The sting in the tail of Victoria’s right to work from home

The Victorian Government is proposing to give eligible workers the right to work from home (WFH) for up to 2 days per week from September. The new laws would also require employers to pay ‘reasonable costs’ for WFH equipment and protect workers against discrimination if they use the right.

Victoria is the first state to go down this path, making it an important test case for other states who may be considering the same. But our new research urges caution. Drawing on a large survey experiment of Australian office workers, we show that the proposed law would disproportionately affect workers who value WFH less and whose jobs are less suited to it.

What is the proposed law?

The proposed changes are not an automatic entitlement; instead they give workers a right to request WFH 2 days per week, with pro-rata equivalents for part-time workers. If a worker lodges a written request, the employer must grant it unless it is unreasonable. That is a high bar, with the onus on the employer to show that the proposed arrangement would significantly harm the business, and even then, it must allow whatever lesser amount of WFH is reasonable.

That makes the Victorian right significantly stronger than existing federal flexible-work provisions, which only cover specific demographic groups (e.g. parents, older workers) and only require employers to demonstrate ‘reasonable business grounds’ to reject a request.

Overall, while the policy will not automatically give every office worker 2 days at home, it does appear to give workers the whip hand.

The political case for the legislation.

Since the onset of the COVID-19 pandemic, millions of firms and workers have experimented with WFH and typically settled on a mix of home and office days. That widespread, voluntary take-up suggests that hybrid arrangements work well in many jobs, and surveys in Australia and internationally show that workers are willing to sacrifice pay to WFH.

Yet many workers are allowed to WFH less than they would like or fear that their ability to WFH could be taken away. The new legislation is thus likely to be popular at the ballot box this November.

The economic case is weaker.

The new legislation changes little for the many workers already allowed to WFH 2 days or more. It reaches only those whose employer currently allows less than 2 of 5 workdays from home – and they are not a random slice of the workforce. We call them affected workers and we estimate they are about one-third of Victorian office workers and one-sixth of workers state-wide.

To understand how the changes might affect these workers, we ran a discrete-choice survey experiment with 2,000 Australian office workers between April and June 2026. In the experiment, we asked each worker to make a series of choices between 2 hypothetical full-time office jobs (Job A or Job B), which differed in pay, commuting time, how much WFH the firm allowed, how much colleagues worked from home, and whether office presence mattered for promotion.

Because these features were randomised, we can isolate how each one affects job choices and the trade-offs workers are willing to make between salary and other features. This allows us to quantify workers’ willingness to pay for WFH and show how its value depends on colleagues’ WFH behaviour and promotion incentives – features that direct valuation questions typically ignore.

We also asked how much they would WFH in each job and several follow-up questions about their current jobs, including the number of days they are allowed to WFH.

Four findings stand out.

First, Victoria already has the most WFH-friendly employers in the country.

Our earlier peer-reviewed research showed this is a legacy of Melbourne’s lengthy lockdowns. Our 2026 survey indicates that Victoria remains Australia’s WFH leader: 68 per cent of full-time office workers in Victoria are allowed at least 2 WFH days, compared to 65 per cent in NSW/ACT and 58 per cent in other states. Victoria’s lead only widens after we adjust for differences in workers’ demographics and job characteristics.

Second, the impact of the proposed WFH legislation is large.

Despite Victoria’s high WFH activity, a 2-day right would lead to large increases in WFH. If the policy moved their firms to a 2-day policy, affected workers’ WFH would jump from 0.2 to 1.7 days a week, with three-quarters taking the full 2 days – lifting average WFH across all Victorian office workers by about half a day or 25 per cent. Affected workers would sacrifice about 5.6 per cent of salary if colleagues stayed in the office, and 10.5 per cent if colleagues also WFH 2 days.

Evidently, WFH is far more valuable when the whole team does it, as sole-WFH brings isolation and a loss of visibility with colleagues and managers who remain in the office.

Third, WFH is more difficult in jobs affected by the law.

Relative to other office workers, affected workers spend far more of the week on in-person tasks and they cluster in customer-facing and hands-on industries like retail, health, hospitality, manufacturing, education and personal services. Their jobs also rely more heavily on teamwork. The law would therefore matter in jobs where WFH is harder to make productive.

Finally, affected workers value WFH less.

In our job-choice experiment, affected workers were only willing to give up about half as much pay for a hypothetical 2-day WFH job as other office workers. WFH is also less valuable in their actual jobs because promotion decisions place greater weight on office presence. This is selection at work – workers who value WFH are already working for businesses that allow more WFH.

Will the law improve economic welfare?

Whether the law improves welfare primarily depends on how productive WFH is in the jobs where employers currently limit it. Our evidence suggests that is where the case for additional WFH is weakest, especially in Victoria’s high-WFH environment.

Existing arrangements are also informative. If the gains to workers clearly exceeded the cost to firms, these firms would likely already offer WFH, since they could recover some of its value through slower pay rises or hiring better workers, as well as cheaper rent. The fact that they have not is instructive.

None of this means that employers cannot make mistakes with their WFH policies. The fact that WFH was rarely allowed before the pandemic provides evidence of this.

But we should also be sceptical that the government is better placed to assess the merits of WFH than employers and employees themselves.

Governments should also expect the proposed laws to have unintended consequences. Over time, firms may respond to higher WFH levels by suppressing wage growth, which would harm workers who prefer on-site work.

Younger workers, who learn most by sitting near experienced colleagues, may bear the most significant costs of higher WFH levels, since WFH makes training and on-the-job learning more difficult. And more WFH will likely continue to push people away from the CBD, push up prices for larger homes, and further weaken demand for CBD offices and hospitality venues.

So where does this leave the policy?

A 2-day right would give some workers more time at home, and they would value that flexibility. Whether Victoria comes out ahead is the harder question and the one that matters.

For the policy to improve welfare, the gains from additional WFH must exceed the costs in the workplaces that currently restrict it. Our evidence highlights the sting in the tail – this popular policy will reshape precisely those workplaces where the benefits of additional WFH are least likely to exceed the costs.