The passage of the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 (Cth) has brought about significant changes to the obligation on employers to provide Flexible Working Arrangements. Holman Webb foreshadowed these changes in our October 2022 article The Future of Flexible Work: Amendments to the Fair Work Act 2009.

In this article, we will discuss the specific changes.

The changes come into force on 6 June 2023.  It is important that employers consider the changes, given the prevalence of flexible working arrangements in the aftermath of the COVID-19 lockdowns.

New decision process

The amendment introduces a new section 65A dedicated to the process of responding to requests for flexible working arrangements.

The amendment continues the obligation of employers to respond to requests within 21 days.

This section now sets out what must be done in that 21 days.  The employer has 3 options, being:

1.     The employer may accept the request;

2.     The employer and the employee may discuss the matter, with both parties then reaching an agreement that differs from the original request.  If this occurs, the employer must set out the agreed change and implement it; or

3.     The employer may refuse the request.  A refusal is subject to further conditions.

Updated procedure for refusal of a request

An employer may only refuse a request for flexible work if it has discussed the request with the employee, and genuinely attempted to make changes to the employee’s working arrangements to accommodate the reasons for the request. 

An employer can only refuse a request if:

• no arrangement can be agreed upon;
• the employer had regard for the consequences of a refusal; or if
• the refusal is on reasonable business grounds.

Reasonable business grounds to refuse is maintained

The Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 clarifies that genuinely trying to reach an agreement does not require the employer to accept an employee’s request. The employer can still refuse the request on reasonable business grounds.

The legislation includes a list of examples “reasonable business grounds” that an employer may rely upon.  The list is not exhaustive, and matches that in the old legislation, being:

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

This section also provides that the context of the business can have an impact on what constitutes reasonable business grounds for refusal of a request.  The example it gives is that a business may have few employees, and hence no capacity to grant flexible working conditions. 

Employers should have regard to the Fair Work Ombudsman’s Flexible working arrangements guide when making these decisions.

Communicating reasons for refusal

An employer must still communicate any refusal to an employee, and must include reasons why the request was refused. This must include both the particular business grounds on which the request was refused, and how those grounds applied to the request.

The refusal response must also set out the employee’s right to challenge the refusal in the Fair Work Commission, discussed below.

Application for review in the Fair Work Commission

Previously, if a request was denied, an employee would have no further avenue of review of the dispute.  

The legislation now provides that an employee can escalate the dispute to the Fair Work Commission if:

• it cannot be resolved in the workplace;
• the employer did not respond to the request within 21 days; or
• the employer has refused the request within that time, and the employee says these are not legitimate and not reasonable business grounds.

If a dispute is referred to the Fair Work Commission, the Commission must first attempt to deal with it by means other than arbitration (i.e., by conciliation or mediation).  If this process does not resolve the dispute, the Fair Work Commission can then proceed to arbitration, to make a binding decision on the parties.

Powers of Fair Work Commission to determine disputes

The Fair Work Commission can make a series of orders including:

• if an employer did not respond to a request for flexible work with written notice, it can order that an employer refused the request (i.e., a deemed refusal);
• it can order the employer to provide information supporting any deemed refusal;
• if an employer refused the request (either actually, or by a failure to respond within 21 days) the Commission may order that this refusal was, or was not, made on reasonable business grounds;
• it can order the employer to accept the request;
• it can order the employer to make specified changes that were not in the original request; or
• it can uphold the decision and refuse the request.

The Commission must take into account fairness between employer and employee in making an order. Its orders cannot be in contradiction with the Act, or any legislative instruments under the Act.

Penalties For Non-Compliance

If an employer refuses to implement orders of the Fair Work Commission, a civil remedy is available to an employee under section 539 of the Fair Work Act.  

An employee, employee organisation or inspector can apply to the Federal Court, the Federal Circuit and Family Court, or any other eligible State or Territory Court seeking a penalty.

This penalty is up to $16,500.

Implications

Employers must be exceptionally careful in determining a request once the new legislation starts on 6 June 2023.  It is important that employers not only deal with requests within the 21 day period, but that they properly discuss it with the employee in an attempt to make reasonable steps to implement arrangements.

If an employer has reasonable business grounds to refuse the request, those grounds should be properly communicated in order to avoid any costly disputation in the Fair Work Commission.

In the event of contentious matters, where it is likely to lead to dispute, we strongly recommend that an employer obtain legal advice at the time of initial refusal, to make sure that the grounds of a refusal have the best opportunity of being upheld.

If the Fair Work Commission does make an order, it is imperative that the employer then comply to avoid further penalties.

If you have a query relating to any of the information in this article, or would like to speak with Nick Maley, Partner in respect of a separate matter – please call today on 02 9390 8306 or 0488 675 775, or email Nick at nick.maley@holmanwebb.com.au