The Fair Work Commission (“FWC”) has overturned an employer’s refusal of a flexible working arrangement request, stating that “the importance of the written response” required by the Fair Work Act “cannot be understated”.

In this employment update we discuss what flexible working arrangements are, who is entitled to request them, and what went wrong for the employer in Naden v Catholic Schools Broken Bay (“Naden”). ¹

Naden in a nutshell

The employee in this matter worked in an executive role prior to taking parental leave. When she requested to return to her employment on a part time basis, the employer (a school) refused to allow her to return to the executive role on a part-time basis but indicated that it would allow her to return (part time) as a teacher only.

This refusal was upheld on the first instance but overturned by the FWC on appeal. Read on to understand how and why this occurred, and what it means for your business.

What are flexible working arrangements / requests?

Part 2-2 of the Fair Work Act 2009 contains the National Employment Standards (“NES”), which set out minimum employment standards in Australia. Division 4 of the NES allows some employees to request changes to their working arrangements to accommodate certain personal circumstances.

The Act does not provide an exhaustive list of what changes can be requested. However, it does note that “examples of changes in working arrangements include changes in hours of work, changes in patterns of work and changes in location of work“.

It also clarifies that, without limitation, an employee returning to work after taking parental leave may request to work part-time to care for the child.

Who is entitled to make flexible working arrangement requests?

Only certain employees can make a flexible working arrangement request. For an  employee to make a request they must:

• be pregnant;
• have the care of a child who is school-aged or younger (i.e. a parent);
• be a carer within the meaning of the Carer Recognition Act 2010;
• have a disability;
• be 55 years old, or older;
• be experiencing family and domestic violence (“FDV”); or
• be providing care or support to a member of their immediate family or household due to FDV.

Any request must be based on and relate to the circumstances on which the employee is entitled to make the request. For example, a person with a school-aged child might wish to make a request for adjustments to their working arrangements that allow them to collect their child from school.

An employee cannot make a request unless:

• for a full time / part time employee, they have at least 12 months of continuous service immediately before making the request; or
• for a casual employee, they have been a regular casual employee for at least 12 months and have a reasonable expectation of continuing work on a regular and systematic basis.

If an employee was previously employed as a casual employee, but had their employment converted, any period in which they were a regular casual employee counts towards the 12-month service period.

This means for example that an employee who has been employed on a part time or full time basis for 9 months may still be eligible to make a request if they worked at least three months as a regular casual employee.

What should you do if you receive a request?

If you receive a request, you only have 21 days to respond in writing.

If you plan to accept the request, you should state (in writing) that you accept the request, or, if an alternative arrangement has been agreed to through consultation, set out the agreed changes.

You can only refuse the request if:

• you have discussed the request with the employee, and made a genuine effort to reach an agreement with the employee about making changes to their working arrangements to accommodate the circumstances on which the request is based; and
• you have failed to reach such an agreement; and
• you have considered the consequences of such refusal on the employee; and
• you make the refusal on ‘reasonable business grounds’.

‘Reasonable business grounds’ for refusing a request can include:

• the working arrangements requested being too costly;
• lack of capacity by your business to change the working arrangements;
• any practicality in changing other arrangements to facilitate the request; and
• negative impacts on efficiency, productivity, or customer service.

As highlighted by the decision in Naden, it is important that you follow due process as a failure to do so could make the refusal invalid, even if the refusal would otherwise be on reasonable business grounds.

What went wrong in Naden?

The Act provides that an employer may refuse a request only if all four requirements of section 65A(3) of the Fair Work Act are met.

While most of the evidence at first instance was directed towards whether reasonable business grounds existed for the refusal, the FWC highlighted the fact that if these requirements were not addressed the employer could not refuse the request. In this instance, it was found that:

• there were discussions about the request and attempts to reach an agreement (65A(3)(a);
• there was a failure to reach an agreement (65A(3)(b)); and
• the refusal was purportedly on reasonable business grounds (65A(3)(d));

however, the employer did not properly address the consequences of the refusal on the employee (65A(c)). To quote the decision “It is to be expected that any such consideration will be discussed in the consultations over a request and be included in the written reasons for refusal required by s 65A(1) to be given to the employee within 21 days.”

As the refusal provided no such reference to the consequences of the refusal on the employee, the FWC found that the employer was not entitled to refuse the request and was required to implement the flexible working arrangement.

Key take-aways

In summary, if you receive a flexible working arrangement request, you should be very careful to ensure that you:

• hold proper consultations with the employee, including making genuine efforts to reach an agreement;
• consider the impacts of a refusal on an employee, including setting out your considerations in any written refusal; and
• only refuse a request if you have reasonable business grounds to do so.

Regardless of whether you accept or refuse the request, you must provide your response within 21 days of receiving the request, advising the employee that you accept the request, accept an agreed amended version of the request, or refuse the request and set out the considerations made and reasons for reaching your decision.

If you are ever unsure about whether you are entitled to refuse a request, or whether your proposed grounds for refusal constitute reasonable business grounds, we strongly encourage you to seek appropriate legal advice on the matter. A failure to follow the proper process could, as in Naden, result in a flexible working arrangement being put into place that may not suit your business.

If you would like advice about flexible working arrangements, please reach out to our experienced employment law team.

 

¹ Elizabeth Naden v Catholic Schools Broken Bay Limited as Trustee for the Catholic Schools Broken Bay Trust (C2025/1113)