Defective IFA survives to defeat underpayment claim

In brief

The Federal Circuit Court rejected a truck driver's underpayment claim, finding that the terms of an individual flexibility arrangement (IFA) applied to his employment, despite it not complying with the relevant legal requirements.¹ Senior Associate Stephanie Burn and Lawyer Sarah Lunny report.

How does it affect you?

• IFAs can be used to vary certain terms of modern awards to suit the individual needs of an employer and employee.
• If the employer and employee genuinely agree to an IFA, it applies as if it is a term of the award, even if its contents do not comply with all of the legal requirements for IFAs.

Background

K&S Freighters Pty Ltd (K&S) employed Mr Robinson as a fuel-tank driver. When he accepted the offer of employment with K&S, he believed it was conditional on him entering into an IFA that altered the provisions concerning pay rates, allowances, ordinary hours of work, and rostering in the Road Transport and Distribution Award 2010.

Mr Robinson subsequently resigned and brought an underpayment claim, alleging the IFA was defective and he should have been paid according to the award.

He argued that the IFA was defective because, contrary to the Fair Work Act:

• it was entered into after he commenced employment; and
• he felt under duress to accept it and therefore had not genuinely agreed to it.

The decision

The court found that the IFA still applied, even though it was not entered into after Mr Robinson commenced employment, and despite his offer of employment being conditional upon his acceptance of the IFA. Mr Robinson entered the IFA and did not exercise his right to terminate it.

The IFA permitted Mr Robinson to work a 38-hour week. His underpayment claim was calculated on the basis of the 35-hour week specified in the award. The court decided that the IFA applied and it permitted a 38-hour week; therefore, there had not been any underpayments.