Flexible work arrangements - less flexible for employers, more risk for getting it wrong!

The Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 brings significant changes to the current flexible work arrangement regime under the Fair Work Act 2009.

In this article, we explain what these changes mean for employers — calling attention to the scope of employees that can make such requests, the more stringent requirements in responding or refusing to flexible work requests and the new powers the Fair Work Commission will have in resolving disputes.

These changes come into effect on 6 June 2023. To be ready to comply, employers will need to refine their processes, better understand tolerances for flexibility in the business and be ready to respond.

Quick recap - what is a flexible work arrangement?

The Fair Work Act already provides certain employees the right to request changes to their working arrangements. The employees[1] able to request a flexible work arrangement are:

• parents, or persons with responsibility for the care of a child who is of school age or younger;

• a “carer” — which is, generally speaking, someone who provides personal care, support and assistance to another person because that person has a disability, a medical condition, mental illness, or is frail and aged; or

• have a disability; or

• are 55 years or older; or

• experiencing violence from a member of their family; or

• provide care or support to a member of their immediate family or their household, who requires care or support because the member is experiencing family and domestic violence.

It is those circumstances that result in the request for the change in working arrangements. The kind of changes that can be made are broad and not specified, but usually include:

• changes to the hours the employee works;

• when those hours are worked;

• working patterns; and

• where the work is performed (for example, working from home rather than the office).

The underlying policy behind these laws is to assist specific kinds of employees better balance their working arrangements with difficulties they may be facing in their personal lives. The employer can refuse the request “only on reasonable business grounds”.

However, critics of the existing law point to it being only a right to request with no effective means to deal with an employer refusing the request. 

More employees will be able to make the request

The scope of employees is largely the same as before, except there are two key changes. 

The first change is that the list now includes pregnant employees — which is not qualified in any way (for example, how far into the pregnancy they are, or whether they are facing difficulties with their pregnancy). It is sufficient that the employee is pregnant, full stop.

The second change is to employees experiencing violence, with the phrase now “experiencing family and domestic violence”, which goes further than the previous focus on “violence” and now includes behaviours which are abusive or threatening.

The steps required to process a flexible work arrangement - a high-level guide

If the employee is eligible to request a flexible work arrangement, then the employee must make that request:

• in writing, and

• set out details of the change sought and the reason for the change.

Once that request is received, the employer has 21 days to respond to the employee. There can be consequences for missing this deadline. The response must made be in writing and either:

• state that the employer grants the request; or

• if the employer and employee agree to a change to the employee’s working arrangements that differs from the employee’s request — set out the agreed change; or

• state the employer refuses the request, which will now require the employer to set out:

  • the reasons for the refusal, including the “reasonable business grounds” for doing so and how they apply to the request; and

  • either set out the changes the employer would be willing to make, or state that there are no changes the employer is willing to make; and

  • set out information about referring the dispute to the Fair Work Commission.

Refusals — tightly confined

An employer can only refuse a request for a flexible work arrangement if:

• the employer has discussed the request with the employee and genuinely tried to reach an agreement about making changes to the employee’s working arrangements that would accommodate the employee’s circumstances;

• the employer and employee have been unable to reach agreement;

• the employer has had regard to the consequence of the refusal for the employee; and

• the refusal is based on “reasonable business grounds”.

But what are “reasonable business grounds”? Secure Jobs, Better Pay provides a non-exhaustive list (our emphasis):

• the new working arrangements requested would be too costly for the employer;

• that there is no capacity to change the working arrangements of other employees to accommodate the new working arrangements requested;

• it would be impractical to change the working arrangements of other employees, or recruit new employees, to accommodate the new working arrangements requested;

• the new working arrangements requested would be likely to result in a significant loss in efficiency or productivity;

• the new working arrangements requested would be likely to have a significant negative impact on customer service.

The examples provided raise the bar for employers. Indeed, the message is that some inconvenience, loss or disruption is acceptable to accommodate a flexible work request. In essence, employers will need to clearly demonstrate a significant detriment to its business, customers or other employees to be able to refuse a flexible work request. 

When the Fair Work Commission can get involved

Secure Jobs, Better Pay allows employees to readily bring disputes about flexible work arrangements to the Fair Work Commission. Employees can do so if they have made the request, and the employer either:

• refuses the request; or

• does not respond to the request in writing within the 21-day time limit.

The Fair Work Commission must first try and resolve the dispute by means other than arbitration — this will likely mean the dispute will be subject to a conference or conciliation to try to facilitate an agreement between the parties. But if the matter is arbitrated, then the Fair Work Commission will now have powers to make specific orders to resolve the dispute. Critically, the Fair Work Commission can make orders that employer grants the employee’s original request or make other changes to accommodate the employee’s circumstances.

Before making such an order, the Fair Work Commission needs to take into account “fairness” between the parties. 

Any employer found to be in breach of these new orders may be liable for civil penalties.

Practical tips for employers

To prepare for these changes, employers should consider the following:

• Review and update policies and procedures for handling requests for flexible work arrangements, so that managers and human resources officers know what they need to do and by when. Employers should get legal advice about the content of these policies and procedures before implementing them.

• If a request is made, the employer should begin discussions with the employee as soon as possible. There is no requirement that the “discussion” occur in person. It can occur in writing.

• If the request is granted (or there is an agreed compromised position), then the employer should sign the written response and have the employee do the same. This is not a requirement, but it is recommended so the employer can demonstrate the comprise reached.

• Employers should avoid using templated responses in rejecting an employee’s request. The Fair Work Commission will look closely at the specific circumstances of each request, meaning the employer will need to be ready and able to explain their refusal. Having that detail at hand will not only demonstrate the employer’s genuine attempt to resolve the dispute, but also mean it has more convincing evidence at hand to avoid an adverse order being made.

Authors: James Mattson, Sylvia Moses & Joshua Handley

[1]  For employees who are not casuals, they can only make the request if they have completed at least 12 months of continuous service. For casuals, those employees will need to have had regular engagement over a twelve-month period and have a reasonable expectation of continuing employment on a regular and systemic basis.