Evolving the employment contract for hybrid working

As hybrid working becomes the new normal, we know you're asking: how do we formalize this? Do we need to review our employment contracts? What about our duty of care for home workers? How do we balance individual needs with organizational efficiency? This episode looks at what needs to change, and what doesn't.

We dig into the detail of employment contracts and relationships in the wake of COVID-19,  exploring the benefits of putting more rigor in place to safeguard employee health and wellbeing in this new era. We grapple with some complexities of hybrid work arrangements, including when people work from a variety of locations, near and far. 

There are potential challenges popping up around data protection, tax, immigration, and employment rights - all of which we highlight . It's a deep and informative dive into the future of employment post-pandemic.

AWA Host: Karen Plum

Guests: 

• Ewan Keen, Partner & Joint Head of Employment Department, Simons Muirhead Burton
• Brad Taylor, Director of Consulting, AWA

AWA Guest details: https://www.advanced-workplace.com/our-team/ 

CONTACTS & WEBSITE details:

AWA contact: Andrew Mawson 

AWA Institute contact:Natalia Savitcaia 

Music: Licensed by Soundstripe – Lone Canyon

Want to know more about AWA?

• Follow us on LinkedIn
• Visit our website

Thanks for listening to the DNA of work podcast

Transcript

Karen Plum: 0:00

Hello there. When was the last time you thought about your employment contract? If you're now working more flexibly, perhaps operating some form of hybrid working, have you thought about whether your contracts are still fit for purpose? And what about all the other aspects of your employment relationship that might have been addressed on a needs-must basis back in COVID times but which perhaps now needs a look over? We're going to explore these questions, so let's get on with the show.

Karen Plum: 0:30

Welcome to AWA's podcast, which is all about the changing world of work and trying to figure out what's right for each organisation, because we know that everyone is unique. We talk to people who have walked the walk, who've got the t-shirt and who've learned lessons that they're happy to share with us. I'm your host, Karen Plum, and this is the DNA of Work. Employment contracts and relationships are things we probably don't think about too deeply, unless there's a problem.

Karen Plum: 1:02

So much about the way we work has changed since the pandemic started in 2020. Many things have become a new normal without needing to be formalised or documented, but what about the employment contract that lies at the formal end of the contractual relationship between employer and employee? Do those need to change if we're now working hybrid, perhaps asking people to come to the office three days a week? AWA recently held an event to explore these questions and I was lucky enough to continue the conversation with the event speakers, Ewan Keen, Partner and Joint Head of the Employment Department at legal firm Simons Muirhead Burton, and AWA's Director of Consulting and former HR director, Brad Taylor. I started by asking Ewan what a typical employment contract looked like before 2020.

Ewan Keen: 1:53

It would typically have a clause that says 'your normal place of work is' - and that would normally be an office. There would typically be an addition to that clause that says 'or somewhere within', for example, 'a 25-mile radius of the office', but typically it would be 'the office'. And if there was any home working arrangement, it tended to be either very infrequent and inflexible and you'd just ask your line manager and they say that's okay, or it would be part of a flexible working request, whether an internal, informal one or formally under the statutory procedures, where there would be a pattern worked out and when would you work from home and what would you do from home. And it was all very rigid.

Karen Plum: 2:40

Yeah, so quite prescriptive. If they didn't have agreements in place that were fixed and rigid, then they kept everything extremely fluid so that they could retract it at any point.

Ewan Keen: 2:50

Absolutely, it depended on the industry and what someone was doing within the company. But broadly, I think people were suspicious of how efficient it would be if someone were working from home, and so any formal license to allow that person to assert a right to work from home tended to be quite closely guarded.

Karen Plum: 3:09

Yes, absolutely. I think we all remember those days and boy how they've changed. So along came COVID. Lots of people went home to work because that was the only place they could safely work to shelter away from the pandemic and from catching it. So as we started to emerge out of that situation, with lots of people having different arrangements, much more flexibility in their day-to-day working arrangements, what started to happen in an employment contract sense? Was there much happening in the early days?

Ewan Keen: 3:46

I think most contracts, particularly those that didn't have any provision for home working, the arrangement whilst people were away for COVID reasons, was well informally, we're going to allow you to work from home because of this pandemic. Organisations, I would say in my experience at that point, made a formal or permanent change to the work arrangements. They just said look, whilst this is going on, of course everyone can work from home. So as we emerged from COVID and people were coming back to work, most people who didn't in the first?

