Working From Home, Hybrid Policies and Lawful Directions
What SMEs Need to Know
Working from home and hybrid arrangements are now a normal part of how many Australian businesses operate. While flexibility can support productivity and employee engagement, it also creates legal and safety obligations that employers cannot afford to overlook.
A recent Fair Work Commission decision provides timely clarity for employers navigating hybrid work arrangements and reinforces that flexibility does not remove an employer’s right to issue lawful and reasonable directions.
The legal framework employers must consider
Under the Fair Work Act 2009 (Cth), a dismissal will not be unfair if there is a valid reason related to an employee’s capacity or conduct and the process followed is fair. Where an employee refuses to follow a workplace direction, the Fair Work Commission must consider whether that direction was lawful and reasonable in the circumstances.
This assessment looks closely at the employment contract, workplace policies, and how the direction was introduced and enforced.
The Fair Work Commission decision
In Johnson v PaperCut Software Pty Ltd (2026), the Fair Work Commission considered whether an employee’s refusal to comply with a hybrid work policy was a valid reason for dismissal.
The employer introduced a hybrid policy requiring employees to attend the office three days per week. The employee’s contract allowed working from home, but only in accordance with company policy. Despite consultation, notice, and a staged transition, the employee repeatedly refused to comply with the policy.
The Commission found that the direction to attend the office was lawful and reasonable and that the employee’s ongoing refusal constituted a valid reason for dismissal.
In reaching this decision, the Commission confirmed several important principles for employers:
A contractual right to work from home subject to company policy does not create an unconditional or permanent entitlement to remote work.
Where a contract allows an employee to work at different locations from time to time, directing attendance at the office may fall squarely within the contract.
Hybrid work directions are more likely to be lawful and reasonable where there has been consultation, adequate notice, and genuine opportunities for employees to comply.
An employee’s personal belief that they are entitled to work remotely does not make an employer’s direction unlawful or unreasonable.
For SMEs, this case reinforces that hybrid work policies can be enforced, provided they are well designed, properly implemented, and aligned with contractual terms.
Working from home is an extension of the workplace
While many employers focus on the industrial relations aspects of working from home, it is equally important to understand that working from home is not risk free from a work health and safety perspective.
Under Australian WHS laws, including the Work Health and Safety Act 2011 and equivalent state and territory legislation, employers owe a primary duty of care to ensure, so far as is reasonably practicable, the health and safety of workers while they are at work. This duty applies regardless of where the work is performed.
In practical terms, this means a home office is treated as an extension of the workplace. Employers must consider risks such as:
Ergonomic hazards and poorly set up workstations
Mental health risks associated with isolation or blurred work boundaries
Fatigue and extended working hours
Electrical safety and general home environment hazards
Failing to manage these risks can expose SMEs to workers compensation claims, regulatory scrutiny, and potential breaches of WHS obligations.
Why policies alone are not enough
Having a hybrid or working from home policy is an important starting point, but it is not enough on its own. Employers must ensure their policies align with employment contracts, are communicated clearly, applied consistently, and supported by practical WHS controls.
This includes risk assessments, home workstation guidance, manager training, clear expectations around availability, and documented processes for managing non compliance.
How HR Excellence Partners supports SMEs
HR Excellence Partners works with small and medium businesses to navigate the legal, safety, and people risks associated with working from home and hybrid arrangements.
We support SMEs by:
Reviewing employment contracts to ensure flexibility clauses are clear and enforceable
Designing lawful and reasonable hybrid and working from home policies
Advising on Fair Work Act obligations and managing employee non compliance
Supporting WHS risk assessments for home based work
Providing practical guidance to managers on enforcing policies fairly and consistently
Helping businesses reduce exposure to unfair dismissal and workers compensation claims
For SMEs, getting this right is about more than compliance. It is about protecting your business, supporting your people, and maintaining control over how work is performed.
If your business is navigating hybrid work arrangements or reviewing its working from home approach, now is the time to ensure your frameworks are fit for purpose.
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