Australia: Changes to requests for flexible working arrangements and unpaid parental leave come into effect on 6 June 2023

The Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 (Cth) (Secure Jobs, Better Pay Act) introduced several reforms regarding requests for flexible working arrangements and requests for extensions of unpaid parental leave that will come into effect from 6 June 2023.

Key takeaways

Effective 6 June 2023:

• businesses will need to comply with new procedural requirements when considering and responding to requests for flexible working arrangements and requests for extensions of unpaid parental leave;
• employees will be able to make an application to the Fair Work Commission (FWC) if their request for a flexible working arrangement or for an extension of unpaid parental leave is refused by their employer or their employer fails to respond to the request within 21 days; and
• the FWC will be empowered to resolve disputes regarding requests for flexible working arrangements and unpaid parental leave, including through arbitration.

Requests for flexible working arrangements

The Secure Jobs, Better Pay Act introduces a new dispute resolution mechanism for employees to challenge an employer's refusal of, or failure to respond to, a flexible working request, marking a significant shift from the previous provisions regarding these types of requests. Previously, decisions by employers to refuse requests on reasonable business grounds were generally not reviewable, subject to the terms of an applicable award or enterprise agreement.

Who can make a request?

Not all employees are entitled to make a request for a flexible working arrangement. Employees are only entitled to make a request if they have completed at least
12 months of continuous service with their employer and where they require flexibility because of a specified attribute, including that they:

• are a parent or has responsibility for a child who is school age or younger;
• are a carer;
• have a disability;
• are 55 years or older; or
• a member of their immediate family or household are experiencing violence from a member of their family.

From 6 June 2023:

• this list will also include employees who are pregnant; and
• there will be expanded circumstances where an employee can make a flexible working request because they or a member of their immediate family or household are experiencing family and domestic violence.

Casual employees are able to make a request if they have one of the specified attributes and they have been employed on a regular and systematic basis for at least 12 months and have a reasonable expectation of continuing employment on that basis.

New procedural requirements

Previously, employers were required to respond to requests for flexible working arrangements in writing within 21 days of the request and could only refuse a request on reasonable business grounds.

Under the reforms, requests may still only be refused on reasonable business grounds and the meaning of that phrase has not changed. Reasonable business grounds include the following:

• 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 inefficiency or productivity; and
• that the new working arrangements requested would be likely to have a significant negative impact on customer service.

From 6 June 2023, employers must still respond to the request in writing within 21 days. However, within that 21-day period, the employer must also discuss the request with the employee and genuinely try to reach an agreement with the employee about making agreed changes to the employee's working arrangements, which may be different to the changes requested where a workable compromise may be available.

If, following these discussions, the employer and employee have not reached an agreement and the employer wishes to refuse the request, the employer must have regard to the consequences of the refusal on the employee and, still within the 21-day period, provide the employee with a response in writing that:

• includes details of the reasons for the refusal including the particular business grounds relied on for refusing the request and how those grounds apply to the request;
• sets out the changes to the employee's working arrangements that they employer would be able to accommodate or be willing to make or states that there are no such changes; and
• provides the employee with details of the dispute resolution options available to them in the FWC in relation to the refusal.

Applications to the FWC

From 6 June 2023, employees will be able to apply to the FWC in circumstances where:

• their request for flexible working arrangements is refused;
• their employer has not provided a written response to their flexible working request within 21 days; or
• the parties have been unable to resolve a dispute regarding a flexible working request at a workplace level.

The FWC will be required to resolve a dispute about a request for a flexible working arrangement through a means other than arbitration (usually conciliation or mediation) in the first instance, unless exceptional circumstances apply.

If exceptional circumstances apply or the dispute does not resolve through conciliation or mediation, the FWC will be empowered to arbitrate the dispute and may make orders including orders that the employer grants the request or makes other specified changes to the employee's working arrangements.

Failure to comply with an order of the FWC in relation to a flexible working arrangement is a civil remedy provision, and can result in maximum penalties of $16,500 per contravention for an individual and $82,500 per contravention for companies.

Requests for extension of unpaid parental leave

The Secure Jobs, Better Pay Act introduces similar changes in relation to requests for an extension of unpaid parental leave.

Eligible employees are entitled to take up to 12 months' unpaid parental leave and can also request an extension of unpaid parental for a period of up to another 12 months (24 months total). Like with flexible working requests, previously, employers were required to respond to requests for an extension of unpaid parental leave within 21 days, however, an employer's decision to refuse a request was generally not reviewable.

New procedural requirements

Under the reforms, an employer can still only refuse an employee's request to extend their unpaid parental leave on reasonable business grounds and employers are required to respond to requests within 21 days. However, in those 21 days, employers will be required to discuss the request with the employee and genuinely try to reach an agreement about the extension of unpaid parental leave.

If following their discussions, the employer and employee have not reached an agreement and the employer wishes to refuse the request, the employer must have regard to the consequences of the refusal on the employee and, still within the 21-day period, provide the employee with a response in writing that:

• includes details of the reasons for the refusal including the particular business grounds relied on for refusing the request and how those grounds apply to the request;
• sets out what extension period the employer would be willing to agree to or states that there is no extension period the employer would be willing to agree to; and
• provides the employee with details of the dispute resolution options available to them in the FWC in relation to the refusal.

Applications to the FWC

From 6 June 2023, employees will be able to apply to the FWC in circumstances where:

• their request for an extension of unpaid parental leave has been refused;
• their employer has not provided a written response to their request for an extension of unpaid parental leave within 21 days; or
• the parties have been unable to resolve a dispute regarding a request to extend unpaid parental leave at a workplace level.

As with requests for flexible working arrangements, the FWC will be required to resolve a dispute about a request to extend unpaid parental leave through a means other than arbitration (usually conciliation or mediation) in the first instance, unless exceptional circumstances apply.

If exceptional circumstances apply or the dispute does not resolve through conciliation or mediation, the FWC will be empowered to arbitrate the dispute and may make orders including orders that the employer grants the request or agrees to an extension of unpaid parental leave for up to 12 months.

Failure to comply with an order of the FWC in relation to a flexible working arrangement is a civil remedy provision, and can result in maximum penalties of $16,500 per contravention for an individual and $82,500 per contravention for companies.

What steps do employers need to take?

Some measures that will assist employers to prepare for the changes on 6 June 2023 include:

• updating any internal processes for responding to requests for flexible working arrangements and extensions of unpaid parental leave;
• providing appropriate training to managers who will be considering and responding to requests;
• keeping contemporaneous records of the business' consideration of requests, including discussions with the employee and the 'reasonable business grounds' behind the refusal of any request; and
• ensuring the business acts on requests promptly, as failure to comply with the new request process within 21 days will give the employee an automatic right to make an application to the FWC.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.