Ewan Keen: 4:24

place have a contract stipulating home working or any kind of remote working. Most people have come back to work on the existing contract. In other words, your normal place of work is the office. It's just that there's been an understanding that's carried on post-COVID that actually there can be a mix of home working, but not many organisations have specifically contractually changed their terms, although hopefully by now there will be a number of organisations that have introduced a policy. So I think probably where we're at now is that most organisations will still have an employment contract that doesn't allow for hybrid working, but have made it known to their employees that there is a hybrid working policy and they should adhere to it. And then again there's probably an unwritten or reasonably flexible arrangement with the immediate line manager or department manager or country manager.

Brad Taylor: 5:23

And I think just one of the ingredients as well to that I think that has helped us to get to this situation is that with the pandemic, there was this understandable focus on wellbeing and the need to look after the employee and protect the employee's health and wellbeing, and a lot of employers have become increasingly sensitive to that dynamic of the relationship.

Brad Taylor: 5:46

So, rather than just being able to insist, right, it's over everyone back in the office, please. There's been this ongoing sort of care element of oh, are people ready to sort of come back. Especially in the early years, straight after the panoramic, a re they sort of ready to come back in yet? Are they in that right sort of headspace and feel safe enough to come back in? Have we got the right sort of procedures in place? Coupled with, I think, the sort of blind eye that was turned to all of the things that wouldn't have been set up in the home environment when people had to work from home under pandemic circumstances. So there's that sort of combination going on, but I think now people are starting to think well, actually surely that can't continue. We do probably need to put a bit more rigor into place around this.

Ewan Keen: 6:28

Yeah, I'd agree with that. I think there was necessarily an emergency element and an impromptu element to what was being done. People hadn't had a chance to plan for this, and I think one of the things that would have been put in place if there was a formal arrangement on home working would have been the organisation looking at well, what was that environment like at home? Do you have the right chair? Do you have the right computer equipment? Do you have the right internet connection? Is that something we're going to help with or will that be your responsibility? Those are the sort of things that were sorted out

Ewan Keen: 6:59

if, pre-pandemic, you were entering into a formal arrangement for an element of home working. That almost necessarily couldn't take place when it was an emergency. You couldn't get people out into people's homes to have a look at their equipment. You knew it was the right thing for people's health for them to be at home, notwithstanding there might not be the right equipment there. The balance of that and getting on a tube or sending people over from any well-known outfitter store to put in the right chairs - the risk just wasn't acceptable.

Ewan Keen: 7:28

So that was a de facto arrangement that went in place, I think with everyone going oh, that's fine, because it's a medical emergency, it's a pandemic and it's not permanent. The minute it goes into well, the government direction to stay at home isn't there anymore. The requirement for it to be necessarily required by the business isn't there anymore. And now we're coming into a choice element. Are employees choosing to stay at home; are businesses more compliant in letting them stay at home; are businesses enthusiastically wanting people to stay at home? But once it's a permanent arrangement, then the choices, the issues that have to be looked at and the choices made by the parties entering into that agreement about environment becomes very different.

Karen Plum: 8:18

You mentioned, Ewan, that you didn't think the majority of organisations had changed their employment contracts, but they had supplemented them with a policy that was clear about whatever flavour of hybrid working they were operating. Do you feel these days that that is a suitably robust arrangement for most organisations?

Ewan Keen: 8:41

I think the short answer to that is yes. Obviously there's not always one size fits all and it depends on the environment and the organisation. But yes.

Ewan Keen: 8:50

I think if you're looking at it from an employer perspective for the moment, then you would presumably still want to provide yourself as an employer, as a corporate entity, with enough flexibility to enable to roll with the times and change.

Ewan Keen: 9:07

And maybe in a year, two years time we'll be looking at this with a very different perspective and saying actually, for people's mental health, for the ability to switch off from work, to have downtime, maybe the move to hybrid working hasn't been so good and maybe we'll move away from it.

Ewan Keen: 9:23

So I think employers at heart will probably want to keep the normal place of work as the office, unless we've agreed something else with you and that something else can be temporary, it can be flexible, it can be under review hey, it's in accordance with this policy.

Ewan Keen: 9:40

And if it's a policy in a handbook and you're very clear that the staff handbook is not contractually binding, if you're very clear that you can change the policies on review, then that gives the employing entity as much flexibility as a commercially sensible trend to retain I would suggest. But it also gives the individual enough certainty to know that there is a formal mechanism here and I'm not doing something under the radar and if one line manager moves, will I be exposed for an arrangement that's not allowed? No, it is formal and it's well governed and regulated by the employer, but nevertheless there is that flexibility. So I would think, as long as, going forward, people are very clear in the employment contract that there is a hybrid working policy, and being clear about the contractual standing or otherwise of that policy, and then that policy is itself regularly looked at and updated, then that's probably the way most employers would want to go and it probably gives enough individuals the right amount of certainty and satisfaction.

