Major changes affect employers

A number of important changes introduced by the Fair Work Act 2009 could significantly impact small and medium businesses.  Two recent changes provide new entitlements to employees with children which could have ramifications for your business and staff management.

Under these changes brought in by the Fair Work Act 2009, effective 1 January 2010, employees now have the right to request flexible working arrangements – including working from home – and unpaid parental leave has been increased from 12 to 24 months.

You may have recently heard about the introduction of paid parental leave (due to start 1 January 2011) – it is government funded and therefore unlikely to have any direct financial impact on employers (although there will be management costs in administering payments).

By contrast, the recent changes to unpaid parental leave and the introduction of flexible working arrangement entitlements under the Fair Work Act 2009 will cause a greater administrative burden and in order to ensure our clients have a greater understanding of their obligations, we have summarised the main points that will affect employers.

Flexible working arrangements

The Fair Work Act 2009 introduces for the first time a right for employees to request flexible working arrangements in order to care for children.

Whilst similar rights may already be afforded under the general provisions of State Equal Opportunity legislation (depending on the circumstances), this is the first time employees have been granted rights specifically to request workplace flexibility.

An employee can only make a request for flexible working arrangements if he or she is a parent of, or is responsible for the care of, a child under school age.  The employer must have employed the staff member for at least 12 months before they are entitled to make such a request and the same conditions apply for permanent or long term casual staff.

A request may, for example, be for flexibility in hours of work, patterns of work or location of work, including working from home.

The employee is required to provide a written request and must also explain and give reasons for the request.

An employer must respond to such a request in writing and may only refuse on “reasonable business grounds” and must set out those reasons in the response.

The Explanatory Memorandum to this legislation provides some guidance by giving examples of a few circumstances that may constitute “reasonable business grounds” eg it may include the effect on an employer’s business (including financial impact), or efficiency and customer service.  However there is no exhaustive list provided and it will always depend on the particular circumstances of the employer.

For example, a request to work from home may be more reasonable in the case of an IT business which has sophisticated remote access computing systems in place in contrast to a similar sized business in a different field.

It should also be noted that where flexible arrangements have been allowed for one employee, it may make it more difficult to argue that similar arrangements are not reasonable for another employee.

The uncertainty of the term “reasonable business grounds” is one that should cause employers concern because there are no set, simple criteria and this makes it easy to get these decisions wrong.  For this reason, any employee requests for a change in work conditions will need to be considered on a case-by-case basis and legal advice should be sought as soon as such a request is received.

Unpaid parental leave

There have been a number of major changes and an employer needs to be fully aware of each of them.