Are you ready for the upcoming changes to Flexible Working Arrangements?

Coming into effect Tuesday 6 June 2023 are changes to the Flexible Working Arrangements (Section 65A) of the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022. These changes provide further obligations on the employer to provide Flexible Working Arrangements to employees.

From 6 June 2023, the right to request flexible working arrangements will also apply to employees who are pregnant and employees, or immediate family members experiencing domestic violence.

Process of responding to requests:

The amendment to the bill introduces a new section 65A dedicated to the process of responding to requests for Flexible Working Arrangements. The amendment firms up on an employer’s obligation when responding to a request, including the requirements to discuss the proposed changes, genuinely trying to reach an agreement before refusing the request, and providing detailed reasons for the refusal.

The amendment continues the current obligation of employers to respond to requests within 21 days. The section now clearly outlines what must be done by the Employer within those 21 days. The Employer has 3 options when responding to a request for Flexible Working Arrangements from an employee:

1. The employer may accept the request;

2. The employer and the employee may discuss the matter, with both parties then reaching an agreement which 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.

Considerations for such requests:

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.

The process employers will need to follow before they can refuse a request from an employee around Flexible Working Arrangements is:

1. Discuss the request with the employee (recommending written notes from this discussion);

2. Make a genuine effort to find alternative arrangements to accommodate the employee’s circumstances;

3. Consider the consequence of refusal for the employee;

4. Provide a written response to the employee within 21 days of the request made, that includes:

   • An explanation of the reasonable business grounds for refusing the request and how these grounds apply to the request.

   • Other changes the employer is willing to make that would accommodate the employee’s circumstances or that says there aren’t any changes.

   • Information about referring a dispute to the Fair Work Commission.

Grounds to refuse a request for Flexible Working Arrangements:

An employer can only refuse a request for flexible working arrangements if they have:

1. discussed the request with the employee, and

2. 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:

1. No arrangements can be agreed upon;

2. The employer had regard for the consequences of a refusal; or if

3. The refusal is on reasonable business grounds.

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 on reasonable business grounds.

What are "reasonable business grounds"?

Examples of ‘reasonable business grounds’ as per the legislation are:

• the new working arrangements requested 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;

• the new working arrangements requested would be likely to result in a significant loss in efficiency or productivity;

• the new working arrangements requested would be likely to have a significant negative impact on customer service.

Communication of 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

Under the current legislation, if a request is denied, an employee has no further avenue of review of the dispute.

With the changes to the new legislation in June, the legislation will now provide an option for employees to 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/or 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.

You can view the full details of the amendment here – Fair Work Act 2009 – Sect 65

How can we help?

As specialists in human resource management and industrial relations we assist Australian businesses navigate their way through the complexities around employing people.

We deliver HR Partnering Services via an outsourced model. With a powerful combination of technology (Employment Hero) and HR/IR expertise, we deliver efficiencies, compliance, pragmatic advice, and solutions for small-medium business.

To learn more how we can assist your workplace stay up-to-date and compliant by visiting our website at: www.esshr.com.au.

This information is of general guidance only and is not legal advice. Readers are encouraged to consider this information in their own context and with independent advice.