The next tranche of legislative changes stemming from the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 are set to come into effect on 6 June 2023. These next two changes are aimed at strengthening the rights of employees to:
- request flexible working arrangements; and
- request an extension of unpaid parental leave.
Both of these entitlements are currently covered under the National Employment Standards (NES), however the Fair Work Act 2009 (Cth) (Fair Work Act) does not currently provide an avenue for employees to challenge a refusal of a request that is said to be on ‘reasonable business grounds’. This will change under the amendments, which will also place additional obligations on employers to discuss requests with employees and to suggest alternative arrangements where they cannot accommodate the employee’s full request.
Requests for flexible work arrangements
Section 65 of the Fair Work Act currently provides for eligible employees (those with at least 12 months service and with a special characteristic such as caring responsibilities, or having a disability) to make flexible working requests. If they do so, employers must follow the process set out in the Act to deal with the requests.
Flexible working requests from other employees would just need to be dealt with using the employer’s discretion and following their own internal policies.
The Secure Jobs Better Pay Bill has now amended the Fair Work Act to expand the list of eligible employees who can make requests for flexible working arrangements under the Act to include pregnant employees. The amendments have also varied the language used to describe family and domestic violence to bring the relevant section in line with section 106B(2) of the Fair Work Act.
From 6 June 2023, the steps an employer must comply with when responding to a request have also changed. Before refusing a request, employers will now be required to discuss the request with the employee and genuinely attempt to reach an agreement on the request (or an alternate arrangement that the employer would be willing to accommodate). This obligation did not exist before.
Similar to the current process, employers will then be required to provide the employee with a written response to that request within 21 days which either grants the request, sets out alternative changes agreed by the parties or refuses the request.
As is the case now, an employer may only refuse a request on ‘reasonable business grounds’. However, a new obligation is that they can only refuse a request after they have held discussions with the employee and considered the effect of refusal on the employee alongside the employer’s reasonable business grounds. The threshold of reasonable business grounds and the examples provided in the Fair Work Act remain unchanged. The non-exhaustive list of examples include:
- 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; and
- that the new working arrangements requested would be likely to have a significant negative impact on customer service.
The Fair Work Act also notes that the specific circumstances of the employer, including but not limited to the size and nature of the employer’s enterprise, are relevant to whether an employer has reasonable business grounds.
If an Employer ultimately refuses a request, the written response must:
- include details of the reasons for refusal;
- set out the employer’s reasonable business grounds for refusing the request and explain how those grounds apply to the request;
- set out any other arrangements (apart from the request change) that the employer is willing to accommodate or state there are no alternative arrangements available; and
- Set out the effect of sections 65B and 65C of the Fair Work Act (ie the right to apply to the Fair Work Commission to dispute the decision).
The obligation to set out any other arrangements (apart from the request change) that the employer is willing to accommodate, is new.
This could cover a situation where an employee has requested to work 3-days-working-from-home, but the employer can only accommodate a 2-day-working-from-home arrangement.
Sections 65B and 65C are new provisions which provide employees with a right to challenge a refused request in the Fair Work Commission (FWC) and are discussed further below.
Requests for an extension of unpaid parental leave
Employees with 12 months service are currently entitled to up to 12 months unpaid parental leave, but can request an extension for a further 12 months, which an employer can only refuse on reasonable business grounds.
The amendments to requests to extend a period of unpaid parental leave largely mirror those discussed above regarding a request for flexible working arrangement and ultimately provide guidance on how an employer is required to respond to a request.
Employers are also required to respond in writing to a request within 21 days. The response must either grant the request, set out an alternative period of extension agreed by the parties or refuse the request.
As above, a request may only be refused on ‘reasonable business grounds’ and following a discussion with the employee which considers the effect of refusal on the employe.The section dealing with reasonable business grounds now provides guidance via examples of reasonable business grounds. This list is also non-exhaustive and includes:
- that the extension of the period of unpaid parental leave requested by the employee would be too costly for the employer;
- that there is no capacity to change the working arrangements of other employees to accommodate the extension of the period of unpaid parental leave requested by the employee;
- that it would be impractical to change the working arrangements of other employees, or recruit new employees, to accommodate the extension of the period of unpaid parental leave requested by the employee;
- that the extension of the period of unpaid parental leave requested by the employee would be likely to result in a significant loss in efficiency or productivity; and
- that the extension of the period of unpaid parental leave 4 requested by the employee would be likely to have a 5 significant negative impact on customer service.
As above, if the employer ultimately refuses a request for an extension of unpaid parental leave the written response must:
- include details of the reasons for refusal;
- set out the employer’s reasonable business grounds for refusing the request and explain how those grounds apply to the request;
- set out any other extension of the period (apart from the requested extension) that the employer is willing to agree to (eg “we can accommodate you moving to working 4 days a week, but not to 3 days a week”) or state there are no extension they are willing to agree to; and
- Set out the effect of sections 76B and 76C of the Fair Work Act (ie the right to apply to the FWC to dispute the decision).
Sections 76B and 76C mirror sections 65B and 65C and provide employees with a right to challenge a refused request in the FWC and are discussed further below.
Challenging a refused request in the Fair Work Commission
Under the new legislative changes the FWC has been empowered to deal with disputes which arise from a refused request for flexible working arrangements or for an extension of a period of unpaid parental leave.
At first instance, the parties to a dispute must attempt to resolve the dispute at a workplace level before the matter is referred to the FWC. This might involve holding further discussions with the employee and discussing any alternate arrangements or periods of extension that the employer is willing to grant.
If the dispute can not be resolved at the workplace level, either party may refer the dispute to the FWC. As a first step, the FWC will attempt to resolve the dispute through conciliation or mediation unless there are exceptional circumstances.
If the dispute is not resolved by this point the FWC may then deal with the matter by arbitration. If the matter proceeds to an arbitration the FWC may order any of the following remedies, taking into account fairness between the employer and the employee:
- if no response was given by the employer – that the employer has refused the request;
- if the employer refused the request – that the reasonable business ground were or weren’t appropriate;
- if the employer has not responded or responded adequately – that the employer take further steps as the FWC considers appropriate;
- an order that the Employer make specified changes other than the requested change;
- an order that the Employer agree to an extension other than the requested extension; or
- an order that the request be granted.
These sections are civil remedy provisions which means that parties in breach of these orders may be fined.
Amendments to modern awards
Most modern awards already contain a flexible work request and dispute resolution process similar to that which is being introduced into the Fair Work Act for all employees.
This means the provisions in the award will be largely unnecessary with the potential to lead to uncertainty as to their operation. As a result the FWC has announced an intention to review these provisions from awards and just refer to the entitlement under the Fair Work Act.
What employers need to do to comply with the changes
It is important for employers to be aware of their obligations under the new provisions of the Fair Work Act which come into effect on 6 June 2023. To ensure compliance, employers should review their policies and procedures and ensure that they are up to date and reflect the new provisions.
If you require any assistance with updating your policies and procedures or require further information about the legislative changes contact us.
