Flexible work arrangements in the fair work system

The extract from a recent decision of a Full Bench of the Fair Work Commission sets out the legislative context of an appeal to the Fair Work Commission against a decision of an employer to decline a request from an employer for flexible working arrangements, a right inserted into the fair work system in 2023.

 

“Legislative framework

 

[13] Division 4 of Part 2-2 of the FW Act, The National Employment Standards is concerned with ‘Requests for flexible working arrangements’. Division 4 has been substantially amended a number of times since the enactment of the FW Act in 2009, most recently by the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 (Cth) (SJBP Act).

[14] Section 65 of the FW Act in its current form sets out the circumstances in which an employee may request for a change in working arrangements. It provides:

  1. Requests for flexible working arrangements

Employee may request change in working arrangements

 

(1) If:

(a) any of the circumstances referred to in subsection (1A) apply to an employee; and

(b) the employee would like to change his or her working arrangements because of those circumstances;

then the employee may request the employer for a change in working arrangements relating to those circumstances.

Note: Examples of changes in working arrangements include changes in hours of work, changes in patterns of work and changes in location of work.

(1A) The following are the circumstances:

(aa) the employee is pregnant;

(a) the employee is the parent, or has responsibility for the care, of a child who is of school age or younger;

(b) the employee is a carer (within the meaning of the Carer Recognition Act 2010);

(c) the employee has a disability;

(d) the employee is 55 or older;

(e) the employee is experiencing family and domestic violence;

(f) the employee provides care or support to a member of the employee’s immediate family, or a member of the employee’s household, who requires care or support because the member is experiencing family and domestic violence.

(1B) To avoid doubt, and without limiting subsection (1), an employee who:

(a) is a parent, or has responsibility for the care, of a child; and

(b) is returning to work after taking leave in relation to the birth or adoption of the child;

may request to work part-time to assist the employee to care for the child.

(2) The employee is not entitled to make the request unless:

(a) for an employee other than a casual employee—the employee has completed at least 12 months of continuous service with the employer immediately before making the request; or

(b) for a casual employee—the employee:

(i) is, immediately before making the request, a regular casual employee of the employer who has been employed on that basis for a sequence of periods of employment during a period of at least 12 months; and

(ii) has a reasonable expectation of continuing employment by the employer on a regular and systematic basis.

(2A) For the purposes of applying paragraph (2)(a) in relation to an employee who has had their employment converted under Division 4A of Part 22, any period for which the employee was a regular casual employee of the employer is taken to be continuous service for the purposes of that paragraph.

Formal requirements

(3) The request must:

(a) be in writing; and

(b) set out details of the change sought and of the reasons for the change.

 

[15] In its original form upon the enactment of the FW Act in 2009, s 65(1) provided for the right to make a request for flexible working arrangements only where the employee was a parent of or had the responsibility for the care of a child who was under school age or was under 18 and had a disability. Sections 65(1), (1A) and (1B) were introduced by the Fair Work Amendment Act 2013 (Cth) in substantially their current form (except for s 65(1A)(aa))[4]. The Statement of Compatibility with Human Rights in the Explanatory Memorandum for the Fair Work Amendment Bill 2013 (2013 EM) stated that:

Part 3 of Schedule 1 to the Bill extends the right to request a change in working arrangements to a broader category of persons, including to employees with caring responsibilities, parents with children that are school age or younger, employees with a disability, those who are mature age, as well as to employees who are experiencing violence from a family member or are providing care and support to a member of their immediate family or a member of their household as a result of family violence.

. . .

Extending the right to request a change in working conditions to this additional range of employees recognises the interests of these particular groups and further enhances the assistance provided to them.

These amendments reinforce existing protections against discrimination contained in the FW Act.

 

[16] In relation to s 65(1), the 2013 EM said (at [27]-[28])

New subsection 65(1) provides that if an employee would like to change his or her working arrangements because of any of the circumstances specified in new subsection 65(1A), then the employee is entitled to request a change in his or her working arrangements. The terms of new subsection 65(1) make clear that the reason the employee would like to change their working arrangement is because of the particular circumstances of the employee. That is, there must be a nexus between the request and the employee’s particular circumstances.

These provisions are not intended to limit the timing or nature of discussions about flexible working arrangements generally. For example, where an employee can foresee that he or she may need to assume caring responsibilities in the short to medium term, it is anticipated that the employee could commence discussions ahead of assuming those responsibilities to ‘flag’ that a request in accordance with these provisions may be coming, and to give the parties an opportunity to explore suitable alternative arrangements that accommodate the needs of both parties. Consistent with the current operation of the right to request provisions and the intent of these provisions to promote discussion between employers and employees about flexible working arrangements, there is no evidence requirement attaching to the request. It would be expected that documentation relating to the particular circumstances of an employee would be addressed in discussions between employers and employees.

