War and workplace: What does the war in Iran mean for your job?

It is not only oil at stake. The Strait of Hormuz serves as a crucial chokepoint for the industrial inputs that underpin modern economies. Along this route move essential materials such as fertilisers, medical helium, sulphur for metal processing, chlorine for water treatment, and petrochemical feedstocks, including ethylene, propylene, and ammonia, core ingredients in the manufacture of plastics, resins, and a broad array of industrial chemicals.

Deep impact

If the conflict with Iran persists for more than a few months, its impact will affect the price and availability of everyday essentials, from food to industrial goods. Economists warn that a prolonged confrontation could trigger widespread economic disruption, pushing up costs, constricting supply chains, and increasing inflation, with potentially severe consequences for households and businesses around the world. For example:

• Diesel shortages and higher fuel prices will flow through the entire supply chain.
• Rising transport costs lift prices of groceries, fresh produce, and all road-freighted goods.
• Fewer fuel shipments to Australia place a sustained strain on freight and logistics networks.
• Shipping lines will impose steep surcharges, increasing costs for exporters and importers.
• Builders will pause construction projects as oil-linked materials and transport expenses surge.
• Fertiliser shortages and high diesel costs will force farmers to reduce or halt plantings.
• An increase will occur in freight surcharges across sea, air, and land transport.
• Higher costs across industries will be passed on to consumers, drastically impacting the cost of living.

Australia is currently considering “light touch” ways to conserve fuel, but the crisis could impact workplaces in a number of ways, directly and indirectly.

Work-from-home directions

Some employers in Australia are already making arrangements for working from home, to assist employers with the cost of living, as petrol prices are putting financial pressure on workers who drive to work.

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The Finance Sector Union has been urging banks and financial employers to let staff choose their own remote work days to help ease cost-of-living pressures, including rising fuel costs. The union argues that “with surging fuel prices and transport costs, increased mortgage and rent repayments, and growing inflation, suspending office attendance requirements is a reasonable and practical measure” that employers can take right now to help keep costs down.

The federal government has said it won’t issue mandates requiring workers to stay home because of the fuel crisis. Instead, it has encouraged remote work for people who can do it to help reduce fuel demand. For those who cannot work from home, the Victorian and Tasmanian state governments are deterring driving to the office by making public transport free for April.

Stand downs

Under section 524 of the Fair Work Act 2009, an employer may lawfully stand down an employee without pay during a period when the employee cannot be usefully employed, such as a stoppage of work caused by factors such as supply failures. The employer must show there is genuinely no useful work the employee can perform.

In some limited cases, employers are standing down workers without pay because of fuel disruptions. ABC News has reported that gold miner Blue Cap Mining has stood down around two-thirds of its 180 fly-in, fly-out workers due to fuel shortages, cutting production as diesel supplies remain unreliable. The company said it had less than two weeks’ worth of fuel stored and was reducing production until supply certainty improves.

Flexible work arrangements

Most Australian workers can already request flexible work arrangements if they meet certain criteria (e.g., caring responsibilities, disability, etc.), and employers must genuinely consider such requests under the Fair Work Act. Some legal experts, such as Ian Neil SC, have suggested fuel hardship could reasonably justify employee requests for flexible work, which employers may need to consider unless they have “reasonable business grounds” to refuse. Rising petrol costs, for example, may prompt requests to accommodate childcare or support for elderly parents who cannot afford travel to appointments.

Hiring freezes

During the early COVID-19 period, the US saw the “Great Resignation”, with many workers leaving jobs due to poor pay, limited prospects, and feeling undervalued. Now, a “Great Hesitation” may be emerging, as uncertainty prompts employers to slow hiring and become more selective about new recruits.

Decreased business travel

Soaring oil prices will curb business travel, as higher costs and mounting pressure on aviation fuel markets force companies to rethink their plans. Many international conferences and business events are being postponed or cancelled, with employers delaying non-essential travel until later in the year. Key business hubs, such as Dubai, are seeing reduced activity as companies seek to minimise expenses and avoid the financial strain of high travel and fuel costs.

Redundancies

Prolonged global energy supply shocks can dampen economic growth, raise costs, and potentially push energy-reliant industries into decline. Rising fuel and transport expenses may reduce profit margins, slow production, and, if sustained, lead to job losses. We are yet to see widespread fuel-driven redundancies in Australia, as government and industry efforts remain focused on securing supply and mitigation. Still, the risk of employment impacts will grow if fuel disruptions persist or worsen.

Paul O’Halloran is an employment law partner at Dentons.