The state Labor government intends to legislate a new legal right for employees to work from home, for two days a week, where it is reasonable to do so.

Billing the proposal as a win for employees and workforce participation, Allan on Tuesday said small businesses will face the same rules as major corporates.

Some business groups and small employers criticised the government position, fearing it could create extra red tape or separate white- and blue-collar workers within the same business.

On Wednesday, Allan maintained the government’s position that small businesses should fall under proposed changes to the state’s Equal Opportunity Act.

The reforms will come into effect on September 1, 2026, according to the Premier’s office.

However, small businesses will have until July 1, 2027, giving employers time to adapt their HR processes and workplace policies.

Allan also confirmed new dispute resolution pathways for when those WFH negotiations break down.

The Victorian Equal Opportunity and Human Rights Commission will handle workplace conciliation, with unresolved cases forwarded to the Victorian Civil and Administrative Tribunal.

The government is expected to introduce legislation underwriting those reforms in July this year.

Beyond ‘traditional’ small businesses, some critics have expressed their concerns for Victorian startups affected by the WFH proposal.

City of Melbourne Councillor and innovation spokesperson Andrew Rowse shared his personal view with SmartCompany, saying the measure would add a new layer of complexity for up-and-coming technology businesses.

“It’s a debate on the method on how to achieve the best outcome for Melbourne, and I’ve never seen more red tape do that, especially for our startup community.”

That statement comes amid a high-profile debate between the state government and the City of Melbourne, whose Lord Mayor Nick Reece is opposed to plans that could reduce CBD foot traffic and visitation.

The City of Melbourne passed a motion opposing the state government plan in October, with Rowse among those to vote against the state government’s WFH proposal in a 9-2 decision.

“Our focus must be on ambitious long-term competitiveness and attracting world-class talent, rather than short-term measures that may prove short-term vote winners but undermine our future global standing,” said Rowse.