Australia’s fuel crisis is pushing flexible work back up the agenda, and SME employers across the country should expect more staff to request remote or adjusted arrangements in the weeks ahead.
With petrol prices squeezing household budgets, employees are looking for ways to reduce commuting costs, and working from home sits at the top of that list. State governments have already started responding. Victoria and Tasmania have introduced free public transport measures to ease pressure on commuters, while New South Wales has held off on similar action. A national cabinet meeting has been convened to address the broader crisis.
The flow-on effect for employers is clear. Media outlets including the ABC have published guidance for employees to help them build cases for flexible work and present it to their boss, with requests based on business performance rather than personal convenience. That means the requests landing on SME employers’ desks are likely to be well-prepared, data-backed and framed around productivity. The question is not whether these conversations will happen; it is how prepared employers are to handle them.
For SME owners and HR managers, this signals a shift in the nature of incoming requests. These are unlikely to be casual hallway conversations. Workers are being told to come prepared with evidence of how they can maintain or improve output from home.
Dr Libby Sander, Associate Professor of Organisational Behaviour at Bond University, told the ABC that employers should focus on outputs rather than hours spent at a desk. That framing matters for SMEs, where visibility of staff can feel important but is often a poor proxy for actual performance.
The practical takeaway for employers is straightforward. Rather than being caught off guard, businesses benefit from having a position ready before the conversation starts.
The Fair Work Act Sets Clear Rules for Formal Requests
Not every flexible work conversation triggers a legal obligation, but some do. Under the Fair Work Act 2009, certain employees have the right to formally request a change to their working arrangements after 12 months of continuous service.
Those eligible to make a formal request are:
- Parents or carers of a child who is school-aged or younger
- A carer of an elderly or disabled person
- People with a disability
- Employees experiencing family and domestic violence
- Employees assisting a family or household member experiencing family and domestic violence
- Pregnant employees
- Workers aged 55 or older
A formal request can only be made where it is in connection with one of the seven outlined circumstances. For example, to work from home to have a shorter distance to pick up kids from school. A request to work from home purely based on the impact of the rising costs of fuel when commuting, would therefore not meet this test.
Simon Obee, Head of HR Advisory & Senior Legal Counsel at Employment Hero, explains that formal requests must connect to one of these specific circumstances.
When a formal request is made, employers must respond in writing within 21 days, and in the meantime must consult with the employee about their request. A request can only be refused on reasonable business grounds, and the written response must explain those grounds clearly. The written response must also advise employees of their right to appeal the decision to the Fair Work Commission, if, for example, they do not consider the employer had reasonable grounds to refuse the request.
This is where SMEs can trip up. A verbal “no” or a delayed response can expose a business to compliance risk. Even for employers who intend to accommodate requests, failing to document the process properly can create problems down the track. The Fair Work Ombudsman’s guidance is explicit: the process matters as much as the outcome.
Most Flexibility Is Negotiated Informally
While the formal request process gets the most attention, the reality is that most flexible arrangements are worked out through informal conversations between employers and staff.
For SME employers, this is both a risk and an opportunity. Informal agreements offer speed and simplicity, but they can also create inconsistency if different managers apply different standards. A written policy, even a one-page document outlining how requests are assessed, helps ensure fairness across the business and provides a reference point if disputes arise.
Employers who are open to these conversations, rather than waiting for a formal request to force the issue, are more likely to reach arrangements that work for both sides.
How to Respond Without Losing Good People
The way an employer handles a flexible work request matters as much as the decision itself. A well-reasoned “no” with alternatives can strengthen an employment relationship. A blanket refusal with no explanation can damage it permanently.
Where working from home is genuinely not possible, such as in retail, hospitality or hands-on trades, alternative forms of flexibility still exist. Adjusted start and finish times, compressed work weeks and staggered shifts can reduce commuting costs without removing staff from the workplace entirely.
When assessing any request, employers should consider the nature of the role, the employee’s track record and whether a trial period could reduce risk. Documenting the agreement, including any trial terms, protects both parties.
The Fair Work Ombudsman’s guidance reinforces that flexible work arrangements improve job satisfaction, reduce absenteeism and help attract and retain skilled staff. For SMEs that often cannot compete with larger employers on salary alone, flexibility is one of the most cost-effective retention tools available.
Flexibility Will Outlast the Fuel Crisis
Fuel prices should eventually stabilise, but the expectation of workplace flexibility will not. The current crisis is accelerating a trend that has been building since the pandemic and employees who secure flexible arrangements now are unlikely to give them up when petrol drops by a few cents.
SME employers who treat this moment as an opportunity to formalise their approach to flexible work, rather than scrambling to respond to each request individually, will be better positioned to retain experienced staff and attract new talent in a tight labour market.
The cost of replacing a good employee almost always exceeds the cost of accommodating a reasonable request. For SMEs navigating the current cost-of-living crunch alongside their staff, that equation is worth keeping front of mind.
