Fair Work Commission overrules employer rejection of flexible working arrangement

In a controversial decision, the Full Bench of the Fair Work Commission (FWC) has overruled an employer decision to reject an employee request for a flexible working arrangement and ordered that the employer implement the employee’s request for a flexible work arrangement.

In Elizabeth Naden vs Catholic Schools Broken Bay Limited [2025] FWCFB 82 the employee had been teaching at a Catholic primary school since 2016. In 2023, the employee was promoted to an executive role as a Religious Education Coordinator (REC) role. In 2024, the employee took time off for the birth of her child and was due to return from parental leave in 2025. In preparation for her return to work, the employee requested to work part-time or 3 days per week to assist in balancing her work commitments with her parental responsibilities and to accommodate the childcare arrangements she had organised. The employer refused the request to return to work part-time unless the employer agreed to return only as a classroom teacher and did not return to her REC role until she returned to full-time work. The employee challenged the refusal. At first instance, the FWC upheld the employer’s decision. The employee appealed to the Full Bench of the FWC and was successful.

Requirements for an employer response to an employee request for a flexible work arrangement

In June 2023, the Albanese Labor Government made significant legislative changes to employee requests for flexible work arrangements, including a new right to appeal to the FWC against an employer’s refusal.

As a result of the changes, the FWC noted that an employer now had the following obligations when responding to an employee’s request for a flexible work arrangement:

1. The employer must respond to the request in writing and within 21 days.

The balance of the requirements for a refusal relate to the form, process and substance.

2. The second obligation relates to form in that the written response needs to:

• state that the employer refuses the request
• include the details of the reasons for the refusal
• set out the employer’s particular business grounds for refusing the request
• explain how those business grounds apply to the request, and

o set out the changes (other than the requested change) in the employee’s working arrangements that would accommodate, to any extent, the particular business grounds for such refusal and the changes employer would be willing to make or state that there are no such changes; and

o that the employee has a right to refer the dispute to the FWC after the parties have attempted to resolve the dispute by discussions between themselves.

3. The employer has process obligations, in that the employer may only refuse the request if:

• the employer has discussed the request with the employee
• the employer has genuinely tried to reach agreement with the employee about making changes to the employee’s working arrangements to accommodate the employee’s particular circumstances
• the employer and employee have not reached such an agreement
• the employer has had regard to the consequences of the refusal for the employee

4. The final obligation is a matter of substance, in that the employer may only refuse the employee’s request if the refusal is on reasonable business grounds relating to:

• cost
• capacity to change the working arrangements
• impact on other employees, signficant loss in efficiency or productivity or
• significant negative impact on customer service

FWC’s application of these requirements to the School’s refusal to the employee request for part-time return to work

The Full Bench of the FWC held that the School had unlawfully refused the employee’s request because it had not considered the consequences for the employee of its refusal to permit part-time work.
This was the case even though the School had discussions with the employee about alternatives offered by the employer based on its business needs as these discussions did not include any consideration of the consequences of refusing the arrangement on Ms Naden.
The fact that the employee did not fully describe the consequences of a refusal did not relieve the employer of the obligation to consider these consequences prior to refusing the request.
The School was expressly required to give consideration to such things as that the employee would receive a lower rate of pay than if she was performing the REC role and that her personal circumstances involved the management of a substantial mortgage and other financial concerns, such that the financial loss of the REC role would have a serious impact on her and her family. The School should have also considered that the employee was a practising Catholic with a strong commitment to her faith and that the REC role meant a great deal to her personally, as well as the distinct disadvantage for her future career advancement.

Key Points for Employers and HR Managers

1. The Fair Work Act changes place a positive obligation on the employer to consider the consequences of a refusal on the employer. It is expected that consideration of the consequences of refusal will be discussed in the consultation over a request and be included in the written reasons for refusal to be given to the employee within 21 days.
2. The employer is not entitled to refuse a request for a flexible working arrangement unless all the requirements set out in in 1-4 above have been satisfied including that it has had regard to the consequences of the refusal for the employee and how it has had such regard.
3. If an employer has not lawfully refused the request, the flexible working arrangement comes into force against the employer’s wishes, as ordered by the FWC.
4. It is no exaggeration to say that this decision marks a significant erosion of managerial prerogative which would appear to be the policy intent of the legislative changes made in 2023.

Recent amendments to the Fair Work Act have introduced significant changes to how employers must respond to requests for flexible working arrangements. For guidance on navigating these new obligations, contact Tim Greenall, Special Counsel at Madgwicks Lawyers.

The information provided in this article is general in nature and cannot be relied on as legal advice, nor does it create an engagement. Please contact one our lawyers listed above for advice about your specific situation.