Quick Summary
Quick Summary
- Employers can direct employees back to the office, but only with proper consultation, notice, and documented business reasons.
- The Fair Work Commission’s 2026 decisions (Westpac and PaperCut) show the difference between refusing flexibility requests (must have genuine reasons) and changing policy (requires consultation).
- 21-day response deadline applies to flexibility requests. Refusals must include specific, business-based grounds—not vague preferences.
- Employment contracts should include a ‘lawful direction’ clause. Without it, disputes escalate to the FWC.
- Disability and caring responsibility requests have stronger protections. Refusing these requires careful, documented assessment.
The hybrid work debate has shifted. A year ago, the question was whether employees could work remotely. Today, employers are asking whether they can change flexible arrangements and require staff back in the office—and the Fair Work Commission (FWC) has given clear answers.
In 2025 and 2026, two landmark cases have reshaped employer obligations: Westpac Banking Corporation (where the FWC sided with the employee) and PaperCut Software Pty Ltd (where the FWC sided with the employer). The difference between them isn’t what you might think. It’s about process, consultation, and genuine reasons—not about which party “wins.”
The Westpac Decision: Refusing a Flexible Work Request Without Good Reason
Karlene Chandler worked for Westpac and requested flexible work (remote arrangements) to manage her caring responsibilities. Westpac refused her request. The FWC sided with Ms Chandler and ordered Westpac to approve the arrangement.
Why? Westpac didn’t provide genuine, business-based reasons for the refusal. Under the Fair Work Act 2009 (Cth), employers must consider flexibility requests genuinely and refuse only if there are legitimate business or operational grounds.
Westpac’s mistake: a blanket “no” without evidence.
The PaperCut Decision: Changing Policy With Proper Consultation
Three days a week in the office. That’s what PaperCut Software decided after reviewing its business needs post-pandemic. The company:
- Communicated the intention to change policy
- Engaged in meaningful consultation with employees
- Implemented a staged return period (months, not days)
- Set a clear commencement date
When Richard Johnson refused to comply with the direction, claiming it breached his employment contract, he lodged an unfair dismissal claim. The FWC found PaperCut’s direction reasonable and dismissed the claim.
Why? The employer followed a lawful process.
The Critical Difference: Request vs. Direction
Here’s the key distinction employers often miss:
Westpac case: An employee made a formal request under the Fair Work Act. The employer had to assess it properly and provide genuine reasons if refusing.
PaperCut case: The employer unilaterally changed policy (not in response to an employee request). The change required consultation and notice, but the employer set the terms.
These are two different legal pathways. Confusing them costs employers unfair dismissal claims.
📅 Key Deadline: 21 Days to Respond
The Fair Work Act requires employers to respond in writing to flexibility requests within 21 days. Missing this deadline significantly weakens your legal position if the matter reaches the Fair Work Commission. Set calendar reminders and document all responses.
Key Takeaways
Key Takeaways for Employers
- ✓Update contracts to require compliance with lawful directions; reference your flexible work policy explicitly.
- ✓Consult 4–8 weeks before implementing return-to-office policy changes; don’t announce changes days before enforcement.
- ✓Provide genuine, documented reasons when refusing flexibility requests; vague answers result in FWC losses.
- ✓Apply flexibility and direction rules consistently across all employees; inconsistency is a legal liability.
- ✓Disability and caring responsibility requests need extra care; refusals must be based on genuine operational grounds.
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When Can You Direct Employees Back to the Office?
Yes—if you follow the rules:
- Update your employment contract — Include a clause requiring employees to comply with reasonable, lawful directions about work location and arrangements.
- Create a clear policy — Define hybrid or flexible work terms explicitly: what’s negotiable, what’s business-driven, what’s permanent, what’s subject to change.
- Consult before changing — If you’re tightening an existing flexible arrangement (moving from five days home to three days in office), speak to affected employees. Not a casual chat—a genuine, meaningful discussion about business reasons and impact.
- Provide notice — Give employees reasonable time (weeks or months, not days) to adjust.
- Apply the direction consistently — Don’t enforce it for some employees and ignore it for others.
- Document everything — Keep records of consultation, the policy change, dates, and communication.
What If an Employee Refuses to Comply?
If an employee refuses a lawful direction to return to the office (assuming your contract and process were sound), you can treat it as:
- Insubordination (if the refusal is willful and unreasonable)
- Grounds for disciplinary action, including termination (if the conduct is serious enough)
But “serious enough” requires the direction to be reasonable, the process to be lawful, and the refusal to be deliberate. PaperCut demonstrates this principle: Mr Johnson was dismissed fairly because the direction was reasonable, backed by consultation, and his refusal was deliberate.
What If an Employee Requests Flexibility and You Want to Refuse?
