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New Right to Request flexibility in Australia: What does it mean for employers?

The (Australian) Federal Parliament recently approved the introduction of National Employment Standards which include a right for (some) employees to request a flexible work arrangement. Between now and 1 January 2010 (when the “Right to Request” commences) employers have a window of opportunity to get on top of this significant change to the way in which flexible work practices will be negotiated at the workplace. Based on similar legislation overseas (e.g. the United Kingdom) we predict an increase in requests for flexibility, not only by those directly covered by the Standard. This note discusses the terms of the Standard and how employers might ensure compliance. In essence compliance will be about employers demonstrating greater transparency, consistency and thoughtfulness in decision-making about flexible work practices.

1.1 Provision
Section 65 of the FW Act provides that an eligible employee has a Right to Request of their employer access to a flexible work arrangement. Whilst such arrangements are not defined formally in the FW Act, examples are included in the “note” to the section, namely changes in work hours, patterns of work and location.

1.2 Who is eligible?
The National Employment Standards are minimum terms and conditions that apply to all national system employees (e.g. an employee employed by a corporation or by the Federal Government).

Under section 65(1) employees who are parents of (or care for) children under-school age, or a child under 18 who has a disability, may request a “change in working arrangements”.

The provision applies to both permanent and casual employees. In particular an employee must have completed 12 months continuous service before making this request, or if the employee is employed on a “casual” basis, the employee must be a long term casual and have an expectation of continued employment.

1.3 What does the provision require?
The request: The employee must make a request in writing demonstrating: (i) the reason for the change (i.e. how the requested change will assist the employee to care for their child); and (ii) the nature of the change.

The response: The employer must respond in writing within 21 days of the request. The response must identify whether the request is granted or refused, and if refused the response must detail the reasons why. These reasons must demonstrate that the refusal was made on “reasonable business grounds”.

1.4 What are reasonable business grounds?
The Standard does not define “reasonable business grounds”, nevertheless a body of Australian case law on family/carers’ responsibilities discrimination suggests that relevant issues will include (i) the nature of the role; (ii) the impact of the request on business/team operations; and (iii) associated costs as well as the benefit to the individual and the business (e.g. turnover and productivity).

1.5 Enforcement
The FW Act provides that all national system employers must comply with the National Employment Standards, including the provision that an employer provide reasons for accepting or refusing to grant a request for flexibility. The maximum penalty for non-compliance is AUS$6,600. There is no capacity however for a review of the reasons provided by an employer to ensure that they meet the “reasonable business grounds” test (this is specifically excluded by section 44(2)). The Standard is thus designed to provide a platform for a conversation between an employee and employer, and a mechanism for transparent and consistent decision-making. Having said this, no doubt an aggrieved employee will seek to use an employer’s written response as the basis for a family/carers’ responsibilities discrimination complaint under State or Federal legislation.

1.6 What should employers do to ensure compliance?
Given the likelihood that employers will be held to account for their decisions in relation to an employee’s request for flexibility, it would be prudent for employers to educate their managers about the factors to be taken into account when determining such a request. A checklist of factors would include:

  1. Whether a work/family policy exists within the organisation
  2. Whether a similar request has been granted elsewhere in the business
  3. The nature of the role and key performance indicators
  4. Options for change (e.g. including modifications to the request)
  5. The impact of the change on the team/business unit
  6. The cost of the change vs. the cost of not making the requested change (e.g. turnover).

In the spirit of evidence-based decision-making, consideration of whether there are “reasonable business grounds” to accept/reject a request might also prompt an employer to introduce the requested change on a trial basis, i.e. to determine the practicality of the requested change. Finally, in order to ensure that the employer’s assessment is perceived as reasonable a prudent employer would engage in a consultation process with the employee which demonstrates an open-mind towards the employee’s needs and encourages mutuality. Clearly just saying “No” to a request because it has never been done before will not be sufficient to meet the spirit of the legislation.

Juliet Bourke (BA, LLB, LLM(Hons), Partner, Human Capital, Deloitte.