Workplace Watch – August 2026: WFH, flexible work requests, casual conversion, extensions of time and awarding compensation in unfair dismissal matters, and the use of AI in FWC cases
Welcome to the latest edition of the KHQ Workplace Watch where we give you insights on key development in workplace relations and safety law and what that means for you as an employer, HR practitioner, in house legal counsel or fellow IR enthusiast.
In this edition, we cover recent developments in working from home requests, Victoria’s paused working from home reforms, the first substantial casual conversion decision from the Fair Work Commission (FWC), decisions on extensions of time and determination of compensation in unfair dismissal matters, and the use of AI in FWC cases.
Working from home all day, everyday – Fair Work Commission says no
The FWC recently rebuffed an employee’s request to work entirely from home. The employee’s request was made because of his caring responsibilities and while the employer refused the request to work at home 100 percent of the time it proposed alternative arrangements including a gradual return to the office.
The FWC found that the employer genuinely considered the employee’s circumstances and that the employer’s hybrid working policy, requiring just two days of attendance at the office per week, was a considered, balanced position and that the employee missing out on crucial face-to-face connections and a chance to foster engagement and collaboration in the employee’s team represented reasonable business grounds for refusing the request.
This case highlights the benefits of a well-crafted hybrid work policy and is important recognition by the FWC of the benefits from in-person attendance such as knowledge-sharing, team cohesion, collaboration, mentoring and supervision, as legitimate business needs. But having a policy alone is not enough: employers need to engage genuinely with flexible work requests, offer meaningful alternatives where appropriate, and document decision-making.
The FWC decision can be found here.
The right to request use of a personal mobile phone – a new frontier of flexible working arrangements?
A recent FWC case has held, although with some hesitation, that an employee’s right to request a flexible working arrangement extended to requesting changes to his employer’s strict mobile phone ban so he could receive emergency calls on his personal mobile phone about his children’s severe asthma and anaphylaxis. The employer refused the request on safety grounds.
While the FWC found that the employee did have the right to make this request (and so expanding on the traditional view that a request for a flexible working arrangement was properly directed to when, where and how employees work), ultimately the FWC found the employer was entitled to refuse the request on reasonable business grounds in circumstances where the employer had a genuine, well-documented safety rationale and engaged with the employee’s circumstances and explored alternatives.
The FWC decision can be found here.
What about Victoria’s working from home legislation?
In a sigh of relief for Victorian employers, the Victorian Government announced this month that the much anticipated – and hotly contested – working from home laws would be placed on hold and be implemented, at the earliest, in July 2027 (rather than on 1 September 2026 as originally intended).
It remains to be seen whether the laws will be passed before the impending Victorian state election in November 2026. This means that, while there is not (yet) a specific legislated right to work from home in Victoria, employers still need to contend with the right to request flexible work arrangements in the Fair Work Act 2009 (Cth) (FW Act) as noted in the above case.
Whilst no formal public press release was made by the Victorian Premier announcing the change, the ABC’s media report can be found here.
Casual conversion
Remember casual conversion? In a long-awaited development, the FWC has published its first substantial casual conversion decision since the employee “choice provisions” for casual conversion in the FW Act took effect in August 2024.
In this case, the employee had been casually teaching computing subjects at a university since 2023. In November 2025, he notified the university that he wasn’t a casual anymore under the FW Act notification process, the university disagreed and the employee filed in dispute in the FWC. In opposing the application, the university argued, among other things, that an order could not be made for the employee to be treated as a part-time employee because he only performs teaching duties and the enterprise agreement did not permit such an arrangement.
The FWC agreed with the employee — he was not properly a casual employee as his employment was not characterised by an absence of a firm advance commitment to continuing and indefinite work. The employee had been engaged to perform teaching work since 2023 and was allocated subjects to teach throughout a semester. However, the employee’s arrangements changed in Semester 2 of 2026.
The FWC found that the employee’s work was potentially more akin to recurring fixed-term periods of part-time employment, rather than genuine casual employment. As a result of these findings, the FWC ordered that the employee be treated as a 0.1 FTE part-time employee (basically 3.5 hours/week averaged across the year).