(underlining added)

 

[17] Specifically in respect of the inclusion of ‘the employee has a disability’ in s 65(1A)(c), the 2013 EM stated (at [35]):

‘Disability’ in new paragraph 65(1A)(c) is not defined and has its ordinary meaning.

 

[18] Section 65A, which was added to the FW Act by the SJBP Act, concerns the obligations of an employer which arise when an employee makes a request under s 65(1). Section 65A provides:

65A Responding to requests for flexible working arrangements

Responding to the request

(1) If, under subsection 65(1), an employee requests an employer for a change in working arrangements relating to circumstances that apply to the employee, the employer must give the employee a written response to the request within 21 days.

(2) The response must:

(a) state that the employer grants the request; or

(b) if, following discussion between the employer and the employee, the employer and the employee agree to a change to the employee’s working arrangements that differs from that set out in the request—set out the agreed change; or

(c) subject to subsection (3)—state that the employer refuses the request and include the matters required by subsection (6).

(3) The employer may refuse the request only if:

(a) the employer has:

(i) discussed the request with the employee; and

(ii) genuinely tried to reach an agreement with the employee about making changes to the employee’s working arrangements to accommodate the circumstances mentioned in subsection (1); and

(b) the employer and the employee have not reached such an agreement; and

(c) the employer has had regard to the consequences of the refusal for the employee; and

(d) the refusal is on reasonable business grounds.

Note: An employer’s grounds for refusing a request may be taken to be reasonable business grounds, or not to be reasonable business grounds, in certain circumstances: see subsection 65C(5).

(4) To avoid doubt, subparagraph (3)(a)(ii) does not require the employer to agree to a change to the employee’s working arrangements if the employer would have reasonable business grounds for refusing a request for the change.

Reasonable business grounds for refusing requests

(5) Without limiting what are reasonable business grounds for the purposes of paragraph (3)(d) and subsection (4), reasonable business grounds for refusing a request include the following:

(a) that the new working arrangements requested would be too costly for the employer;

(b) that there is no capacity to change the working arrangements of other employees to accommodate the new working arrangements requested;

(c) that it would be impractical to change the working arrangements of other employees, or recruit new employees, to accommodate the new working arrangements requested;

(d) that the new working arrangements requested would be likely to result in a significant loss in efficiency or productivity;

(e) that the new working arrangements requested would be likely to have a significant negative impact on customer service.

Note: specific circumstances of the employer, including the nature and size of the enterprise carried on by the employer, are relevant to whether the employer has reasonable business grounds for refusing a request for the purposes of paragraph (3)(d) and subsection (4). For example, if the employer has only a small number of employees, there may be no capacity to change the working arrangements of other employees to accommodate the request (see paragraph (5)(b)).

Employer must explain grounds for refusal

(6) If the employer refuses the request, the written response under subsection (1) must:

(a) include details of the reasons for the refusal; and

(b) without limiting paragraph (a) of this subsection:

(i) set out the employer’s particular business grounds for refusing the request; and

(ii) explain how those grounds apply to the request; and

(c) either:

(i) set out the changes (other than the requested change) in the employee’s working arrangements that would accommodate, to any extent, the circumstances mentioned in subsection (1) and that the employer would be willing to make; or

(ii) state that there are no such changes; and

(d) set out the effect of sections 65B and 65C.

Genuinely trying to reach an agreement

(7) This section does not affect, and is not affected by, the meaning of the expression ‘genuinely trying to reach an agreement’, or any variant of the expression, as used elsewhere in this Act.

 

[19] Sections 65B and 65C of the FW Act, also introduced by the SJBP Act, empower the Commission to deal with disputes arising from an employer’s refusal of, or failure to reply within 21 days to, an employee’s request made under s 65(1):

65B Disputes about the operation of this Division

Application of this section

(1) This section applies to a dispute between an employer and an employee about the operation of this Division if:

(a) the dispute relates to a request by the employee to the employer under subsection 65(1) for a change in working arrangements relating to circumstances that apply to the employee; and

(b) either:

(i) the employer has refused the request; or

(ii) 21 days have passed since the employee made the request, and the employer has not given the employee a written response to the request under section 65A.

