Work-from-home laws reignite fight over Melbourne’s CBD recovery

The Victorian Government’s move to legislate a right to work from home has reignited a bitter debate over Melbourne’s post-pandemic recovery, with the City of Melbourne, business groups and the housing industry warning the policy will add red tape, weaken city activity and create new uncertainty for employers.

Premier Jacinta Allan announced on June 16 that Labor’s work-from-home laws would come into effect from September 1, with legislation introduced to parliament to amend the Equal Opportunity Act 2010.

Under the proposed laws, Victorians who can reasonably work from home would have a legal right to do so two days a week. Regular casual and part-time workers would also be covered, with guidance to be released on how pro-rata entitlements would operate.

Workplaces with fewer than 15 employees would have until July 1, 2027 before the laws apply, giving small businesses more time to prepare.

The government says the change will lock in flexibility for workers, save families money and support workforce participation. It estimates working from home saves Victorian workers an average of $110 a week, or $5308 a year, while reducing commuting time by more than three hours a week.

Work from home works for families, it saves time and money and it gets more parents working, Ms Allan said.

“That’s why we’re protecting work from home in law.”

Minister for Industrial Relations Jaclyn Symes said working from home was “good for families, good for productivity and good for the economy”.

But the announcement has drawn immediate criticism from the City of Melbourne, which has long argued that flexible work arrangements should remain a matter between employers and employees rather than be imposed through state legislation.

Acting Lord Mayor Roshena Campbell said the council’s position was clear.

“Flexible work arrangements are a matter between employers and employees already provided for in federal legislation,” Cr Campbell said.

“Not only is this State Government legislation unnecessary, it creates a bureaucratic and legal nightmare for Victoria’s small businesses that are already doing it so tough.”

Cr Campbell said the government should instead focus on “building confidence, attracting investment and driving economic activity”.

“This legislation will do nothing to grow the State’s economy and is a long-term threat to every worker in Victoria because a job that can be done from home is a job that can be done offshore,” she said.

The criticism follows months of tension between Spring St and Town Hall over the issue.

In February, Premier Allan publicly released a letter rebuking Lord Mayor Nick Reece and councillors over the council’s opposition to mandated work-from-home rights.

In that letter, the Premier argued that the council had left “workers” out of its list of stakeholders and said she was “speaking for them”.

But the council has maintained that its position is not anti-flexibility. Rather, councillors have argued that a blanket legislated right risks further weakening CBD recovery, increasing office vacancies and undermining small businesses reliant on weekday foot traffic.

That argument sits at the heart of the latest backlash.

The Victorian Chamber of Commerce and Industry and other employer groups, through the Victorian Congress of Employer Associations, have called on the government to withdraw the Bill, arguing it is creating “a problem that didn’t exist”.

The groups said Victorian businesses had already embraced flexible work, with recent Victorian Chamber surveys showing about three-quarters of businesses already provide flexible work arrangements, including hybrid models.

“The system is currently working,” the joint statement said.

“Instead of supporting practical conversations between employers and employees, this legislation introduces a new layer of regulation and positions VCAT as the ultimate arbiter of workplace arrangements.”

Under the government’s model, disputes would go to the Victorian Equal Opportunity and Human Rights Commission for conciliation, or to the Victorian Civil and Administrative Tribunal if conciliation failed.

Business groups argue that would replace workplace-level negotiation with delay, legal processes and uncertainty at a time when employers are already dealing with rising freight, energy, insurance and supply chain costs.

“Business supports genuine workplace flexibility,” the statement said.

“What we do not support is replacing collaborative workplace conversations with legal processes, uncertainty and unnecessary bureaucracy.”

“There was no problem to fix.”

The Housing Industry Association has also called for the laws to be abandoned, warning the policy represents a “one-size-fits-all” approach that fails to reflect the operational reality of industries such as residential construction.

HIA Victorian executive director Keith Ryan said flexible work could support workforce participation, but argued the government’s use of anti-discrimination laws was “a cynical attempt to circumvent existing federal laws”.

“These changes would create obligations that simply don’t reflect how businesses operate,” Mr Ryan said.

“For home builders, this would add unnecessary compliance pressure and complexity at a time when many employers are already under significant strain.”

Mr Ryan said Victoria should be focused on delivering more homes, addressing integrity issues in construction and making the state more attractive for business, rather than adding further workplace regulation.

He said HIA’s recent Small Business Conditions Survey showed around 75 per cent of small business members were considering scaling back, relocating or closing due to the regulatory burden of operating in Victoria.

“This rushed announcement only reinforces the perception that Victoria is not open for business – particularly small business,” he said.

The debate is now set to become a major pre-election flashpoint.

Labor is framing the laws as a cost-of-living and family-friendly reform, while the City of Melbourne and business groups argue the policy risks damaging the central city economy and complicating workplace arrangements already being managed without state intervention.

As it did earlier this year, the dispute again raises a more nuanced question than whether flexible work is good or bad. Most stakeholders accept it is now part of modern working life.

The unresolved issue is who should decide its limits: employers and employees at the workplace level, or the state through a legislated right.

Evan Mulholland, Liberal Member for the Northern Metropolitan Region and Deputy Leader of the Opposition in the Legislative Council, said, “The Liberals and Nationals support flexible working arrangements. We will be looking closely at what the government has proposed and assessing this legislation on its merits.” •