Karen Plum: 10:43

Right. So just to go back to what we were talking about in terms of perhaps the things that weren't looked at so closely during the pandemic, because it was an emergency and we weren't about to go and inspect people's homes and all of that sort of stuff, what sort of issues are you both seeing now in terms of what clients are bringing to you?

Brad Taylor: 11:05

I think now with organisations that are thinking about well, actually, how do we get something in place that feels consistent across the organisation and be clear as to what our position is on hybrid working. So what does hybrid working look like for our organisation? Because it does mean different things to different organisations. I think they're then trying to grapple with the nuances of that. So you know well what if we have people that we might say, for example, that we want people to come in two days a week, but what do we do if people live more than, say, 20, 30, 40, 50 miles away, or more than an hour and a half travel time away? Do we put all those people on a homeworker contract, or is that the fair thing to do? Or what if we've recruited people in the meantime and those managers have said to people well, we're a hybrid organisation, so you can work from home, you don't really have to come in that much. How do we rectify these things? So that seems to be the biggest thing at the moment is how do we now sort of pull it all in and get something consistent in place?

Brad Taylor: 12:03

And then sometimes also for organisations, if they are also then thinking well, we need to make sure that the numbers add up from a cost perspective on what we're doing, so perhaps we don't need to have the office as open as much as we did in the past. What does that mean in terms of the employment contract? Let's say, for example, if we say right, we'll close the office on a Friday, does that change what we need to be doing? Because now we're insisting, therefore, that those people that will be typically working on Friday have to work from home because there isn't an office for them to come into if they wanted to. So does that change? And I think that's the thing they're trying to grapple with? They want to be flexible. A lot of them like to be flexible and come up with something that works for the good of the organisation and the good of the individuals, but it's how to create something that's not going to get them into trouble a bit further down the line, because they're now changing what used to be the status quo.

Karen Plum: 12:56

And if you think about the two ends of the spectrum, where you've got an organisation that wants to close its office one day a week, what about the office that wants to close the office almost permanently or completely contract the amount of space that they have, so it literally just becomes like a drop in space, and so there is much more of a requirement for people to work somewhere else.

Ewan Keen: 13:18

I think it's fair to say that where there is a tension between the employing entity and the employees in home working environments, hybrid working environments, it's at both ends of the scale. Sometimes there are organisations that see this as an opportunity to cut down on certain headcount costs. Other employers are concerned that actually you don't get the best out of your employees, whether it's for their health and wellbeing, whether it's for their progression, whether it's for pure economic return and profitability and efficiency, that actually people need to be in the office at least X days a week. So I think you are seeing tensions, if I put it that way, at both ends of the scale. And again, it comes down purely from an employment law point of view, if an employer is looking to require people to return and physically be present or saying to people you no longer need to be present at all, purely from a contractual point of view, whether they can do that will depend on the wording of the contract. Is it a contract where you can require people because it's an office based contracts, five days a week, and the changes were temporary and you're now removing those temporary changes? If you're saying no, you aren't required to come in and indeed there's nowhere to come in at all.

Ewan Keen: 14:38

If it was important for you that there was interaction, if you feel it's better for you, for your health, your career, you might say well, hold on a minute, I've got an employment contract where my place of work, my normal place of work, is an office. So I think really you need to do two things as an employer. You need to be aware of what the contractual position is, and you are either going through a contract variation process, you're specifically consulting with your staff about changing the written terms, whether collectively, through unions, individually. Or you are saying, look, we have the contractual authority to make this change, but obviously best practice is that you would do that with your staff and you would try and bring them along with you. But it comes down to what you want to do as an employer. What does the contract say? Can you enforce it? And even if you can enforce it, presumably you want to do that in the best possible way by trying to win hearts and minds and bring your staff with you.

Karen Plum: 15:33

Yes, I think it was one of the early questions that everybody was asking - can the employer force me to come into the office?

Ewan Keen: 15:41

And the short answer to that is if you have a standard, if I can refer to it that way, a standard employment contract that says your normal place of work is 5 The Avenue, central London, then yes, you can. Now there's always caveats there, as there were before COVID, and they still apply. Hold on a minute. Are there specific, relevant individual reasons why I'm saying that's not appropriate? If I have a disability, for example, would it be a reasonable adjustment to allow me to work from home? Is there a reason why I can't work from home?

