Navigating flexible working arrangements in a post-pandemic world

Flexibility. The preference of many employees in a post pandemic world appears to be at the very least a ‘hybrid’ model of working – a mixture between work-from-home (or work-from-anywhere) and work from the office.

Over the last almost three years, employees have structured their lives in a way that the requirement to return to the office five days a week is inconvenient at best, and impossible at worst, particularly those now with childcare (or COVID pet care) responsibilities.

Post-pandemic, an employee’s right to request flexible working arrangements has never been so front of mind for employers that are wanting employees to return to the office more regularly.

Refusing an employee’s request is likely to become more technical for employers if the Government’s new Fair Work Legislation Amendment (Secure Jobs, Better Pay) Bill 2022 (Proposed Bill) passes into legislation.

If passed, the Proposed Bill, amongst many other proposed changes, will change an employer’s obligations upon receipt of an employee’s request for a flexible working arrangement, further strengthening and regulating employees’ rights in those circumstances. However the Proposed Bill will not become binding law until it passes through both Houses of Parliament, a process which will undoubtedly subject the Bill to a raft of amendments.

So, what legal obligations do employers have in relation to flexible working arrangements and what impact will the proposed changes have?

What is a flexible working arrangement request?

Employees with particular circumstances have a right to ask their employer for a flexible working arrangement.

The right falls under the national employment standards (NES) in the Fair Work Act 2009 (Cth) (FW Act), which are minimum standards of employment which an employer and employee cannot contract out of.

For example, an employee with the responsibility for the care of a child who is school age or younger has a right to request a flexible working arrangement from their employer, provided they have worked for the employer for at least 12 months.

Where an employee asks their employer to start and finish earlier each day because they have childcare obligations in the afternoon, that request would be for a flexible working arrangement.

Any request made by an employee, must be in writing setting out the details of the changes sought and the reasons for the change.

How should an employer respond to a flexible working arrangement request?

An employer must provide a written response to an employee’s request for a flexible working arrangement within 21 days, stating whether the employer grants or refuses the request.

An employer may only refuse a request on reasonable business grounds.

Currently, where an employer does refuse the request, the employer’s written response must include details of the reasons for the refusal.

The Government has previously argued that in refusing an employee’s flexible working arrangement request, employers currently have little obligation to make a genuine effort to find alternative arrangements.

The Proposed Bill introduces new requirements to attempt to cure that issue, by setting out that an employer must first discuss the request with an employee, and genuinely attempt to reach an agreement to accommodate the employees’ particular circumstances.

Where such an agreement cannot be reached, the employer must then have regard to the consequences of the refusal for the employee, in addition to having reasonable business grounds to refuse.

If the Proposed Bill is passed into legislation, where an employer does refuse a request on reasonable business grounds, it will have to include details of the refusal including setting out the particular business grounds for refusing the request and explaining how those grounds apply to the request.

What are reasonable business grounds to refuse a flexible working arrangement request?

The FW Act identifies, without limitation, some reasonable business grounds for refusing a request, including:

• That the new working arrangements requested by the employee 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 by the employee
• That it would be impractical to change the working arrangements of other employees, or recruit new employees, to accommodate the new working arrangements requested by the employee
• That the new working arrangements requested by the employee would be likely to result in a significant loss in efficiency or productivity
• That the new working arrangements requested by the employee would be likely to have a significant negative impact on customer service

Although, where a request is refused by an employer, whether that refusal was based on reasonable business grounds will turn on the relevant facts and circumstances present at the time.

When a request is refused by an employer, can the Fair Work Commission deal with the dispute?

Currently, the Commission must not deal with an application to determine if an employer refused an employee’s request on reasonable business grounds unless the parties have agreed in a contract of employment, enterprise agreement or other written agreement to the Commission dealing with the matter.

The Proposed Bill proposes to change that by granting the Commission power to arbitrate a dispute about an employer’s refusal, where conciliation fails, and make orders including an order that the employer grant the flexible working arrangement request.

What if a modern award or enterprise agreement applies?

Where a modern award or enterprise agreement applies, it may set out additional requirements for employers dealing with flexible working arrangement requests.

Many awards and enterprise agreements already include requirements that an employer consult with the employee, and genuinely try and reach agreement on a change that will reasonably accommodate the employee’s circumstances.

What are the risks of refusing a flexible working arrangement request?

Employee preferences

In a tight jobs market, being able to attract and retain good workers is critical for employers, and the ability to work flexibly is continuing to prove high on the list of priorities for employees.

As the impacts of the pandemic begin to recede in our rapidly recovering society, employers are now turning their minds to navigating the return to office process more permanently.

Employers seeking to improve employee connection, workplace culture and employee morale, are indicating a desire for employees to return to pre pandemic settings.

Although, for many employees, expectations about how and where work is performed has shifted, perhaps permanently.

In this current environment, where an employee requests a flexible working arrangement, and that request is refused, an employee may decide to seek more flexible employment elsewhere.

Civil penalties

Most NES provisions of the FW Act are civil remedy provisions.

That means, for most breaches of the NES, there is a risk for employers that a court may, on application, order that the employer pay a penalty. The maximum penalty is currently $66,000 for a Company per breach.

Currently, under the FW Act such an order cannot be made for a contravention or alleged contravention of the provision that enables employers to refuse a flexible working arrangement request on reasonable business grounds.

The Proposed Bill proposes to change that by allowing for civil penalties to be imposed where employers are found to have failed to properly consider flexible working arrangement requests.

Modern Award or Enterprise Agreement compliance

Where a modern award or enterprise agreement applies, employers must be careful to strictly comply with relevant award provisions when assessing a flexible working arrangement, or they may face a dispute application at the Commission, and may also face an order to pay penalties for breaching the terms of the applicable modern award or enterprise agreement.

FWC proceedings

There is also a risk an employee may bring Commission proceedings against the employer, including unfair dismissal or general protections proceedings, subject to them being eligible to do so.

Anti-discrimination obligations

Additionally, employers should be aware of their obligations arising under anti-discrimination legislation when considering a flexible working arrangement request. The requirements and obligations under such legislation will differ from state to state but generally have the same essential protections.

An employee with particular circumstances that makes a flexible working arrangement request because of those circumstances, may be protected from unlawful discrimination.

For example, the Anti-Discrimination Act 1977 (NSW) provides that an employer must not discriminate against a person on the ground of the person’s carer responsibilities.

The Equal Opportunity Act 2010 (VIC) also provides, more specifically, that an employer must not, in relation to the work arrangements of a person offered employment, unreasonably refuse to accommodate the responsibilities that the person has as a parent or carer.

Key Takeaways

It is understandable that employers want to achieve some form of business normality after a long period of disruption.

However, employers seeking to return to pre pandemic settings, particularly in relation to employees returning to work from the office, might find some inertia from employees.

A tool an employee may use to avoid an employer’s direction to return to the office on a full-time basis, may be to request a flexible working arrangement.

Refusing such a request has potential risks for employers, both legal risks (which are likely to become more significant), as well as risks of losing good workers in a tight jobs market.

There is plenty to consider for employers when assessing whether to approve or refuse a request for a flexible working arrangement, and legal advice may be necessary.

If you require advice in navigating flexible working arrangements in a post pandemic world, our Employment, Workplace Relations, and Safety group at McCabes Lawyers can assist.