As part of its four-yearly review of modern awards, a Full Bench of the Fair Work Commission (FWC) has handed down its provisional view1 that all modern awards should be varied to incorporate a ‘model term’ expanding the rights of award-covered employees when requesting flexible working arrangements. In doing so, the FWC has recognised that “about a quarter of workers were not happy with their working arrangements", but “do not make a request for change…for various reasons including that their work environment is openly hostile to flexibility.”

This decision marks a significant likely change to the rights of award-covered employees to request flexible working arrangements.

Existing flexible working arrangements under the Fair Work Act

Right to request

Currently, section 65 of the Fair Work Act 2009 (Cth) (FW Act) gives national system employees the right to request flexible working arrangements where:

  • they are not a casual employee and have completed at least 12 months of service; or
  • they are a long term casual employee that has a reasonable expectation of continuing employment on a regular and systematic basis.

The request itself must be made in writing and set out the details of the change sought, as well as circumstances justifying the change. To request flexible working arrangements, an employee must:

  • be a parent or carer of a school aged child or younger;
  • be a carer within the meaning of the Carer Recognition Act 2010 (Cth);
  • have a disability;
  • be 55 or older;
  • be experiencing violence from a member of the employee’s family; or
  • provide 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 the member is experience violence from the member’s family.

Employer’s response

Once an employer receives a written request for flexible working arrangements, it must give the employee a written response within 21 days. The response must state whether the request is granted, and if it is not, the reason(s) for the refusal.

The employer may only refuse the request on reasonable business grounds. These grounds include (but are not limited to) the following:

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

Challenging an employer’s response

If the employer rejects an employee’s request for flexible working arrangements, the employee can only challenge the employer’s procedural compliance with the NES – not the decision itself. This is because the FWC has no power under the FW Act to deal with a dispute about whether an employer had reasonable business grounds when rejecting an employee’s request.

What are the proposed model terms?

The model terms proposed by the FWC align with, but also expand upon, the section 65 framework outlined above.

Significantly, the model terms put in place a requirement on an employer to discuss the request with the employee and to “genuinely try to reach agreement on a change in working arrangements that will reasonably accommodate the employee’s circumstances” before responding under section 65.

In addition, the model terms put in place more onerous requirements when giving a written response if that response refuses the employee’s request. Particularly, the terms require that an employer outline, in addition to the reasonable business ground(s) for the refusal:

  • how the reasonable business ground(s) apply;
  • whether there are any changes in working arrangements that the employer can offer the employee to better accommodate the employee’s circumstances; and
  • if there are any changes in working arrangements that can be offered, what those changes are.

Further, disputes about whether the employer has discussed the request with the employee and responded to the request (as required) are to be dealt with under the consultation and dispute resolution clauses of the relevant modern award. Notably, this means that the dispute resolution procedure within an employer’s organisation cannot be used to challenge whether the grounds for any refusal are reasonable – only whether the employer has complied with its obligation to discuss the request and respond in accordance with the model terms.

When do the changes come into force?

The exact date the changes will come into force is yet to be determined. Further submissions relating to any award-specific issues will be invited in the coming weeks once draft determinations for each modern award are released. Subject to these submissions, it is the FWC’s provisional view that all modern awards should be varied to insert the model term. That view will only be displaced in respect of a modern award if it is shown that there are matters relevant to that modern award that do not necessitate the inclusion of the model terms.

Implications for employers

Employers must ensure they are across these additional obligations to ensure they remain award compliant. For this reason, as a matter of good practice, employers should consider implementing the proposed changes into their internal HR procedures once the FWC has confirmed that the model terms will be incorporated, but before the changes come into effect. Leading on from that, a question that employers will need to grapple with is whether they will extend the rights in the model term to employees not covered by a modern award to ensure parity and consistency across the workforce.

In practice, a real challenge for employers will be to ensure those tasked with dealing with requests and having discussions with employees are properly equipped to handle such matters. The changes appear to be aimed at moving employers away from the mindset of “it’s too hard” or “we don’t do flexible working here”. Employers need to ensure that HR and line managers are ready to deal with requests properly and not just give lip service to them.