Will flexibility and WFH die out in 2024?

Following a recent Fair Work Commission decision ruling in favour of an employer declining a request to work from home full-time, employment lawyers and legal recruiters have discussed the future of flexibility in law – and whether employers will be able to mandate full-time onsite work moving forward.

The Fair Work Commission (FWC) recently ruled against an Adelaide man who wanted to work from home full-time, siding with his employer, Maxxia. This comes after a number of banks and big corporations ordered their employees back into the office over the course of this year – including Commonwealth Bank, NAB, and IBM.

However, in late 2022, legal recruiters told Lawyers Weekly that firms not offering flexibility would become “second- and third-tier choices” for candidates – particularly in a tight legal market with mid-level lawyers and senior associates in high demand. But as the pandemic is left further behind, will working from home become a distant memory?

The case and potential precedents

In the recent case, Fair Work commissioner Christopher Platt upheld the employer’s decision to refuse an employee’s application to work exclusively from home, ruling against the employee, Charles Gregory, who applied for flexible working on the grounds of having to care for his child every second week and that he suffered from inflammatory bowel disease.

For most of Mr Gregory’s contract of employment at Maxxia, he worked from home due to COVID-19. But now, according to commissioner Platt’s judgement, Maxxia is now “within its rights to require its employees to return to the office” for at least 40 per cent of their working hours.

Maxxia said it attempted to make accommodations for Mr Gregory, including moving his desk closer to the bathroom and allowing him to work from home on the days he had custody of his child. However, the company denied his request to work from home full-time and said his daily productivity was 35 per cent below what it should be and that Mr Gregory was stepping into a different role for which he required additional support and a new skill set.

As such, commissioner Platt ruled that Maxxia’s reasons for refusing Mr Gregory’s request to work 100 per cent from home were “based on reasonable business grounds” pursuant to the Fair Work Act 2009.

Calvados + Woolf principal Luke Giribon told Lawyers Weekly this case sets some interesting precedents for employers, including that face-to-face presence allows for observation, interaction, and coaching and that, in this case, Mr Gregory’s knowledge and experience would be more easily accessible by less-experienced team members when working from the office.

“These considerations by the FWC appear to transcend the mere arguments as to the meaning of disability and/or inconvenience but go to the essence of productivity and the desirability to have employees attend and participate in the work and office environment,” Mr Giribon said.

“In this particular case, the employer had followed a rigorous and fair process in assessing and considering the applicant’s request, and it decided that a full-time WFH regime was unacceptable for the applicant and undesirable on business grounds for the rest of the workplace. Ultimately, the FWC required the applicant to return to work at the work premises in accordance with their employment contract.

“In terms of client advice, practitioners would necessarily need to advise their clients to formulate detailed and persuasive arguments to evidence the requirement of an employee to attend the office in accordance with their employment agreement if it so stated, and these reasons would need to cover both the individual’s personal circumstances and the overall workplace’s dynamics and business productivity grounds.”

However, it would be “unwise” for employers to assume this decision means they can compel their staff to return to the office with ease, Wallmans Lawyers partner Michael Kay warned.

“Employees can (and no doubt will) continue to request flexible working, and each request must be considered on a case-by-case basis. Employment law is rarely black and white. It is couched in concepts of reasonableness to ensure that the circumstances (or ‘business grounds’) at a particular workplace must be considered. Working from home is no different.

“The law in this area is not limited to the flexible working provisions in the Fair Work Act 2009 (Cth). Employers must also consider their obligations as a PCBU under WHS law to provide a safe workplace (noting the recent increase in regulation around psychosocial safety), and if an illness or injury is relevant, an employer also has obligations to consider reasonable adjustments under anti-discrimination laws. Requirements around ‘significant change’ consultation, found in modern awards and enterprise agreements, are a further layer of regulation that must be considered,” he explained.

