The latest batch of ACAPMA Guides has been released to Members. The Fuel Retail and Fuel Transport IFA Packs have been released, including Guide, Template IFA, Modelling Communications and IFA Calculators. The ACAPMA Guides provide detailed contextual information and practical guidance and instruction on a vast array of employment, safety, compliance and operational areas. Covering everything from specific product compliance, to contractor management, to safe operating systems and of course a vast array of employment areas, the ACAPMA Guides are detailed and focused on practical application in the fuel wholesale, fuel transport, fuel retail and fuel administration industry segments. Supplemented with editable templates, calculators and sample policies, letters and plans, the ACAPMA Guides are provided free to Members. The IFA Packs explore the often vexed area of Individual Flexibility Agreements and the creation of a ‘Racked Rate’.
An individual Flexibility Agreement (IFA) is an agreement between the employer and the individual employee to modify some eligible clauses of the applicable Award. The typical use of an IFA in fuel transport and fuel retail segments is to create a “racked” or “common hourly” rate that provides for all allowances and penalties that would ordinarily have to be shown on the payslip separately and individually, but with the use of an appropriate and compliant IFA can be shown as a single rate (or a series of rates) that provides for all of those elements and makes payroll simpler to implement. IFAs can also be used to capture agreement to modify some permitted areas of the Awards operation, such as spread of hours.
“The process for modelling and reviewing the ‘Racked Rate’ that will be used in an IFA is very similar to the process for setting and reviewing appropriate annualised salaries”, explains ACAPMAs Elisha Radwanowski.
A salary is an annual amount that provides compensation for the work of an employee, but it is not a number that can be picked for the air and then applied. Ensuring that the salary provided to any employee can be difficult. This difficulty can result in spectacular consequences as wave of sophisticated businesses that have failed to meet minimum standards have demonstrated recently. From massive retailers, to distributed franchise networks, it is clear that, despite their size and capacity, many businesses have ended up with underpayments and breaches that have arisen from sloppy salary practices including poor modelling and lacklustre or even non-existent review of the modelling effectiveness. The result is literally hundreds of millions of dollars in underpayments, most of it to managers.
“While a salary is an annual amount that will be provided as remuneration for work to the agreed roster, an IFA is able to capture more than just dollars and cents. An IFA can be the mechanism for the employer and employee to agree on changes to spread of hours, where the Award allows, or rolling together of allowances so they do not have to be displayed separately on a payslip. Despite this broader functionality, the same ‘problems’ and pitfalls that we see with flawed salary modelling processes often impact IFA use too”, continues Elisha.
A salary, is an annual amount that has the intention of providing a single payment that includes all of the elements that an employee is entitled to (Base Rate, Loadings, Allowances, Penalties etc). This single annual amount is then divided into 12, 26 or 52 increments according to the businesses pay cycle (monthly, fortnightly, weekly). The process by which the salary is set, and what is included in it is referred to as modelling.
While an IFA may break this modelling down into an hourly rate – the process, and the pitfalls are the same.
“Sloppy modelling is often the first failure point in salaried or racked rate underpayment cases. If the initial calculations provide for 38 hours of Day Shift at Base Rate, but the actual work is 40 hours, then the modelling has failed and there will be an underpayment”, notes Elisha.
Modelling also often fails due to elements like allowances, loadings or penalties being ‘forgotten’ or misapplied. One of the most common elements missing from salary modelling is public holiday treatment. The result is that if it is not included in the salary modelling, then the employee should receive an additional payment when they work a public holiday, failure to do so would result in an underpayment.
“Whether it is a salary or an IFA the employee MUST receive at least as much as if they were paid per the Award with no changes or modifications. The employee must be equal to or better off overall on the salary or IFA when compared to the work they ACTUALLY do, and this is the second big failure point in salaries and IFA racked rates. Underpayments can arise quickly if the actual hours, patterns and sundries of the work the employee actually does, exceeds or does not match up with the modelling. There is an imperative model the work well and then to compare the actual work to the modelled work and make adjustment payments where required”, cautions Elisha.
The ACAPMA IFA Tools combine to give Members a clear picture of what an IFA can (and cannot) do, how it must be structured and communicated, when and how it can be removed (and what happens if it is) as well as providing detailed step by step modelling instructions using the current pay rates and common modified elements.
“The IFA Tools in the Packs are a great resource and have everything Members need to review, update or implement IFAs as required, but the ACAPMA Employment Team is also available to assist Members in IFA modelling and implementation if they need a hand”, concluded Elisha.
ACAPMA Individual Flexibility Tools Available Now
- 2023/2024 – Fuel Retail – Individual Flexibility Agreement – Guide
- 2023/2024 – Fuel Retail – Individual Flexibility Agreement – Template
- 2023/2024 – Fuel Retail – Individual Flexibility Agreement – Calculator
- 2023/2024 – Fuel Transport – Individual Flexibility Agreement – Guide
- 2023/2024 – Fuel Transport – Individual Flexibility Agreement – Template
- 2023/2024 – Fuel Transport – Individual Flexibility Agreement – Calculator
The ACAPMA Individual Flexibility Tools are available to Members via the ACAPMA Member Portal https://acapma.com.au/member-portal/ . Members can also request a copy from employment@acapma.com.au.
ACAPMA members are reminded that the ACAPMA Employment Professionals are available to assist with employment, safety and training compliance. For more information email employment@acapma.com.au
HR Highlights are things to consider, implement and watch out for in your business. They are provided as general advice and you should seek further advice on your situation by emailing employment@acapma.com.au its free for members. ACAPMA membership is affordable at only $860 per year for a single site and valuable with sites gaining access to all the ACAPMA Guides as well as HR and IR advice support and representation and a raft of other benefits and discounts.
Elisha Radwanowski BCom(HRM & IR)
Executive Manager Employment and Compliance
ACAPMA
