Work From Home in Victoria: From Flexibility to Formal Right, What Employers Are Grappling With

For many Victorian employers, work from home (WFH) began as a pragmatic, voluntary response to COVID. What is now emerging is something fundamentally different: legislated rights to request flexible and remote work, with higher expectations around employer justification and compliance.

Recent ABS figures estimate about 36% of employed people regularly work from home, indeed Melbourne has become one of Australia’s highest-WFH cities, with reports suggesting nearly two-thirds of workers log in from home at least once a week.

This shift is not simply a policy change. It materially affects how leaders think about productivity, culture, service delivery and risk.

The New Reality: When Flexibility Becomes Regulation

The move from discretionary WFH arrangements to legislated employee rights creates several challenges for employers:

1. Operational consistency
When WFH was voluntary, leaders could tailor arrangements role by role. Legislation introduces the risk of inconsistency, approving one request while declining another can quickly become a legal or industrial relations issue if not clearly grounded in role requirements.

2. Customer service and responsiveness
An ACCI-released employer survey last September indicated that 69% of employers believe mandated WFH arrangements could lead to a deterioration in customer service levels, alongside broader concerns about workplace culture. These findings reflect real pressures in client-facing and operational settings, where delays, fragmented communication and reduced real-time collaboration can directly affect outcomes.

3. Culture and capability development
Many organisations report that culture, informal learning and early-career development are harder to sustain in highly distributed teams. Leaders worry about reduced visibility of performance, weaker coaching moments and fragmented accountability.

4. Manager capability and confidence
People leaders are increasingly required to assess WFH requests, justify decisions, manage hybrid teams and address underperformance often without clear frameworks or training. Poorly handled, this creates inconsistency, disengagement and risk.

How Businesses Can Respond – Without Overcorrecting

The challenge is not whether to allow WFH, but how to implement it in a way that is defensible, commercially sound and sustainable.

Clarify what flexibility means in your context
Not all roles are equal. Organisations should clearly articulate which roles can be performed remotely, which require physical presence, and why. This should be grounded in service delivery, risk, collaboration and performance, not personal preference.

Shift from “where people work” to “how work gets done”
High-performing hybrid organisations define outputs, decision rights and response times clearly. When expectations are explicit, flexibility becomes easier to manage and easier to defend.

Invest in manager capability
Hybrid work exposes weak management quickly. Leaders need support to manage performance, have difficult conversations, and make consistent decisions. This is a capability issue, not a policy issue.

Rebuild culture deliberately
Culture will no longer happen by proximity alone. Organisations need to be intentional about onboarding, mentoring, leadership visibility and team rituals particularly for new hires and emerging leaders.

Fair Work Commission Decisions:

Two recent Fair Work Commission (FWC) decisions appeared at first to contradict each other, but closer examination demonstrates why the decisions were made.

In Chandler v Westpac, a long serving employee who had some caring responsibilities sought to work from a location closer to home or permanently work from home. Westpac denied the request but after FWC hearing, permanent WFH was granted. In its findings FWC found that when the employee made the request, there was no formal response within 21 days and they also found that there was no genuine consultation or consideration of the personal impact.

Without consultation and without formal response in 21 days, which is a very rigid requirement by FWC, saw the employer lose the case.

In Johnson v Papercut Software, an employee was refused a permanent 3-day work from home under the company’s hybrid policy. In this case, the FWC dismissed the employee claim. Here the court found that Paper Cut had phased in the Hybrid policy after extensive consultation and its policy had clear directions and role requirements. The employee wanted exclusive WFH arrangements, but failed on the grounds that there was indeed full consultation and consideration for role specific requirements.

Importantly, this demonstrates that hybrid working can be enforced and that a WFH permission is not the same as permanent entitlement.

So What?

WFH legislation in Victoria is forcing a reset. Employers who treat it as a compliance exercise will struggle. Those who treat it as an operating model redesign — balancing flexibility with accountability — will be better positioned to protect service, culture and performance.

The concern raised by employers about customer service and culture is valid. Ignoring it is not the answer — but neither is blanket resistance.

What to Do Next

• Review role design and document genuine role-based requirements for on-site work
• Equip managers with clear frameworks for assessing and managing WFH arrangements
• Define performance and service expectations explicitly in hybrid teams
• Treat flexibility as a strategic workforce decision, not an entitlement debate

The organisations that will navigate this successfully are not those that default to maximum flexibility or rigid restriction, but those that apply deliberate, role-based decisions grounded in operational requirements, risk management and legislative compliance.