There are, in our view, two key learnings from this case. First, the FWC must ignore anything that happened after the employee’s “notification date” – such as the change in the employee’s arrangements in Semester 2 of 2026 – it’s all about the facts at the time of the notice. Second, if a clause in an enterprise agreement would effectively block an employee’s FW Act right to convert, that clause gets read down and simply won’t operate to the extent of the inconsistency with the FW Act.
The FWC decision can be found here.
Calculation of compensation in unfair dismissals
A recent FWC Full Bench case provides important guidance on when the FWC can take into account post-dismissal earnings to reduce an award of compensation in an unfair dismissal matter.
At first instance, the FWC assessed that an employee’s employment would have continued for a further five and a half weeks, until November 2025, had she not been unfairly dismissed. During that period, the employee was unemployed, received no income from work, and acted reasonably to mitigate her loss. However, the employee received income from alternative employment from March 2026. The FWC reduced the amount of compensation calculated by reference to the loss caused in the five and a half week period (ending in November 2025) by reference to earnings received many months later (in March 2026).
The Full Bench held it was an error to reduce the employee’s compensation by earnings the employee received months after the anticipated period of employment had ended and that only income earned during that period can be offset against lost remuneration.
In light of this case, an employer facing an unfair dismissal claim should not assume an employee’s later earnings will automatically reduce the amount of compensation that may be payable — it won’t if it falls outside the anticipated employment period.
The Full Bench decision can be found here.
Extension of time – more than a glance required at the merits of the application
In an important decision on extension of time applications in unfair dismissal matters, the Federal Court quashed both a FWC decision refusing an employee an extension of time to file an unfair dismissal application and a Full Bench’s refusal of permission to appeal.
Under s 394(3) of the FW Act, the FWC may extend time for the filing of an unfair dismissal application if the FWC is satisfied that there are exceptional circumstances, taking into account six factors, which include the merits of the application.
The Court found that the FWC failed to meaningfully consider the merits of the substantive application and held that simply observing the applicant had “an apparent case” to which the employer had “an apparent defence” did not amount to the active intellectual engagement required by the FWC. In determining whether to grant an extension of time the FWC must form at least an “impressionistic view” of the merits of the application, even without resolving contested facts.
This case is important for employers to have on their radar because employers can’t assume a late unfair dismissal application will be dismissed – the FWC must genuinely weigh the merits of the claim when deciding whether to grant an extension of time, and a failure to do so is a reviewable error.
The Federal Court decision can be found here.
Use of AI in Fair Work Commission cases
With the systemic rise of proceedings in the FWC where parties – particularly self-represented applicants – are using generative AI, the FWC is taking steps to actively address its use.
In a very clear signal of the danger in using AI, the FWC recently awarded costs against a self-represented applicant whose heavily reliance on AI was unreasonable enough to meet the rarely achieved threshold of costs in the FWC.
In that case the applicant was dismissed from his employment on 26 March 2026, three days short of the six-month minimum employment period required to bring an unfair dismissal claim. The applicant filed a claim anyway, using AI to prepare all of his materials. His AI-generated submissions consistently argued the wrong legal points and despite the FWC sending the Applicant two detailed warnings of the risk in continuing his claim, he persisted.
The applicant eventually conceded that he hadn’t served the minimum employment period (at the latest moment – in the hearing) and discontinued the claim. However, this did not spare the applicant from an adverse costs order.
The FWC decision can be found here.
Guidance from the FWC about the use of generative AI
On 24 August 2026, President Hatcher published a guidance note on the use of generative AI. The guidance note, which commences operation on 20 October 2026, applies where a party uses generative AI to create, write, edit, modify or otherwise prepare an application to the FWC or any other document to be lodged in a FWC case. The key requirements of the guidance note are:
- parties must state in the document lodged with the FWC that generative AI was used and how it was used;
- parties must check their documents are correct and relevant to the case – and state in the document that has been done;
- if the document is a witness statement or declaration, a party must check that it is based on the witness’s own knowledge, reflects their own words and is true to the best of their knowledge (and include a statement to that effect in the document).
Links to the guidance note and a statement by President Hatcher can be found here.
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