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C_Bomb
20-05-2010, 08:37 AM
Hi Guys,
I'm new here and need a little help.

The company i work for has given me the new contracts (IFA's) for our existing employees to sign.


This was apparently done in consultaion with an Australian solicitor (we have an American parent) then the IFA's werre sent to our US HR dept and they added in a bunch of things that could apparnetly be illegal in Australia.

The first and main issue is that it appears as though if my current employees choose not to sign the IFA and want the standard award terms, then the company will reduce the employee's salary to that which is the minimum wage under the applicable award.

Is this legal???

an example is that employee A is currently on $50k.per Annam
Under the award his/her minimum wage is $33967.44 per Annam
The options given to my employee are

Sign the IFA and retain his/her current salary but waine rights to overtime, leave loading, penalties and allowances

or

Stick with the award, have their salary reduced to the figure which is the minimum wage under the award and keep all standard entitlements included in the award(OT, loading, etc...)

I'm stuck in the middle between a Parent company who doesn't accept that they have to follow the new NES and a group of employees who will potentially hate me for trying to reduce their salaries


Thanks in advance for any help.
Chris

Moz
20-05-2010, 08:58 AM
Hmm, not an enviable position Chris.Even if it does turn out to be legal, the way they are approaching it sounds like blackmail.

I guess the other thing is the US parent might not take too kindly to you taking the side of the employees.

I really don't know the legality of what they are trying to do, it may depend upon the specific award. Does it have any provisions to "cash out" those entitlements (give them up in return for compensation by higher wages)?

Do they currently get paid OT, leave loading etc? (or did they before the FWA and NES?)

C_Bomb
20-05-2010, 11:04 AM
HI Moz,

No they don't get OT or leave loading etc...

I would just like to be sure of their entitlements before i present the IFA.

Are my employees who are paid $50k entitled to $50k + the terms of the Award under the NES?

If the answer is yes, then the IFA that will be presented would make my employees worse off than under the award.

I'm not interested in the minimum salary. I'd like to know of my employee is entitled to the salary amount he/she was paid prior to Jan 1 2010 + the conditions listed in the award

Chipmunk
20-05-2010, 06:57 PM
Hi C-Bomb,

This is an interesting situation, and to be honest I am not sure if the employer is going about it the right way. I will make the assumption you are talking about Individual Flexibility Arrangements (IFA's) that must be included in modern awards. There are rules about how these arrangements can be made and implemented, check these out here on the Fair Work Ombudsman’s website

Use of individual flexibility arrangements (http://www.fwo.gov.au/Best-Practice-Guides/Pages/Use-of-individual-flexibility-arrangements.aspx)

Section 144 of the Fair Work Act 2009 deals with how these are included and the requirement for any IFA to be made. Hopefully reading this section of the Act and the best practice guide will give you the answers you seek to the above questions.

Under the act the employer is only required to provide the minimum payments in any award or agreement that is applicable to the employee, anything beyond this is at the employers discretion, unless the employee has something in writing specifying a salary amount. Then they may possibly have a case for breach of contract.

Job Media
20-05-2010, 08:37 PM
I think it would be reasonable to assume that when introducing the NES, it was not the intention of the Government to burden employers with a heap of additional costs in situations where they were already paying way above the award, which appears to be the case here.

Chris, you could perhaps contact Fair Work Australia (http://www.fwa.gov.au/index.cfm?pagename=headercontact) and ask them for some input.

C_Bomb
22-05-2010, 10:09 PM
[QUOTE=Job Media;10939
Chris, you could perhaps contact Fair Work Australia (http://www.fwa.gov.au/index.cfm?pagename=headercontact) and ask them for some input.[/QUOTE]

I have contacted FWA 3-5 times with different questions and scenarios with very little clarity so far.

I have received answers ranging from, they are there to help employees not employers through to you should consult your solicitor.

I don't have the authority to request a solicitor in this case as I'm just stuck in the middle.

Thanks for the suggestion though.

Moz
23-05-2010, 09:56 PM
I have contacted FWA 3-5 times with different questions and scenarios with very little clarity so far.

I have received answers ranging from, they are there to help employees not employers through to you should consult your solicitor.

Job Media suggested you call a Government department, not a union office. Oh sorry, I forgot, we have a Labor Government so there's no difference :)

Given that your company pays well above the award in lieu of paid OT and leave loading, I'm sure they don't expect to suddenly have to start paying for those things again. So while they could have perhaps gone about this a bit more diplomatically, it's very easy to see why they are doing it.

As for "entitlements", remember the NES are a set of minimum standards. I don't think the intention was that the NES increase everyone's wages, the intention was that the NES protected people who were getting ripped off.

Moz
23-05-2010, 09:59 PM
Chris,
Just one other thing - if you are in Victoria you could call VECCI (http://www.vecci.org.au/Pages/Home.aspx), although they may require that you become a member before they would offer advice.

There may be similar organisations in other States.

arowe
24-05-2010, 11:22 AM
You could also try Australian Industry Group - Biz Assist line if you are already a member. You might want to try and highlight to the US parent company Section 343 and 344 (copied below for you) of the Fair Work Act which expressly relates to coercing people to sign IFA's or other types of agreements / arrangements. It's a tough situation for you to be in, so I would take it to the most senior person in Australia (assuming there is someone else you can go to here) and advise them of the enormous risk that this will put the company in (and the exposure to you under section345!:().

The options that are being offered are correct though, an employee can be paid above the Award, therefore no entitlement to penalties, allowances, leave loading etc, however the cotnracts should be very clear about what the salary covers. I've posted a question on here about "set off clauses" which is exactly what this relates to, ie wording about the fact that the "salary you are receiving is in full and final satisfaction of minimum salary, overtime, penalties, allowances and elave loading" etc. The other part of the clause that needs to be inserted is something along the lines of "should any Award change to provide you with any benefit, X (comapny) will set that benfit off against your current pay, therefore absorbing the benefit into your salary without increasing the overall amount"

Or, they can with 28 days notice win writing, go back to Award entitlements, which could ultimately be less pay, but all of the previous payments that were included in their salary become payable.

343 Coercion
(1) A person must not organise or take, or threaten to organise or take,
any action against another person with intent to coerce the other
person, or a third person, to:
(a) exercise or not exercise, or propose to exercise or not
exercise, a workplace right; or
(b) exercise, or propose to exercise, a workplace right in a
particular way.
Note: This subsection is a civil remedy provision (see Part 4-1).
(2) Subsection (1) does not apply to protected industrial action.

344 Undue influence or pressure
An employer must not exert undue influence or undue pressure on
an employee in relation to a decision by the employee to:
(a) make, or not make, an agreement or arrangement under the
National Employment Standards; or
(b) make, or not make, an agreement or arrangement under a
term of a modern award or enterprise agreement that is
permitted to be included in the award or agreement under
subsection 55(2); or
(c) agree to, or terminate, an individual flexibility arrangement;
or
(d) accept a guarantee of annual earnings; or
(e) agree, or not agree, to a deduction from amounts payable to
the employee in relation to the performance of work.
Note: This section is a civil remedy provision (see Part 4-1).

345 Misrepresentations
(1) A person must not knowingly or recklessly make a false or
misleading representation about:
(a) the workplace rights of another person; or
(b) the exercise, or the effect of the exercise, of a workplace right
by another person.
Note: This subsection is a civil remedy provision (see Part 4-1).
(2) Subsection (1) does not apply if the person to whom the
representation is made would not be expected to rely on it.