Flexible working arrangements have become more and more popular over the years. Traditionally, this was something used by working mothers and carers, but as social norms have evolved, it has become very common for all types of workers to want to adopt flexible working arrangements. For example, flexible working arrangements allow employees to balance family, carer and other responsibilities and interests alongside their work commitments and career goals.
Flexible working arrangements may include flexible working hours, part-time work, home based work and job sharing. Among the more recent models, unlimited holidays, and employees determining when they perform the work (work flexibility) are some more recent innovations in this area. Many employees report being more productive and engaged in their work when they have the ability to balance the competing demands of work with other aspects of their private lives. However, on the other hand, many employers question how far their obligation extends in relation to flexible working arrangements, and in what circumstances they may refuse a request when the operational demands of the business simply do not permit the employer to agree to such a request.
In this article, we consider the obligations of employers in relation to flexible working arrangements and when an employer may have grounds to refuse such a request. We also consider the recent decision of the Fair Work Commission in relation to flexible working arrangements as part of the 4-yearly review of Modern Awards.
The Law
Section 65 of the Fair Work Act 2009 (Cth) (“FWA”) provides that an employee who has been employed with the same employer on a continuous basis for at least 12 months is eligible to make a request for flexible working arrangements in the following circumstances:
- The employee is the parent, or has responsibility of the care, of a child who is of school age or younger;
- The employee is a carer (within the meaning of the Carer Recognition Act 2010);
- The employee has a disability;
- The employee is 55 or older;
- The employee is experiencing family or domestic violence from a member of the employee’s family; or
- The employee provides care or support to a member of the employee’s immediate family, or a member of the employee’s household, who requires care or support because of family or domestic violence.
Notably, long term casual employees who have been working for the same employer and who have a reasonable expectation of continuing employment on a regular and systematic basis, may also make a request for flexible working arrangements.
If an employee is eligible to request flexible working arrangements, they are required under the FWA to make any such request in writing and to set out the details and reasons for the changes requested. An employer in receipt of a request for flexible working arrangements must provide a written response to the employee within 21 days, stating whether the request is approved or refused. In accordance with section 65(5) of the FWA, an employer may refuse a request only on “reasonable business grounds”.
Section 65(5A) of the FWA provides examples of what “reasonable business grounds” may include for the purposes of refusing a request. These include where:
- The new working arrangements requested by the employee would be too costly for the employer;
- 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 by the employee;
- The new working arrangements requested by the employee would likely result in a significant loss in efficiency or productivity; or
- The new working arrangements requested by the employee would be likely to have a significant negative impact on customer service.
Importantly, there is no general internal enforcement or appeal mechanism for employees to challenge a refusal of a request for flexible working arrangements. Section 44 of the FWA specifies that no civil remedy is available where the employer’s refusal is based on reasonable business grounds. However, employees who seek to challenge the decision of their employer, can apply to the Fair Work Commission to deal with a dispute in circumstances where:
- the employer and the employee have agreed in a contract of employment, enterprise agreement or other written agreement for the Commission to deal with a dispute in relation to their employment; or
- the terms of an applicable enterprise agreement have the same (or substantially the same) effect as section 65(5) of the FWA in relation to the operation of flexible working arrangements.
Whilst there may be limited circumstances in which an employee can challenge their employer’s decision to refuse a request for flexible working arrangements, by seeking redress from the Fair Work Commission, the employee may be able to commence other proceedings including:
- a discrimination claim in either the State or Federal anti-discrimination jurisdiction; or
- a claim for breach of the General Protection provisions of the FWA.
Review of the Flexible Working Arrangements
Relevantly, as part of the Fair Work Commission’s 4 yearly review of Modern Awards the Australian Council of Trade Unions (“ACTU”) made an application to amend the Modern Awards to provide greater entitlements to employees in relation to flexible working arrangements.
The ACTU’s claim included a proposed clause to be inserted into Modern Awards which would include a right for parents and carers to access “family-friendly working hours” upon giving an employer reasonable notice. This proposal also sought the right for parents/carers to revert to their previous working hours when their child reached school age (or at a later time as agreed) or after two years on family friendly hours.
