Fair Work Commission Upholds Dismissal: What This Landmark Ruling Means for Remote Work in Australia

Employee Contracts vs. Remote Work Policies

A Melbourne software engineer's dismissal for refusing to comply with his company's return-to-office (RTO) mandate has been upheld by the Fair Work Commission, highlighting the legal limits of remote work contracts.

The Fair Work Commission's decision centered on the interpretation of the employment contract signed by PaperCut product engineer Richard Johnson in April 2022. While the contract permitted work from his personal residence "in line with relevant PaperCut policy," it also required him to comply with reasonable, lawful directions and company policies. It stated he "may be required to work at other locations from time to time."

Crucially, the contract did not specify a primary place of work. Commissioner Scott Connolly concluded this did not grant Johnson an unconditional right to work from home, placing the company's evolving hybrid policy within the scope of lawful direction.

PaperCut's implementation of a formal "return to hybrid work" policy in August 2023, which aimed for three in-office days per week by January 2025, was deemed a reasonable progression. The company provided staff consultation, trials, and clear warnings to Johnson over several months.

The commission found the direction lawful, as it "involved no illegality" and was reasonable given the transition steps taken, with termination following explicit final warnings about the consequences of non-compliance.

The Importance of Formal Flexible Work Requests

The ruling draws a clear distinction from the successful case of a Westpac employee, who formally requested flexible working arrangements under a legal provision for workers with specific life or career circumstances.

Joellen Riley, Professor Emeritus at Sydney University, notes, "Most employment contracts have clauses in them that allow the employer a high level of flexibility in changing terms of your role, location, and other aspects of your work."

In Johnson's case, the company noted that he neither requested a flexible arrangement nor provided a personal reason for his inability to comply. This absence of a formally invoked right under specific workplace laws weakened his position, as the company's directive was assessed broadly for lawfulness and reasonableness rather than on protected personal grounds.

Riley emphasized this point, stating that for those wanting to challenge return-to-office directives, "they should first look at requesting flexible work arrangements." However, she noted that this right is only available to employees who meet the stipulated requirements, such as caring for elderly parents or children, having a disability, or being over 55. As she notes, "It's not just for someone who thinks they'd like to work from home because it's easier to go out at lunchtime and practice their golf swing."

That approval is not guaranteed even then. This creates a two-tiered landscape where employees with legally protected personal circumstances have a distinct, though not absolute, avenue for challenge that was not utilized in this instance.

Offshore Workers Gain Stronger Protections

This principle that the substance of a work relationship outweighs its contractual labels is being asserted even more forcefully in offshore arrangements, as seen in a landmark ruling that a Filipino paralegal hired by a Brisbane firm was an employee entitled to Australian wages and protections.

That decision confirms the Fair Work Commission's consistent scrutiny of the actual working dynamics over formal paperwork, whether assessing a local hybrid work policy or a global outsourcing contract.

Together, these cases bookend a critical theme. As much as employers still have wide discretion to make reasonable workplace directives, they cannot disavow basic employee rights, whether the worker is on the other side of the city or the other side of the ocean.

This decision solidifies a paradigm shift concerning the future of work, that in-person work can legally be entrenched in the contract. Still, its sustainability depends on employer policy, which solidifies managerial authority to achieve a reasonable hybrid conversion.

Moreover, the decision creates a stark divide between employees who can leverage protected grounds for formal flexible arrangements and those who cannot, ultimately reinforcing that the power to define the workplace remains predominantly an employer prerogative, not an employee entitlement.

How Outsourcing Firms Mitigate Compliance Risks

This underscores a strategic role for experienced outsourcing firms, as they provide companies with a legally straightforward, contractually defined remote workforce that circumvents the domestic disputes over hybrid work policies.

As Derek Gallimore, Chief Executive Officer (CEO) and Founder of Outsource Accelerator, notes, "Companies must understand the value of recruitment firms and how they have become fundamental tools in global employment. They not only provide businesses with expert outsourced staff but are also knowledgeable about the nuances of employment regulations worldwide."

"An outsourcing firm protects them from these issues by ensuring the partnership is healthy, and the business runs smoothly."