This is where Westpac applies. You must:
- Assess the request in writing — Respond within 21 days (Fair Work Act requirement)
- Provide genuine reasons if refusing — “We need everyone in the office” isn’t enough. You need specific, operational grounds: client contact requirements, team collaboration, training, onboarding, or business restructuring.
- Consider whether the request can be partially granted — For example, if the employee needs three days remote for caring duties, can you approve that while requiring two days in office?
- Keep records — Document your assessment, the reasons for refusal or approval, and any consultation.
Westpac’s failure was a blanket “no” with no business justification. The FWC made them approve the flexible arrangement because they hadn’t met their legal obligation to consider the request properly.
Hybrid Work: Best Practice Checklist for Australian Employers
- ☐ Employment contracts include a “lawful direction” clause covering work location and flexibility
- ☐ Flexible work policy is written, accessible, and clear on what is negotiable and what isn’t
- ☐ Any change to existing arrangements is communicated 4–8 weeks in advance
- ☐ Consultation with affected employees is documented (emails, meeting notes, dates)
- ☐ Refusals of flexibility requests include specific business or operational grounds
- ☐ The same standards are applied to all employees (no favoritism or inconsistency)
- ☐ Payroll and HR systems reflect the agreed arrangements
- ☐ Training for managers covers the difference between refusing requests and directing changes
The Fair Work Centre’s employment law templates include modern award-compliant flexible work policies and employment contracts with direction clauses built in—ready to customise for your industry.
The Bottom Line
Hybrid work isn’t “settled law.” Employers retain the right to direct work location and amend policies—but only through a lawful, consultative process with genuine business reasons. The FWC’s 2026 decisions show that the commission takes process seriously. Get the process right, and courts will back your direction. Skip it, and you’ll lose the claim.
The difference between Westpac and PaperCut isn’t about employee rights vs. employer rights. It’s about employers who follow the law and those who don’t. For employers managing hybrid teams, the lesson is clear: consult, document, and communicate.
Frequently Asked Questions
Yes, but only with proper process. The Fair Work Commission’s PaperCut decision (2026) confirmed that employers can change flexible working arrangements if they consult genuinely, provide notice, and have business-based reasons. Simply demanding return without consultation will likely be ruled unreasonable.
Genuine reasons include operational needs (client-facing role, team collaboration, training, onboarding), business restructuring, or customer requirements. Vague reasons like ‘company culture’ or ‘we prefer everyone in the office’ aren’t sufficient under Fair Work law. You must explain specifically how the arrangement would harm business.
The Fair Work Act requires employers to respond within 21 days of receiving a request. If you refuse, you must provide reasons within that timeframe. If you approve, document the agreement in writing. Missing the deadline weakens your legal position if the claim ends up in court.
You can have different arrangements based on role requirements (e.g., receptionist in office, software developer hybrid). But you can’t apply different rules to employees doing the same job without documented, role-specific reasons. Inconsistency is a red flag in FWC cases.
Your contract should include: (1) a clause requiring employees to comply with lawful directions about work location, (2) reference to the company’s flexible work policy, and (3) confirmation that the employer may modify arrangements for business reasons with notice and consultation. Don’t make remote work a contractual entitlement if you want to retain flexibility.
Yes, if the direction was lawful, reasonable, and properly communicated, and the refusal was deliberate. However, dismissal must follow fair process: warnings, opportunity to respond, and documentation. A single refusal may not justify immediate termination, but repeated insubordination could. Consult an employment lawyer before dismissing.
These requests have stronger legal protections. Disability accommodations are covered by anti-discrimination law, and caring responsibilities are specifically cited in Fair Work law. You cannot refuse lightly. You must genuinely assess whether the request can be accommodated and provide detailed reasons if refusing. The Westpac case involved caring responsibilities—the FWC found in favour of the employee partly for this reason.
Use the PaperCut model: (1) Announce the change in writing, (2) Explain business reasons clearly, (3) Consult with staff (at least 4–8 weeks before implementation), (4) Listen to concerns and document feedback, (5) Set a firm start date, (6) Provide guidance for any exceptional circumstances. Written communication is critical—verbal announcements won’t hold up in a dispute.
Yes, if you follow lawful process. You don’t need unanimous consent, but you do need genuine consultation and notice. If the change affects someone’s caring responsibilities, health, or disability, you must consider whether an exception is justified. Some employers negotiate compromise (e.g., ‘three days in office’ instead of five) to reduce conflict.
A flexibility request is when the employee asks for remote work (or changes to arrangements). The employer must assess it properly and refuse only with genuine reasons. An employer direction is when the employer unilaterally sets work location or policy. This requires consultation and notice, but the employer has more authority. Confusing these two gets employers into trouble.
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