Business groups have criticised a decision to rule out exemptions for small businesses in the Victorian government’s plan to legislate the right to work from home two days a week, saying some companies could move interstate or overseas.

Cabinet met on Monday to greenlight the work from home plan – a key pillar of Labor’s re-election campaign – with further announcements expected during the parliamentary sitting week.

On Tuesday, the premier confirmed that all businesses – regardless of size – would be covered by the laws once passed. It marks a shift from comments she made last year suggesting the government would consider an exemption for small businesses.

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Allan said the government had consulted extensively with businesses and decided that applying the policy to all employers was a matter of “fairness”. She said while many large companies and organisations already offer flexibility, such arrangements were less common in small businesses, which employ about 1.3m Victorians.

“If you can work from home for a small business, you deserve the same rights as someone working for a big bank,” Allan said.

Scott Veenker, the acting chief executive of the Victorian Chamber of Commerce and Industry that opposes the proposal, said it could create a significant “regulatory burden” on small- to medium-sized businesses.

“It’s just another added impost. They don’t necessarily have HR departments to engage with and to consult,” Veenker said.

“I’ve spoken to a number of businesses over the last couple of weeks and they just have a lot of dismay, in terms of not understanding why it’s necessary and why it needs to be done.”

Veenker said the laws – if passed – could lead to some businesses to consider “moving operations interstate or potentially overseas”.

“If you make business too hard, they’ll go elsewhere and that’s the last thing we need in Victoria right now,” he said.

The Council of Small Business Organisations Australia’s chief executive, Skye Cappuccio, said the “one-size-fits-all model simply does not reflect how small businesses operate”. It had previously called for exemptions for businesses with fewer than 50 full-time employees due to potential adverse effects.

“This proposal duplicates existing federal legislation, adds another layer of compliance, and creates further uncertainty for small business owners who are already spending almost a day each week on regulatory paperwork,” Cappuccio said.

Prof Peter Holland, a human resource management expert at the Swinburne University of Technology, said plan was simply formalising a shift to work from home that had “accelerated” during Covid-19 lockdowns.

“This is something the workforce actively wants, and employers who ignore that do so at their own risk,” Holland said.

The treasurer, Jaclyn Symes, said there was similar opposition to workplace rights now universally accepted.

“We are at the forefront of this particular policy, but this will not be new and interesting in 10 years’ time. Look at OHS laws, look at penalty rates, look at all the things that employers – not all – have rallied against,” Symes said.

Last year, the premier announced that her government would legislate the right to work from home two days a week for those who can “reasonably” do so.

She said the legal right would apply to both public and private-sector workers. But it remains unclear how it would be enforced, given Victoria, like other states, handed its industrial relations powers to the commonwealth years ago.

On Tuesday, Allan said the government had received legal advice the plan was “constitutionally valid”.

She framed the policy as one that would boost productivity via increasing participation of women, particularly new mothers, in the workforce.

The policy was also designed to wedge the opposition after the issue became a flashpoint in the 2025 federal election campaign, when Peter Dutton was forced to back down on a policy to restrict work-from-home arrangements for public servants due to backlash.

The opposition leader, Jess Wilson, has refused to provide a position on the policy. On Tuesday she accused the government of “drip feeding information” in an “attempt to deflect” from allegations of union corruption on Big Build sites.

“I call on the premier to be transparent,” Wilson said. “Produce the legislation.”