviewing 2 or more modern awards at the same 
time.

(3) FWC may make a determination varying any of the modern awards in any way that 
FWC considers appropriate to remedy any issues identified in the review.

Note: Any variation of a modern award must comply with the requirements of the FW Act 
relating to the content of modern awards (see Subdivision A of Division 3 of Part 2-3 of the 
FW Act).

(4) The modern awards objective applies to FWC making a variation under this item, and 
the minimum wages objective also applies if the variation relates to modern award minimum 
wages.

(5) FWC may advise persons or bodies about the review in any way FWC considers 
appropriate.








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(6) Section 625 of the FW Act (which deals with delegation by the President of functions 
and powers of FWC) has effect as if subsection (2) of that section included a reference to 
FWC’s powers under subitem (5).”

[5] Subitem 6(1) provides that the Fair Work Commission (the Commission) must 
conduct a review of all modern awards2 as soon as practicable after 1 January 20123. It is 
important to note that the Transitional Review contemplated in Item 6 is quite separate from, 
and narrower in scope than, the 4 yearly reviews of modern awards provided for in s.156 of 
the Fair Work Act 2009 (Cth) (the FW Act). The scope of the Transitional Review was a 
matter of contention in the June 2012 Full Bench proceeding. 

[6] The June 2012 Full Bench decision construed Item 6 according to its terms, having 
regard to the legislative purpose and context. Part of that context was the award modernisation 
process conducted by the former Australian Industrial Relations Commission (AIRC) under 
Part 10A of the Workplace Relations Act 1996 (Cth) (the WR Act). We deal with the award 
modernisation process in Part 1.2 of this decision. As to the scope of the Transitional Review 
the June 2012 Full Bench concluded as follows: 

“[91] It is important to recognise that we are dealing with a system in transition. Item 6 of 
Schedule 5 forms part of transitional legislation which is intended to facilitate the movement 
from the WR Act to the FW Act. The Review is a “one off” process required by the 
transitional provisions and is being conducted a relatively short time after the completion of 
the award modernisation process. The transitional arrangements in modern awards continue to 
operate until 1 July 2014. The fact that the transition to modern awards is still occurring 
militates against the adoption of broad changes to modern awards as part of the Review. Such 
changes are more appropriately dealt with in the 4 year review, after the transition process has 
completed. In this context it is particularly relevant to note that s.134(1)(g) of the modern 
awards objective requires the Tribunal to take into account:

“the need to ensure a simple, easy to understand, stable and sustainable modern award 
system for Australia” . . .

[99] To summarise, we reject the proposition that the Review involves a fresh assessment of 
modern awards unencumbered by previous Tribunal authority. It seems to us that the Review 
is intended to be narrower in scope than the 4 yearly reviews provided in s.156 of the FW Act. 
In the context of this Review the Tribunal is unlikely to revisit issues considered as part of the 
Part 10A award modernisation process unless there are cogent reasons for doing so, such as a 
significant change in circumstances which warrants a different outcome. Having said that we 
do not propose to adopt a “high threshold” for the making of variation determinations in the 
Review, as proposed by the Australian Government and others.

[100] The adoption of expressions such as a “high threshold” or “a heavy onus” do not assist 
to illuminate the Review process. In the Review we must review each modern award in its 
own right and give consideration to the matters set out in subitem 6(2). In considering those 
matters we will deal with the submissions and evidence on their merits, subject to the 
constraints identified in paragraph [99] above.”

[7] Under subitem 6(3) of Schedule 5 the Commission has a broad discretion to vary any 
of the modern awards in any way it considers necessary to remedy any issues identified in the 
Transitional Review. However, subitem 6(4) provides that in making such a variation the 
Commission must take into account the modern awards objective in s.134 of the FW Act, and, 
if varying modern award minimum wages, the minimum wages objective in s.284. 








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[8] The modern awards objective is set out in s.134 of the FW Act:

“134 The modern awards objective
What is the modern awards objective?

(1) FWC must ensure that modern awards, together with the National Employment Standards, 
provide a fair and relevant minimum safety net of terms and conditions, taking into account:

(a) relative living standards and the needs of the low paid; and

(b) the need to encourage collective bargaining; and

(c) the need to promote social inclusion through increased workforce participation; and

(d) the need to promote flexible modern work practices and the efficient and productive 
performance of work; and

(e) the principle of equal remuneration for work of equal or comparable value; and

(f) the likely impact of any exercise of modern award powers on business, including on 
productivity, employment costs and the regulatory burden; and

(g) the need to ensure a simple, easy to understand, stable and sustainable modern award 
system for Australia that avoids unnecessary overlap of modern awards; and

(h) the likely impact of any exercise of modern award powers on employment growth, 
inflation and the sustainability, performance and competitiveness of the national economy.

This is the modern awards objective.”

[9] Any variation of a modern award arising from the Transitional Review must also 
comply with the provisions of the FW Act which deal with the content of modern awards (see 
ss.136–155 of the FW Act). To the extent that any application seeks to alter the coverage of a 
modern award, then the requirements set out in ss.162–164 within Division 6 of Part 2-3 of 
the FW Act are relevant. Similarly Division 3 of Part 2-1 will be relevant if an application 
seeks to alter the relationship between a modern award and the National Employment 
Standards (NES). Section 138 of the FW Act, dealing with the content of modern awards, is 
also relevant and a factor to be considered in any variation to a modern award arising from the 
Transitional Review.

[10] In considering the legislative context we note that one of the authorities referred to in 
the proceedings purports to summarise the views expressed in the June 2012 Transitional 
Review decision. In AMWU v Australian Business Industrial4 a Full Bench expressed the 
approach to the Transitional Review in these terms:

“Where an evidentiary case has been presented, direct submissions have been made and the 
tribunal has made a determination about the relevant award provisions on the basis of that 
material, cogent reasons will need to be advanced for departing from the award provision.”5

[11] In our view, this statement does not accurately reflect the approach adopted by the 
June 2012 Full Bench decision. The relevant passage from the June 2012 Full Bench decision 
states that in the context of the Transitional Review:

“the Tribunal is unlikely to revisit issues considered as part of the Part 10A award 
modernisation process unless there are cogent reasons for doing so, such as a significant 
change in circumstances which warrants a different outcome.”6 [emphasis added]








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[12] The approach posited by the June 2012 Full Bench decision is not qualified by 
reference to those instances ‘where an evidentiary case has been presented’. The reason for 
such an omission is that evidentiary cases were rarely presented in the Part 10A award 
modernisation process. To adopt such a precondition to the requirement to establish cogent 
reasons for a particular variation materially changes the intent of the June 2012 Full Bench 
decision.

[13] We now turn to the award modernisation process that resulted in the inclusion of the 
standard award flexibility provision in all modern awards. 

1.2 The award modernisation process 

[14] The award modernisation process took place in the period from April 2008 to 
December 2009 and was conducted in accordance with a written request (the award 
modernisation request) made by the Minister for Employment and Workplace Relations to the 
President of the AIRC.7 The process was completed in four stages, each stage focussing on 
different industries and occupations. 

[15] The award modernisation process was governed by Part 10A of the WR Act. Section 
576C of Part 10A required award modernisation to be conducted in accordance with an award 
modernisation request. The process involved the AIRC inviting submissions, conducting 
consultations with interested parties, publishing exposure drafts, accepting further written or 
oral submissions and then publishing a modern award. By the end of 2009 the AIRC had 
reviewed more than 1500 federal awards and notional agreements preserving State awards 
(NAPSAs) and created 122 industry and occupation based modern awards.

[16] The AIRC was required to prepare a model flexibility clause as part of the award 
modernisation process. The objectives of the clause were set out in the Ministerial request of 
28 March 2008 and subsequently varied on 18 December 2008 and 2 May 2009. An extract 
from the consolidated version of the Ministerial Request is set out at Attachment 2. 

[17] In a statement issued by the President of the AIRC on 29 April 20088 the award 
flexibility model clause was identified as a priority task. The statement included two draft 
model award flexibility clauses, one proposed by the Australian Council of Trade Unions 
(ACTU) and the other a joint proposal by the Australian Chamber of Commerce and Industry 
(ACCI) and Ai Group. At paragraph [25] of the 29 April 2008 Statement the President said: 

“The drafts attached to this statement provide a starting point for consultation. Nothing will be 
finalized until the consultation has been concluded and the Commission has had an opportunity 
to consider all of the matters that have been raised. The Full Bench should decide on the 
priority list, the model flexibility clause and the timetable by 20 June 2008.”

[18] On 20 June 20089 a Full Bench decision of the AIRC dealt with the matters identified 
as priority tasks, including the determination of the model flexibility clause. The detailed 
reasons in support of the draft model clause are set out at paragraphs [155] - [192] of that 
decision. In the course of its reasons the Full Bench identified the differing views on a 
number of the features of the proposed clause. The aspects of the Full Bench decision which 
go to the scope of the clause and a number of ancillary matters are particularly relevant in the 








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context of the applications before us. As to the scope of the proposed model clause the Full 
Bench said: 

“[166] The next issue concerns the clauses of the award in relation to which agreements might 
be made under the model clause. The ACTU suggested that we should not specify the types of 
clauses to which the model clause could apply, leaving that matter for consideration in relation 
to each model award. We do not think this is a sustainable approach. If it were accepted it 
would leave open for debate at some future time matters which we are able to decide now and 
thereby unnecessarily prolong the making of modern awards. Parties are entitled to whatever 
certainty about the operation of the model provision we can give at this point. 

[167] Section 576J(1) provides that a modern award may include terms about a number of 
matters, as follows:

“576J Matters that may be dealt with by modern awards
General

(1) A modern award may include terms about any of the following matters:

(a) minimum wages (including wage rates for junior employees, employees 
with a disability and employees to whom training arrangements apply), and:

(i) skill-based classifications and career structures; and

(ii) incentive-based payments, piece rates and bonuses;

Note: Employee with a disability and junior employee are defined in 
subsection (3).

(b) type of employment, such as full-time employment, casual employment, 
regular part-time employment and shift work, and the facilitation of flexible 
working arrangements, particularly for employees with family 
responsibilities;

(c) arrangements for when work is performed, including hours of work, 
rostering, notice periods, rest breaks and variations to working hours;

(d) overtime rates;

(e) penalty rates, including for any of the following:

(i) employees working unsocial, irregular or unpredictable hours;

(ii) employees working on weekends or public holidays;

(iii) shift workers;

(f) annualised wage or salary arrangements that:

(i) have regard to the patterns of work in an occupation, industry or 
enterprise; and

(ii) provide an alternative to the separate payment of wages, or 
salaries, and other monetary entitlements; and

(iii) include appropriate safeguards to ensure that individual 
employees are not disadvantaged;

(g) allowances, including for any of the following:

(i) expenses incurred in the course of employment;

(ii) responsibilities or skills that are not taken into account in rates of 
pay;








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(iii) disabilities associated with the performance of particular tasks or 
work in particular conditions or locations;

(h) leave, leave loadings and arrangements for taking leave;

(i) superannuation;

(j) procedures for consultation, representation and dispute settlement.”

[168] Dealing first with s.576J(1)(a), minimum wages, we note that there is another award 
matter which deals with flexibility in relation to wages. Pursuant to s.576J(1)(f) awards may 
include terms about annual wage and salary arrangements, including alternatives to the 
separate payment of wages or salaries and other monetary entitlements. Award terms made 
under that paragraph must include appropriate safeguards to ensure that individual employees 
are not disadvantaged. In light of the fact that separate provision is made for flexibility in 
relation to the way in which wages, salaries and other monetary entitlements may be paid it is 
unnecessary to include terms about minimum wages in the model clause. Indeed it may be 
inappropriate to do so. It is difficult to see how the trading-off of minimum wages against 
other benefits could meet a genuine need for individual flexibility without at the same time 
weakening the function of the award as a safety net in an unacceptable way. There does not 
appear to be any sound basis for including award terms about minimum wages within the 
operation of the model clause. It follows also that award terms made under s.576J(1)(f), which 
is itself a flexibility provision, should not be included in the operation of the model flexibility 
clause either. We should emphasize that by excluding minimum wages from the model clause 
we obviously do not intend to limit arrangements which increase wages. Our concern is to 
guard against minimum wages being traded off.

[169] In relation to s.576J(1)(b), type of employment, award terms made under that section 
may include “the facilitation of flexible working arrangements, particularly for employees 
with family responsibilities.” Modern award terms about such matters will by definition 
provide for flexibility in the manner prescribed. For this reason there is no need to include 
award terms dealing with type of employment in the model clause.

[170] Award terms dealing with arrangements for when work is performed (paragraph (c)), 
overtime rates (paragraph (d)), penalty rates (paragraph (e)) and allowances (paragraph (g))
should all be brought within the operation of the model clause. 

[171] Award terms of the kind described in s.576J(1)(h) require closer consideration. 
Generally speaking leave matters, although not leave loading, are dealt with in the NES. The 
interaction between the NES and modern awards is dealt with in cll. 28 to 46 of the Minister’s 
request. At this stage we would not be prepared to include any of the matters to be dealt with 
by the NES in the model flexibility clause. There are several reasons.

[172] The first point is that it is not clear what scope there will be for variation in the operation 
of the NES at the modern award level. Until the NES have been dealt with in the modern 
award concerned there will necessarily be uncertainty in relation to a number of aspects of 
their operation. It would not be prudent to make any provision for variation of NES terms at 
this stage. But there are other cogent reasons for caution. Clause 30 of the request provides 
that a modern award cannot exclude the NES or any provision of the NES. Clause 31 provides 
that a modern award may include industry specific detail about matters in the NES. Clause 32 
provides that a modern award may supplement the NES in some circumstances. Clause 33 
provides that particular types of provisions are able to be included in modern awards even 
though they might otherwise be inconsistent with the NES. It would seem to follow from these 
provisions that to the extent that modern awards will include terms about the NES those terms 
would deal directly with any flexibility issue in relation to the relevant NES entitlement. 








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[173] Returning to the terms of s.576J(1)(h), and with those considerations in mind, the only 
matter dealt with in that section which is appropriate for inclusion in the operation of the 
model clause at this stage is leave loading.

[174] The remaining award matters are superannuation (paragraph (i)) and procedures for 
consultation, representation and dispute settlement (paragraph (j)). There is a significant 
degree of uncertainty about the operation of any modern award clause dealing with 
superannuation and its relationship with relevant legislation. This is not an area in which the 
scope for flexibility is immediately apparent in any event. Modern award terms dealing with 
consultation, etc will require to be simple and flexible since they will necessarily have 
application in a wide range of circumstances. To include such terms in the operation of the 
model clause would be likely to add complexity and unnecessary regulation rather than 
increase flexibility. We do not regard either of these matters as appropriate for inclusion in the 
scope of the model clause.

[175] In summary, the award terms which might be included within the scope of the model 
flexibility clause are: 

 arrangements for when work is performed;

 overtime rates;

 penalty rates;

 allowances; and

 leave loading. 

[176] Before leaving the matters to be included in the model clause there is another question 
to be considered – whether limits should be put on the flexibility available in relation to the 
particular award terms we have specified. That approach has some attraction in that it would 
provide some additional protections for employees. The difficulty with the proposal is that the 
limitations might not be appropriate in all circumstances and their adoption might lead to 
unfairness to employers and employees in some cases. Bearing in mind that the clause will 
have the potential to apply in a very broad range of cases it would be undesirable to place 
limits on what the parties might agree as appropriate to their needs. On balance we think that 
additional restrictions would be too prescriptive and the other protections the clause will 
contain should be adequate.”10

[19] Three things may be said about the Full Bench’s decision with respect to the scope of 
the model flexibility clause. 

[20] First, the Full Bench concluded that it was unnecessary and inappropriate to include a 
term about minimum wages in the model clause as s.576J(f) of the WR Act made separate 
provision for flexibility in relation to the way in which wages, salaries and monetary 
entitlements may be paid. We note that s.139 of the FW Act is in the same terms as s.576J of 
the WR Act (compare s.576J(1)(f) and s.139(1)(f)).

[21] Second, in relation to s.576J(1)(h) - leave, leave loading and arrangements for taking 
leave, the Full Bench noted that generally speaking leave matters, other than leave loading, 
are dealt with in the NES. At that stage the Full Bench was not prepared to include any of the 
matters dealt with in the NES in the model flexibility clause for the reasons stated at 
paragraph [172] of its decision.