Note 1: Modern awards and enterprise agreements must include a term that provides a procedure for settling disputes in relation to the National Employment Standards (see paragraph 146(b) and subsection 186(6)).

Note 2: Subsection 55(4) permits inclusion of terms that are ancillary or incidental to, or that supplement, the National Employment Standards. However, a term of a modern award or an enterprise agreement has no effect to the extent it contravenes section 55 (see section 56).

Resolving disputes

(2) In the first instance, the parties to the dispute must attempt to resolve the dispute at the workplace level, by discussions between the parties.

FWC may deal with disputes

(3) If discussions at the workplace level do not resolve the dispute, a party to the dispute may refer the dispute to the FWC.

(4) If a dispute is referred under subsection (3):

(a) the FWC must first deal with the dispute by means other than arbitration, unless there are exceptional circumstances; and

(b) the FWC may deal with the dispute by arbitration in accordance with section 65C.

Note: For the purposes of paragraph (a), the FWC may deal with the dispute as it considers appropriate. The FWC commonly deals with disputes by conciliation. The FWC may also deal with the dispute by mediation, making a recommendation or expressing an opinion (see subsection 595(2)).

Representatives

(5) The employer or employee may appoint a person or industrial association to provide the employer or employee (as the case may be) with support or representation for the purposes of:

(a) resolving the dispute; or

(b) the FWC dealing with the dispute.

Note: A person may be represented by a lawyer or paid agent in a matter before the FWC only with the permission of the FWC (see section 596).

65C Arbitration

(1) For the purposes of paragraph 65B(4)(b), the FWC may deal with the dispute by arbitration by making any of the following orders:

(a) if the employer has not given the employee a written response to the request under section 65A—an order that the employer be taken to have refused the request;

(b) if the employer refused the request:

(i) an order that it would be appropriate for the grounds on which the employer refused the request to be taken to have been reasonable business grounds; or

(ii) an order that it would be appropriate for the grounds on which the employer refused the request to be taken not to have been reasonable business grounds;

(e) if the FWC is satisfied that the employer has not responded, or has not responded adequately, to the employee’s request under section 65A—an order that the employer take such further steps as the FWC considers appropriate, having regard to the matters in section 65A;

(f) subject to subsection (3) of this section:

(i) an order that the employer grant the request; or

(ii) an order that the employer make specified changes (other than the requested changes) in the employee’s working arrangements to accommodate, to any extent, the circumstances mentioned in paragraph 65B(1)(a).

Note: An order by the FWC under paragraph (e) could, for example, require the employer to give a response, or further response, to the employee’s request, and could set out matters that must be included in the response or further response.

(2) In making an order under subsection (1), the FWC must take into account fairness between the employer and the employee.

(2A) The FWC must not make an order under paragraph (1)(e) or (f) that would be inconsistent with:

(a) a provision of this Act; or

(b) a term of a fair work instrument (other than an order made under that paragraph) that, immediately before the order is made, applies to the employer and employee.

(3) The FWC may make an order under paragraph (1)(f) only if the FWC is satisfied that there is no reasonable prospect of the dispute being resolved without the making of such an order.

(4) If the FWC makes an order under paragraph (1)(a), the employer is taken to have refused the request.

(5) If the FWC makes an order under paragraph (1)(b), the grounds on which the employer refuses the request are taken:

(a) for an order made under subparagraph (1)(b)(i)—to be reasonable business grounds; or

(b) for an order made under subparagraph (1)(b)(ii)—not to be reasonable business grounds.

Contravening an order under subsection (1)

(6) A person must not contravene a term of an order made under subsection (1).

Note: This subsection is a civil remedy provision (see Part 4-1).

 

[20] Schedule 1 to the FW Act sets out transitional provisions applying to amendments to the FW Act. Item 64 of Schedule 1 provides that the amendments in, relevantly, Division 3 of Part 11 of Schedule 1 to the SJBP Act (which added ss 65A, 65B and 65C to the FW Act) ‘apply in relation to a request made under subsection 65(1) of [the FW Act] on or after the commencement of that Part’. Item 17 of s 2(1) of the SJBP Act provides that the Part 11 amendments commenced on 6 June 2023.