“With the myriad of legal and factual matters requiring consideration, employers must consider specialist legal advice before mandating a return to the office. For example, the Maxxia decision may have been decided differently if the employee was required to return to the office full-time (rather than two days a week) or if the employee was working productively at home and had sufficient psychosocial and peer support by way of electronic means. Although some are declaring Maxxia a ‘win for employers’, it must be kept in mind that this employee continues to have a flexible hybrid working arrangement.”

Cases like these will also become increasingly common while this emerging area of employment law is clarified.

In fact, Squire Patton Boggs partner Kim Hodge said the firm warned clients back in June that they needed to take action regarding the legislative changes in relation to flexible working (including WFH) arrangements.

“Anecdotally, most employers are keen to have everyone back in the office or workplace. However, we are not in an environment where employers can apply blanket rules to all employees. In short, we don’t think employers should get too excited by the decision. Every application involving a flexible work arrangement needs to be assessed on the individual circumstances of both the employee and employer,” he said.

“We don’t think this decision necessarily means that the commission is more likely to find in employers’ favour. However, in terms of what employers should take away from the case, it is important to note that a blanket ‘no’ to a request will not be sufficient – employers will need to demonstrate that there were sound business reasons for refusing a flexible work request, including arrangements for working from home.

“Employers will also need to show they genuinely tried to engage with the employee regarding the request and considered potential alternatives and compromises. Overall, this case shows the commission will use its new powers to mediate and arbitrate flexible work disputes, judging each case on its own merits.”

Is WFH dead?

In May last year, UK firm Stephenson Harwood told its staff they could work from home permanently – provided they take a 20 per cent pay cut.

Subsequently – and post-pandemic – office mandates have now been seen across a number of large Australian organisations, and, as noted in a recent HR Leader article, nearly two-thirds of CEOs globally believe hybrid working will be a thing of the past by 2050.

“Blanket” expectations and acceptance from employees and employers, respectively, regarding WFH regimes are also likely to die out moving forward, added Mr Giribon, who noted that “employers are now far more circumspect about allowing employees to WFH without conditions or very compelling reasons”.

“Every day, there are news articles about employers requesting the return of their staff to their offices, either full-time or for a substantial portion of the working week. These include banks, IT companies, logistics companies and the public service. Some companies have decided to tie attendance to the office with both the prospect of future promotions or even the recalibration of workers’ pay packets,” he said.

“It is highly likely that post-pandemic, employers will ‘tighten’ employment agreements and clarify and detail the circumstances under which WFH is allowed or even acceptable and undoubtedly, the FWC’s decisions and consideration will find themselves repeated in the various employment contract clauses.”

WFH requirements could also potentially have an “undesirable” impact, from both a “societal and business perspective”, on retailers, commercial landlords and public transport infrastructure, as well as workplaces.

“In the context of workplaces, it is undesirable and unfair for a business to have some workers work from home and some workers who, because of their role, must attend the office or factory, are being precluded from even being considered for a WFH arrangement – this will cause disharmony and discord in the workplace,” Mr Giribon opined.

“From an employee’s perspective, it appears unhealthy and counterintuitive to work/life balance to spend essentially 24 hours per day at home. This may well lead to social and workplace isolation, real or perceived missed career opportunities and also the realisation that if a task or a job can be successfully carried out remotely, then it may well be carried out remotely at a fraction of an Australian salary by outsourcing it. Already, this very scenario is being actively promoted by foreign providers who are targeting organisations with high WFH workforces.”

However, Lawyers Weekly has also been told that rigid office mandates would be “unlikely to work” within law firms, and flexibility still remains important for those in the legal profession, particularly women (who are more likely to face the “motherhood penalty” and be disproportionately impacted by inflation) and working parents.

Therefore, the FWC decision is unlikely to have “much impact” on firms that are pushing for more office time, according to Major, Lindsey & Africa Sydney managing director Ricardo Paredes.

“The vast majority of firms continue to push for a minimum of three days in the office per week, with some firms pushing harder for full-time return to the office than others,” he said.

“In regards to the future of WFH policies, I think each firm out there will make their own call on what works best for them. Levels of productivity, year-on-year revenue growth and firm profitability levels will impact these policies for each firm.”