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[22] Flexibility in respect of leave and arrangements for taking leave are not before us and 
are being dealt with by another Full Bench constituted to specifically deal with Transitional 
Review applications relating to annual leave.

[23] The final observation in relation to the Full Bench’s decision with respect to the scope 
of the model clause is that the Full Bench decided that it was not appropriate to include award 
terms dealing with superannuation, consultation, representation and dispute settlement within 
the scope of the model clause. The Full Bench was of the view that the inclusion of such 
terms in the model clause ‘would be likely to add complexity and unnecessary regulation 
rather than increase flexibility’. 

[24] The AIRC Full Bench also dealt with a number of ancillary issues which went to the 
practical operation of the model clause, including the question of dispute settlement, and the 
term or duration of flexibility agreements and the provision of guidance to parties to proposed 
agreements.11 We refer to some of these aspects of the Full Bench’s decision later, in our 
consideration of the applications before us. For present purposes it is sufficient to note that the 
Full Bench decided that a flexibility agreement could be terminated at any time by agreement 
or by one party giving four weeks’ notice in writing to the other.

[25] A draft model clause was attached to the Full Bench’s decision of 20 June 2008. In a 
subsequent statement issued on 12 September 200812 the AIRC slightly modified the model 
clause: 

“Award Flexibility

[17] With one exception we have not found it necessary to modify the substance of the model 
award flexibility clause in any of the drafts. To put the intended operation of the clause 
beyond doubt we have included the words “Notwithstanding any other provision of this 
award” at the start of the model clause. The draft award flexibility clause in the exposure draft 
for the textile, clothing, footwear and associated industries contains some modifications 
directed to the nature of employment in that industry. They deal with translation and time for 
consideration of proposed agreements.”

[26] The model clause was subsequently modified in December 200813 and 3 April 200914

to take account of submissions from interested parties, amendments to the Ministers Request 
and legislative change.

[27] The current model clause is in the following terms: 

“7. Award flexibility
7.1 Notwithstanding any other provision of this award, an employer and an individual 

employee may agree to vary the application of certain terms of this award to meet 
the genuine individual needs of the employer and the individual employee. The 
terms the employer and the individual employee may agree to vary the application of 
are those concerning:

(a) arrangements for when work is performed;

(b) overtime rates;

(c) penalty rates;








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(d) allowances; and

(e) leave loading.

7.2 The employer and the individual employee must have genuinely made the agreement
without coercion or duress.

7.3 The agreement between the employer and the individual employee must:

(a) be confined to a variation in the application of one or more of the terms listed 
in clause 7.1; and

(b) result in the employee being better off overall than the employee would have 
been if no individual flexibility agreement had been agreed to.

7.4 The agreement between the employer and the individual employee must also:

(a) be in writing, name the parties to the agreement and be signed by the 
employer and the individual employee and, if the employee is under 18 years 
of age, the employee’s parent or guardian;

(b) state each term of this award that the employer and the individual employee 
have agreed to vary;

(c) detail how the application of each term has been varied by agreement between 
the employer and the individual employee;

(d) detail how the agreement results in the individual employee being better off 
overall in relation to the individual employee’s terms and conditions of 
employment; and

(e) state the date the agreement commences to operate.

7.5 The employer must give the individual employee a copy of the agreement and keep 
the agreement as a time and wages record.

7.6 Except as provided in clause 7.4(a) the agreement must not require the approval or 
consent of a person other than the employer and the individual employee.

7.7 An employer seeking to enter into an agreement must provide a written proposal to 
the employee. Where the employee’s understanding of written English is limited the 
employer must take measures, including translation into an appropriate language, to 
ensure the employee understands the proposal.

7.8 The agreement may be terminated:

(a) by the employer or the individual employee giving four weeks’ notice of 
termination, in writing, to the other party and the agreement ceasing to operate 
at the end of the notice period; or

(b) at any time, by written agreement between the employer and the individual 
employee.

7.9 The right to make an agreement pursuant to this clause is in addition to, and is not 
intended to otherwise affect, any provision for an agreement between an employer 
and an individual employee contained in any other term of this award.”

[28] A clause in these terms is in every modern award, as is required by s.144 of the FW 
Act. 

[29] Before leaving the 2008 AIRC Full Bench decision it is important to note that the Full 
Bench itself stated that it was desirable to review the model flexibility clause after a 
reasonable period. At paragraph [192] the Full Bench said:








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“The model clause will not commence to operate before 1 January 2010. It is not possible to 
be certain about the award and legislative environment in which the clause will operate. While 
it is anticipated that the award modernisation process will have been completed, the content 
and scope of the awards is yet to be decided. In addition the details of the workplace relations 
system which will be operating at that time are also uncertain. While the Government has 
given indications of its policy on many matters the legislative process has barely begun. For a 
number of reasons, it is obviously desirable that there be a review of the operation of the 
model flexibility clause after it has been operating for a reasonable period. This review would 
provide an opportunity to assess whether the clause has achieved its purpose of providing 
flexibility to meet the genuine individual needs of employers and employees. An important 
related issue for consideration would be whether the provision has provided sufficient 
protection from disadvantage for employees. The experience of employers, employees and 
unions would be extremely helpful in such a review as would the views of the authority 
responsible for ensuring the observance of modern awards.”15

[30] The fact that a review of the model flexibility clause was specifically contemplated by 
the AIRC at the time it was determined is an important factor in our consideration of the 
applications before us. It is also relevant to observe that aspects of the current legislative 
framework were not in operation at the time the 2008 AIRC Full Bench made its decision. 
Section 145 of the FW Act is particularly relevant in this regard and we return to this point 
later in our decision.

[31] The sentiments expressed by the AIRC in the extract set out at paragraph [29] above 
are reflected in the Explanatory Memorandum to the Fair Work (Transitional Provisions and 
Consequential Amendments) Bill 2009:

“190. The interim review will enable FWA to examine individual flexibility clauses in 
modern awards to ensure they are being used for the purpose intended and not to alter industry 
standards on hours and shift patterns.”

[32] Before turning to deal with the applications before us we propose to briefly address the 
broader issue of workplace flexibility and some developments since the AIRC Full Bench 
decision regarding the model clause. The report titled ‘Towards more productive and 
equitable workplaces - an evaluation of the Fair Work legislation’ (the Review Report) and 
the ‘General Manager’s report into the extent to which individual flexibility arrangements are 
agreed to and the content of those arrangements: 2009-2012’ (the 2012 IFA Report) are 
particularly relevant in this regard.

2. WORKPLACE FLEXIBILITY

2.1 General

[33] The general object of the FW Act is to provide ‘a balanced framework for cooperative 
and productive workplace relations that promotes national economic prosperity and social 
inclusion for all Australians’.16 Balance in this context has a number of dimensions: balance 
between the interests of business and unions; between work and family responsibilities; and 
between fairness and flexibility. This balanced framework incorporates, among other things:








[2013] FWCFB 2170

14

 a guaranteed safety net of fair, relevant and enforceable minimum terms and 
conditions which cannot be undermined by statutory individual employment 
agreements of any kind (s.3(b) and (c)); and

 flexible working arrangements that assist employees to balance their work and 
family responsibilities (s.3(d)).

[34] The safety net is provided through the National Employment Standards (the NES), 
modern awards and national minimum wage orders. Flexible working arrangements are 
facilitated through provisions within the NES, the model flexibility term in modern awards 
and enterprise agreements. The type of flexibility afforded can be characterised as ‘procedural 
flexibility’, which Stewart defines as the ‘adoption of regulatory mechanisms which facilitate 
change’.17

[35] The NES are the minimum standards that apply to national system employees and 
underpin what can be included in modern awards and enterprise agreements. The NES sets 
minimum employment standards in relation to the following matters:18

(a) maximum weekly hours (ss.62-64)
(b) requests for flexible working arrangements (ss.65-66)
(c) parental leave and related entitlements (ss.67-85)
(d) annual leave (ss.86-94)
(e) personal/carers’ leave and compassionate leave (ss.95-107)
(f) community service leave (ss.108-112)
(g) long service leave (ss.113-113A)
(h) public holidays (ss.114-116)
(i) notice of termination and redundancy pay (ss.117-123)
(j) Fair Work Information Statement (ss.124-125)

[36] The NES provides scope for the flexible application of the prescribed minimum 
standards in a number of ways, such as:

 providing for the averaging of hours over a specified period (ss.63-64);
 capacity for an employee to request an extension of unpaid parental leave (s.76);
 facilitating ‘keeping in touch’ days while an employee is taking unpaid parental 

leave (s.79A); 
 providing that modern awards and enterprise agreements can include terms 

providing for the cashing out of annual leave by an employee (subject to the 
requirements of s.93(2) and s.94(2)-(4)) (ss.93 and 94); and

 making provision for reasonable requests to work on public holidays (s.114(2)-
(4)).

[37] Section 65 is also part of the NES and provides that an employee who is a parent, or 
has the responsibility for the care of a child may request the employer for a change in working 
arrangements to assist the employee to care for the child if the child:

(a) is under school age; or
(b) is under 18 and has a disability.








[2013] FWCFB 2170

15

[38] There are restrictions on the entitlement to make such requests, relating to the 
employees’ length of service and employment type (s.65(2)).

[39] A report on the Australian work and life index 2012 by Skinner, titled ‘Work-Life 
balance in South Australia’, (the 2012 AWALI Report) assesses the impact of the right to 
request provisions in s.65 of the FW Act.19 An overview of the key findings from the 2012 
AWALI Report is set out below.20

Overview of key findings
From SA AWALI 2012, South Australian workers request flexible work arrangements, and 
have their requests accepted, at comparable rates to the national average:

 1 in 5 SA workers made a request for a flexible work arrangement in the last 
12 months;

 The majority – nearly 70 per cent – had this request fully accepted. 

Those most likely to make a request are:

 Women with children, especially pre-school aged children;

 Workers in part-time jobs, especially women part-timers;

 Workers in sales occupations.

The most common reasons to make a flexibility request are:

 To meet child-care or family responsibilities and commitments;

 To meet study commitments;

 Because of health reasons.

Of those workers who did not make a request, the majority (around 60 per cent) are content
with their current work arrangements. Other reasons cited by a minority of respondents were
that flexibility is not possible in their job, they had just started their job or that they could not 
afford a reduction in income.
Access to flexibility is an important support for work-life balance – there is a clear
association between having a flexibility request accepted and lower work-life interference.

[40] Modern awards are dealt with in Part 2-3 of Chapter 2 of the FW Act. Section 144(1) 
provides that each modern award must include a ‘flexibility term’ enabling an employee and 
his or her employer to agree on an individual flexibility arrangement (an IFA) varying the 
effect of the award in relation to the employee and the employer. The stated objective of such 
arrangements is ‘to meet the genuine needs of the employee and employer’.

[41] An IFA has effect in relation to the employee and the employer as if the relevant 
modern award was varied by the flexibility arrangement. For the purposes of the FW Act the 
IFA is taken to be a term of the modern award (s.144(2)). 

[42] Subsections 144 (4) and (5) deal with the requirements pertaining to flexibility terms: 








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16

“Requirements for flexibility terms

(4) The flexibility term must:

(a) identify the terms of the modern award the effect of which may be varied by an 
individual flexibility arrangement; and

(b) require that the employee and the employer genuinely agree to any individual 
flexibility arrangement; and

(c) require the employer to ensure that any individual flexibility arrangement must 
result in the employee being better off overall than the employee would have been if 
no individual flexibility arrangement were agreed to; and

(d) set out how any flexibility arrangement may be terminated by the employee or the 
employer; and

(e) require the employer to ensure that any individual flexibility arrangement must be 
in writing and signed:

(i) in all cases—by the employee and the employer; and

(ii) if the employee is under 18—by a parent or guardian of the employee; and

(f) require the employer to ensure that a copy of any individual flexibility
arrangement must be given to the employee.

(5) Except as required by subparagraph (4)(e)(ii), the flexibility term must not require 
that any individual flexibility arrangement agreed to by an employer and employee 
under the term must be approved, or consented to, by another person.”

[43] Section 145 of the FW Act is also relevant and we deal with it later in our decision.

[44] Modern awards and the NES provide a framework of minimum terms and conditions 
of employment. There is no statutory impediment to employers and employees agreeing to 
increase these minimum entitlements. In other words the workplace relations system does not 
limit ‘upwards flexibility’. As the [2008] AIRC Full Bench observed:

“It is evident from the scheme of the legislation that award terms prescribing wages and 
conditions are to operate as minimum entitlement of employees. It follows that there is no 
statutory restriction on employers and employees agreeing to increase those minimum 
entitlements and an individual flexibility provision is unnecessary for agreements of that kind. 
The purpose of a model flexibility provision is to permit a reduction in one or more minimum 
award entitlements as part of an agreement which meets the genuine individual needs of the 
employer and the employee without disadvantaging the individual employee. This is the 
underlying basis on which we have approached the drafting of the model clause.”21

2.2 The Review Report

[45] On 20 December 2011 the Minister for Workplace Relations, the Hon. Bill Shorten 
MP, announced the appointment of a three member panel to review the FW Act and the 
Transitional Provisions Act. The terms of reference asked the Panel to examine and report on 
the extent to which the legislation is operating as intended, and on areas where the evidence 
indicated that the operation of the legislation could be improved consistent with the legislative 
objects.








[2013] FWCFB 2170

17

[46] In June 2012 the Panel provided its report titled the Review Report to the Minister. 
The Review Report was publicly released on 2 August 2012 and can be accessed through the 
Department of Education, Employment and workplace Relations website at 
www.deewr.gov.au/fair-work-act-review. 

[47] The Panel established to review the operation of the FW Act considered, among other 
things, whether the FW Act impedes flexibility in work patterns and the organisation of work. 
The Panel saw ‘considerable scope for increased use of individual flexibility arrangements’ 
and made a number of recommendations to encourage their wider adoption. We deal with that 
aspect of the Panel’s report at section 2.2 of our decision. More broadly, the Panel observed 
that ‘the Australian industrial relations system exhibits a reasonably high degree of flexibility 
and mobility’.22 That observation was based on a number of important indicators23:

 Both the extended national character of the FWA and the modernisation of awards in 
its jurisdiction have permitted greater flexibility than was possible in the 
combination of state and federal systems, and under the older style of awards. The 
number of awards and related instruments has been reduced from 3175 to 122, and 
the provisions of awards have been made less prescriptive. A number of submissions 
to the Panel commented on the improvement in the structure that had come with the 
replacement of state awards by a much smaller set of national awards, and of 
detailed and prescriptive awards with less prescriptive awards.

 The transition from arbitration and the legislative frameworks since have evidently 
been compatible with increasing diversity in work patterns. In August 1992, 21 per 
cent of employees (excluding owner-managers of incorporated enterprises) were 
casual according to the ABS definition. By August 2011 the proportion had 
increased to 24 per cent.24 Part-time employment has also increased, from 24 per 
cent of employment in 1992 to 30 per cent in 2012.25

 As several studies26 have pointed out, the Australian labour market adjustment to the 
global downturn in 2001 and the 2009 GFC took the form of changes in hours 
worked more than it did changes in employment. This suggests a recent capacity to 
reach flexible arrangements to cope with what may be temporary downturns in 
output and demand.

 The Australian labour force is more mobile than the workforces of many comparable 
economies. OECD research based on survey data for 2007 shows Australian 
residential mobility over a two-year period was the second highest of the countries 
examined.27 With respect to mobility between employers, the ABS measure of 
labour mobility is invariant to the IR framework.28

[48] The Review Report specifically considered the operation of IFAs (see section 5.3.2 of 
the Review Report) and noted that it had ‘given the issue of IFAs extensive consideration and 
made a series of recommendations on their operation’.29 The Panel’s recommendations in 
relation to IFAs were intended ‘to create a greater opportunity for employers and employees 
to make individual flexibility arrangements while ensuring adequate and appropriate 
protection for the employer and the employee’.30 The specific recommendations are as 
follows:

Recommendation 9: The Panel recommends that the better off overall test in s. 144(4)(c) and s. 203(4) be 

amended to expressly permit an individual flexibility arrangement to confer a non-monetary benefit on an 








[2013] FWCFB 2170

18

employee in exchange for a monetary benefit, provided that the value of the monetary benefit foregone is 

specified in writing and is relatively insignificant, and the value of the non-monetary benefit is 

proportionate.

Recommendation 10: The Panel recommends that the FW Act be amended to require an employer, upon 

making an individual flexibility arrangement, to notify the FWO in writing (including by electronic means) of 

the commencement date of the arrangement, the name of the employee party and the modern award or 

enterprise agreement under which the arrangement is made.

