The Allan Labor government has ruled out exempting small businesses from its landmark work-from-home legislation, the Sydney Morning Herald reports, drawing a hard line in what is shaping up as one of Victoria's sharpest election-year industrial relations battles.
The decision means that when the laws reach parliament, the legislation will enshrine the right to work from home for at least two days a week for employees who can reasonably do so, across both public and private sectors, with no carve-out based on employer size.
The government is expected to make further announcements on the policy in coming weeks, according to the Sydney Morning Herald, as it seeks to cement the issue as a positive voter offer before the November 2026 poll.
Premier Jacinta Allan announced the law at last year's Victorian Labor conference and has promised to introduce it in 2026, prior to the state election. Polls indicate Labor is on track to win a fourth term, though the November vote will be the first as premier for Allan, who lags Opposition leader Brad Battin as preferred state leader.
The government's case rests on family budgets and workforce participation. More than a third of Australian workers, including 60 per cent of professionals, regularly work from home. The government says this saves Australians an average of $110 a week, or $5,308 a year.
The decision to exclude a small business exemption will intensify friction with industry. Small business advocates, including the Council of Small Business Organisations Australia (COSBOA), have raised significant concerns about the lack of industry consultation and the potential operational and financial impact on smaller employers.
COSBOA had urged the Victorian government to conduct a comprehensive regulatory impact assessment specifically examining effects on small and medium enterprises, and to consider exemptions or modified arrangements for SMEs with fewer than 50 full-time employees. That call has now been rejected.
COSBOA's then-chief executive also argued that current Fair Work legislation already provides employees with the right to request flexible working arrangements. "Small businesses regularly accommodate these requests where operationally feasible. Why is the Victorian government seeking to add complexity to an arrangement that already exists under the Fair Work Act?" he said.
Survey data from the Victorian Chamber of Commerce and Industry adds weight to those concerns. Results show that businesses are already offering flexible working arrangements without government intervention, with 76 per cent of businesses already providing flexible work arrangements and 77 per cent requiring a minimum workplace attendance, most commonly three days per week.
The Chamber's survey found the greatest losers from enshrined working-from-home rights would be young Victorians, who risk missing out on professional development opportunities including mentoring, networking and informal learning. The findings also show that 56 per cent of Victorian businesses report it is harder to operate in Victoria compared to other states, citing high taxes, regulatory burdens and escalating costs.
More than one third of businesses said they would look to expand operations and hire staff outside Victoria if the WFH legislation is introduced. Committee for Melbourne CEO Scott Veenker previously described the plan as a "complete overreach", saying it was "another regulatory burden or requirement that just makes the cost of doing business too hard."
Legal experts have flagged a further complication. The legislation is likely to face a constitutional challenge on the basis that the Victorian government does not have power to make laws relating to workplace relations, as those powers were referred by Victoria to the federal government. However, the Victorian government may seek to make the laws under its powers relating to health and safety or equal opportunity.
The political context also matters. The federal opposition's earlier proposal to eliminate remote work for public servants was partly blamed for its poor performance at the May federal election, even though it abandoned the policy before voting day. That recent history gives Labor both political confidence and a ready-made point of contrast with its opponents.
Victorian Opposition leader Brad Battin has signalled a cautious position, saying his party supports measures that help Victorians enjoy a better work-life balance and will review any legislation closely to ensure it supports flexibility, productivity and personal choice. That response leaves room for the Opposition to support a modified version of the bill, which could complicate the government's framing of the issue as a clear ideological battle.
The crux of this dispute is a legitimate tension between two reasonable propositions. Workers, particularly women and carers, have real and documented interests in retaining the flexible work arrangements that became normalised during and after the pandemic. At the same time, a blanket legislative mandate that takes no account of employer size or business type risks substituting political calculation for genuine workplace negotiation. The evidence suggests most Victorian businesses are already accommodating flexibility without compulsion. Whether legislating a minimum standard adds genuine protection or merely adds cost and compliance risk is a question the government has so far avoided answering directly. The Fair Work Commission already handles flexible work disputes at a federal level; the case for a parallel state regime deserves more rigorous public testing before parliament votes.