If G8 Education Can Get IFAs Wrong, So Can You

G8 Education is now facing Federal Court action after the Fair Work Ombudsman commenced legal action against the childcare operator, alleging underpayments and seeking compensation of more than $2 million combined for more than 1,400 workers.

Here’s the bit every employer needs to sit up for. This isn’t just a case of paying someone the wrong hourly rate. A big chunk of the claim relates to Individual Flexibility Arrangements, or IFAs, and how badly they can go wrong when nobody’s checking the maths.

What did the Fair Work Ombudsman find?

G8 Education self-reported the issue back in 2020 and has apparently been working with the FWO ever since. To their credit, that’s the right move. But the numbers tell you how big the mess is: $1.03 million is being sought for workers under the Children’s Services Award 2010, and $1.05 million for workers not paid entitlements in connection with the IFA.

The IFA problem is the real story here. G8 Education had entered into flexibility arrangements with hundreds of childcare workers that increased the number of ordinary hours that could be worked in a day without the payment of overtime, from the usual 8 hours to 10 hours. The FWO says these workers weren’t left better off overall by the deal, and any non-monetary benefit on offer didn’t come close to covering what they lost.

On top of that, some of the IFAs allegedly didn’t meet basic legal requirements, like correctly identifying the award clause being varied or being signed by both parties.

Why does an IFA fail even when everyone signs it?

IFAs get sold as the flexible, common-sense option. Extend the ordinary hours window, skip the overtime, everyone’s happy. On paper it looks like a win-win.

Here’s the trap. An IFA is only lawful if the employee is genuinely better off overall once you net out what they gain against what they lose. Not “better off in theory.” Not “better off if you squint at the roster.” Actually better off, in dollars, when you compare it to what the award would have paid them without the IFA.

That test doesn’t get easier because you’re a big company with a payroll team, and it doesn’t get harder because you’re a 15-person SME running things off spreadsheets. The law doesn’t care about your headcount. It cares about the maths.

What should you check in your own business right now?

If you’ve got any of the following in your business, get this checked before Fair Work does it for you:

• Individual flexibility clauses in modern award-covered contracts
• Extended ordinary hours arrangements that trade off overtime
• Any deal you did with an employee “to make things easier” without running the better-off-overall comparison in writing
• IFAs that are missing a signature, missing a clear reference to the award clause being varied, or just vibes-based rather than documented

What does a compliant IFA actually look like?

An IFA isn’t a favour you do someone informally. It’s a legal document with specific requirements:

1. It has to be in writing and signed by both employer and employee.
2. It has to clearly identify which award term is being varied.
3. You need to be able to show, with actual numbers, that the employee is better off overall.
4. It needs to be reviewable, not something you set and forget for years.

If you can’t produce that paper trail today, you don’t have a compliant IFA. You have an exposure sitting on your books, and it doesn’t matter whether it’s one employee or four hundred.

What’s the takeaway for employers?

Fair Work Ombudsman Anna Booth put it plainly: “It is crucial for employers that any Individual Flexibility Arrangements leave employees better off overall.”

That’s not a throwaway line. It’s the whole test. If you’re relying on flexibility arrangements anywhere in your business and you haven’t recently checked they still stack up, this is your reminder. G8 Education had a payroll team, HR resourcing and lawyers, and it still ended up here. Assuming your setup is fine because “we’ve always done it this way” is exactly how businesses end up in court.

Get your IFAs reviewed properly. It’s a lot cheaper than finding out you got it wrong from the FWO.

Frequently Asked Questions

What is an Individual Flexibility Arrangement?

An IFA is a written agreement between an employer and an employee that varies certain terms of a modern award, such as ordinary hours, overtime, or penalty rates. It’s only lawful if the employee ends up genuinely better off overall compared to what the award alone would have given them.

What is the better off overall test for an IFA?

It means comparing, in dollar terms, what the employee gets under the IFA against what they’d have received under the award without it. A non-monetary benefit like extra flexibility doesn’t count unless it genuinely outweighs any financial loss. If it doesn’t stack up in the numbers, the IFA isn’t valid.

Can a small business use IFAs the same way as a big company?

Yes, and the compliance bar is exactly the same. The Fair Work Act doesn’t have a lighter test for smaller employers. If anything, SMEs are more exposed because they’re less likely to have a payroll or legal team checking arrangements before they’re signed.

What happens if my IFAs aren’t compliant?

You may owe back payments to affected employees, plus interest and superannuation, and the Fair Work Ombudsman can pursue penalties in the Federal Court. G8 Education is facing penalties of up to $66,600 per contravention, on top of compensation.

How often should IFAs be reviewed?

At minimum, whenever an employee’s hours, role or pay changes, and again whenever the underlying award is varied. An IFA signed years ago under different award rates may no longer pass the better off overall test today.

Need your flexibility arrangements checked? HR Gurus can review your IFAs, contracts and award compliance before it becomes a Fair Work problem. Book a call with us.