Recommendation 11: The Panel recommends that the FW Act be amended to provide a defence to an 

alleged contravention of a flexibility term under s. 145(3) or s. 204(3) where an employer has complied with 

the notification requirements proposed in Recommendation 10 and believed, on reasonable grounds, that 

all other statutory requirements (including the better off overall test) had been met.

Recommendation 12: The Panel recommends that s. 144(4)(d) and s. 203(6) be amended to require a 

flexibility term to require an employer to ensure that an individual flexibility arrangement provides for 

termination by either the employee or the employer giving written notice of 90 days, or a lesser period 

agreed between the employer and employee, thereby increasing the maximum notice period from 28 days 

to 90 days.

[49] Each of these recommendations proposes that the FW Act be amended, in specified 
ways. The amendment of the FW Act is, of course, a matter for the Parliament. We note 
however that recommendation 12 is capable of implementation without legislative 
amendment.

[50] Recommendation 12 proposes that s.144(4)(d) be amended to ensure that an IFA may 
be terminated by either the employee or the employer giving 90 days written notice. It will be 
recalled that s.144(4)(d) provides that the flexibility term in modern awards must ‘set out how 
any flexibility arrangement may be terminated by the employee and the employer’. On a plain 
reading of s.144(4)(d) it provides that a flexibility term in a modern award must include a 
provision which sets out how any IFA ‘may be terminated by the employee and the 
employer’. Importantly, s.144(4)(d) does not specify by what method an IFA may be 
terminated, that issue being a matter for the discretion of the Commission. In this regard the 
requirements for flexibility terms in modern awards are quite different to those which apply to 
flexibility terms in enterprise agreements.

[51] The FW Act provides that a flexibility term must be included in enterprise agreements 
approved by the Commission (see s.202(1)). Section 203 sets out the requirements to be met 
by such terms. Relevantly, s.203(6) provides that the flexibility term must require the 
employer to ensure that any IFA agreed to under the term must be able to be terminated:

“(a) by either the employee, or the employer, giving written notice of not more than 
28 days; or
(b) by the employee and the employer at any time if they agree, in writing, to the 
termination.”








[2013] FWCFB 2170

19

[52] If an enterprise agreement does not include a flexibility term the ‘model flexibility 
term’ in Schedule 2.2 to the Fair Work Regulations 2009 is taken to be a term of the 
agreement.31 Clause 5 of the model flexibility term deals with the termination of an IFA and 
is in essentially the same terms as s.203(6).

[53] It seems to us that the differences between ss.144(4)(d) and 203 are telling. If the 
legislature had intended to mandate the duration of a termination period in relation to IFAs 
made pursuant to a flexibility term in a modern award then it would have chosen language of 
the type used in s.203(6). It chose not to do so. The clear inference is that the notice required 
to effect the termination of an IFA made under a flexibility term in a modern award is to be 
determined by the Commission.32 The merits of such a provision is a separate matter and we 
return to that issue later.

2.3 The 2012 IFA Report

[54] Section 653(1)(b) of the FW Act requires the General Manager to conduct research 
into the extent to which IFAs under modern awards and enterprise agreements are being 
agreed to and the content of those arrangements. This research is to be conducted in relation 
to the first three years after the commencement of the FW Act and in each subsequent three 
year period (see s.653(1A)). The first report under these provisions, in relation to the period   
1 January 2010 to 30 June 2012, was tabled in Parliament on 13 February 2013, the 2012 IFA 
Report, and a copy can be accessed through the FWC website at 
www.fwc.gov.au/documents/IFA.

[55] In order to provide information on the extent to which IFAs were made and the 
content of those arrangements, a survey of employers and a survey of employees was 
undertaken between March and June 2012.

[56] The sample survey of 2650 national system employers was stratified according to the 
Australian Bureau of Statistics’ definition of employer size (based on the number of 
employees) and industry. A survey of some 4500 employees from a range of industries and 
locations was also conducted. Information about the stratification and sampling methods used, 
and the limitations of the research is set out in section 3 of the 2012 IFA Report.

[57] Employer awareness of IFAs varied across different employer sizes.33 About 54 per 
cent of all employers were ‘aware that employers can have an IFA with an employee that 
varies the effect of the modern award or an enterprise agreement that applies to an employee’. 
Awareness of IFAs was lowest among smaller employers, i.e. those employing fewer than 
15 employees (50 per cent) and highest amongst large employers (84 per cent). ‘Large 
employers’ were defined as those which employ 200 or more employees.

[58] About 35 per cent of employees were aware that employees who have their 
employment conditions set by a modern award or an enterprise agreement can agree to an IFA 
with their employer. Awareness was higher among full-time employees (38 per cent) than 
amongst part-time employees (30 per cent). There were also differences in awareness by 
gender, age and whether or not the employee was from an English speaking background.34

[59] Around eight per cent of employers reported making at least one IFA and the 
likelihood of having made an IFA increased with employer size. Almost 27 per cent of large 








[2013] FWCFB 2170

20

employers reported at least one IFA compared with around 12 per cent of medium sized 
employers and about 7 per cent of small employers. Employers indicated that IFAs had more 
commonly been made to vary modern awards as opposed to enterprise agreements.

[60] Section 4.2.3 of the 2012 IFA Report provides information about employers who did 
not make IFAs. Some 45 per cent of employers were aware of IFAs but had chosen not to 
make them. These employers were asked the reasons why they had chosen not to make IFAs. 
The results are set in Table 4.2 of the 2012 IFA Report, which is reproduced below.35

Table 4.2: Reasons for not making IFAs, per cent of employers aware of but who had not made 
IFAs

Per cent CI
Have not thought about it 1.9 [1.0,3.6]
No identifiable need for IFAs 51.0 [46.4,55.7]
Don’t understand IFAs 1.8 [0.9,3.6]
Concern about possible penalties or risks associated with 
IFAs 0.7 [0.2,2.2]

Use individual agreements (such as ITEAS, AWAs or 
common law contracts) instead 12.7 [10.1,15.9]

Use unwritten or verbal agreements with staff to vary 
conditions of employment 14.7 [11.6,18.5]

Employee(s) have not requested IFAs 32.6 [28.3,37.2]
Could not agree with employee(s) about content of IFA 0.2 [0.1,0.9]
IFAs do not allow sufficient flexibility 0.9 [0.4,2.0]
IFAs are not reliable (i.e., they can be cancelled with four 
weeks’ notice) 0.5 [0.1,1.8]

Other 1.9 [1.0,3.3]
Don't know/can't say 3.7 [2.4,5.7]

Note: Estimates are derived from the weighted sample. Figures in square brackets represent 95 per cent confidence intervals. 

Employers aware of, but had not made, IFAs could provide multiple reasons for not making IFAs. 

[61] The most common reason, reported by just over half of employers (51 per cent), was 
that there had been no identifiable need for an IFA. Around one-third of employers indicated 
that they had not made an IFA because they had not received a request. Employers also 
indicated that they did not make IFAs because they varied conditions of employment with 
employees through other less formal arrangements (15 per cent) or by using formal individual 
agreements (13 per cent). Less than one per cent of employers indicated that they did not 
make IFAs because they could not agree with their employees about them; or that they were 
concerned about penalties or risks associated with IFAs; or that IFAs could be unilaterally 
terminated upon four weeks’ notice.

[62] Employers party to only one IFA reported varying lengths of IFA operation.36 About 
31 per cent of IFAs had been in operation for six to less than 12 months and a further 27 per 
cent for one to less than six months. Around seven per cent of IFAs had been in operation for 
more than two years. When compared with single IFA employers, multiple IFA employers 
reported that IFAs had typically been in operation for a longer period. While around 19 per 
cent reported IFAs in operation for six to 12 months, about 40 per cent reported IFAs in 
operation for more than two years.37








[2013] FWCFB 2170

21

[63] For single IFA employers, most reviews, modifications and terminations of enterprise 
agreement IFAs were employer-initiated (94 per cent), with only six per cent being employee-
initiated. For modern award IFAs the results were more evenly split: 50 per cent of reviews, 
modifications and terminations were employer-initiated and 47 per cent were employee-
initiated, with an additional two per cent initiated by both parties.38

[64] Multiple IFA employers reported that most reviews, modifications and terminations of 
IFAs were employer-initiated (around 70 per cent). Around 21 per cent were reportedly 
initiated by an employee or employee representative and around eight per cent by both 
employer and employee.39 These results are not disaggregated so the proportion of modern 
award IFAs that were terminated at the initiative of multiple IFA employers is unknown.

[65] The survey data also provides some insight into the content of matters dealt with by 
IFAs. The employee survey data reveal that the modern award terms most frequently varied 
related to arrangements for when work is performed (identified by 59 per cent of employees 
with an IFA), as shown by Table 5.11 of the 2012 IFA Report.

Table 5.11: Matters varied by IFAs, per cent of employees with an IFA

Per cent
Arrangements for when work is performed 58.5
Penalty rates 17.9
Overtime rates 15.4
Allowances 12.2
Leave loading 13.0
Other variations 45.5

Note: Employees could provide multiple responses. 

[66] A relatively large proportion of IFAs related to ‘other’ terms (45 per cent). Table 5.12 
in the 2012 IFA Report provides an overview of some of the other terms and conditions of 
employment that IFAs were reported to vary. An increase in the base rate of pay was the most 
common variation identified (representing 11 per cent of all other variations) followed by an 
increase in flexibility in the hours worked (nine per cent). Around 20 per cent of these 
variations could not be categorised into these groups.

[67] The employer survey data showed a similar pattern. The table below is derived from 
Tables 5.2 and 5.3 from the 2012 IFA Report.

Matters varied by Modern Awards IFAs

Element modified Single IFA
Employers %

Multiple IFA
Employers %

Arrangements for when work is performed 55.8 36.8

Overtime 27.0 44.2

Penalty rates 12.4 23.6

Allowances 17.6 28.9








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22

Leave loading 7.9 17.5

Other variations 30.6 33.6

[68] The employers surveyed also identified a range of benefits to employees resulting 
from agreeing to an IFA40. The most common benefits identified by single IFA employers 
were more flexible working hours (37 per cent) and increased take-home pay (33 per cent). 
Around a quarter of single IFA employers identified more consistent take-home pay, 
increased job security and improved work-life balance as benefits.

[69] Multiple IFA employers most commonly suggested that the benefits to the employee 
were more flexible working hours (40 per cent) and increased take-home pay (41 per cent). 
More flexible working hours was a benefit identified by 30 per cent of employers with 
enterprise agreement IFAs and 50 per cent of employers with modern award IFAs. Increased 
take-home pay was reported by 29 per cent and 43 per cent of employers with enterprise 
agreement IFAs and modern award IFAs respectively. A greater proportion of employers with 
enterprise agreement IFAs indicated that ‘other parenting or family reasons’ had been a 
benefit to the employee than employers with modern award IFAs (41 per cent compared with 
13 per cent).41

[70] Employers also identified benefits to the business/organisation arising from their 
IFA(s).42 For single IFA employers, the benefits most commonly indicated were the creation 
of benefits and incentives to attract or retain staff (34 per cent) and clarity about conditions 
for both the employer and employee (30 per cent). Around nine per cent suggested there was 
no benefit to the employer.

[71] For multiple IFA employers, the benefits most commonly identified were formalising 
existing arrangements (43 per cent); clarity about conditions (36 per cent); staff being able to 
work more or less hours as needed by the employer (34 per cent); and increased flexibility 
with rostering (34 per cent).

[72] Multiple IFA employers with modern award IFAs were more likely to have cited that 
formalising existing arrangements was a benefit to the employer (43 per cent) compared with 
employers with enterprise agreement IFAs (16 per cent). Some 60 per cent of multiple IFA 
employers with enterprise agreement IFAs identified that the creation of benefits and 
incentives to attract or retain staff was a benefit to the employer, while this was reported by 
28 per cent of employers with modern award IFAs.43

[73] We also note that there is some evidence that IFAs are being used in a manner which 
is inconsistent with the model flexibility term and the requirements of the FW Act.

[74] In the employer survey conducted as part of the 2012 IFA Report employers were 
asked whether the employee was required to sign IFA documentation in order to continue or 
commence employment. A majority of single IFA employers (69 per cent) with modern 
award IFAs required the employee to sign the IFA documentation to either commence or 
continue their employment.44 Just over half of multiple IFA employees (54 per cent) required 
all employees to sign IFA documentation to either commence or continue their employment.45

On its face such conduct is inconsistent with the requirement in clause 7.2 of the model 
flexibility term that the employer and individual employee must have ‘genuinely agreed’ to 








[2013] FWCFB 2170

23

make the IFA, without coercion or duress. The making of an IFA prior to the commencement 
of employment is inconsistent with the June 2008 AIRC Full Bench decision in which it was 
decided that an IFA was to be made available only after the commencement of employment:

“We next consider whether the model clause ought permit an agreement to be made prior to 
the commencement of employment. The terms of cl.10 suggest that an agreement ought be 
available only after employment has commenced. Had it been intended that an agreement be 
permitted between an employer and a prospective employee that could have been made clear.
By way of contrast to the language of cl.10, s.326(5) specifically provides that an interim 
transitional employment agreement may be made prior to the commencement of employment.
The absence of such direct language in cl.10 is telling. We recognise that this interpretation 
may limit the flexibility available under the clause in some circumstances. On the other hand it 
is consistent with the statutory concept of awards as a safety net that the parties should initially 
be bound by the award provisions, which then form the base from which a flexibility 
agreement might be made.”46

[75] The intention of the AIRC Full Bench is reflected in the reference to ‘employee’ in the 
model flexibility clause, rather than ‘prospective employee’. 

[76] Section 341(3) of the FW Act is also relevant in this context, it states:

“(3) A prospective employee is taken to have the workplace rights he or she would have if 
he or she were employed in the prospective employment by the prospective employer.

Note: Among other things, the effect of this subsection would be to prevent a prospective 
employer making an offer of employment conditional on entering an individual flexibility
arrangement.”

[77] The Review Report also gave consideration to this issue and concluded as follows:

“The Panel is not persuaded that it is appropriate or desirable for the employer and employee 
to enter an IFA at the time of the engagement of the employee. This is important. An essential 
underpinning of our recommendations is that the arrangement is genuinely agreed to by the 
employee. At the point of engagement, it is extremely unlikely that the employee will 
genuinely agree by engaging in an assessment of the potential worth of benefits foregone with 
the benefits gained. At this point, a potential employee may feel he or she has no real choice 
other than to accept employment on the terms offered. These circumstances would not involve 
genuine agreement of the type we consider must be associated with IFAs. For the sake of 
clarity, the Panel considers that ss.144 and 203 should be amended to include the prohibition 
currently under s.341(3) preventing a prospective employer making an offer of employment 
conditional on entering into an IFA.”47

[78] There is also at least one reported instance of a penalty being imposed on an employer 
for using coercion and duress to compel an employee to agree to an IFA. Fair Work 
Ombudsman v Australian Shooting Academy Pty Ltd48was such a case. In that matter, Logan J 
observed at [36]:

“It is axiomatic and each party acknowledges that employees should not be subject to duress, 
coercion, undue influence or pressure in the workplace. Parliament has expressly so provided 
in the Fair Work Act. The manifest intention of that legislation is that individual flexibility 
arrangements should be negotiated openly and freely at arms length between employer and 
employee without outside interference and without either party being deceived or misled.
There is no suggestion, on the facts of this case, of any misleading or deceptive conduct. There 








[2013] FWCFB 2170

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is, though, as is acknowledged, evidence of other types of conduct to which I have made 
reference.”

[79] The final observation in relation to the practical implementation of the model 
flexibility term relates to the ‘Qld - Pharmacy Industry Audit Program Report’ (the Qld Audit 
Report). In that report the Fair Work Ombudsman (FWO) raises some concerns about the use 
of IFAs in the retail pharmacy sector in Queensland. The Qld Audit Report was the result of a 
program conducted by the FWO to assess the level of compliance in the sector with rates of 
pay, minimum hours of engagement, meal break entitlements, time and wages record keeping 
and pay slip obligations. FWO Inspectors assessed the records of 575 employers operating 
pharmacies throughout Queensland. Of the 575 audits completed, 320 employers (56 per cent) 
were found to be compliant and 255 employers (44 per cent) to be in contravention. One of 
the findings made in the Qld Audit Report related to the use of IFAs in the sector:

“During the audit program inspectors noted some employers utilising Individual Flexibility 
Arrangements (IFAs) . . .