The ACTU’s proposed family-friendly working hours arrangement would enable full-time employees to work part-time hours and for part-time or casual employees to reduce their hours as needed due to carer or family reasons.
In addition, the proposal put forward by the ACTU would not allow employers to refuse flexible working arrangements on reasonable business grounds or otherwise.
In reviewing the ACTU’s proposal, the Full Bench of the Fair Work Commission stated that the proposed clause would provide a new set of employee entitlements. In particular, the clause appears to permit the unilateral variation of working hours on an unlimited number of occasions which was only subject to ‘reasonable notice’. Nevertheless, the Full Bench did accept the notion that the current provision which dealt with flexible working arrangements lacked an effective enforcement or appeal mechanism. Ultimately, the Full Bench rejected the ACTU’s claim on its merits stating, “granting the union claim would amount to replacing one flawed mechanism for facilitating workplace flexibility with another flawed mechanism”.
However, the Full Bench went on to state that the rejection of the ACTU’s claim did not conclude the matter. As the claim was made in the context of the 4-yearly review of Modern Awards, the review is conducted on the Fair Work Commission’s own motion and was not dependent on an interested party. In this regard, the Full Bench recognised the general benefit to the Australian economy and labour force to support and enable parents and carers to increase their employment participation. As such, the Full Bench expressed a “provisional view” that the Modern Award minimum safety net should be varied to incorporate a model term that has broader application for parents and carers than the current section 65 of the FWA ‘requests for flexible working arrangements’ provision, and more prescriptive requirements for employers that refuse requests.
In the decision, the Full Bench outlined how the provisional model term may supplement the National Employment Standards. These include:
- The group of employees eligible to request a change in working arrangements relating to parental or caring responsibilities, will be expanded to include ongoing and casual employees with at least six months’ service but less than 12 months’ service.
- Before refusing an employee’s request, the employer will be required to seek to confer with the employee and genuinely try to reach agreement on a change in working arrangements that will reasonably accommodate the employee’s circumstances.
- If the employer refuses the request, the employer’s written response to the request will be required to include a more comprehensive explanation of the reasons for the refusal. The written response will also be required to include the details of any change in working arrangements that was agreed when the employer and employee conferred, or, if no change was agreed, the details of any changes in working arrangements that the employer can offer to the employee.
The Full Bench has opened this matter to the general public for comment and interested parties have been invited to make submissions on this subject if they wish. Should any of our readers or clients be interested in making a submission regarding this matter, please do not hesitate to contact us.
Lessons for Employers
Given the potential changes to flexible working arrangements, employers should consider how they intend to manage their workforce, in particular for working parents and casual employees. Employers wanting to differentiate themselves should consider how they may provide a better work life balance culture and how they can support flexible working arrangements.
In addition, it is important for employers to follow a fair and valid process when dealing with requests for flexible working arrangements. If the employer has chosen to refuse such a request, it is essential employers have a valid and reasonable basis on which to do so. It is also imperative that employers keep appropriate documentation of the decision-making process, particularly where a request has been declined. Employers should only consider refusing such a request where they have genuine and legitimate operational reasons for doing so.
In responding to an employee’s request, employers must also ensure they comply with the formal procedural requirements set out in section 65 of the FWA, any applicable enterprise agreement and any workplace policy which applies to the business. This is especially important otherwise employers run the risk of an employee claiming that the refusal of a request for flexible working arrangements was in some way connected to the exercise of a workplace right, that is, the right to make the request in the first place (or other exercise by the employee of a workplace right), or that the employer’s decision amounts to a breach of anti-discrimination legislation. In order to defeat such claims, an employer would be greatly assisted if it could rely on clear and carefully written records setting out the decision-making process undertaken in responding to the employee’s request for flexible working arrangements.
Although only a limited class of employee now has a limited right to request flexible working arrangements, many progressive employers are recognising the enormous motivational impact granting this right more broadly may have on their workforce. To that end, numerous employers are looking at how they can provide their employees with greater flexibility and work life balance.
We regularly advise employers on workplace flexibility matters including dealing with requests for flexible working arrangements. If you wish to discuss any aspect of this article or require specialist advice or assistance in relation to an employment law issue, please do not hesitate to contact us.
This alert is not intended to constitute, and should not be treated as, legal advice.