AbstractDespite the current controversial debates about discretion in public bureaucracies in general, and in welfare agencies in particular, the current literature on street‐level bureaucracy mainly assumes that discretion is a distinctive feature of the daily work of public servants. Nonetheless, a pertinent question has not specifically been asked in this literature, that is, given the context of privatisation and increased welfare conditionality in the welfare sector that are seriously challenging welfare frontline staff's commitment to social justice and human rights‐based practices, what are forms of street‐level discretion likely to contribute to improving the quality of welfare services? In this study, we attempt to address this question by exploring discretion displayed by welfare frontline staff in four Australian employment service providers. We argue that emotional labour, especially when being informed by critical empathy, is an important and effective form of street‐level discretion that welfare frontline workers can perform to better support welfare recipients and minimise the punitive aspects of welfare policy.