Fair Work Inspectors involved in the program reported the use of what appeared to be a 
‘standardised’ or template-driven IFA being used by a small number of employers. A 
‘template approach’ raises the question as to whether the IFA was produced following genuine 
negotiations.”49

[80] A copy of the Qld Audit Report can accessed through the FWO website:  
http://www.fairwork.gov.au/campaignresults/QLD/Qld-Pharmacy-Industry-Campaign-Final-
Report.pdf

3. CONSIDERATION OF THE APPLICATIONS

[81] As we have mentioned, this decision deals with 15 applications to vary the standard 
award flexibility provision in 10 modern awards. 

[82] A set of draft directions in relation to these matters was published on the 
Commission’s website on 21 January 2013. A Directions Hearing was held on 31 January 
2013 to provide interested parties the opportunity to comment on the draft directions. Final 
directions were issued by the Full Bench on 4 February 2013 and posted to the Commission’s 
website. Applicants and interested parties were directed to file comprehensive written 
submissions, relevant documentary material and comprehensive witness statements for any 
witness evidence in support of their position on any application within the timeframe set out 
in the directions.  

[83] Two background documents prepared by the Commission’s staff were placed on the 
website for the information and assistance of interested parties, the first was a summary of the 
applications and supporting submissions received, and the second was a history of the model 
award flexibility clause. We do not propose to repeat that material but note that we have had 
regard to all of the submissions. An annotated model flexibility clause setting out the 
variations proposed is set out at Attachment 3 to this decision. 

[84] Oral submissions were heard by the Full Bench on 27 March 2013. 








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25

[85] The applications can be broadly categorised as going to the scope and operation of the 
model flexibility term. We propose to deal first with the applications going to the scope of the 
model flexibility term.

3.1 Scope

[86] As we have noted, s.144(4) of the FW Act provides that the flexibility term must 
identify the terms of the modern award the effect of which can be varied by an individual 
flexibility arrangement. Subclause 7.1 of the model flexibility term provides that the employer 
and employee may agree to vary the application of award terms concerning:

 arrangements for when work is performed;
 overtime rates;
 penalty rates;
 allowances; and
 leave loading.

[87] A number of applications seek to vary the scope of the model flexibility term. 

[88] Some applications seek the deletion of clause 7.1 in its entirety and the insertion of a 
provision which would allow IFAs in respect of each and every term of a modern award.50 For 
example the VANA and Hair and Beauty Australia both propose the deletion of clause 7.1 in 
its entirety and its replacement by a new clause 7.1 in the following terms:

“7.1 Notwithstanding any other provision of this award, an employer and an 
individual employee may agree to vary the application of any term of this award to 
meet the genuine individual needs of the employer and the individual employee.”

[89] The Housing Industry Association (HIA) seeks to add a new paragraph (h) to 
subclause 7.1 as follows:

“(h) any other matter within the award”

[90] Other applications seek more limited variations to the scope of the model flexibility 
term. For instance in relation to clause 7.1(a), ‘arrangements for when work is performed’, the 
Baking Industry Association of Queensland - Union of Employers, the National Retailers 
Association (NRA) and the Hair and Beauty Industry Australia (HBIA) seek to include the 
words “including the minimum duration of shifts.”51 In its application, the Australian 
Retailers Association52 seeks to reword 7.1(a) as follows: “arrangements for when work is 
performed, including minimum shift engagements”. In its subsequent submission dated 25 
February 2013, the NRA appears to have changed its proposed rewording of 7.1(a) to:
“arrangements for when work is performed (including minimum shift engagement)”. 

[91] The Victorian Employers’ Chamber of Commerce and Industry (VECCI) seeks the 
insertion of two new award terms which may be varied by an IFA, namely minimum shift 
lengths and ‘preferred hours’ arrangements.53

[92] The HIA seeks to vary clause 7.1 to provide that award terms dealing with frequency 
of payment may be varied by an IFA. 








[2013] FWCFB 2170

26

[93] It is convenient to deal first with those applications which seek to vary the scope 
clause of the model flexibility term such that an IFA may vary the application of any term of a 
modern award.

[94] We note that no evidence was advanced in support of such a variation and little was
put by way of merit argument. Those organisations that supported such a variation were 
unable to identify any particular issues which have arisen from the current scope of the model 
term save in respect of frequency of payment and minimum engagement periods.54 We deal 
later with those particular issues. The most common complaint about the scope clause of the 
model term was the ambiguity and uncertainty said to arise from the use of the expression 
‘arrangements for when work is performed’ in subclause 7.1(a).

[95] The written submission by Australian Business Industrial (ABI) makes this point at 
paragraph 4.5:

“The current wording of the flexibility clause in modern awards is making access to flexible 
arrangements desired by employees more difficult and uncertain. Many members report 
spending more time on their human resources achieving compliance and dealing with higher 
levels of uncertainty (uncertainty about entitlements, uncertainty about processes and 
uncertainty about outcomes) than in the past for no benefit to the business. ABI supports the 
applications seeking clarity on the scope of what award terms can be varied in IFAs as it will 
assist in meeting the Modern Award Objective.”55

[96] In its submission Australian Federation of Employers and Industries (AFEI) says:

“AFEI agrees with the submissions that the term ‘arrangements for when work is performed’ 
is ambiguous. Consequently, the award flexibility provisions in modern awards are not 
operating effectively and have failed to achieve the modern award objectives.”56

[97] To similar effect Business SA submitted:

“It would be beneficial to users of an Award if further guidance is provided on what 
constitutes ‘arrangements for when work is performed’ as this will ensure that mistakes are 
eliminated and breaches to the Award are avoided. The broad terms in relation to a user’s 
interpretation of arrangements for when work is performed leaves room for error, is inflexible 
and is inconsistent with the Modern Award objective.”57

[98] Mr Barkatsas, on behalf of VECCI, submitted:

“. . . in a nutshell we submit that as the clause stands at the moment does not so identify with 
any amount of certainty what can be subject to an IFA . . . We submit that that ambiguity is 
something that ought to be clarified within this review . . .”58

[99] We are not persuaded to vary the scope of the model flexibility term such that an IFA 
may vary the application of any term of a modern award.

[100] Division 3 of Part 2-3 of Chapter 2 of the FW Act deals with the terms of modern 
awards. Sections 143-149 deals with certain terms that must be included in each modern 
award:

 coverage terms (ss.143, 143A, 143B);








[2013] FWCFB 2170

27

 flexibility terms (ss.144-145);
 terms about settling disputes (s.146);
 ordinary hours of work (s.147);
 base and full rates of pay for pieceworkers (s.148); and
 automatic variation of allowances (s.149).

[101] No case has been advanced as to why these particular award terms should be able to be 
varied by an IFA.

[102] Section 139 of the FW Act sets out the terms that may be included in a modern award:

139 Terms that may be included in modern awards—general
(1) A modern award may include terms about any of the following matters:

(a) minimum wages (including wage rates for junior employees, employees with 
a disability and employees to whom training arrangements apply), and:

(i) skill-based classifications and career structures; and

(ii) incentive-based payments, piece rates and bonuses;

(b) type of employment, such as full-time employment, casual 
employment, regular part-time employment and shift work, and the 
facilitation of flexible working arrangements, particularly for 
employees with family responsibilities;

(c) arrangements for when work is performed, including hours of work, 
rostering, notice periods, rest breaks and variations to working 
hours;

(d) overtime rates;

(e) penalty rates, including for any of the following:

(i) employees working unsocial, irregular or unpredictable hours;

(ii) employees working on weekends or public holidays;

(iii) shift workers;

(f) annualised wage arrangements that:

(i) have regard to the patterns of work in an occupation, industry or 
enterprise; and

(ii) provide an alternative to the separate payment of wages and 
other monetary entitlements; and

(iii) include appropriate safeguards to ensure that individual 
employees are not disadvantaged;

(g) allowances, including for any of the following:

(i) expenses incurred in the course of employment;

(ii) responsibilities or skills that are not taken into account in rates 
of pay;

(iii) disabilities associated with the performance of particular tasks 
or work in particular conditions or locations;

(h) leave, leave loadings and arrangements for taking leave;

(i) superannuation;








[2013] FWCFB 2170

28

(j) procedures for consultation, representation and dispute settlement.

(2) Any allowance included in a modern award must be separately and clearly 
identified in the award.

[103] The June 2008 AIRC Full Bench gave careful consideration to the terms of s.576J and 
decided to limit the scope of the model flexibility term to those matters specified in clause 
7.1. In doing so, the 2008 AIRC Full Bench specifically addressed award terms dealing with 
minimum wages by reference to s.576J(1)(a) and concluded that there was no sound basis for 
including such terms within the operation of the model clause. The AIRC Full Bench 
expressed the view that it was unnecessary to include such terms having regard to the separate 
provision that was made for flexibility in relation to the way in which wages, salaries and 
other monetary entitlements may be paid (referring to s.576J(1)(f) of the WR Act) and, 
further, it was ‘inappropriate’ to include minimum wages terms within the model clause 
because:

“It is difficult to see how the trading-off of minimum wages against other benefits could meet 
a genuine need for individual flexibility without at the same time weakening the function of 
the award as a safety net in an unacceptable way.”59

[104] In our view, these observations remain apposite and we note that s.139(1)(f) of the FW 
Act is in the same terms as s.576(1)(f) of the WR Act.

[105] The 2008 AIRC Full Bench also concluded that the inclusion of award terms dealing 
with superannuation, consultation, representation and dispute settlement within the scope of 
the model clause would be likely to add complexity and unnecessary regulation rather than 
increase flexibility. No cogent reasons have been advanced for departing from this aspect of 
the 2008 AIRC Full Bench decision and we do not propose to do so. 

[106] We also note that the Fair Work Amendment Act 2012 (Cth) inserted a number of 
provisions in the FW Act dealing with the inclusion of a default superannuation fund term in 
modern awards and requiring the Commission to conduct 4 yearly reviews of such terms. The 
variations to modern awards flowing from these new legislative provisions should be dealt 
with before consideration is given to including award terms dealing with superannuation 
within the scope of the model flexibility term.

[107] The instances of inappropriate use of IFAs referred to earlier provide a further reason 
for declining to expand the scope of the flexibility term to cover any term of a modern award.

[108] While we are not persuaded to vary the scope of the model flexibility term in the 
manner sought we acknowledge that subclause 7.1 has given rise to some ambiguity and 
uncertainty, particularly in relation to the scope of the expression ‘arrangements for when 
work is performed’. It is appropriate that this ambiguity and uncertainty be addressed.

[109] As to how this matter may be addressed a number of parties agreed with the 
proposition that one way of providing clarification would be to identify the specific 
provisions within each modern award that fall within the expression ‘arrangements for when 
work is performed’ in clause 7.1.60 As we noted earlier (see paragraphs [65]-[67] above) the 
award terms most frequently varied by an IFA related to arrangements for when work is 
performed. 








[2013] FWCFB 2170

29

[110] The starting point in resolving the existing uncertainty is to ascertain the intention of 
the 2008 AIRC Full Bench when it determined the scope of the model clause. In deciding that 
award terms dealing with arrangements for when work is performed would be within the 
scope of the model clause the AIRC Full Bench made reference to paragraph 576J(1)(c) of the 
WR Act.61 A provision in the same terms is now in s.139(1)(c) of the FW Act and it provides:

“(1) A modern award may include terms about any of the following matters:

. . . (c) arrangements for when work is performed, including hours of work, rostering, 
notice periods, rest breaks and variations to working hours.”

[111] It is tolerably clear that the AIRC Full Bench intended that the reference to 
‘arrangements for when work is performed’ would include the matters specifically identified 
in s.576J(1)(c), of the WR Act (now s.139(1)(c) of the FW Act), that is ‘hours of work, 
rostering, notice periods, rest breaks and variations to working hours’.

[112] VECCI, and others, contended that minimum engagement provisions in modern 
awards fall under the head of power in s.139(1)(c) and accordingly fall within the expression 
‘arrangements for when work is performed’ and hence within the scope of the model 
flexibility term. Indeed, VECCI submitted that s.139(1)(c) was the only head of power which 
supported the inclusion of a minimum engagement term in a modern award and hence it must 
follow that such a term is within the scope of the model flexibility term.

[113] We do not accept VECCI’s analysis, for two reasons.

[114] First, contrary to VECCI’s submission, s.139(1)(c) is not the only source of power for 
minimum engagement periods in modern awards. Properly understood such provisions deal 
with minimum wages (s.139(1)(a)) or are incidental (within the meaning of s.142) to casual 
employment (s.139(1)(b)). This characterisation is apparent from a consideration of the 
minimum engagement term in the Clerks—Private Sector Award 2010, which is the award 
VECCI is seeking to vary. The relevant clause is clause 12.4 and appears under the heading, 
Casual Employment:

“12.4 Casual employees are entitled to a minimum payment of three hours’ work at the 
appropriate rate.” [emphasis added]

[115] This provision is clearly dealing with minimum wages for casual employees, it is not 
dealing with arrangements for when work is performed.

[116] The second reason for rejecting VECCI’s contention flows from a plain reading of the 
expression ‘arrangements for when work is performed’ [emphasis added]. A minimum 
engagement term says nothing about ‘when work is performed’, it simply prescribes the 
minimum payment to be made to casual employees for each engagement.

[117] Having rejected the contention that minimum engagement terms fall within the 
meaning of the expression ‘arrangements for when work is performed’, the task remains to 
provide greater clarity as to the award terms that do fall within that expression. In our view, 
this is best done on an award by award basis, on application by an interested party. In the 
event such an application is made we will publish draft variations which will identify the 
specific clauses in the relevant modern award which fall within the purview of the expression 
‘arrangements for when work is performed’. 








[2013] FWCFB 2170

30

[118] We also note that the application by the Master Plumbers and Mechanical Contractors 
Association of NSW (the Master Plumbers) sought to identify specific award clauses in the 
Plumbing and Fire Sprinklers Award 2010 in relation to overtime rates, penalty rates and 
allowances. On the material before us we are not persuaded that such a variation is necessary. 
We have had regard to the survey advanced in support of the Master Plumbers’ application 
but we are not persuaded that it establishes that there is any ambiguity in relation to these 
matters. The relevant survey question asked: ‘Are you in favour of inserting a new clause to 
clarify and potentially expand the scope of making Individual Flexibility Agreements 
(IFAs)?’. No information was provided to survey respondents as to how the new clause would 
clarify the making of IFAs and nor does the survey assist in identifying any ambiguity in the 
current clause.

[119] We now turn to deal with those applications which seek more limited variations to the 
scope of the award matters which may be dealt with by IFAs.

[120] As mentioned previously, these applications seek to include ‘minimum shift 
arrangements’ (or words to that effect), frequency of payment and ‘preferred hours options’. It 
is convenient to deal with the last matter first.

[121] VECCI is seeking to vary clause 7.1 of the Clerks - Private Sector Award 2010 to 
insert an additional paragraph in the model flexibility term:

“(c) preferred hours option”.

[122] There does not appear to be any generally accepted definition of ‘preferred hours 
arrangements’ and none is proferred by VECCI. In a recent academic article Cameron dealt 
with this definitional issue, as follows:

“The concept is that the employee elects to work different or additional hours - hours that 
would ordinarily trigger penalty and overtime payments - but is paid at a lower rate ... because 
the employee volunteers or prefers to work those hours ...

... two general types of clauses can be discerned. Under the first type (‘different hours’), the 
employee elects to work different hours to his or her usual work pattern (ie. as set out in a 
roster or contract). These different hours, such as ordinary hours worked on a Saturday, 
Sunday or at night during the week or hours worked outside the spread of ordinary hours, 
would typically attract penalty or overtime rates. Under the second type (‘additional hours’), 
the employee elects to work hours in excess of their maximum ordinary hours prescribed in 
the [relevant industrial instrument], hours which would ordinarily attract overtime rates. The 
common feature of both types of clauses is that the employee is paid at a lower rate than what 
would otherwise be paid under the [relevant industrial instrument] because he or she 
volunteers or prefers to work the additional or different hours.”62

[123] In our view, VECCI’s application is misconceived. Clause 7.1 provides that the 
employer and the individual employee may agree to vary the application of ‘certain terms of 
this award’. The award terms which may be the subject of such an arrangement are then 
identified as those concerning:

“(a) arrangements for when work is performed;
(b) overtime rates;








[2013] FWCFB 2170

31

(c) penalty rates;
(d) allowances; and
(e) leave loading.”

