Victorian WFH mandate for SMBs: ‘A fizzle rather than a bang’

With SMBs added to the Victorian government’s WFH agenda, concerns are being raised about practical hurdles and the financial drains from emptier offices.

Earlier this week (Tuesday, 3 March), Victoria added small-business employees as recipients of work-from-home (WFH) rights, with the state government introducing legislation to its Parliament in July 2026. The laws will come into effect on 1 September 2026 and 1 July 2027 for employers with 15 or fewer employees.

“This will allow small businesses an opportunity to review their scheduling and other work arrangements that could be impacted by any proposal that employees work from home,” said Katie Sweatman (pictured, left), partner at Kingston Reid.

“Given that working from home has become such an ingrained part of the flexible work toolkit in the years post-COVID, we do not, however, expect the new laws to have a significant impact, in much the same way that the right to disconnect came in with a fizzle rather than a bang.”

Sweatman said the Victorian government is still finalising development of its legislation to give effect to proposed changes to the Equal Opportunity Act, which will create an effective right to work from home, proposed to be introduced into Parliament in July.

Any disputes regarding the law will be referred to the Victorian Equal Opportunity and Human Rights Commission (VEOHRC) for conciliation, and if this fails, the Victorian Civil and Administrative Tribunal (VCAT).

Premier Jacinta Allan and Minister for Industrial Relations Jaclyn Symes said the reforms are good for families, with Symes highlighting the positive impacts on productivity and the economy.

In a statement, Victoria’s government said the law will bring clarity for dispute resolution and enforcement, a justification reminiscent of Priya’s law, which passed in November last year in the federal government.

Aon human capital client leader Alex Cass (pictured, centre) agreed, saying the reform provides certainty to employees and reinforces the need for clear role definitions, expectations, and outcomes for employers.

An unfortunate example of over-governance

Colin Biggers & Paisley partner Adam Foster (pictured, right) noted that small businesses may underutilise their office spaces, leading to a long-term drain on employers’ resources.

“From a cultural perspective, the smaller the team, the more critical interpersonal interactions and working face-to-face are for achieving business success. Business success will be disrupted,” Foster said.

The Victorian Regional Chamber Alliance (VRCA) argued that the law will remove autonomy from small businesses, preventing them from being effective.

“Victoria is already home to an extensive amount of red tape that makes doing business extremely difficult, and the proposed legislation could further hinder local enterprise,” the alliance said.

“It creates unnecessary division despite a widespread culture that allows work/life balance discussions between employers and employees.”

The alliance also stressed that the proposed legislation favours certain industries and deters many workers in construction, childcare, retail, and hospitality.

“This is an unfortunate example of over-governance that further muddles the structure of industry, micro-managing systems that are not under threat whilst ignoring deeper issues,” the alliance said.

Dealing with implementation challenges

Sweatman noted that these reforms would subject SMBs to the full force of the Equal Opportunity Act generally.

“This will foreseeably involve an assessment of the genuine operational requirements of an employee’s role, taking into account factors such as whether the role is customer-facing and what the impact on other employees may be,” Sweatman said.

Foster said that compliance and culture will be the greatest challenges for SMBs.

He stressed that small businesses must invest in the necessary tools and training to ensure a safe workplace for employees when working from home, mitigating the physical and psychological safety risks they cannot see.

“The policy highlights that flexibility can look different depending on scale, even when the intent is the same,” Cass said.

Sweatman said: “Consultation with employees who seek to work from home in reliance on new or existing laws towards reaching a mutually workable solution will accordingly be key.”

And according to Cass, “for smaller businesses, the challenge will be applying the principle in a practical way without adding unnecessary complexity or compliance burden”.

Cass noted that many roles have hybrid working arrangements, with employees viewing this working style as supporting participation and balance.

“Larger organisations are generally better placed to manage this through systems, structure, and policy. Smaller businesses often rely on more informal arrangements, which can increase the risk of inconsistency, non‑compliance, or employee grievances linked to work‑from‑home decisions,” she said.