CEDA submission on Victoria’s working from home legislation

CEDA welcomes the opportunity to provide feedback on the Victorian Government’s proposed working from home legislation.  

Since the COVID-19 pandemic, both employers and workers have benefited from the increased adoption of working from home (WFH). Our research finds it has afforded flexibility to those who previously faced barriers to employment, reduced commute times and saved employers on their wage bill. These outcomes suggest parties are negotiating to find solutions that work best for their circumstances. 

Data also indicates that working from home is here to stay – overall working from home rates have remained elevated since the pandemic and more than 80 per cent of those who do work from home are doing so one or more days per week.

Given the incentives and the successful record of employers and employees finding working from home arrangements that suit their circumstances, the proposal to enshrine the right to work from home two days a week is not necessary. This policy risks adding to regulatory burden at a time when cutting red tape is a key state and national priority. 

Employers and workers benefit from working from home  

CEDA’s four-part working from home research series shines light on some of the benefits accruing to employers and workers.  

For example, WFH has helped overcome participation barriers that previously made it harder for underrepresented groups to get a job, keep their job or increase their work hours. This is particularly true for workers with a health condition or disability, women with children and carers, who have all significantly increased their participation in occupations that have made large transitions to remote work since the pandemic.  

This rise in participation is reflected in CEDA’s analysis of data from the Household, Income and Labour Dynamics in Australia (HILDA) survey, which found that those who worked from home worked around 3.6 hours more per week than those who didn’t, and on average spent 15.7 per cent less time commuting. Less time spent commuting brings savings on public transport fares and fuel, as well as the benefits gained from the time saved.  

Employers are also seeing benefits in their wage bill. Since the pandemic, those who undertake hybrid or fully remote work have earned on average 5.8 per cent less than those who cannot or do not work from home. This difference signifies that workers are willing to give up significant income to gain greater flexibility and save on commuting time. Moreover, employers are benefitting from greater worker retention. A US study found resignations reduced by a third if employers were able to work from home.  

The above outcomes highlight the trade-offs employers and workers are making in their decisions about WFH. Where there are mutual benefits, employers have incentives to offer this option, which attracts workers who place a high value on this flexibility.  

There are positive and negative effects on productivity  

The productivity implications of working from home are critical for employers and workers, as it will directly affect profits and wages.  

Academic consensus is that an individual can get more done from home. This is particularly true for occupations with specific and measurable outcomes.  

Within a team environment, the effects are less clear. Early evidence suggests creative idea generation is more difficult within a virtual environment. Other research shows that junior staff receive less feedback and mentoring when they are out of sight of senior staff, with drags on long-run productivity.  

Ultimately, the effects on productivity reflect the type of remote work, whether fully or hybrid, as well as the business’s adaptability and openness to business practices that enable remote work. 

International evidence has shown that the productivity effects of hybrid work – a mix of working from home some days in the week and in the office the other days – are typically small and potentially positive. As technology improves and businesses’ WFH management practices and frameworks mature, more efficient work from home systems will support productivity. 

Working from home is here to stay 

The data shows that working from home is not under threat, despite considerable media focus on return-to-office mandates.  

ABS data shows the rate of WFH has remained elevated since the pandemic. The share of people who say they regularly work from home decreased by just over one percentage point between August 2023 and August 2024 from 37.4 per cent to 36.3 per cent. More detailed data from HILDA supports this narrative, with only a slight decrease in the share of workers who work any hours from home, from its peak of 38 per cent in 2021 to 35 per cent in 2023.

Employers also seem content with the current state of play. A poll of 1000 employers by the Australian HR Institute found there was no increase in the share of return-to-office mandates between 2023 and January 2025. Most employers were content to continue under a hybrid arrangement. Of the 313 Victorian employers surveyed, only four did not allow hybrid or remote work.  

The proposed legislation is unnecessary and would add to regulatory burden 

Considering the current state of working from home, the Victorian Government’s proposal to mandate a right to WFH two days a week, for jobs where it is feasible to do so, is unnecessary.  

Workers are assessing the trade-offs of working from home and seeking agreements with employers that match their preferences. With a consistent number of people working from home since the pandemic, this arrangement is not currently under threat. This policy therefore aims to fix a policy problem that does not exist.  

While this policy doesn’t prevent people from working full-time in the office, it does undermine an employer’s right to request this. Some employers may have greater need for their employees to be collaborating, learning and innovating in-person. Employers themselves are best placed to assess the trade-offs they face in terms of productivity, staff retention and the wages they need to offer to attract staff. Ultimately, employers and workers should be left to find solutions that work best for both parties, as they are already doing. 

Finally, it is worth considering the additional regulatory burden associated with this policy. A key point of consensus arising from the Federal Government’s Economic Reform Roundtable in August was the need to reduce the burden of regulation in the economy. The Victorian Government identified cutting red tape as one of the four key action areas within its Economic Growth Statement released last year. Regulating working from home contradicts these priorities and opens the door to potentially costly court cases without obvious or demonstrable benefits to Victorians.  

Done well, working from home offers significant benefits for employers and employees. The winners from these arrangements outnumber the losers. The mutual benefits and sustained use of these arrangements mean there is no need for legislation that risks turning working from home into an industrial relations battleground.