[124] There is no award term which concerns ‘preferred hours option’. Hence even if we 
were minded to grant VECCI’s application, which we are not, it would be ineffective in any 
event.

[125] Preferred hours arrangements of the type described by Cameron in the extract at 
paragraph [122] above concern the variation of the application of award terms dealing with 
arrangements for when work is performed, overtime rates and penalty rates. It follows that 
such arrangements can be agreed within the scope of the existing model flexibility clause. But 
there is a real issue as to whether such arrangements would result in the individual employee 
being better off overall in relation to their terms and conditions of employment (as required by 
clause 7.4(d)).

[126] Preferred hours arrangements were considered by a Full Bench of the Commission in 
Re Bupa Care Services Pty Ltd (the Bupa decision).63 The Bupa decision dealt with a number 
of appeals in respect of decisions refusing to approve the Bupa Care Services, ANF and HSU 
Enterprise Agreement 2009 and a number of retail industry agreements. Each of the enterprise 
agreements was made prior to 1 January 2010 and as a consequence the ‘no disadvantage test’ 
(the NDT) in Item 10 of Schedule 7 of the Transitional Provisions Act applied. The ‘preferred 
hours arrangements’ in the agreements in question were of the type described by Cameron in 
the extract above.

[127] The Full Bench in the Bupa decision cited with approval the decision of the majority 
in Re MSA Security Officers Certified Agreement 2003 (MSA Security).64 In MSA Security 
the majority rejected a clause enabling an employee to work overtime at ordinary rates by 
agreement with the employer on the basis that the comparison under the NDT was between 
the terms and conditions of employment in the relevant agreement and the relevant award. 
The possibility that the employer would provide an employee with additional work hours was 
irrelevant because the applicable award made no distinction between voluntary working hours 
and hours directed by the employer.

[128] In the Bupa decision, the Full Bench characterised the NDT in these terms:

“the ‘no-disadvantage test’ does not involve an analysis of matters other than the terms and 
conditions of the enterprise agreement against those in any relevant reference instrument. The 
effect the terms and conditions may have on the actions of an employer or employee is not 
relevant to the ‘no disadvantage test’.”65

[129] The agreements in question failed the NDT because the preferred hours clause 
represented at least one term or condition of employment that was less beneficial than the 
awards that applied to the employees.

[130] However, as observed in Black Crow Organics,66 the effect of the Bupa decision is not 
that an agreement which provides for hours which would otherwise be payable at overtime 
rates, to be paid at ordinary rates, because an employee voluntarily works those hours at a 
particular time, will automatically fail the NDT:








[2013] FWCFB 2170

32

“There is nothing in that decision to indicate any change to the longstanding approach with 
respect to the application of the no-disadvantage test. Essentially, that approach is that the no-
disadvantage test is applied on a global, rather than a line by line basis. Thus an agreement 
provision which considered alone may be less beneficial to an employee when compared with 
an equivalent provision in a relevant reference instrument, will not result in the agreement 
failing the no-disadvantage test, if there are other more beneficial provisions in the agreement, 
which on balance, offset the less beneficial provision. For example, an agreement which 
provides for employees to be paid a flat hourly rate for all hours worked, may not 
disadvantage those employees if the flat hourly rate is higher than the base rate in the relevant 
reference instrument. The payment of a loaded rate for all hours worked is an advantage that 
may offset the disadvantage associated with the entitlement of the employee under a reference 
instrument to be paid overtime rates for some hours worked. It may also be relevant for the 
purposes of the no-disadvantage test that a flat hourly rate feeds into leave entitlements under 
an agreement, so that those entitlements are paid in a way that is more beneficial than the 
terms of the relevant reference instrument.

The decision in Bupa does make it clear however, that the application of the no-disadvantage 
test does not involve an analysis of matters other than the terms and conditions of the 
enterprise agreement, against those in any relevant reference instrument, and the effect that the 
terms and conditions may have on the actions of the employer or employees, is not relevant. 
Thus it is not relevant to the application of the no-disadvantage test that the employee may 
prefer to work at particular times. It is also not relevant that if the employer would be required 
to pay overtime rates for particular hours, the employer would not have scheduled work to be 
done during those hours, or that the employer would have allocated the hours among 
additional employees, so that no employees would have been entitled to overtime payments.”67

[131] The NDT applied to all agreements made between 1 July 2009 and 31 December 
2009.68 This was the period between the repeal of Work Choices and the commencement of 
the remaining elements of the FW Act (i.e. minimum wages, NES and modern awards).

[132] Under the NDT the Commission had to be satisfied that the ‘agreement does not, or 
would not result, on balance, in a reduction in the overall terms and conditions of employment 
of the employees who are covered by the agreement under any reference instrument relating 
to one or more employees’.69

[133] Agreements made on or after 1 January 2010 must pass the ‘better off overall test’ (the 
BOOT). Under the BOOT the Commission must be satisfied that each employee ‘would be 
better off overall if the agreement applied to the employee than if the relevant award applied 
to the employee’.

[134] While the BOOT is expressed in different terms to the NDT, each involves a global 
assessment. In Armacell Australia Pty Ltd a Full Bench of the Commission described the 
BOOT in these terms:

“The BOOT, as the name implies, requires an overall assessment to be made. This requires 
identification of terms which are more beneficial to an employee, terms that are less beneficial 
and an overall assessment of whether an employee would be better off under the agreement.”70

[135] While the Bupa decision involved the application of the NDT the same approach has 
been taken to the BOOT in a number of first instance decisions. For example, in Jellifish!! Pty 
Ltd where the Commission said:








[2013] FWCFB 2170

33

“An enterprise agreement that provides for hours that would otherwise be paid at overtime 
rates if the employee was covered by a modern award, to be paid at a base or ordinary rate that 
is less than the overtime rate under the modern award, contains a provision that is less 
beneficial than the modern award. In order for that agreement to pass the BOOT, it is 
necessary for the Tribunal to be satisfied, that at the test time, the Agreement contains 
provisions that are more beneficial than equivalent terms in the modern award or are not 
conferred by the modern award, that offset those provisions that are less beneficial, so that on 
balance, employees are better off overall if the agreement applied to them than they would be 
if the modern award applied. 

Thus an agreement that provides for a loaded hourly rate payable for all hours worked, may 
result in employees being better off overall notwithstanding that they are working some hours 
that would be paid at overtime rates if they were covered by a modern award. This is because 
the loaded rate is payable for all hours worked and not just those payable at overtime rates. 
There may also be a cut off point where employees work so many hours that the loaded rate 
ceases to result in employees being better off overall than they would be if the award 
applied.”71

[136] It follows from the foregoing that on the basis of the current authorities a purported 
IFA which contains a preferred hours arrangement would not, of itself, result in the individual 
employee being better off overall. The IFA would need to contain a corresponding benefit that 
outweighs the detriment of the preferred hours arrangement in order to meet the requirements 
of the BOOT.

[137] To the extent that the VECCI application is seeking some general endorsement of 
preferred hours arrangements, we decline to give such an endorsement. As we mention later, 
such matters are best considered in an appropriate context, rather than in the abstract (see 
paragraph [158]).

[138] We now turn to those applications which seek to include minimum engagement 
periods and frequency of pay within the scope of the model flexibility term.

[139] A number of the employer organisations who supported the inclusion of minimum 
engagement periods within the scope of the model flexibility term relied on Commission 
decisions which provided reduced minimum engagement periods for secondary school 
students in the General Retail Industry Award 2010 (the General Retail Award)72and in the 
Animal Care and Veterinary Services Award 201073. These decisions are clearly 
distinguishable from the matters before us, in particular:

 the variations in those matters did not facilitate a general change to minimum 
engagement periods but were confined to circumstances after school on weekdays 
for full-time secondary school students;

 the variation to the General Retail Award was supported by evidence as to the 
particular circumstances pertaining to that award and the variation to the Animal 
Care and Veterinary Services Award was unopposed; and

 both variations incorporated a number of requirements by way of additional 
conditions before the reduced minimum engagement period may operate.








[2013] FWCFB 2170

34

[140] In relation to the variation to the General Retail Award referred to above it is also 
important to note that the Commission had earlier rejected an application to generally reduce 
the minimum engagement period.74

[141] We are not persuaded that it is appropriate to include ‘minimum engagement periods’ 
within the scope of the model flexibility term. As we have noted these provisions relate to 
minimum wages and for many employees are an important aspect of the modern award safety 
net. As Vice President Watson observed in Secondary School Students case:

“There is a long history of minimum engagement periods for part time and casual employees 
providing protection for employees from employer expectations of working short periods 
where the cost and inconvenience of attending the workplace outweighs the benefits received 
from the engagement.”75

[142] Any variation to minimum engagement periods in modern awards should only be by 
application to vary the relevant modern award or by enterprise agreement. This will ensure 
that the variation is subject to appropriate scrutiny. It is not appropriate to permit such 
variations by IFAs, which are effectively self-executing. In our view, the inclusion of such 
terms within the scope of the model flexibility term would not be consistent with the modern 
awards objective.

[143] We now turn to the proposal to include ‘frequency of payment’ within the scope of the 
model clause.

[144] In support of its proposed variation the HIA says:

“[the] variation seeks to address a continual source of frustration for employers that being the 
mandatory requirement to pay wages on a weekly cycle under clause 31 of the Onsite Award.
HIA submits that such a requirement is inflexible and unnecessarily impacts on productivity, 
employment costs and the regulatory burden of employers.”76

[145] Clause 31 of the Building and Construction General On-site Award 2010 (the On-site 
Award) deals with the payment of wages:

“31. Payment of wages

31.1 All wages, allowances and other monies must be paid in cash, or by cheque, bank 
cheque, electronic funds transfer (EFT) or similar transfer or any combination.

31.2 An employee paid by cheque must be allowed reasonable time, as agreed between the 
employer and the employee, to attend the branch of the employee’s bank nearest the 
workplace to cash cheques during working hours.

31.3 Payments must be paid and available to the employee not later than the end of ordinary 
hours of work on Thursday of each working week. Where an employer made payment less 
frequently in compliance with a relevant award or award-based transitional instrument, prior 
to the making of this award on 1 January 2010, or where an employer made payment less 
frequently in compliance with a Division 2B State award, prior to 1 January 2011, the 
employer may continue to make payment at that frequency, subject to the agreement of 
employees and/or a majority of employees if required by the relevant award, award-based 
transitional instrument or Division 2B State award.








[2013] FWCFB 2170

35

31.4 When notice is given, all monies due to the employee must be paid at the time of 
termination of employment. Where this is not practicable, the employer will have two working 
days to send monies due to the employee by registered post (or where paid by EFT the monies 
are transferred into the employee’s account).

31.5 If an employee is paid wages by cash or cheque and is kept waiting for their wages more 
than a quarter of an hour after the usual time of finishing work on pay day (for reasons other 
than circumstances beyond the control of the employer), the employee is to be paid at 
overtime rates after that quarter of an hour for the period they are kept waiting, with a 
minimum payment of a quarter of an hour.”

[146] Issues in respect of frequency of payment have generally been dealt with on an award 
by award basis. For example in Re Simpson Personnel Pty Ltd77 Senior Deputy President 
Watson rejected an application to vary clause 31 of the On-site Award to generally make 
provision for the payment of wages on a weekly or fortnightly basis by mutual agreement. His 
Honour said:

“I am not satisfied that making a determination varying the 2010 Modern Award generally, as 
sought by the applicant or its supporters, is necessary to achieve the modern awards objective. 
I am, however, satisfied that a variation permitting employers, who were availing themselves 
of a longer frequency of payment permitted by a relevant award or award-based transitional 
instrument applying to them immediately before the making of the 2010 Modern Award, to 
continue to do so is necessary to achieve the modern awards objective. Accordingly, I will 
make a determination varying the 2010 Modern Award in those more limited terms. Any 
broader review of clause 31 of the 2010 Modern Award should await the 4 yearly reviews of 
the modern awards. 

The determination will vary the Building and Construction General On-site Award 2010 by 
replacing the current clause 31.3 with the following: 

‘31.3 Payments must be paid and available to the employee not later than the end of 
ordinary hours of work on Thursday of each working week. Where an employer made 
payment less frequently in compliance with a relevant award or award-based 
transitional instrument, prior to the making of this award on 1 January 2010, the 
employer may continue to make payment at that frequency, subject to the agreement 
of employees and/or a majority of employees if required by the relevant award or 
award-based transitional instrument.’78

[147] It should be noted that this application was made outside the Transitional Review and 
hence s.157 of the FW Act applied. Such a variation can only be made if the Commission is 
‘satisfied that making the determination . . . outside the system of 4 yearly reviews of modern 
awards is necessary to achieve the modern awards objective’.

[148] In the context of the Transitional Review, Senior Deputy President Hamberger varied 
the frequency of payment provision in the Graphic Arts, Printing and Publishing Award 
2010.79 At paragraphs [25] and [26] of his decision the Senior Deputy President said:

“There are very few modern awards that require wages to be paid weekly. The great majority 
of awards, including those which cover a greater number of low paid employees than this 
award, allow at least for fortnightly pay. The manufacturing award, which covers very similar 
employees to those covered by the Award, provides for wages to be paid weekly or 
fortnightly. Where there is agreement between the employer and the majority of employees in 
the relevant enterprise, or with an individual employee, wages may be paid three weekly, four 








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weekly or monthly. I am satisfied that it is anomalous and unduly prescriptive for the Award 
to require that wages must be paid weekly. Varying the Award to bring it broadly into line 
with the manufacturing award will ensure that the Award meets the modern award objectives. 
In particular it is consistent with the need to promote flexible modern work practices. 

Accordingly, Clause 28.1 will be deleted and replaced with a new clause: 

‘Wages must be paid weekly or fortnightly as determined by the employer. Wages may 
be paid four weekly or monthly if agreed with an individual employee.’80

[149] In our view the issue of frequency of payment is best dealt with on an award by award 
basis in the context of either the Transitional Review or the 4 yearly review of modern 
awards. The relevant award history and the circumstances pertaining to each award are likely 
to vary and should be dealt with on a case by case basis. The inclusion of such a term within 
the scope of the model flexibility term would not be consistent with the modern awards 
objective.

3.2 Machinery matters

[150] In addition to the scope of the flexibility term in modern awards the applications 
before us raise four issues which may be described as machinery matters:

 the operation of the ‘better off overall test’;
 termination provisions;
 external approval of IFAs; and
 annual review of IFAs.

(i) The ‘better off overall test’

[151] The model flexibility term provides that an IFA must ‘result in the employee being 
better off overall than the employee would have been if no individual flexibility agreement 
had been agreed to’ (clause 7.3(b)). Two observations may be made about this requirement.

[152] The first relates to the meaning of the expression ‘being better off overall’. No party in 
the proceedings before us contended that this expression in the model flexibility term meant 
anything other than a reference to the BOOT. Section 193 sets out the circumstances in which 
an enterprise agreement passes the BOOT, relevantly:

“... if FWC is satisfied, as at the test time, that each award covered employee ... for the 
agreement would be better off overall if the agreement applied to the employee than if the 
relevant modern award applied to the employee’ (s.193(1)).

[153] The second observation is that the employee must be “better off overall” at the time 
the IFA is made. In other words the requirement to meet the BOOT is not a continuing 
obligation over the life of the IFA. The 2008 AIRC Full Bench dealt with this issue at 
paragraph [180]:

“The no-disadvantage test should be applied as at the time the agreement commences to 
operate. We are not satisfied that the test should be continuously applied over the life of the 
agreement. This would add an extra process requirement to agreement-making and introduce 
an element of ongoing uncertainty. It is relevant to point out that the provision for termination 








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37

on notice, which we deal with later, provides some additional protection against disadvantage 
arising during the life of the agreement. Some parties suggested that we should include 
provision for a public interest test in the model clause. We have decided not to do so because 
of the uncertainty which would result.”

[154] A number of employer submissions supported varying the current model flexibility 
term to ‘provide greater clarity on the treatment of non-monetary benefits’ in the assessment 
of the BOOT.81 In his oral submission Mr Mammone, on behalf of ACCI, pointed to some 
uncertainty in relation to the proper interpretation of the BOOT.82

[155] The uncertainty referred to relates to the treatment of what are described as ‘non-
monetary benefits’ in the application of the BOOT. In this context reference was made to the 
apparent inconsistencies between the illustrative example on p.137 of the Explanatory 
Memorandum to the Fair Work Bill 2009; the FWO Best Practice Guide 3: ‘Use of individual 
flexibility arrangements’; and the Bupa decision.83

[156] We have already referred to the Bupa decision in the context of dealing with VECCI’s 
application to expand the scope of the model flexibility term to include the expression 
‘preferred hours option’ (see paragraphs [126]-[136] of this decision).

