Industrious Conversations: What employers need to know about flexible work requests

Talia Firth:

Hello, and welcome to Ashurst Legal Outlook, and the seventh and final episode for 2025 in our Industrious Conversations series, bringing you insights into workplace developments in Australia from our leading Employment team at Ashurst. I'm Talia Firth, a partner in our Employment practice, and I'm delighted to be joined by my colleague, Jane Harvey, also a partner in our Employment team. In this episode we'll be talking about the spate of recent decisions about flexible work arrangements, and what these and other developments mean for Australian employers.

Hi Jane.

Jane Harvey:

Hi Talia. I am really delighted to be here with you for this last podcast in our series for the year. We're going to talk about flexible work arrangements. There's been lots of press about this issue over recent weeks. As I'm sure most of you will know, employees, or certain employees at least, have a right under the National Employment Standards to request flexible work arrangements from their employer, and that's a right that's been in the Fair Work Act for quite a long time now. But what has changed in the last couple of years is that there are now new quite stringent requirements for employers that they've got to follow when they're responding to flexible work requests, and also where there's a dispute about a flexible work request, that dispute can be taken to the Fair Work Commission. The Fair Work Commission has received about 300 applications under this new dispute provision over 2024 and 2025. The vast majority of those applications are resolved, and only 2% of them are arbitrated.

What we're seeing is that as this new arbitration function has been put in place, it's actually coincided with a bit of a trend in Australian employers rolling back the work from home arrangements that had originated during the COVID-19 pandemic, with many employers directing employees to return to the office at least on a part-time basis. So, we have seen a bit of a flurry in those circumstances of disputes coming through, and Talia, maybe you can tell us about some of the trends that we're actually seeing in those cases.

Talia Firth:

Yes, that's right, Jane, we have seen a flurry of decisions in this area, and early this year we saw a number of decisions that really sought to emphasise the technical requirements under the Act. So, first of all, in the case of employees, there are technical requirements in terms of who is eligible to make a request for a flexible work arrangement, and there is also a need to actually link the nature of the request to the particular eligibility criteria that the employee's relying on. So, in the decision of Paul Collins v InterSystems, we saw an employee who had requested to work from home two days per week, that request was refused by the employer. Ultimately the Fair Work Commission found that there was no clear connection between the employee's parental responsibilities, which was the basis on which he was eligible to make the request, and the request to work from home two days per week.

So, that dispute was resolved in favour of the employer because the employee couldn't prove the technical elements required. Similarly, in a recent case involving Sydney Water, the Fair Work Commission held that it lacked power to arbitrate a dispute about a flexible work request in circumstances where the employee was not yet 55 years old, and that was the eligibility criteria that was relied on in making the request, and so because he wasn't yet 55, the Commission couldn't arbitrate the dispute.

On the other hand, there are some pretty stringent and technical requirements on an employer who is given a flexible work request, and the case earlier this year of Naden v Catholic Schools found that the employer had failed to meet the requirements under section 65A(3) of the Act because it did not actually consider the consequences of the refusal of a request for a flexible work arrangement for the employee.The Commission highlighted that not only does the employer have to consider those consequences, the consideration of those consequences must be discussed in consultation with the employee, and the written response, in this case refusing that request, must show how the employer had regard to the consequences of the refusal on the employee.

So, some pretty technical preliminary requirements that must be met before you even get to probably the hardest part, which is establishing whether or not the employer has reasonable business grounds for refusing the requestr. So, Jane, what are we seeing in terms of the trends on reasonable business grounds?

Jane Harvey:

Yes, well, overall I would say that the decisions are showing that it's actually not that easy to establish reasonable business grounds, and the case that most people have heard about which does examine this question is the recent decision involving Westpac. In that case, the Fair Work Commission ordered that a long-serving employee, Karlene Chandler, could continue working remotely on a permanent basis, which was really to enable her to pick up and drop off her children from a private school, which was about 30 minutes away from her home, and two hours away from her closest corporate office. Now, aside from highlighting the importance of compliance with those procedural obligations, which we mentioned when you're dealing with flexible work requests, including considering the impacts of a refusal on an employee that Talia has just mentioned, the decision confirmed that there must be evidence specific to the employee making the request to support a decision to refuse a request on reasonable business grounds.

What the Deputy President in the Westpac case found was that the evidence which Westpac had relied on as to the benefits attached to in-person attendance and face-to-face interaction were generalised and insufficient to establish reasonable business grounds for the purposes of Ms. Chandler's request. The Deputy President also noted that Westpac didn't provide evidence of any negative impacts on the business which would justify rejecting her request, and rather it was a case that Ms. Chandler had in fact worked remotely for a number of years, and was doing that very successfully, and that a loss of productivity or efficiency or a negative impact on customer service had not materialised as a consequence of the existing remote working arrangements.

So, it's fair to say that if you are dealing requests from employees who have in fact had longstanding flexible work arrangements, whether it be on the basis of a particular flexible work request they've made, or just because that's what's been happening for a long time post-COVID, and you don't have any documented evidence of there being particular performance or other issues with those arrangements, it's actually going to be very hard to refuse a flexible work request. The other thing we've seen off the back of that decision in particular is unions becoming much more proactive around this issue. Following the Westpac decision, the Finance Sector Union has written to all of the major banks warning them against the implementation of return to work directives, and seeking that they review all of the flexible work requests that they might have rejected in the last year or so.

Talia Firth:

And interestingly, at the same time as we're seeing this move in the decisions, we've also seen the Greens introduce a Bill actually seeking to expand the current flexible work provisions to include a specific right to request to work from home for up to two days a week, and that type of request would not be limited to the categories of employees who are otherwise eligible to make a flexible work request. The Bill would provide that employers could refuse the request if the arrangement is impracticable or impossible due to the inherent requirements of the role, but would first require the employers to weigh whether reasonable adjustments could be made to enable a request to work from home.