Jurisdictional prerequisites for arbitration

 

[21] Section 65B(1) relevantly provides that s 65B applies to a dispute between an employer and an employee if, first, the dispute relates to ‘a request by the employee to the employer under subsection 65(1) for a change in working arrangements relating to circumstances that apply to the employee’ and, second, the employer has either refused the request or has not given the employee a written response under s 65A within 21 days. Thus, to the extent that s 65B(3) permits a dispute to be referred to the Commission and s 65B(4) empowers the Commission to deal with the dispute (including, if necessary, by arbitration under s 65C), the dispute must be of the type referred to in s 65B(1). Absent the existence of such a dispute, the Commission lacks jurisdiction under s 65B(4) and cannot engage in arbitration under ss 65B(4)(b) and 65C. Because, as explained, the first predicate for such a dispute is that it must relate to a request by the employee under s 65A(1), then the Commission’s jurisdiction is dependent on a request of that nature having been made.

[22] There are five discernible requirements in s 65 that must be satisfied in order for a request under s 65(1) to have been validly made. The first two requirements are contained in s 65(1) itself. First, s 65(1)(a) requires that ‘any’ — that is, at least one — of the circumstances in s 65(1A) must apply to the employee. The use of ‘apply’ in the present tense connotes that the relevant circumstance must, as a matter of fact, exist (rather than being anticipated or the subject of anticipatory discussions) in respect of the employee at the time the request is made. It follows that, where the Commission is asked to arbitrate pursuant to s 65B(4)(b), it must be able to be satisfied that one of the circumstances in s 65(1A) applied to the relevant employee at the time of the employee’s request for flexible working arrangements.

[23] Second, the employee’s desire for changed working arrangements must be ‘because of’ the relevant circumstance in s 65(1A) (s 65(1)(b)), and the request for a change in working arrangements must ‘relat[e] to’ the relevant circumstance. This embodies the requirement for a ‘nexus’ between the request and the relevant circumstance referred to in the 2013 EM.

[24] The third requirement is that contained in s 65(2), namely that the employee has a minimum period of service which, in the case of a non-casual employee, is 12 months of continuous service immediately before making the request.

[25] The final two requirements are the ‘formal requirements’ in s 65(3). The fourth requirement, in s 65(3)(a), is that the request must be in writing. The fifth requirement, in s 65(3)(b) is that the request must set out the details of the change sought and the reasons for the change. The requirement to set out the ‘reasons for the change’ is to be understood as connected with the requirements for a valid request in s 65(1), such that the required reasons would need to identify the relevant circumstance in s 65(1A) and explain how the proposed changed working arrangements relates to that circumstance.

[26] Ms Quirke submitted, in respect of s 65(3), that the ‘in writing’ requirement in paragraph (a) only applies to the requested change in working arrangements and that the matters referred to in paragraph (b) do not have to be set out in writing. We reject this submission. The reference to ‘[t]he request’ in the chapeau to s 65(3) may only reasonably be read as referable to a single and entire solicitation process of the type described in s 65(1), such that the requirement for the request to be in writing is to be understood as meaning that it must be wholly in writing. Section 65(3)(b) requires that the prescribed content be ‘set out’ — a phrase which is not apt to describe something other than in writing. The prescribed content includes ‘the details of the change sought’ and, if Ms Quirke’s submission that this does not need to be in writing were to be accepted, the requirement that the request be in writing would be left with little or no work to do. Finally, the use of the conjunction ‘and’ to connect paragraphs (a) and (b) of s 65(3) indicates that the requirements in the two paragraphs are intended to operate cumulatively and are not exclusive of each other.

[27] Ms Quirke submitted, in support of her construction of s 65(3), that a requirement that the request be wholly in writing might defeat the purpose of Division 4 of Part 2-2 in respect of employees with no knowledge of the FW Act or with other limitations on their capacity to make a written request setting out the matters in s 65(3)(b). However, such a consideration cannot overcome the plain language of the provision. We also note that there are sound policy considerations in favour of the construction that we prefer. In particular, because the making of a request under s 65(1) enlivens the obligation of the employer under s 65A(1) to respond in writing within 21 days, a requirement that the request be wholly in writing and set out the matters in s 65(3)(b) may be understood as allowing the employer to reasonably comprehend that a formal s 65(1) request has been made. As earlier set out, the 2013 EM distinguished between a s 65(1) request and other, less formal discussions about flexible working arrangements generally which may be made outside the statutory framework of Division 4 of Part 2-2.

[28] In order for the Commission to have jurisdiction under s 65B(4) to deal with a dispute about a request under s 65(1), there is also a further requirement (sixth requirement) applying to the request arising from item 64 of Schedule 1 to the FW Act, namely that the request has to have been made on or after 6 June 2023.”

 

Jordan Quirke v BSR Australia Limited [ 2023] FWCFB 2009