Employee loyalty is increasingly based on the ability to work flexibly – at the same time as many companies are forcing workers to return to the office, a new report has found.

Flare HR’s National Employee Benefits Index found that while many Australian companies are scaling back flexible work, employees are basing much of their loyalty on being able to work flexibly.

Australian companies are approaching a point where they will either need to relent and allow workers to continue working flexibly or see large-scale resignations in protest to returning full-time to the office.

Flare HR surveyed 3,000 Australian employees across all industries on how the economy is impacting employee sentiment to their workplace and role.

It found that being able to access remote and flexible work is the biggest driver of loyalty in 45 per cent of workers surveyed.

Paradoxically, there was also a 16 per cent drop in flexible work arrangements being made available to Australian employees since the last survey was conducted in February this year.

“With job mobility the highest it’s been since 2012, and pre-recessionary sentiment high, keeping employees productive has never been more critical,” Flare HR chief revenue officer David Brudenell said.

“The National Index shows employee perks and benefits drive productivity and loyalty, but most businesses have the wrong mix of them.

“Aussies want flexibility above all else – and are loyal to employers that offer it.”

The research found that cost-of-living pressures in Australia are having a huge impact on workers, with 41 per cent feeling emotionally drained, 37 per cent saying they are overworked and nearly 20 per cent unsatisfied with their compensation.

While the research found that work benefits have a significant impact on employee loyalty and retention, it also found a drop of more than 70 per cent of the most popular benefits, including remote working and reasonable hours.

Nearly one in four of the workers surveyed are considering leaving their current employer.

“Over half of the employed workforce is financially stressed,” Brudenell said.

“With a worsening business outlook, there is a real risk that employees disengage, impacting productivity when business needs it most.

“Benefits have the power to help employees thrive, acting as a buffer between economic pressures and emotional stress, but this is dependent on the right benefits, company processes and culture.”

Since February this year there has been a 3 per cent decrease in flexible schedule options in Australian companies, a 7 per cent decrease in support for reasonable work hours and a 16 per cent decrease in flexible work being offered.

A number of tech companies have led the charge in forcing employees to return to the office for a certain number of days each week.

Google, Tesla and Amazon now require employees to spend at least three days per week in the office, while X (formerly Twitter) workers must work 40 hours per week in the office.

X CEO Elon Musk earlier labelled working from home as “immoral”.

Even Zoom is mandating office hours, with employees living within 80km of an office having to work in person at least twice a week.

Numerous studies have found that having the option to work remotely and flexibly has numerous mental and physical health benefits for employees, improves their productivity and reduces their likelihood to leave their job.

One report found recently that flexible workers are happier and better employees, and are prepared to quit if they are forced to return to the office.

Australia was recently found to be the 25th best place in the world to work remotely, with good levels of economic safety but poor cyber practices and high cost-of-living pressures.

Microsoft research has found that workplaces are now likely entering into a new period of structured flexible work, with employees looking for flexibility and connections at work.