Employers will be forced to justify their decisions to knock back requests for flexible working arrangements under a new clause to be inserted into all modern awards by the Fair Work Commission.

And workers will gain the right to mount a legal challenge if an employer fails to properly consider their request and give a detailed explanation of any refusal - including the business grounds for the decision.

The full bench of the commission said in its decision, published on Monday, that the new clause was crafted in response to "significant unmet employee need for flexible working arrangements" in Australia, where about a quarter of workers were "not happy with their working arrangements".

ACTU Secretary Sally McManus said the Fair Work Commission decision was "a step in the right direction". Credit:James Alcock

Under the new clause, employers will be obliged to "discuss the request with the employee and genuinely try to reach agreement on a change in working arrangements that will reasonably accommodate the employee’s circumstances", before responding.