[157] We acknowledge that there is a degree of tension between the illustrative example in 
the Explanatory Memorandum, the FWO Best Practice Guide and the Bupa decision (albeit 
that the Bupa decision dealt with the NDT, not the BOOT). But we are not persuaded that it is 
appropriate for us, in these proceedings, to address that issue.

[158] Observations about the application of the BOOT and the matters which can be taken 
into account in making such an assessment are best made in the context of a particular case, 
rather than in the abstract. Any reconsideration of the Bupa decision should be in an 
appropriate context, such as an application to approve an enterprise agreement, and any party 
seeking such a reconsideration should make application to have the matter referred to a Full 
Bench, pursuant to s.615A of the FW Act.

[159] We do, however, think that the model flexibility term should be amended to make it 
clear that the reference to ‘the employee being better off overall’ in clause 7.3(b), refers to 
when the IFA is made.

(ii) Termination provisions

[160] Clause 7.8 of the model flexibility term in modern awards provides that an IFA may 
be terminated by consent (clause 7.8(b))84 or by the employer or the individual employee 
giving four weeks’ written notice of termination (clause 7.8(a)). The IFA ceases to operate at 
the end of the notice period.

[161] In these proceedings Greater Union and Birch, Carroll & Coyle have sought to vary 
clause 7.8(a) of the model flexibility term by deleting the reference to “four weeks’ notice” 
and inserting “sixteen weeks notice.” The application received general support from employer 
organisations and was opposed by the ACTU and the unions who made submissions in the 
proceedings.








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38

[162] AFEI and Business SA supported the variation sought. Ai Group supported the 
proposition that the notice period should be extended and, in particular, supported the Review 
Report’s recommendation that the notice period be extended to 90 days.85 ABI took a similar 
position.86 ACCI provided general support for the proposition that a period of more than 28 
days should be provided before a party can unilaterally terminate an IFA, but did not proffer a 
view in support of any particular notice period.87

[163] The ACTU and a number of unions opposed any extension to the period of notice of 
termination.88 The ACTU submitted:

“No cogent reason has been put forward to support these variations, the effect of which would 
be to significantly dilute a critical safeguard for employees currently contained in the model 
flexibility term. Nor has any persuasive evidence been presented to why the current 
requirement does not meet the modern awards objective.”89

[164] The ACTU contends that the applications seeking to extend the notice of termination 
are reagitating an issue that was comprehensively dealt with during award modernisation and 
that the variations sought are inconsistent with the modern awards objective.90 It is also 
submitted that the capacity for either party to terminate an IFA on four weeks’ notice is 
consistent with the legislative intent with respect to how IFAs should operate, in the following 
respects:

 IFAs are intended to be mutually beneficial for both parties hence if an IFA no 
longer meets this requirement then there should be some capacity for a party to 
unilaterally terminate the arrangement, with notice; and

 the capacity to terminate an IFA with four weeks’ notice is an important safeguard 
and helps prevent abuse of IFAs.

[165] In relation to the last point, the ACTU advanced the following submission:

“the capacity for a party to terminate an agreement with four weeks’ notice constitutes an 
important safeguard and helps prevent abuse of individual flexibility arrangements. This is 
particularly important given that the process by which agreement is reached and the content of 
any such agreements are generally not subject to external scrutiny. The importance of this 
consideration was underscored by the Full Bench of the Commission, which emphasised that 
the capacity of a party to terminate a flexibility agreement with four weeks’ notice was also 
important given that the no-disadvantage test (subsequently amended to the BOOT) applies at 
the time the agreement commences rather than continuously over the life of the agreement: 

‘It is relevant to point out that the provision for termination on notice, which we deal 
with later, provides some additional protection against disadvantage arising during the 
life of the agreement.’91

Unlike collective agreements made under the FW Act, there is also no process for ensuring 
that the employee has genuinely agreed to enter into a flexibility arrangement. This means that 
all but the most egregious abuses are likely to go undetected.”92

[166] The ACTU rejected the employer contentions that the safeguards in ss.144 and 145 
sufficiently protect an employee from being disadvantaged by an IFA and did not accept the 
submissions to the effect that the current capacity to terminate an IFA with four weeks’ notice 








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provides a high level of uncertainty for employers such as to justify a variation of the model 
flexibility term.

[167] The termination provisions in the model flexibility term were determined by a Full 
Bench of the AIRC in June 2008 as part of the award modernisation process. We have earlier 
referred to aspects of that Full Bench decision. In relation to the termination provisions, the 
Full Bench said:

“[184] There was significant debate concerning the term or duration of flexibility agreements, 
how they might be brought to an end and related matters. It would not be appropriate that the 
model clause prescribe the duration of flexibility agreements. On the other hand it would not 
be right to leave these matters entirely to the parties. Unforeseen developments can render a 
flexibility agreement not only unacceptable to one of the parties but also substantially unfair.
If that circumstance occurs the agreement ceases to be one which meets the needs of the 
parties. We shall provide that an agreement might be terminated at any time by agreement or 
by one party giving 4 weeks’ notice in writing to the other. The provision for termination on 
notice will provide some protection for employees who through ignorance or for some other 
reason make an agreement which materially disadvantages them. In this way the provision will 
also assist in ensuring that employees are not disadvantaged by the operation of the model 
clause. We are conscious of employer concerns that provision for termination of the agreement 
on notice will lead to an unsatisfactory level of uncertainty for employers. We have balanced 
that consideration against the other matters to which we have just referred. Given the 
individual nature of the arrangements that are contemplated we do not think the problem will 
be too onerous. Where significant numbers of employees are involved the employer can obtain 
greater certainty by entering into a collective agreement should that course be a practical 
one.”93 [emphasis added]

[168] The emphasised parts of the above extract highlight the rationale for the decision to 
permit IFAs to be unilaterally terminated by giving four weeks’ notice in writing.

[169] Those supporting a notice period of more than four weeks contend that the current 
notice period acts as a disincentive for employers to enter into IFAs. As ABI put it:

“The current provisions essentially mean that individual flexibility arrangements simply live 
on month to month only. For many employers (and employees) it is clear that the creation of 
such arrangements, especially if they relate to working patterns in the organisation, need to 
operate with greater longevity and certainty.”94

[170] Similarly, Business SA submitted:

“The existing requirement for an employer or an employee to provide four weeks’ notice to 
terminate an IFA does not meet the Modern Award objectives because it:

(i) does not promote flexible work practices;
(ii) creates an administrative and financial burden by requiring the employer to change the 

documentation, rearrange the organisation’s operational requirements ie. staffing levels 
etc;

(iii) would be of no value to both the employer and employee if the IFA arrangement was 
terminated in the early stages of an IFA which adds uncertainty to an employer’s 
operational needs.”95

[171] The 2012 IFA Report provides little support for the contention that the four weeks’ 
notice period acts as a disincentive for employers to enter into IFAs. As shown in Table 4.2 








[2013] FWCFB 2170

40

(see paragraph [60] above) less than one per cent of employers who were aware of, but did 
not report making IFAs, cited the four weeks’ notice period as the reason why they had not 
entered into an IFA. The most common reason, reported by just over half of employers, was 
that there had been no identified need to enter into an IFA. The survey data does, however, 
have some limitations. It does not distinguish between employers covered by enterprise 
agreements and those whose principal industrial instrument was a modern award. Hence, we 
do not know the proportion of surveyed employers who were operating under a modern award 
and who had an identified need, but chose not to make an IFA because it could be terminated 
upon four weeks’ notice. However, based on the published survey data this is unlikely to be a 
large proportion of this group of employers.

[172] It is also relevant that employer organisations have consistently identified the four 
weeks’ notice period as a disincentive to employers entering into IFAs. In addition to their 
submissions in these proceedings, employer organisations advanced similar contentions to the 
FW Act Review Panel. At page 107 of the Review Report the Panel states:

“The capacity for an employee to unilaterally terminate an IFA with 28 days notice was cited 
by many as a key disincentive to use IFAs.”

[173] Further, after giving the issue extensive consideration, the Panel recommended that the 
four weeks’ notice period be extended to 90 days.

[174] For our part, we accept that the provision of a longer unilateral termination notice 
period would provide greater certainty to the employer and individual employee parties to 
IFAs. A longer notice period would also reduce an existing disincentive for employers 
entering into IFAs.

[175] But these considerations need to be balanced against the factors cited by the 2008 
AIRC Full Bench in support of their adoption of a four week notice period, that is:

 unforeseen developments can render an IFA unacceptable to one of the parties and 
substantially unfair; and

 it provides some protection for employees who through ignorance or for some 
other reason make an IFA which materially disadvantages them.

[176] Hence, while a longer notice period provides greater certainty it also reduces the 
ability of parties to adapt to changing circumstances, such as those identified by the 2008 
AIRC Full Bench. In other words a longer notice period increases certainty but reduces 
flexibility. 

[177] Nor is it any answer to say that an IFA can be terminated by consent at any time. A 
change in circumstances may not impact on each party in the same way. It may disadvantage 
one party but have a neutral effect on, or actually advantage, the other party. A change in 
circumstances will not always result in creating a mutual incentive to vary or terminate the 
IFA. In this context, it needs to be remembered that the survey data in the 2012 IFA Report 
suggests that reviews, modifications and terminations of modern award IFAs were initiated by 
employers as often as employees.

[178] The central issue for us is the balance between the considerations identified by the 
2008 AIRC Full Bench (see paragraph [175] above), that is:








[2013] FWCFB 2170

41

 employer concerns that provision for termination on notice will lead to an 
unsatisfactory level of uncertainty for employers; and

 providing some protection for employees who make an agreement which materially 
disadvantages them.

[179] Section 145 of the FW Act is also relevant in this context:

145 Effect of individual flexibility arrangement that does not meet requirements of 
flexibility term
Application of this section

(1) This section applies if:

(a) an employee and employer agree to an arrangement that purports to be an 
individual flexibility arrangement under a flexibility term in a modern award; and

(b) the arrangement does not meet a requirement set out in section 144.

Note: A failure to meet such a requirement may be a contravention of a provision of 
Part 3-1 (which deals with general protections).

Arrangement has effect as if it were an individual flexibility arrangement

(2) The arrangement has effect as if it were an individual flexibility arrangement.

Employer contravenes flexibility term in specified circumstances

(3) If subsection 144(4) requires the employer to ensure that the arrangement meets the 
requirement, the employer contravenes the flexibility term of the award.

Flexibility arrangement may be terminated by agreement or notice

(4) The flexibility term is taken to provide (in addition to any other means of termination of 
the arrangement that the term provides) that the arrangement can be terminated:

(a) by either the employee, or the employer, giving written notice of not more than 
28 days; or

(b) by the employee and the employer at any time if they agree, in writing, to the 
termination.

[180] In effect s.145(4) imports a termination provision into an award flexibility term which 
is in addition to any other means of termination of an IFA that the flexibility term provides. 
Subsection 145(4) states that flexibility term is taken to provide that the purported IFA can be 
terminated by agreement or by either the employee, or the employer, giving written notice of 
not more than 28 days.

[181] As previously mentioned, s.145 was not part of the legislative framework at the time 
of the 2008 AIRC Full Bench decision. This legislative change constitutes a ‘significant 
change in circumstances’ within the meaning of the June 2012 Transitional Review decision. 
The change is significant because it provides a legislative safeguard which addresses the 
central rationale for the 2008 AIRC Full Bench decision. The fact that a review of the model 
flexibility clause was specifically contemplated by the AIRC at the time it was determined is 
also an important factor.  These matters clearly distinguish the circumstances in these 
proceedings from those which applied in the Transitional Review Penalty Rates case96 and the 
Transitional Review Public Holidays case97.








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[182] It will be recalled that one of the factors which led the AIRC Full Bench to adopt a 
four week notice period was that such a provision provided some protection for employees 
who made an IFA which materially disadvantaged them. This consideration no longer has the 
same force as it has now been addressed by the legislative safeguard in s.145.

[183] Contrary to the ACTU’s submissions we are persuaded that s.145 (in conjunction with 
s.144) sufficiently protects an employee from being disadvantaged by an IFA.

[184] Section 145 only applies in the circumstances set out in s.145(1), that is, an employee 
and employer have agreed to an arrangement that purports to be an IFA, under a flexibility 
term in a modern award and the arrangement does not meet a requirement set out in s.144. 

[185] One of the requirements in s.144 is that the IFA must result in the employee being 
better off overall than the employee would have been if no IFA were agreed to (s.144(4)(c)). 
If an employee party to a purported IFA is not better off overall then s.145(4) applies and the 
IFA may be unilaterally terminated in accordance with s.145(4). The same situation pertains 
in the event that the employee and employer have not ‘genuinely agreed’ to the IFA (see 
s.144(4)(b) or where the IFA has not been signed by the employee and employer parties (see 
s.144(4)(e)) or where the employer has failed to ensure that a copy of the IFA is given to the 
employee (s.144(4)(f)).

[186] We accept that s.145 does not apply in all circumstances. For example, it would not 
give rise to a right of termination if circumstances changed after the IFA was made such that 
it no longer operated to the mutual benefit of both parties. But, as we have noted earlier, this 
consideration needs to be balanced against the greater certainty afforded to both parties by a 
longer notice period.

[187] We are persuaded that it is appropriate to increase the period of notice specified in 
clause 7.8(a) of the model flexibility term. No particular rationale was advanced in support of 
the 16 week notice period proposed by Greater Union and Birch, Carroll & Coyle. A period of 
16 weeks equates to 112 days, which is greater than the 90 day period recommended by the 
Panel in the Review Report. In our view it is appropriate to give effect to the Panel’s 
recommendation. However, we think it is simpler and easier to understand and administer a 
notice period which is expressed in weeks rather than days. Accordingly, we propose to vary 
clause 7.8(a) of the model flexibility term by deleting the reference to ‘four weeks’ and 
inserting a reference to ‘13 weeks’. We are satisfied that such a variation has merit, will 
enhance the operational effectiveness of the model term and is consistent with the modern 
awards objective.

[188] In order to ensure that parties to IFAs are aware of the termination provisions in 
s.145(4) we will insert an appropriate note at the end of clause 7.8 of the model flexibility 
term.

(iii) External approval of IFAs

[189] The model flexibility term provides that IFAs are not subject to any external approval 
process. Indeed clause 7.6 provides that where the individual employee concerned is 18 years 
of age or over:








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“... the agreement must not require the approval or consent of a person other than the employer 
and the individual employee.”

[190] Where the individual employee is under 18 years of age clause 7.4(a) provides that a 
parent or guardian may sign the IFA on their behalf.

[191] These aspects of the model terms (i.e. clauses 7.4(a) and 7.6) are now reflected in the 
statutory requirements for flexibility terms in modern awards. In particular, s.144(4)(e) and 
s.144(5) provide:

“(4) The flexibility term must:

... (e) require the employer to ensure that any individual flexibility agreement must be in 
writing and signed:

(i) in all cases - by the employee and the employer; and

(ii) if the employee is under 18 - by a parent or guardian of the employee; ...

(5) Except as required by subparagraph (4)(e)(ii), the flexibility term must not require that 
any individual flexibility agreement agreed to by an employer and employee under the term be 
approved, or consented to, by another person.” [emphasis added]

[192] The reference to ‘another person’ in s.144(5) includes ‘a body politic or corporate as 
well as an individual’.98 The legislative intent appears to be to prevent unions, other 
employees or employer associations being able to veto IFAs. Paragraph 575 of the 
Explanatory Memorandum to the Fair Work Bill evidences this statutory intention:

“A Flexibility term must not require that any individual flexibility arrangement be approved, 
or consented to, by another person (eg. the flexibility term could not require any individual 
flexibility agreement to be approved by a trade union or employer association) (subclause 
144(5)). This subclause operates subject to subparagraph (4)(e)(ii) which requires a flexibility 
arrangement to be signed by a parent or guardian of an employee who is under 18.”

