Five top takeaways from Australia's flexible work arrangement reforms

2 minute read  02.05.2023 Trent Forno, Kelly Halpin

The Federal Government's flexible work arrangement (FWAs) reforms come into effect on 6 June 2023. Here we outline five key things organisations need to know to about the FWA changes.

The Federal Government's flexible work arrangement reforms are anticipated to 'encourage employers to genuinely discuss and consider' FWA requests and also 'deter employers from refusing to negotiate' FWAs. What do organisations need to know about the changes?

1. Who can request flexible work arrangements?

There is currently no general right under Australian law for employees to request a FWA – the right applies instead to limited categories of employees. The reforms will expand these categories slightly.

This means that employees with at least 12 months' continuous service (including long term casuals who have a reasonable expectation of continuing employment on a regular and systematic basis) may request FWAs where the employee:

  • is a parent, or has responsibility for the care of a child who is of school age or younger; or
  • is a carer; or
  • has a disability; or
  • is aged 55 years or older; or
  • is experiencing family and domestic violence (FDV) – under the changes it will not matter who is perpetrating this violence; or
  • provides care or support to a member of their immediate family or household who requires care or support because the member is experiencing FDV;
  • is pregnant – a new category under the changes.

Employees on parental leave will also have a new express statutory right to request a further 12 month extension of their unpaid parental leave.

Even if an employee does not fall within one of these categories, employers should closely consider how they respond to all FWA requests. Depending on the circumstances, a failure to respond to a request may give rise to other legal risks (such as claims of unlawful discrimination).

2. Timing and process for responding to FWA requests

Under the changes, employers:

  • must still grant or refuse valid FWA requests within 21 days and do so in writing
  • may only refuse a FWA request on reasonable business grounds.

If an employer is considering refusing a FWA request, under the changes they will be expressly required to:

  • discuss the request with the employee and genuinely try to reach agreement
  • consider the consequences of refusal for the employee.

3. An employer must provide explanation if refusing FWA request

Reasonable business grounds to refuse a FWA request remain the same under the changes – the non exhaustive list is summarised here:

  • the FWA would be too costly
  • there is no capacity to change the working arrangements of other employees to accommodate the FWA
  • it would be impractical to change other employees' working arrangements or recruit new employees to accommodate the FWA
  • the FWA would likely result in a significant loss in efficiency or productivity
  • the FWA would likely have a significant negative impact on customer service

The specific circumstances of the employer, including the nature and size of the enterprise, are relevant to what are reasonable business grounds.

Employers must set out the employer’s particular business grounds for refusing the request and, as a result of the changes, explain how those grounds apply to the request.

4. Alternate changes to be canvassed

From 6 June, employers will need to set out alternate changes they could accommodate if they refuse a FWA request, or notify the employee that no alternate changes are available.

5. There is a new FWC dispute resolution process

Currently, there is no binding dispute resolution process to deal with disputes over FWA requests – and on this basis, the current position has been criticised as lacking teeth.

Under the changes, where a dispute about a FWA is not resolved at the workplace level by discussions between the parties, either party will be able to refer the matter to the Fair Work Commission (FWC). The FWC must first deal with the dispute by means other than arbitration (e.g. conciliation or mediation) unless there are exceptional circumstances. If the matter remains unresolved, the FWC may then proceed to arbitrate. Where this occurs, the FWC can make various orders if it is satisfied that there is no reasonable prospect of the dispute being resolved without such an order including that the employer must grant the employee’s request or make accommodations.

Civil penalties may apply to breaches of any FWC arbitration orders made about a FWA dispute – up to 60 penalty units for a company (currently $82,500).

The written response to an employee must also, among other things, inform the employee of this dispute resolution process and potential for FWC arbitration.

What organisations need to do now

How employers manage and respond to FWA requests, as well as the actual decision makers involved, will be under increasing scrutiny as a result of these new changes. Commentators have suggested that these new reforms will lead to increased disputation around FWA requests.
Employers keen to encourage workers to return to the workplace to promote face to face collaboration will therefore need to – if they haven't already – review FWA policies and processes and train managers and senior leaders on the best way to manage FWA requests.

We are assisting organisations to:

  • introduce, or update existing, flexible work policies, processes and supporting documentation
  • train managers and senior leaders on how to respond appropriately – to help ensure, if requests are refused, the decision is a defensible one supported by appropriate evidence.

Please contact us if you have any questions or need assistance.