Can Employees Refuse to Return to the Office? What the Westpac WFH Case Means for Small Business Owners

The debate over remote versus office work has been heating up across Australian workplaces. Some employers are embracing flexibility, while others want their teams back in the office full-time. So what does the Fair Work Commission have to say about it?

A recent Fair Work Commission (FWC) decision involving Westpac and an employee seeking to continue working from home has attracted significant attention. Although the case involved a major corporate employer, the Commission’s reasoning applies just as clearly to small businesses.

For small business owners, the message is simple: flexible work requests can’t be dismissed based on policy or personal preference. The Fair Work Act now requires employers to genuinely consider these requests, follow the correct process, and rely on evidence-based operational reasons for any refusal.

Here’s what happened - and what it means for your business.

The Westpac WFH Case: What Actually Happened?

Karlene Chandler had been working remotely successfully for several years. When Westpac introduced a new hybrid working policy requiring employees to attend a corporate office at least two days per week, she lodged a formal flexible working arrangement request under section 65 of the Fair Work Act. She sought to continue working from home, or alternatively to work from the Bowral branch closer to her home. Her request was based on the practical realities of her life: she lived more than two hours from the nearest corporate office and needed to manage school pick-ups and drop-offs for her children.

Westpac refused her request, insisting that she attend the Kogarah corporate office despite the commute. Her offer to work from Bowral two days per week was also rejected.

Chandler challenged the refusal in the Fair Work Commission: Karlene Chandler v Westpac Banking Corporation FWC 3115.

After reviewing the evidence, the Commission found that Westpac had not complied with the procedural requirements of the Fair Work Act. In particular, Westpac had failed to genuinely consult with Chandler, had not provided a written response within the required 21-day timeframe, and had given vague, generic reasons such as “collaboration” without explaining why her specific role required in-person attendance.

The Commission also noted that Chandler had performed her role effectively while working remotely and that her team was geographically dispersed, undermining Westpac’s reasoning. Because Westpac did not follow the required process and could not substantiate its decision with specific, evidence-based business grounds, the FWC determined that the refusal was not lawful and required the employer to reconsider it in accordance with the Act.

The case underscores an important principle: flexible work requests must be handled on their individual merits, with clear reasoning and strict compliance with the Fair Work Act’s procedural rules.

What This Decision Really Means for Employers

The Westpac ruling doesn’t give employees an automatic right to work from home - but it firmly establishes that flexible work requests must be assessed properly. A simple preference for face-to-face work, or a blanket policy requiring onsite attendance, is no longer enough to justify refusal.

For small business owners, this means any decision to decline a request must be grounded in specific, demonstrable operational needs. If you want someone in the office, you need to be able to explain why the role itself requires it - not merely why the business prefers it.

This shift reflects a broader evolution in the modern workplace. Employees increasingly want flexibility, and while the law has not gone so far as creating universal WFH rights, it has strengthened the expectation that employers handle requests thoughtfully, transparently and with genuine engagement. The Westpac decision makes clear that flexibility is no longer just a cultural trend; it is a regulated feature of employment law that carries real obligations.

The Fair Work Act sets out strict procedural rules for handling flexible working arrangement requests. When an employee submits a request, an employer must:

1. Consult with the employee about the request.
   
2. Provide a written response within 21 days.
   
3. If refusing the request, give clear and specific written reasons.
   
4. Base any refusal on reasonable business grounds.
   
5. Explain how those grounds apply to the employee’s particular role and circumstances.
   

These requirements exist to ensure that employers take each request seriously and assess the practical realities of the job. In Chandler’s case, Westpac’s reasoning was too broad and lacked evidence, which ultimately led to the refusal being set aside.

Why the Quality of Your Reasoning Matters

The biggest lesson from the case is that process and substance now carry equal weight. The Commission is no longer accepting generalised claims about collaboration, culture or team engagement unless they are tied directly to the employee’s actual duties.

If you argue that a role cannot be performed remotely, the Commission will expect you to explain why - for example, by showing that the work involves physical files, in-person customer interaction, essential onsite supervision or specialised equipment. These details help demonstrate genuine operational necessity.

This decision doesn’t mean employers can’t require onsite work when it’s needed. Instead, it ensures that decisions are fair, transparent and grounded in the real requirements of the job. For many small businesses, this is an opportunity to revisit policies, clarify expectations and ensure that business reasons are well-defined and properly communicated.

What Small Business Owners Should Do Now

Although the case involved Westpac, the lessons are especially important for small businesses, which often rely on informal HR processes. The Westpac decision highlights the need for clear, compliant procedures when dealing with flexible work requests.

A good starting point is to review your flexible work or work-from-home policy. Blanket “office-only” rules are now risky unless you can justify them with evidence tied to specific roles. A compliant policy should outline the consultation steps, explain how decisions are made and confirm that each request will be assessed individually.

It’s also important to revisit your employment contracts. Older contracts may contain rigid location-of-work clauses that don’t align with current flexible work rights. Contracts and policies should work together, allowing for individual consideration rather than shutting it down.

Managers should understand the legal obligations around flexible work, particularly the requirement to consult and the 21-day response timeframe. Many disputes arise not because a request is unreasonable, but because an employer didn’t follow correct procedure.

Documentation is equally important. You don’t need extensive notes, but you should be able to show how you considered the request and why you made your decision. If the Fair Work Commission becomes involved, this documentation will be critical.

Finally, make sure you genuinely assess each request on its own merits. Even if your workplace has a strong preference for in-person work, the Commission will expect to see evidence that you considered the employee’s role, personal circumstances, performance and the actual operational impact of the arrangement.

These steps won’t require you to approve every request - but they will help you make decisions that are defensible, compliant, and fair.

Does This Mean Everyone Gets to Work From Home?

No. The Westpac decision does not create a universal right to work remotely. What it reinforces is that employees have a right to request flexible work, and employers have a legal obligation to consider that request properly.

Employers still maintain control over how work is organised. If a role genuinely requires onsite attendance - for example, due to safety requirements, customer interaction, specialist equipment or operational needs - these may be valid reasons to refuse a WFH request. The key is showing how these factors apply to the specific employee and role at hand.

Where employers often fall short is not in refusing the request, but in how they refuse it. A compliant response must be timely, consultative and supported by clear, evidence-based reasoning.

Key Takeaways

• The Westpac decision does not give employees an automatic right to work from home, but it significantly strengthens employer obligations when handling flexible work requests.
• Employers must follow the Fair Work Act’s process: consult with the employee, respond within 21 days and give clear, specific written reasons for any refusal.
• A refusal must be based on genuine, evidence-based “reasonable business grounds,” not blanket rules or generic preferences about office attendance.
• The Fair Work Commission expects employers to assess each request individually and link their decision to the employee’s particular role and circumstances.
• Employment contracts and workplace policies should be reviewed to ensure they reflect current flexible work laws and do not contain outdated or overly rigid location-of-work clauses.
• Managers should be trained to recognise when a request triggers legal obligations and to handle the process correctly.
• Small businesses, which often rely on informal HR practices, may be more exposed if they do not update their documentation and decision-making processes.
  

Conclusion

The Westpac ruling is a reminder that workplace flexibility is no longer a peripheral issue - it is a regulated part of employment law that employers must approach thoughtfully and transparently. While businesses can still refuse work-from-home requests where there are genuine operational reasons, those decisions must be supported by evidence and made through a fair, consultative process. By updating policies, reviewing contracts and strengthening internal procedures, employers can reduce risk, make defensible decisions and contribute to a more modern, compliant and supportive workplace.

If you would like a consultation on your Fair Work obligations, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.