[193] In determining the model term the 2008 AIRC Full Bench gave consideration to the 
insertion of additional process or approval requirements:

“[185] A number of suggestions were made for the provision of guidance of various kinds to 
parties to proposed agreements. These suggestions included the provision of information about 
award rights and obligations and the negotiation and operation of flexibility agreements either 
through a letter, a fact sheet or a code of conduct. Some suggestions involved procedural 
requirements relating to the bargaining process, such as a requirement to bargain in good faith. 
We are reluctant to include process requirements in the clause unless it is strictly necessary to 
do so because such requirements can unnecessarily complicate what should be a relatively 
simple and informal negotiation. Nevertheless there is merit in many of these suggestions. 
While we do not intend to make any provision in the model clause, we encourage the major 
employer and union parties to jointly give consideration to the development of such material. 
An agreed best practice guide to the negotiation of individual flexibility agreements, for 
example, would be highly desirable. In due course the appropriate statutory body might also 
provide relevant information of a similar kind so that parties would have ready access to 
information and advice about agreement-making under individual flexibility provisions in 
modern awards.

[186] Another suggestion was that the Commission might give a private ruling or advice as to 
whether a proposed agreement complied with the model clause. As we understand the 








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proposal it would give parties comfort that a particular agreement did not disadvantage the 
individual employee concerned. We think this approach also has merit, provided it were to 
operate on a voluntary basis. But we do not think we should include this matter in the model 
clause. This is because of the uncertainty, mentioned earlier, about the legislative context in 
which the model clause will operate. No doubt the matter could be reconsidered at some future 
time.”99

[194] The approval process relating to IFAs was also addressed in the Review Report in 
which the Panel said:

“Some parties proposed a registration or approval system with FWA or the FWO, either 
compulsory or optional, to provide certainty that a proposed IFA would not be considered 
invalid in future. Some unions also proposed that IFAs should be registered with or recorded 
by FWA including for the purpose of allowing data as to their use and abuse, and to allow an 
objective assessment to inform stakeholders of their efficacy and areas of concern. The 
Australian National Retailers’ Association (ANRA), in its supplementary submission, 
suggested a proper analysis would need to be conducted to determine whether FWA has the 
capacity to take on this massive administrative task ...

The Panel believes that to create a greater opportunity for employers and employees to make 
individual flexibility arrangements while ensuring adequate and appropriate protection for the 
employer and the employee the following should be done:

...

 Employers should be required to notify the FWO in writing of any IFA entered into at the 
time this occurs, providing particulars of the name of the employee, the date of entry and the 
relevant award or enterprise agreement. The notification could be by email. This would 
enable the FWO to investigate, as and when required at its absolute discretion, whether the 
opportunity afforded by the FW Act to make these arrangements was being abused by a 
particular employer or employers in a particular industry. Notification would have the 
additional benefit of providing data about the incidence of IFAs. It would be desirable for 
the FWO to maintain an electronic database of these notifications.

 An employer should have a statutory defence to any claim for underpayment and penalties 
made after entering into an IFA, namely that the employer had notified the FWO, believed 
the arrangement satisfied the statutory preconditions (including the BOOT) and there was a 
reasonable basis for this belief.”100

[195] The Panel’s observations find expression in recommendations 10 and 11 of the 
Review Report, set out at paragraph [48] above. The Panel did not recommend that IFAs be 
approved by the FWA (now the Fair Work Commission).

[196] Application AM2012/204 by the Accommodation Association of Australia (the AAA) 
seeks to amend the model term by deleting clause 7.6 in its entirety and replacing it with a 
provision in the following terms:

“7.6 In addition and separate to any consent required as provided in clause 7.4, if the 
employer and the employee reach agreement in accordance with this clause 7, then they will 
submit the agreement to Fair Work Australia or the Fair Work Ombudsman for approval 
which is the only other body or person whose approval to the agreement is required.”








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[197] The AAA did not advance any written submissions in support of its proposal, nor did 
it attend the oral hearing on 27 March 2013. In its application, the AAA simply asserts that 
the variation is sought as its members have been reluctant to use IFAs on the basis that they 
may inadvertently breach the award by entering into IFAs which do not pass the better off 
overall test.

[198] No participant in these proceedings advanced any submissions in support of the AAA 
proposed variation. A number of organisations opposed the AAA’s application. In its written 
submission Business SA submits that the variation should be rejected, for the following 
reasons:

“3.1.9 The substance of AAA's variation is to prescribe that an IFA be approved by an 
external authority has already been dealt with by the Full Bench. However, no cogent reasons 
have been provided why the Decision by the Full Bench, [2009] AIRCFB 345, finalising the 
Award Flexibility Clause should be departed from.

3.1.10 There is no evidence that the current wording of the clause is the result of an 
anomaly or technical error for the purposes of item 6(2)(b) of Schedule 5, Part 2 of the Fair 
Work (Transitional Provisions and Consequential Amendments) Act 2009.

3.1.11 Nor is there any evidence that the variation is necessary to achieve the Modern 
Awards objective in section 134(1). While AAA in their application refers to aspects of the 
Modern Awards objective in 134(1) (f), (g) and (h) it is unclear to what extent these aspects 
have any relevance to this variation.

3.1.12 Business SA submit that the variation sought by AAA would be contrary to the 
Modern Awards objective as it would impose a heavier regulatory burden on employers with 
corresponding compliance costs. In addition, no evidence has been provided by AAA to 
demonstrate that the award flexibility provision in its current form fails to achieve the Modern 
Awards objective.”101

[199] Ai Group and ACCI also opposed the AAA’s application. In her oral submission Ms 
Vaccaro, on behalf of Ai Group, submitted that the primary reason the application was 
opposed was because it would ‘impose an onerous regulatory burden that was never intended 
to be there’.102 Ms Vaccaro also submitted:

“Firstly if we focus on the Accommodation Association of Australia, so the one about 
approval processes. The Australian Industrial Relations Commission when developing the 
flexibility term looked at this issue and decided against it on the basis that it would impose too 
much regulatory burden and they also identified that. I think at the time it was a no 
disadvantage test and employees would be protected by the no disadvantage test. Also if 
employees do have concerns about IFAs and whether their agreement does meet the better off 
overall test, there is always that option to contact either their union or go to the FWO and if 
that IFA is invalid it can be acted upon and the issues can be rectified in that way.”103

[200] ACCI also opposed AAA’s application and in the course of oral submissions Mr 
Mammone, on behalf of ACCI, submitted that the application was contrary to the modern 
awards objective.104

[201] We have decided to reject the AAA’s application. No substantive argument has been 
advanced in support of the variation proposed and, in our view, the application lacks merit 
and would increase the regulatory burden on business, contrary to the modern awards 
objective (see s.134(1)(f)). 








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[202] We also note that there is a real question as to whether such a variation would be 
compatible with the legislative intent of s.144(5).

(iv) Annual review of IFAs

[203] In application AM2012/287 Hair and Beauty Australia seeks to amend the model term 
by adding an additional paragraph, as follows:

“7.10 The employer will be responsible to conduct an annual review of the terms of the 
Individual Flexibility Agreement in line with the Annual Wage Review and changes in the 
Award in order to ensure that the individual remains better off overall under the agreement in 
relation to the employee’s terms and conditions of employment in comparison to that of the 
Award.”

[204] Hair and Beauty Australia did not advance any written submissions in support of its 
proposal, nor did it attend the oral hearing on 27 March 2013.

[205] No participant in these proceedings advanced any submissions in support of this 
proposal and a number of organisations submitted that the variation proposed should be 
rejected.105 ACCI and Ai Group opposed the variation on essentially the same grounds as they 
opposed the external approval process proposed in AM2012/204 (see paragraphs [199]-[200]
above). In its submission opposing the application the ACTU noted106 that the 2008 AIRC 
Full Bench decision rejected submissions to the effect that IFAs should be subject to a no 
disadvantage test on an ongoing basis because such a provision would ‘add an extra process 
requirement to agreement making and introduce an element of ongoing uncertainty’.107

[206] We have decided to reject the application by Hair and Beauty Australia. No argument 
has been advanced in support of the variation proposed and in our view the application lacks 
merit and would increase the regulatory burden on business, contrary to the modern awards 
objective (see s.134(1)(f)).

4. CONCLUSION

[207] As previously mentioned, s.145 was not part of the legislative framework at the time 
of the 2008 AIRC Full Bench decision. This legislative change constitutes a ‘significant 
change in circumstances’ within the meaning of the June 2012 Transitional Review decision. 
The fact that a review of the model flexibility clause was specifically contemplated by the 
AIRC at the time it was determined is also an important factor.  These matters clearly 
distinguish the circumstances in these proceedings from those which applied in the 
Transitional Review Penalty Rates case108 and the Transitional Review Public Holidays 
case109.

[208] The model flexibility term will be varied in the following respects:

 insert the words ‘at the time the agreement is made’ into clause 7.3(b)

 delete ‘four weeks’ from clause 7.8(a) and insert ‘13 weeks’
 insert a note at the end of clause 7.8:








[2013] FWCFB 2170

47

Note: If any of the requirements of s.144(4), which are reflected in the 
requirements of this clause, are not met then the agreement may be terminated 
by either the employee or the employer, giving written notice of not more than 
28 days (see s.145 of the Fair Work Act 2009 (Cth)).

[209] In addition to these variations one further variation is proposed in order to improve the 
level of compliance with the requirements of the model flexibility term. As we have 
mentioned the evidence suggests that a significant proportion of IFAs are entered into before 
the individual employee has commenced employment, contrary to the intent of the model 
flexibility term and the FW Act (see paragraph [73]-[77] above). To address this issue we 
propose to insert the following words at the end of clause 7.2:

‘An agreement under this clause can only be entered into after the individual employee has 
commenced employment with the employer.’

[210] The proposed new model flexibility term is set out below, with the variations 
highlighted:








[2013] FWCFB 2170

48

7. Award flexibility
7.1 Notwithstanding any other provision of this award, an employer and an individual employee 

may agree to vary the application of certain terms of this award to meet the genuine 
individual needs of the employer and the individual employee. The terms the employer and 
the individual employee may agree to vary the application of are those concerning:

(a) arrangements for when work is performed as set out in:

[particular award clauses to be specified on an award-by-award basis on application 
by an interested party];

(b) overtime rates;

(c) penalty rates;

(d) allowances; and

(e) leave loading.

7.2 The employer and the individual employee must have genuinely made the agreement without 
coercion or duress. An agreement under this clause can only be entered into after the 
individual employee has commenced employment with the employer.

7.3 The agreement between the employer and the individual employee must:

(a) be confined to a variation in the application of one or more of the terms listed in 
clause 7.1; and

(b) result in the employee being better off overall at the time the agreement is made than 
the employee would have been if no individual flexibility agreement had been agreed to.

7.4 The agreement between the employer and the individual employee must also:

(a) be in writing, name the parties to the agreement and be signed by the employer and 
the individual employee and, if the employee is under 18 years of age, the employee’s parent 
or guardian;

(b) state each term of this award that the employer and the individual employee have 
agreed to vary;

(c) detail how the application of each term has been varied by agreement between the 
employer and the individual employee;

(d) detail how the agreement results in the individual employee being better off overall in 
relation to the individual employee’s terms and conditions of employment; and

(e) state the date the agreement commences to operate.

7.5 The employer must give the individual employee a copy of the agreement and keep the 
agreement as a time and wages record.

7.6 Except as provided in clause 7.4(a) the agreement must not require the approval or consent 
of a person other than the employer and the individual employee.

7.7 An employer seeking to enter into an agreement must provide a written proposal to the 
employee. Where the employee’s understanding of written English is limited the employer 
must take measures, including translation into an appropriate language, to ensure the 
employee understands the proposal.

7.8 The agreement may be terminated:

(a) by the employer or the individual employee giving four weeks’ 13 weeks’ notice of 
termination, in writing, to the other party and the agreement ceasing to operate at the end of 
the notice period; or








[2013] FWCFB 2170

49

(b) at any time, by written agreement between the employer and the individual employee.

Note: If any of the requirements of s.144(4), which are reflected in the requirements of this 
clause, are not met then the agreement may be terminated by either the employee or the 
employer, giving written notice of not more than 28 days (see s.145 of the Fair Work Act 
2009 (Cth)).

7.9 The right to make an agreement pursuant to this clause is in addition to, and is not intended 
to otherwise affect, any provision for an agreement between an employer and an individual 
employee contained in any other term of this award.

[211] The variations proposed are necessary to remedy the issues identified in the 
Transitional Review and to ensure that the model award flexibility term and modern awards 
are operating effectively, without anomalies or technical problems arising from the award 
modernisation process. We are also satisfied that the variations proposed are ‘necessary’
(within the meaning of s.138) to achieve the modern awards objective and will ensure that 
modern awards provide a fair and relevant minimum safety net of terms and conditions 
having regard to the matters set out at paragraphs 134(1)(a)-(h). In particular, the variations 
proposed will provide flexible modern work practices and reduce regulatory burden while 
taking into account the needs of the low paid and making the model flexibility term simpler 
and easier to understand.

[212] The determinations giving effect to our decision will be settled by Senior Deputy 
President Watson, with recourse to the Full Bench if necessary. After the Full Bench dealing 
with the annual leave aspects of the model award flexibility term has decided the applications 
before it, a statement will be issued setting out the process of implementing our decision (and 
the decision of the Annual Leave Full Bench insofar as it deals with the model award
flexibility term) in all modern awards.

PRESIDENT

Appearances:

S. McIvor for Australian Business Industrial.
B. Tkalcevic for the Australian Council of Trade Unions.
D. Mammone for the Australian Chamber of Commerce and Industry and for the Australian 
Federation of Employers and Industries. 
G. Vaccaro for the Australian Industry Group.
J. Nucifora for the Australian Municipal, Administrative, Clerical and Services Union. 
Z. Angus for The Australian Workers’ Union.
G. Starr and J. Moriarty for the Automotive, Food, Metals, Engineering, Printing and 
Kindred Industries Union 
H. Wallgren and E. West for the SA Employers’ Chamber of Commerce and Industry Inc t/as 
Business SA.
A. Borg for the Construction, Forestry, Mining and Energy Union. 
M. Adler for the Housing Industry Association.
S. Kraemer for The Master Plumbers’ and Mechanical Services Association of Australia.








[2013] FWCFB 2170

50

K. Yu for The Master Plumbers and Mechanical Contractors Association of New South 
Wales.
S. Elliffe for the National Retailers Association.
D. De Martino for the Shop, Distributive and Allied Employees Association.
N. Barkatsas for the Victorian Employers’ Chamber of Commerce and Industry. 

Hearing details:

Before Justice Ross: 
2013. 
Melbourne, Sydney, Brisbane, Canberra, Adelaide (video hearing):
31 January. 

Before the Full Bench: 
2013.
Melbourne, Sydney and Adelaide (video hearing):
27 March.

Final written submissions:

Australian Council of Trade Unions and Shop, Distributive and Allied Employees’
Association, 5 April 2013.

                                               
1 [2012] FWAFB 5600.
2 Other than modern enterprise awards and State reference public sector modern awards.
3 Being the second anniversary of the Fair Work (Safety Net Provisions) Act commencement day.
4 [2013] FWCFB 580.
5 Ibid at paragraph [12], adopting the formulation from the review of the Oil Refining and Manufacturing Award 2010 [2012] 

FWA 7212 at [20].
6 [2012] FWAFB 5600 at paragraph [99].
7 The original award modernisation request under s.576C(1) of the Workplace Relations Act 1996 was made on 28 March 

2008 and was varied on a number of occasions. A consolidated version of the Request is available from the FWC 
website. 

8 [2008] AIRC 387. 
9 [2008] AIRCFB 550.
10 [2008] AIRCFB 550. 
11 [2008] AIRCFB 550 at paragraphs 183-186.
12 [2008] AIRCFB 717. 
13 [2008] AIRCFB 1000 at paragraph 35. 
14 [2009] AIRCFB 345 at paragraph 8. 
15 [2008] AIRCFB 550 at 192.
16 Section 3 of the Fair Work Act 2009.
17 Stewart A. (1992), ‘Procedural Flexibility, Enterprise Bargaining and the Future of Arbitral Regulation’ 5 AJLL 101 at 

102.








