The Full Bench of the Fair Work Commission recently handed down a decision that will expand on an employer’s obligations when considering an employee’s request for ‘family friendly’ working arrangements.

On 25 September 2018, the Full Bench proposed to insert a model term into all modern awards (Flexible Work Decision)[1] that will:

  • supplement the flexible work provisions already found in s 65 of the Fair Work Act 2009 (Cth) (FW Act)
  • put additional obligations on employers in relation to how they respond to employees’ requests to work flexibly.

The response to the proposed model term has been generally positive on both sides of the fence. Nonetheless, as it is likely that the changes will take effect in the next couple of months, it is important for employers to understand the proposed changes now.

The new model term will not apply to employees covered by an existing enterprise agreement (EA), although it will need to be considered as part of EA negotiations as it will be relevant to the “better off overall test” (BOOT) going forward, in circumstances where awards containing the model term apply.[2]

We outline below the background to the Flexible Work Decision, the new obligations imposed on employers, and the steps your organisation can take now to prepare for the coming changes.

Background to the Flexible Work Decision

The Flexible Work Decision is part of a suite of decisions arising from the Commission’s four-yearly review of modern awards, and its consideration of ‘family friendly work arrangements’ in particular.

Currently under s 65 of the FW Act, certain employees[3] are eligible to request changes in their working arrangements in specific circumstances, such as if the employee is a carer, a parent of a child who is school age or younger, has a disability, or is 55 years or older. Employers must provide a written response to requests for flexible working arrangements within 21 days, stating whether the employer grants or refuses the request. Employers may refuse the request only on ‘reasonable business grounds’.

Earlier this year, the ACTU made an application for a new award right for parents and carers to:

  • access part-time work or reduced hours upon giving reasonable notice
  • revert to their previous working hours when their child reaches school age and for carers to do the same after two years on family-friendly hours.

The Full Bench rejected the ACTU’s claim, finding that such changes had ‘the potential to have a substantial adverse impact on businesses’.[4]

The Full Bench then published a provisional clause allowing certain employees to request a change in working arrangements based on their parental or caring responsibilities, and sought feedback about whether the entitlement should be extended to workers with disabilities, over 55-year-olds, and workers experiencing domestic violence. The Flexible Work Decision comes as a result of substantial feedback from employers and employee organisations.

What are the new obligations for employers responding to employee requests?

The Full Bench’s Flexible Work Decision proposes to insert a model award term that supplements the current legislation in the following ways[5]:

  • before responding to an employee’s request, an employer must discuss the request with the employee and genuinely try to reach agreement on a change in working arrangements that takes the employee’s circumstances into account
  • if an employer refuses the request, the written response must now include:
    • details of the business ground(s) for the refusal and how they apply
    • details of alternative working arrangements the employer can provide to accommodate the employee’s circumstances
  • employees can now dispute whether employers have correctly followed these processes. However, unless agreed specifically in an EA or employment contract, whether business grounds are reasonable may not be challenged[6].

The proposed model term will apply to all modern awards unless it is demonstrated to the Commission that the achievement of a modern award’s objective does not require its inclusion. It remains to be seen whether any employer or industry groups will argue that the model term should be excluded from particular modern awards.

What does this mean for employers?

While the new model term will impose extra obligations on employers managing employee requests for flexible working arrangements, there is no reason to be concerned. In most cases, employers will simply need to enhance their existing processes for managing employee requests for flexible working arrangements, and they will continue to be able to refuse requests based on (genuine) reasonable business grounds. Many employers already have practices that reflect the proposed terms, given the requirements of discrimination legislation.

The model award term will not be relevant to employees covered by an existing EA. However, it will need to be considered as part of the BOOT for future EAs.

To ensure compliance with the proposed model term going forward, your organisation may wish to consider taking the following steps now:

  • Implement a ‘flexible working arrangements’ policy that is legally compliant and tailored to your organisation’s operations.
  • Educate your staff about how to make a request for flexible working arrangements and how such a request will be handled.
  • Make sure your organisation is genuinely open-minded in its consideration of an employee’s request. This will involve discussing the request with the employee and giving genuine consideration to how the organisation might best respond.
  • If your organisation is considering refusing an employee’s request to change his or her working arrangements, your organisation must have reasonable business grounds to do so, and be able to clearly articulate those reasons.
  • Where a request is refused, then consider whether alternative arrangements could be put in place that will accommodate the employee’s circumstances.
  • Keep up to date with changes to the awards that apply to your workforce by signing up to Fair Work Commission updates.

If in doubt, consider seeking legal advice about how your organisation can best meet its obligations for managing employee requests for flexible working arrangements.