What is an IFA?

Payroll, IFA, Pay calculations,

An IFA (Individual Flexibility Agreement) is a written agreement, between an employer and employee, used to change the effect of certain clauses in their award.

IFAs are used to make alternative arrangements that suit both the employer and employee.

Both parties must genuinely agree an employee cannot be forced to sign an IFA.

IFAs are used to vary clauses about, working hours, overtime rates, penalty rates, allowances and leave loading. Often IFAs are used to determine a flat hourly rate, higher than the award, which includes entitlements covered by the award, for administrative ease.

An IFA cannot be used to reduce or remove employee entitlements.

Employees must be better off overall being managed/paid under the IFA than being managed under the award at the time the IFA is created. This is determined by the Better Off Overall Test (BOOT). BOOT calculations can be complex, depending on what entitlements the employer wishes to include in the flat rate to meet their obligations under the awards.

IFA’s are useful in industries like farming and agriculture where the awards are not very flexible and there are several entitlements to consider when paying employees (e.g. keep, overtime, penalty rates, casual loading).

In this circumstance investing in an IFA and BOOT can benefit business owners immensely, as it ensures they are paying their employees correctly and determines one pay rate that can be used for all hours worked.

IFA’s can save a lot of stress for employers. Get in contact to find out how we can help you manage your business or farm on (08) 9316 9896 or enquiries@processworx.com.au

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Written by Danielle McNamee

 

 

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