Australia’s workplace flexibility debate has reached new heights in 2025, with employers and employees increasingly at odds over how, and where, work is carried out. Large organisations, including some of the country’s biggest employers, are rolling out structured return-to-office (RTO) mandates, adding fuel to an already heated conversation about balancing operational needs with workers’ expectations. 

Compounding the issue is an upcoming federal election that could reshape Industrial Relations (IR) laws, including the contentious Right to Disconnect. As the cost-of-living crisis deepens, many Australians wonder whether rigid RTO policies will push them over the edge – or whether in-person collaboration is ultimately worth the personal and financial trade-offs.

So, how is workplace flexibility shaping up in 2025, and how organisations can respond in this pivotal period?

The reassertion of in-office work

In the past year, we have witnessed a clear trend: businesses nationwide are re-evaluating remote and hybrid models. Our State of Hiring research highlights a growing preference for on-site work. Over half (57%) of Australian businesses we surveyed say they are less likely to hire candidates unwilling to be in the office five days a week. This underscores a decisive shift: many employers link in-person collaboration to stronger team cohesion, spontaneous innovation, and the cultivation of organisational culture that can be difficult to replicate online.

Yet this push for office-based work carries risks. Employees accustomed to remote or hybrid arrangements can view full-time office returns as a rollback of the flexibility gained in recent years. Particularly in sectors where remote work has proven effective, a strict on-site requirement may seem out of step with the realities of modern business. Companies that fail to address such concerns risk falling morale and higher turnover, which undermines the very productivity gains they hope to achieve.

Mounting IR pressures ahead of the federal election

The RTO debate does not exist in a vacuum. The looming federal election has shone a spotlight on Australia’s IR reforms, particularly the Right to Disconnect. Designed to help workers establish boundaries between professional responsibilities and personal time, these protections have sparked considerable debate. Proponents argue they support employee wellbeing by reducing burnout, while critics point to potential downsides such as slower response times and operational inefficiencies.

If a new government takes power, IR policies could be overhauled once again. “Closing Loopholes” provisions, together with obligations under the Right to Disconnect, have already led some organisations to consider global hiring strategies to sidestep complex or uncertain regulations domestically. In fact, our research shows that 37% of businesses cite IR challenges as a primary motivation for moving abroad. Given the ongoing ambiguity about which reforms may remain or be revised, many employers are adopting a wait-and-see approach while also preparing alternative labour options overseas.

The cost-of-living squeeze

These workplace shifts intersect with Australia’s escalating cost-of-living crisis. For many employees, a mandatory return to office involves more than a longer commute: it raises expenses for transport, childcare, and living closer to city centres. According to the International Monetary Fund, hybrid work is worth about an 8% increase in salary for employees and saves them about five hours a week in commuting time. 

While leaders who favour RTO often cite the advantages of face-to-face collaboration, employees already burdened by rising costs may see office mandates as an unwelcome financial strain. 

Consequently, the meaning of “flexibility” itself is expanding. It is no longer limited to choosing one’s location or adjusting hours; it now directly affects workers’ financial stability. Offering hybrid options or financial support for commuting can help employers show empathy and maintain a motivated workforce in a competitive labour market.

Striking a balance: practical steps forward

Workplace strategies in 2025 cannot be one-size-fits-all. Here are some approaches employers can use to navigate the tension around RTO, shifting IR policies, and the escalating cost-of-living crisis:

Establish clear objectives and timelines – When rolling out a RTO policy, explain not only what will change but also why. Communicating broader goals, such as promoting collaboration or rejuvenating company culture, can help employees understand the bigger picture to ease transition.

Stay informed on legislative changes – Monitoring IR updates and the election cycle is crucial. Being proactive about adapting to new legal requirements, or exploring global hiring, ensures you remain agile in a fluid regulatory environment.

Invest in enabling technology – Even if your organisation is re-committing to in-person work, remote and distributed arrangements will persist. Tools that facilitate seamless communication and compliance across borders can bridge any gaps between on-site and off-site teams, helping maintain productivity regardless of location.

Workplace flexibility is no longer just a perk; it is a defining factor in talent acquisition and retention, particularly in a year marked by electoral uncertainty and rising living costs. While the short-term advantages of in-person collaboration are compelling, employers who overlook employees’ legitimate needs for flexibility and support risk losing top talent to more adaptable competitors.

Ultimately, the most resilient organisations will be those that skilfully blend operational aims with authentic employee engagement. By embracing careful planning, open dialogue, and an adaptive mindset, businesses can navigate this transitional moment in Australia’s workplace evolution, and emerge stronger and more connected than ever.