Employees have the right to request flexible work arrangements under the National Employment Standards of the Fair Work Act 2009 (Cth) (FW Act). However, employers can refuse these requests on 'reasonable business grounds'.

When a flexible work arrangement request is made, employers must provide a written response within 21 days. In assessing reasonable business grounds, employers should consider the employee's personal circumstances in relation to the expense and impact on the business in granting the request.

The reasonableness of the grounds is to be assessed in the circumstances that apply when the request is made.

Reasonable business grounds may include, for example, that the requested work arrangement would be too costly for the employer. However, since almost all requests will result in some cost from the proposed arrangement, it will generally be insufficient for an employer to simply point at cost as being a reason for refusal. Instead, the employer must point to some cost over and above what may be regarded as inevitable small adverse impacts.

Other grounds might be that there is no capacity to change the work arrangements of the other employees, to accommodate the requested work arrangement, or that it would be impractical to change the existing work arrangements or recruit new employees to accommodate the requested work arrangement.

In Ambulance Victoria v Fyfe (2023), the Fair Work Commission Full Bench (FWCFB) addressed a dispute where a paramedic requested a flexible work arrangement to care for her children while her partner was at work. The employee wanted to change her hours to commence work at 9pm and conclude at 6am instead of starting at 6pm and finishing at 8am. The employer refused the request, citing reasonable business grounds.

The FWCFB concluded that although there were business grounds for the refusal, the employer did not have reasonable grounds for its decision.

In reaching its decision, the FWCFB considered the employer's enterprise agreement, which stated that the employer could only refuse a flexible work arrangement request on reasonable business grounds. Although the relevant clause in the enterprise agreement did not provide an exhaustive list as in section 65(5A) of the FW Act, the FWCFB found that the parties intended the clause to align with the statutory scheme, which included a non-exhaustive list of reasonable business grounds in section 65(5A). The FWCFB stated that the employer's response did not adequately engage with these factors.

The FWCFB further found that the employer did not engage in an assessment of reasonable business grounds with due consideration to the operation and business requirements of the business. It failed to consider the employee’s personal circumstances or properly engage with its policy commitment to provide an inclusive and flexible workplace, recognising the importance of flexible work arrangements. In particular, the employer failed to explore alternatives or the possibility of a trial period followed by a review, as contemplated by the policy and procedure. The employer did not undertake sufficient analysis of the potential financial impact of the request or its workload implications across the worksite.