Most law firms, added Naiman Clarke managing director Elvira Naiman, have employment contracts stipulating two days working from home, with attendance on the other days “reasonably necessary to perform the job”.

“The ‘reasonably necessary’ element might be different depending on the practice group, the way that group is made up and whether the person was junior or senior. In my experience, a lot of firms give senior lawyers a longer leash as it were and are more or less happy for them to work ‘productively’ from home,” she said.

“We are finding more and more, especially boutique firms, that are back to five days in the office. The WFH arrangements make things very clunky, and they find it really affects productivity and culture – so it’s interesting that was what the decision noted. I would expect many WFH arrangements to be wound back at least to some degree in the legal profession.”

Impacts on work/life balance and future implications

Despite WFH seemingly on the way out, flexibility has been shown to assist with burnout and work/life balance. These issues – along with poor mental health – have been revealed to be all too common in the legal profession, with lawyers working upwards of 50 hours a week and the vast majority being “very exhausted”.

However, work/life balance can be a “nebulous and subjective concept”, Mr Giribon argued.

“My personal opinion is that WFH on a full-time basis, or even beyond two days per week, does not constitute work/life balance. Attending a workplace, interacting with colleagues and physically participating in workplace activities is and has always been an essential part of work/life balance,” he said.

“Employers have to be careful not to dismiss genuine requests for WFH accommodations or to fail to diligently assess all the available considerations, but these case-by-case considerations have to be carefully balanced with the workplace and employer productivity and business requirements.”

This may, in particular, apply more to junior lawyers -– multiple partners have previously expressed concerns regarding missed mentoring and learning opportunities in the face of flexible working, something which Ms Naiman confirmed.

“A well-regarded managing partner I recently spoke with said he trusted his senior lawyer to ‘get the job done’ and that there are very rarely ‘productivity lags’ when these senior lawyers work from home. Comparing this to junior lawyers, he noted that ‘their productivity was very hit and miss on the work-from-home days’ and that those still requiring a lot of direction found it hard to get the vicarious learning that is so important when junior lawyers can see and hear senior lawyers at work,” she added.

“I suspect over the next couple of years what is ‘reasonably necessary’ to do the job will expand to what would be viewed as ‘reasonable business grounds’ as noted in the decision.”

The Australian Public Service is also currently in enterprise bargaining negotiations with employees – and Mr Hodge said that part of the employee claim involves seeking an uncapped number of days that employees can request to work from home.

“Obviously, this will be dependent, to a large degree, on the inherent requirements of the role and the requirements of the applicable department. However, it demonstrates where things may go with workplace flexibility, if the parties are willing to negotiate,” he said.

“The circumstances in which employees can request a change in working arrangements (aside from pregnancy and dealing with family and domestic violence) have largely not changed under the National Employment Standards (NES). This is the statutory minimum, and it is a fairly limited list of circumstances. For example, there is no inherent right to request flexible working arrangements in order to achieve a ‘better work/life balance’. Any right to flexibility in excess of the NES must be by either mutual agreement, contractual negotiations or via a term of an industrial instrument such as an award or enterprise agreement.”

In light of the recent FWC decision, however, Mr Hodge said that the onus will, moving forward, be on employers to ensure they are across the requirements of every role in their organisation should they want to mandate onsite work.

“Very importantly, we think it is critical that employers can demonstrate they have a detailed knowledge of their business and the inherent requirements of each and every role within their organisation. Without this, the employer may find the commission decides differently to the conclusions reached in this decision.

“The legal profession is fortunate that their ‘tools of trade’ are largely portable, and many functions can be performed from home,” he added.

“However, there are still requirements and occasions when employees will need to meet, discuss, debate, review and collaborate – many of which are best performed in face-to-face group or team settings. Law firms, like any other employer, will need to have sound business reasons for refusing flexible work requests (where the right is available) and show they genuinely tried to engage with the employee and look at potential alternatives.”

This article was originally featured in HR Leader’s sister brand, Lawyers Weekly.