[2013] FWCFB 2170

51

18 s.61(2).
19 The 2012 AWALI Report does not comment on award flexibility or IFAs and hence is of limited relevance to the 

applications in these proceedings.
20 2012 AWALI Report at p39.
21 [2008] AIRCFB 550 at 163.
22 Review Report at p 78.
23 Ibid.
24 ABS Cat. No. 6310.0 (various issues) and unpublished data purchased from the ABS. The incidence of casual employment 

(defined as the percentage of casual employees in all employees, excluding owner-managers of incorporated enterprises) 
rose sharply from the early to mid-1990s and rose slowly after that to peak at 25.7 per cent in 2004. While falling slightly 
since then, it has remained at around or just below 25 per cent. The incidence of casual employees in particular years 
was:
1992:   21.3%
1998:   24.2%
2004:   25.7%
2007:   24.7%
2009:   24.4%
2011:   24.2%

25 ABS, Labour force, Australia, April 2012, ABS Cat. No. 6202.0, downloaded from www.abs.gov.au.
26 M Plumb, M Baker & G Spence, ‘The labour market during the 2008–09 downturn’, RBA Bulletin, March quarter 2010, 

Reserve Bank of Australia, Sydney; and Borland, The Australian labour market in the 2000s: the quiet decade, Reserve 
Bank of Australia. 

27 CA Sánchez & D Andrews, To move or not move: what drives residential mobility rates in OECD countries? Economics 
Department Working Papers No. 846, OECD, 2011. The calculations of residential labour mobility are based on data 
collected from various surveys from member countries. The dataset does not allow for distinguishing between local 
residential moves and long distance residential moves.

28ABS, Labour mobility, Australia (Cat. No. 6209.0), various issues.
29 Review Report at p 106.
30 Ibid at p 108.
31 See s.202(4) of the FW Act and Reg. 2.08 of the Fair Work Regulations 2009.
32 As Irvine CJ observed in Scott v Commercial Hotel Merbein Pty Ltd [1930] VLR 75 at [30]: ‘[T]hough it is not to be 

conclusive, the employment of different language in the same Act may show that the Legislature had in view different 
objects’. Also see CFMEU v Hadgkiss (2007) 248 ALR 169.

33 See Figure 4.1 on p 31, 2012 IFA report.
34 See section 4.1.2 2012 IFA Report.
35 General Manager, Fair Work Australia, Employer Survey 2012.
36 Figure 4.10 on p 44 2012 IFA Report.
37 Ibid, Figure 4.11 on p 50.
38 Ibid, at p 43.
39 Ibid, Table 4.7 on p 49.
40 Ibid, Table 5.9.
41 Ibid, Table D.8, Appendix D.
42 Ibid, Table 5.10.
43 Ibid, Table D.8, Appendix D.
44 2012 IFA Report p 42.
45 Ibid at p 46.
46 [2008] AIRCFB 550 at paragraph 165.
47 Review Report at p 109.
48 [2011] FCA 1064.
49 Qld Audit Report at pp 11-12.








[2013] FWCFB 2170

52

50 AM2012/250; AM2012/287.
51 AM2012/177, AM2012/178, AM2012/179, AM2012/180, AM2012/8, AM2012/240 and AM2012/172. 
52 AM2012/245.
53 AM2012/210.
54 HIA at Transcript paragraphs [152]-[153] and [158]; Ai Group at Transcript PN 387-388.
55 Also see Mr McIvor’s oral submission at Transcript paragraphs 228-234.
56 February 2013 AFEI submission at paragraph 7.
57 Business SA written submission at paragraph 5.4.
58 Transcript at paragraphs 174-175.
59 [2008] AIRCFB 550 at paragraph 168.
60 VECCI at Transcript paragraphs 184-185; NRA at Transcript paragraphs 209-212.
61 [2008] AIRCFB 550 at paragraph 70.
62 Cameron C (2012) ‘Oxymoronic or Employer Logic? Preferred Hours under the Fair Work Act’, 25 AJLL 43 at 43-45.
63 [2010] FWAFB 2762.
64 AIRCFB, PR93765 per Watson SDP, Blain DP and Lewin C, 15 September 2003.
65 [2010] FWAFB 2762 at 25.
66 [2010] FWAA 5060.
67 [2010] FWAA 5060 at 21-22.
68 Transitional Provisions Act, Schedule 7, Part 2, Item 2(1).
69 Ibid at Item 4(1).
70 [2010] FWAFB 9985 at paragraph 41. Also see Topend Consulting Pty Ltd [2010] FWA 6442 and Solar Systems Pty Ltd

[2012] FWAFB 6397.
71 [2012] FWA 9640 at paragraph 54-55.
72 [2011] FWA 3777; [2011] FWAFB 6251.
73 [2011] FWA 3974.
74 [2010] FWA 5068; [2010] FWAFB 7838.
75 [2011] FWA 3777 at paragraph 40.
76 HIA submission 26 February 2013 at paragraph 3.1.3; also see paragraphs 3.1.12 - 3.1.19.
77 [2010] FWA 2894.
78 Ibid at paragraphs 50-51.
79 [2012] FWA 8726; [2013] FWAFB 580.
80 [2012] FWA 8726 at 25-26.
81 ABI written submissions 25 February 2013 paragraphs 4.8 - 4.15.
82 Transcript PN 253-271 and 275-280; also see the oral submissions of Ms Yu, on behalf of the Master Plumbers and 

Mechanical Contractors Association of NSW, Transcript PN 479.
83 [2010] FWAFB 2762.
84 Clause 7.8(b) provides that an IFA may be terminated at any time, by written agreement between the employer and the 

individual employee.
85 Transcript at PN 390-391.
86 Transcript paragraphs 216 - 223.
87 Transcript at PN 272-273.
88 ACTU written submission 20 March 2013 at paragraph 61-70.
89 Ibid at paragraph 63.
90 Ibid at paragraphs 37-60.
91 [2008] AIRCFB 550 at paragraph 180.
92 ACTU written submission 20 March 2013 at paragraphs 66-67.








[2013] FWCFB 2170

53

93 [2008] AIRCFB 550 at paragraph 184.
94 ABI written submissions of 25 February 2012 at paragraph 4.3.
95 Business SA written submission at paragraph 4.3.
96 [2013] FWCFB 1635.
97 [2013] FWCFB 2168.
98 Acts Interpretation Act 1901 (Cth), s.2C(1). 
99 [2008] AIRCFB 550 at paragraphs 185-186.
100 Review Panel pp 106 and 108-109.
101 Business SA submission in reply (AM2012/204).
102 Transcript at paragraph 381.
103 Transcript at paragraph 385.
104 Transcript at paragraph 489.
105 ACTU’s written submission of 20 March 2013 at paragraphs 113-114; Ai Group Transcript at PN 381 and 386; ACCI 

Transcript PN 489.
106 Ibid, at paragraph 114.
107 [2008] AIRCFB 550 at paragraph 180.
108 [2013] FWCFB 1635.
109 [2013] FWCFB 2168.








54

ATTACHMENT 1 - LIST OF APPLICATIONS

Matter no. Applicant Modern award title Award ID
AM2012/51 Greater Union and Birch 

Carroll & Coyle
Broadcasting and Recorded 
Entertainment Award 2010

MA000091

AM2012/228 HIA Building and Construction 
General On-site Award 2010

MA000020

AM2012/210 VECCI Clerks - Private Sector Award 
2010

MA000002

AM2012/179 Baking Industry 
Association of Queensland 
- Union of Employers

Fast Food Industry Award 2010 MA000003

AM2012/240 NRA Fast Food Industry Award 2010 MA000003

AM2012/178 Baking Industry 
Association of Queensland 
- Union of Employers

Food, Beverage and Tobacco 
Manufacturing Award 2010

MA000073

AM2012/177 Baking Industry 
Association of Queensland 
- Union of Employers

General Retail Industry Award 
2010

MA000004

AM2012/245 ARA General Retail Industry Award 
2010

MA000004

AM2012/250 VANA Limited General Retail Industry Award 
2010

MA000004

AM2012/8 NRA General Retail Industry Award 
2010

MA000004

AM2012/172 Hair and Beauty Industry 
Association

Hair and Beauty Industry Award 
2010

MA000005

AM2012/287 Hair and Beauty Australia Hair and Beauty Industry Award 
2010

MA000005

AM2012/204 Accommodation 
Association of Australia

Hospitality Industry (General) 
Award 2010

MA000009

AM2012/199 Master Plumbers and 
Mechanical Contractors 
Association of NSW

Plumbing and Fire Sprinklers 
Award 2010

MA000036

AM2012/180 Baking Industry 
Association of Queensland 
- Union of Employers

Restaurant Industry Award 2010 MA000119








55

ATTACHMENT 2

EXTRACT FROM CONSOLIDATED VERSION OF THE MINISTERIAL REQUEST

10. The Commission will prepare a model flexibility clause to enable an employer and 
an individual employee to agree on arrangements to meet the genuine individual needs 
of the employer and the employee. The Commission must ensure that the flexibility 
clause cannot be used to disadvantage the individual employee.

11. Each modern award will include the model flexibility clause with such adaptation 
as is required for the modern award in which it is included.

11AA. The Commission must ensure that the flexibility term:

 identifies the terms of the modern award that may be varied by an individual 
flexibility arrangement;

 requires that the employee and the employer genuinely agree to an individual 
flexibility arrangement;

 requires the employer to ensure that any individual flexibility arrangement must 
result in the employee being better off overall;

 sets out how any flexibility arrangement may be terminated;
 requires the employer to ensure that any individual flexibility arrangement by in 

writing and signed:
(a) in all cases – by the employee and the employer;
(b) if the employee is under 18 – by the parent or guardian of the employee;

 requires the employer to ensure that a copy of the individual flexibility 
arrangement be given to the employee;

 prohibits an individual flexibility arrangement agreed to by an employer and 
employee from requiring the approval or consent of another person, other than 
the consent of a parent or guardian where an employee is under 18; and

 where an employee genuinely agrees with an employer to make an individual 
flexibility arrangement but is either unable to read and/or sign that arrangement, 
a parent, guardian or representative may sign that agreement on their behalf. 

11AB. The Commission can also require any appropriate additional protections for 
employees or groups of employees of Australian Disability Enterprises.








56

ATTACHMENT 3 - AMENDMENTS SOUGHT IN APPLICATIONS

The applicants seek the following amendments:

7. Award flexibility

7.1 Notwithstanding any other provision of this award, an employer and an 
individual employee may agree to vary the application of certain terms of this award to 
meet the genuine individual needs of the employer and the individual employee. The 
terms the employer and the individual employee may agree to vary the application of 
are those concerning:

(a) arrangements for when work is performed (including the minimum duration of 
shifts) (Baking Industry Association of Queensland - Union of Employers -
AM2012/177, AM2012/178, AM2012/179, and AM2012/180; NRA - AM2012/8 and 
AM2012/240; Hair and Beauty Industry Association - AM2012/172);

The ARA, in its application AM2012/245, seeks to reword 7.1(a) as follows: 
“arrangements for when work is performed, including minimum shift engagements”. 
In its subsequent submission to the Tribunal dated 25 February 2013, at clause 16, the
NRA appears to have changed its proposed rewording of 7.1(a) as follows: 
“arrangements for when work is performed (including minimum shift engagement)”. 

(b) minimum engagement period; (VECCI - AM2012/210 - also consequential 
renumbering below)

(c) preferred hours option; (VECCI - AM2012/210 - also consequential 
renumbering below)

(b) overtime rates;

(c) penalty rates;

(d) allowances; and

(e) leave loading.;

(f) frequency of payment; (HIA - AM2012/228)

(g) industry specific redundancy provisions; and (HIA - AM2012/228). HIA, in its 
submission to the Tribunal dated 25 February 2013, at clause 3.1.20, stated it no 
longer wished to pursue this variation.

(h) any other matter within this award (HIA - AM2012/228)

provided that the terms of the agreement are not inconsistent with the National 
Employment Standards within the Fair Work Act 2009. (HIA - AM2012/228)

VANA Limited - AM2012/250 proposes to delete clause 7.1 in its entirety and replace 
it with the following:








[2013] FWCFB 2170

57

“7.1 Notwithstanding any other provision of this award, an employer and an 
individual employee may agree to vary the application of any term of this 
award to meet the genuine individual needs of the employer and the individual 
employee.”

Hair and Beauty Australia - AM2012/287 proposes to delete clause 7.1 in its entirety and 
replace it with the following:

“7.1 Notwithstanding any other provision of this award an employer 
and an individual employee may agree to vary the application of certain 
terms of this award to meet the genuine individual needs of the 
employer and the individual employee.

The employer and employee may mutually agree in writing to a fixed 
term period for the Individual Flexibility Agreement to be effective. 
This Agreement may be fixed for a term of any length mutually agreed 
to by the employer and employee up to a maximum 4 year period.”

Master Plumbers and Mechanical Contractors Association of NSW - AM2012/199, in relation 
to the Plumbing and Fire Sprinklers Award 2010 [MA000036], proposes to delete clause 7.1 
in its entirety and replace it with the following:

7.1 Notwithstanding any other provision of this award, an employer and an 
individual employee may agree to vary the application of certain terms of this 
award to meet the genuine individual needs of the employer and the individual 
employee. The terms the employer and the individual employee may agree to 
vary the application of are those concerning:

(a) arrangements for when work is performed (without limiting the 
matters subject to individual arrangement this can include the averaging 
of work hours);

(b) overtime rates (without limiting the matters subject to 
individual arrangement this can include shiftwork and call-out);

(c) penalty rates (without limiting the matters subject to individual 
arrangement this can include Saturday, Sunday and Public holiday 
work);

(d) allowances (without limiting the matters subject to individual 
arrangement this can include all purpose allowances in Clause 21.1, 
expense incurred allowances in Clause 21.2, fares and travelling 
allowances in Clause 21.8, leading hand allowances in Clause 21.5 and 
other allowances in Clauses 21.6 and 21.7); and

(e) annual leave loading.

7.2 The employer and the individual employee must have genuinely made the 
agreement without coercion or duress.








[2013] FWCFB 2170

58

7.3 The agreement between the employer and the individual employee must:

     (a) be confined to a variation in the application of one or more of the terms 
listed in clause 7.1; and (Hair and Beauty Australia - AM2012/287)

(b) result in the employee being better off overall than the employee would 
have been if no individual flexibility agreement had been agreed to.

(c) have the benefits to the employee documented by the employee and 
these benefits may include monetary and/or non-monetary benefits. (Baking 
Industry Association of Queensland - Union of Employers - AM2012/177, 
AM2012/178, AM2012/179, and AM2012/180)

7.4 The agreement between the employer and the individual employee must also:

(a) be in writing, name the parties to the agreement and be signed by the 
employer and the individual employee and, if the employee is under 18 years 
of age, the employee’s parent or guardian;

(b) state each term of this award that the employer and the individual 
employee have agreed to vary;

(c) detail how the application of each term has been varied by agreement 
between the employer and the individual employee;

(d) detail how the agreement results in the individual employee being 
better off overall in relation to the individual employee’s terms and conditions 
of employment; and

(e) state the date the agreement commences to operate.

7.5 The employer must give the individual employee a copy of the agreement and 
keep the agreement as a time and wages record.

7.6 Except as provided in clause 7.4(a) the agreement must not require the 
approval or consent of a person other than the employer and the individual employee.

7.6 In addition and separate to any consent required as provided in clause 7.4(a), if 
the employer and the employee reach agreement in accordance with this clause 7, then 
they will submit the agreement to Fair Work Australia or the Fair Work Ombudsman 
for approval which is the only other body or person whose approval to the agreement 
is required. (Accommodation Association of Australia - AM2012/204)

7.7 An employer seeking to enter into an agreement must provide a written 
proposal to the employee. Where the employee’s understanding of written English is 
limited the employer must take measures, including translation into an appropriate 
language, to ensure the employee understands the proposal.

7.8 The agreement may be terminated:








[2013] FWCFB 2170

59

(a) by the employer or the individual employee giving four sixteen 
(Greater Union and Birch Carroll & Coyle - AM2012/51) weeks’ notice of 
termination, in writing, to the other party and the agreement ceasing to operate 
at the end of the notice period; or

(b) at any time, by written agreement between the employer and the 
individual employee.

7.9 The right to make an agreement pursuant to this clause is in addition to, and is 
not intended to otherwise affect, any provision for an agreement between an employer 
and an individual employee contained in any other term of this award.

7.10 The employer will be responsible to conduct an annual review of the terms of 
the Individual Flexibility Agreement in line with the Annual Wage Review and 
changes to the Award in order to ensure the individual employee remains better off 
overall under the agreement in relation to the employee's terms and conditions of 
employment in comparison to that of the Award. (Hair and Beauty Australia -
AM2012/287)

Printed by authority of the Commonwealth Government Printer

Price code J, PR535545

Cases cited by this decision: