COMMISSION CONFIRMS LIMITS TO ‘UNCONDITIONAL’ WORK FROM HOME ARRANGEMENTS

A recent Fair Work Commission (Commission) decision provides timely guidance for employers navigating hybrid work arrangements and employee resistance to return-to-office policies.

In Mr Richard Johnson v Papercut Software Pty Ltd [2026] FWC 178, the Commission upheld the dismissal of the employee, finding that his employment contract did not confer an unconditional right to work from home and that his ongoing refusal to comply with the hybrid policy warranted termination.

Key facts

Mr Johnson commenced employment with PaperCut in April 2022.

His employment contract permitted him to work from his personal residence in line with company policy and stated that he “may be required to work at other locations from time to time”.

The contract also required compliance with lawful and reasonable directions and company policies.

During COVID-19, PaperCut allowed Mr Johnson to work from home with only intermittent office attendance.

As COVID-19 restrictions eased, PaperCut undertook hybrid work trials and consulted with employees about future working arrangements.

Following this process, in August 2023, PaperCut introduced a hybrid work policy requiring employees to attend the office three days per week, with a staged transition period of approximately 16 months.

PaperCut sought to vary Mr Johnson’s contract to reflect the hybrid arrangement, but he refused, asserting that his contract entitled him to work from home on a full-time basis.

Despite multiple meetings, written correspondence, legal advice exchanged by both parties, transitional arrangements offered, and repeated warnings about the consequences of non-compliance, Mr Johnson continued to refuse to attend the office as required.

After a final warning and continued non-compliance, PaperCut dismissed Mr Johnson in June 2025.

Mr Johnson lodged an unfair dismissal application, arguing that the direction to attend the office was unlawful and unreasonable, and that dismissal was harsh given his otherwise unblemished employment record.

Key findings

Commissioner Scott Connolly dismissed the unfair dismissal claim, finding that PaperCut had a valid reason for dismissal and that the process undertaken by the employer was fair.

The Commission reaffirmed that a management direction will be lawful if it falls within the scope of the employment agreement and involves no illegality, and that reasonableness is assessed by reference to the contract and surrounding circumstances.

Importantly, Commissioner Connolly rejected the argument that the contract provided an unconditional right to work from home.

Rather, working from home was something PaperCut had “allowed” under its policy at the time the contract was entered into.

It was not a right “without caveat”.

A reasonable person would understand that working from home was conditional on company policy and subject to change.

The hybrid work direction was found to be objectively reasonable.

The Commission placed weight on the extensive consultation undertaken, the lengthy staged transition, the flexibility built into the policy and the numerous opportunities provided to Mr Johnson to comply.

The fact that Mr Johnson did not seek a formal flexible work arrangement or provide reasons for his refusal further weakened his position.

Ultimately, the Commission found that Mr Johnson’s persistent refusal to follow lawful and reasonable directions left PaperCut with “no other real or reasonable option” but to terminate his employment.

Key takeaways

This decision provides practical lessons for employers.

In particular:

Hybrid or work from home arrangements should be clearly set out in policies and framed as ‘subject to company policy and operational needs’ rather than an entitlement outlined in an employment contract;

Any direction to attend the office should be lawful and reasonable, noting in particular that phased returns to the office may assist in demonstrating reasonableness; and

Consulting with employees before enforcing a policy – even if not strictly required – will assist in ensuring any subsequent direction is justified.

Employers should ensure employees are aware of formal flexible work request processes, even where hybrid attendance is required.

Want to know more?

If you require guidance on implementing return-to-office mandates, please contact NRA Legal on 1800 572 679 for a confidential conversation.

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