Fair Work Commission ruling validates employer's return-to-office mandate despite contract language
A Fair Work Commission ruling on January 19, 2026 has given employers legal backing to enforce return-to-office policies, even when contracts reference working from home.
Richard Johnson thought his employment contract with PaperCut Software protected his right to work remotely. The contract stated he was "permitted to work from their personal residence in item 1 of Schedule 1 in line with relevant PaperCut policy." Johnson signed it in March 2022, started work in April, and worked predominantly from home for three years without issue.
But in August 2023, PaperCut introduced a hybrid workplace policy requiring employees to attend the office three days per week, with a staged transition to full implementation by January 2025. Johnson participated in the consultation process but refused to comply when the policy applied to him.
The dispute centered on those few crucial words in his contract. Johnson argued the phrase "permitted to work" gave him an unconditional right to remote work. He obtained legal advice supporting his interpretation and shared it with PaperCut. His position was clear: the direction to return to the office breached his contract, so he didn't have to follow it.
PaperCut saw it differently. The company argued the permission to work from home was always conditional on company policy, and the contract explicitly stated Johnson "may be required to work at other locations from time to time." When he continued refusing to attend the office, PaperCut issued warnings. On May 20, 2025, Johnson received a final warning. On June 11, the company made it explicit: comply immediately or face dismissal. Johnson attended the office just once after the May 20 warning, then failed to comply entirely after the final June 11 directive.
He was terminated on June 19, 2025. The following month, Johnson filed an unfair dismissal claim, seeking reinstatement.
Commissioner Connolly examined the contract language closely. The key finding turned on what a reasonable person would understand from the wording. The Commissioner found that "working from home, is something PaperCut 'allowed' Mr Johnson to do. It was not, however, as Mr Johnson believed, a 'right' he was entitled to without caveat."
The decision emphasized that the words "in line with relevant policy" made the permission conditional, and when PaperCut's policy changed, so did Johnson's working arrangements. The Commissioner also noted that Clause 3 of Johnson's contract required him to "comply with such reasonable and lawful directions and all policies, rules and regulations from time to time provided by PaperCut."
On reasonableness, the Commission accepted that PaperCut had developed its hybrid work policy through consultation, implemented it via a 16-month staged transition, and provided flexibility for employees with specific circumstances. Johnson never requested alternative arrangements or explained why he couldn't comply beyond his contract interpretation.
The Commission found PaperCut's direction was both lawful and reasonable. As Ms. Butcher from PaperCut testified, the only reason Johnson was dismissed was "because despite our best efforts to help him follow a direction he refused to."
Commissioner Connolly found that Johnson's dismissal was not harsh, unjust or unreasonable. After weighing all considerations under the Fair Work Act, the application was dismissed. Johnson's refusal to comply with a lawful and reasonable direction, despite multiple warnings and opportunities to do so, justified his termination.
For HR leaders managing return-to-office transitions, this case demonstrates the importance of contract language that references company policies rather than fixed entitlements. It confirms that employers can enforce workplace attendance requirements through proper process, and that employees cannot rely solely on their contract interpretation to avoid lawful directions.
