Most businesses and employers will use an award covered employment agreement.
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An award is a legal safety net that sets the minimum rules for employment in Australia. It tells you things like
• minimum pay rates
• penalty rates for evenings, weekends and public holidays
• overtime rules
• breaks and rostering
• minimum notice and termination rules
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Each industry and job role has different awards, which is why choosing the correct award for your business is so important. If you are unsure which award applies, you can book a consult with us and we can help you identify the right one.
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Even when an employee is covered by an award, we recommend that you still have a written employment agreement. Why? Because this is where you include all the important protections for your business like intellectual property, confidentiality, restraints, reputation, email and internet use and the real “business protection” clauses.
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So where does an Individual Flexible Arrangement (IFA) fit in?
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An IFA is used when you want to vary certain award rules, usually around pay and penalties.
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For example, instead of tracking penalty rates and overtime, some businesses prefer to pay a higher all inclusive rate.
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BUT there is a very important legal rule.
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The employee must be Better Off Overall compared to the award.
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This is called the BOOT test.
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This means when Fair Work looks at the arrangement, the employee must be genuinely better off than if the award applied normally. This may include
- being paid well above the award rate (including penalties if they work weekends/ overtime)
- flexible working arrangements
- additional benefits not normally provided under the award
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An IFA cannot exist without a written employment agreement confirming the arrangement. This is a legal requirement.
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This is exactly why we are so passionate about providing proper employment agreements. If you are unsure whether you should be using an award covered agreement or an IFA, book a consult and we can help you choose the right structure for your business.