Work From Home and the Fuel Shortage: What Are Your Obligations as an Employer?

Fuel prices are climbing — and so is the pressure on employers

With national average petrol prices sitting around $2.19 per litre — up from roughly $1.69 just six months ago — the cost of commuting has become a genuine financial burden for many Australian workers. The ongoing disruption to global oil supply, driven largely by tensions in the Strait of Hormuz, has pushed fuel costs to levels not seen since the 1970s oil shock.

Energy Minister Chris Bowen has publicly encouraged working from home as a "sensible thing to do," while stopping short of a federal mandate. Several Asian countries have already introduced work-from-home directives. In Australia, Victoria is going further — its new WFH law, taking effect 1 September 2026, will enshrine a right to work from home for at least two days per week for businesses with 15 or more employees.

For employers, this raises practical and legal questions: Do you have to let people work from home? What if you can't? And what happens if an employee simply refuses to come in because of fuel costs?

Can an employee demand to work from home because of fuel prices?

No — not as a standalone demand. Fuel prices alone are not a basis for an employee to unilaterally decide to work from home. However, under section 65 of the Fair Work Act, certain employees have the right to request flexible working arrangements. This includes employees who are parents or carers, are 55 or older, have a disability, experience family or domestic violence, or are pregnant.

If an eligible employee makes a formal flexible work request — and working from home is a reasonable arrangement given their role — the employer must respond in writing within 21 days. You can only refuse the request on reasonable business grounds, and if you do refuse, you need to explain why and discuss alternatives.

The key takeaway: you can't ignore these requests, and "we prefer people in the office" is unlikely to be a reasonable business ground on its own — especially if the role can be performed remotely.

What if the role can't be done from home?

Many roles genuinely require physical presence — manufacturing, retail, healthcare, hospitality, construction, logistics. If an employee in one of these roles asks to work from home, the nature of the work is a legitimate business reason to decline.

However, consider what other support you can offer. Some employers are introducing fuel allowances, adjusting rosters to reduce commuting frequency, allowing compressed work weeks, or subsidising public transport. These measures don't just help with retention — they demonstrate good faith, which matters if a dispute arises.

Can you direct employees to return to the office?

If your employees have been working from home and you want them back in the office, you generally can issue that direction — provided it's lawful and reasonable. But "reasonable" is doing a lot of heavy lifting in that sentence. The Fair Work Commission has recently considered cases where employers directed employees back to the office and the direction was found to be unreasonable in the circumstances.

Factors the Commission considers include whether the role was originally office-based or remote, whether the employment contract or policies contemplate remote work, whether the employee has a legitimate reason for requesting to remain remote, and whether the employer has genuinely considered alternatives.

A blanket "everyone back to the office" directive with no consideration of individual circumstances is a risk — particularly in the current environment where fuel costs are a genuine hardship for some workers.

What about Victoria's new WFH law?

Victoria's Work From Home Act, commencing 1 September 2026, will give employees in businesses with 15 or more employees the right to work from home for at least two days per week, unless the employer can demonstrate that remote work is not reasonably practicable for the role. This is the first law of its kind in Australia, and it's likely other states will follow.

If you operate in Victoria, now is the time to start preparing: review your employment contracts, update your remote work policies, and assess which roles can and can't accommodate remote work. If you're in another state, it's still worth watching this space — the direction of travel is clear.

Practical steps for employers right now

Review your flexible work policy. If you don't have one, create one. It should clearly set out how flexible work requests are made, assessed, and responded to — consistent with section 65 of the Fair Work Act.

Respond to requests properly. Every formal flexible work request must receive a written response within 21 days. Failing to respond, or responding with a generic refusal, creates legal risk.

Consider what support you can offer. Even if remote work isn't feasible for a particular role, alternatives like adjusted start times, compressed weeks, or fuel subsidies can make a meaningful difference — and demonstrate that you're acting reasonably.

Document everything. If you refuse a flexible work request, document the business reasons. If you direct employees to return to the office, document the basis for the direction and any individual considerations.

Get advice if you're unsure. The intersection of flexible work rights, employer directions, and the current fuel situation is creating new risk areas that many employers haven't dealt with before. A quick call to an IR specialist can save you a much more expensive problem down the track.

Industrial HR provides practical, precise HR and industrial relations support for Australian businesses. For more information, visit industrialhr.com.au.