So, we've seen that move, and then similarly, the Victorian Government has also announced proposed legislation which would give employees both in the public and private sectors, the legal right to work from home at least two days a week, and the Premier said that the change is about recognising modern work patterns and protecting employees from having flexible arrangements arbitrarily revoked. It remains to be seen, however, how such legislation could be enforced in circumstances where the Federal system governs industrial relations, including in Victoria. There's a suggestion that the Victorian Government might try to introduce this change through the state discrimination laws, but it seems to us still unclear how the Victorian Government would be able to achieve its stated purposes through that particular avenue, so there are a few unknowns there.

Jane Harvey:

Yes, and it might be, if they do achieve it, a bit of a nightmare and minefield for employers who have Victorian operations, in trying to traverse and comply with both State and Federal regimes. I find it really interesting the Victorian Government's comments about modern work patterns, and this is all designed to recognise the way in which people now work. There seems to be this real disconnect between that on the one hand, and then the very rigid approach we're seeing in relation to compliance issues as evidenced in the Federal Court's supermarkets decision. When you do have a working from home arrangement, there are some real challenges that those arrangements can give rise to in terms of keeping records of hours worked and the like, and thenhow that feeds into entitlements that might arise under an industrial instrument. And Talia, is that something the Commission has grappled with it all, how an employer actually meets those different competing obligations and entitlements?

Talia Firth:

Yes, I think on the one hand we might see issues where the flexible work requests actually result in additional expense for an employer, for example, because they have to pay more penalty rates, or overtime, or an employee working from home for example might work outside the span of hours, and that might be something that can be dealt with through an individual flexibility arrangement under the relevant industrial instrument. But just because it's going to be more expensive for an employer to implement a flexible work arrangement might not meet the test of it actually not being reasonable. And on the other hand, we have seen a really interesting recent Full Bench decision in the case of Opal Australian Paper v May, where the employer actually denied a flexible work arrangement on the basis that the arrangement was inconsistent with the rostering provision under their applicable enterprise agreement. They relied on that inconsistency as a reasonable business ground to refuse the request.

The Full Bench said that in and of itself was not a reasonable business ground to refuse a request. So, just because it was not consistent with the rostering provisions under the particular enterprise agreement, and in making that decision, the Fair Work Commission relied on the interaction between the enterprise agreement and the National Employment Standards, and they said that if the rostering provision under the enterprise agreement prevented the exercise of the right to a flexible work arrangement, it would in turn be contrary to the National Employment Standards and therefore of no effect in that particular scenario. The Fair Work Commission took the same position on this point in the Westpac case, although the focus was not specifically on rostering arrangements in that case.

So, if a flexible work arrangement is inconsistent with roster patterns in the business and therefore causes operational issues, that might be a reasonable business ground to refuse a request, but just because it gives rise to essentially a breach of a provision of an enterprise agreement, that won't be a reasonable business ground to refuse a request in and of itself, and that's because of the interaction between the EA and the NES. There are a lot of minefields here in terms of the interaction between what you've agreed in a flexible work arrangement and what the award or enterprise agreement might otherwise require. And we are seeing some movement to resolve some of those issues, particularly in the proceedings on foot in the Fair Work Commission at the moment to introduce working from home provisions under the Clerks Award. The stated purpose of that case is to develop a working from home term for the Clerks Award, which is intended to facilitate employers and employees making workable arrangements for working at home and remove any existing award impediments to such arrangements.

The idea is that that term is being developed as a model which may then be incorporated into other modern awards, and help to resolve some of those practical issues I was talking about before around things like stringent requirements in relation to span of hours, meal breaks, or minimum engagement periods that would be very hard to enforce or comply with in circumstances where employees are working from home.

So, with all that in mind, Jane, and all the issues that we've talked about today, what would be your top tips for employers in dealing with flexible work requests?

Jane Harvey:

Well, I think the first thing is just to make sure you are clear on and understand the technical requirements under the Act for making and refusing flexible work requests, and make sure you're complying with those requirements. You should make sure that your policies and processes take account of those requirements, and you'll also need to consider, whether you have different approaches for employees who are eligible to make those requests under the Act, and other employees who perhaps don't have a right to make such requests, but where you might, in any case, be considering requests that are made. So, do you have consistent processes or do you diverge between those two different groups? If you do receive a flexible work request, you need to carefully consider it, you need to have discussions, consultation with the employee about their request, you need to consider what alternatives might be available if you can't in fact accommodate the request, and you also need to think about what is the impact that a refusal might have on the employee.

I think a key thing that's come out of the cases as we've discussed, is that trying to rely on less tangible benefits such as collaboration, and teamwork, and the benefits of those things for the business are unlikely to be sufficient business grounds for refusing a flexible work request, and that is going to be particularly the case where somebody has been working from home for a long time without any issue. So, I think if organisations are looking to implement return to work policies and mandates, they need to be really carefully t about, and there needs to be flexibility in how you might implement those types of policies because you're going to have to take account of and make sure you're complying with the obligations that arise in respect of flexible work arrangements under the NES.

Talia Firth:

Absolutely. Well, thank you everyone for listening to this episode of Industrious Conversations on Ashurst Legal Outlook. To hear more Ashurst podcasts and to ensure you don't miss any future episodes in our Industrious Conversations series, subscribe now on Apple Podcasts, Spotify, or your favourite podcast platform. Also, please do reach out to our Employment team if you'd like to discuss this topic more. It's one that we are following closely and have a keen interest in. We hope you'll join us next time as we continue to explore key workplace developments in Australia and hear insights from other members of our leading Employment team here at Ashurst. Until then, thank you for listening and goodbye for now.