Ewan Keen: 16:13

People in particular protected periods of time, so, for example, health and safety check for someone who's pregnant. So there would always be reasons why, notwithstanding the written contract, it would be right for an employer to review, and indeed often they may have to make adjustments. But other than that, then yes, as long as it's with enough notice and it's not exercised capriciously, as the case law language is, then yes, an employer could say we're back to the contractual position now. We've given enough notice, we're phasing it, by X date, you must all be back at work, but we would invite any individuals that had any particular requirements to contact us. But yes, in short, you could, if someone has that kind of contract, require them to return.

Karen Plum: 17:02

So, just coming back to the duty of care, which you were discussing a little while ago, B rad, are you seeing clients who are actively making changes in terms of the way they do things and what they monitor and what they require of people working from home in a way that obviously they weren't able to do and weren't minded to do during the pandemic, for the reasons that Ewan was talking about earlier? Are you seeing them starting to get concerned or they're paying the duty of care a bit more attention?

Brad Taylor: 17:37

Yeah, I think they're definitely paying a bit more attention to this question now, especially as they start to land on what does hybrid working mean for us? So a lot of the clients that I work with ultimately end up with a position, a set of principles around this is what hybrid working means for us and therefore this is how we're going to apply it across our organisation in the future. And then it's with the line managers to take that and nuance it with their team so that, because a finance team is going to be different to, say, a marketing team or business development team exactly how they need to apply those things. But that following on from then is okay. So what sort of equipment do people need to have then, if we're going to have them working from home on a much more permanent basis now x number of days per week. And does that need to vary depending on whether they might just be working one day a week from home versus, say, three days or four days a week from home? Do we need to have agreements with existing suppliers for desks and chairs to control our cost, or can we just simply say buy whatever you want? And if we do say to people buy whatever you want, should we be checking what they're buying to make sure that actually they're buying the right things, that they're not buying a chair that's going to get them into a bit of back pain a bit further on down the line? How do we apply it and to what degree do we, for one of the better word, police what's going on as well?

Brad Taylor: 18:53

And the backdrop to all of that is also what tone do we want to have with our people? Because we're conscious that if we become too heavy handed, then people who are potentially open to the idea of having a more balanced and more true hybrid style of work may become more defensive and more resistant to coming into the office. So we don't want to position ourselves as too harsh. We want to get the tone right with people so that this is something they themselves agree to and come to and feel part of it, that they own the overall position that we adopt as an organisation.

Brad Taylor: 19:23

But those seem to be the things that they're grappling with, and then it could be that the employers thinking well, do we therefore keep the contracts as they were and keep the office as the main place of work, or do we put everyone on a homeworker contract instead, and it's when they come into the office that we pay them for coming in. If it's going to be once or twice a week or a month or whatever it might be, they're trying to get some sense of structure around it that works. And that then becomes an even bigger issue if they're an international organisation and think, well, how do I do that consistently with all our other offices around the world as well. But for now, even just looking at the UK, those seem to be the biggest issues that they're trying to get right so that they don't have to revisit this two years down the line and have to do something quite expensive because they equipped people in the wrong way.

Karen Plum: 20:08

And just changing tack slightly, if you've got people who the employer has agreed or the manager has agreed, they don't need to come into the office very much at all and those people have chosen to live abroad. Certainly this was something that we saw in the earlier days of the pandemic, people wanting to go and work somewhere where the weather was nicer and they knew that they weren't going to be called back into the office. And I remember hearing that that had caused quite some problems for the employing organisations when they had, they actually had found out during the event that the person hadn't asked - s it okay, or what do I need to do? And then the employer discovered that they had employment law liabilities and responsibilities in different countries under different jurisdictions. Is that sort of thing still emerging from the woodwork Ewan?

Ewan Keen: 21:02

That's definitely an issue. In terms of working abroad, then can that bring greater worries, concerns, liability to the employer? Absolutely, I mean you can look at a number of things. It might be that that individual now has certain employment right protections under a different legal jurisdiction that the host employer wasn't even aware of. That might be less if the individual is engaged as a consultant rather than an employee, but nevertheless there might be some rights and obligations that the employer now comes across anew because that individual is permanently working from another jurisdiction.

Ewan Keen: 21:41

There might be tax issues, there might be immigration issues. If you're deemed to be living in another country and working in that country and yet you're required to come back to the let's say, the host country is the UK, X time a year for meetings and conferences and things.

Ewan Keen: 21:56

Well, if you're working elsewhere all the time, do you have the right to come in Because would it still be deemed as working?

Ewan Keen: 22:03

That's immigration questions that my colleagues would be better placed to answer. But also data protection. Are you within an area that meets within our data protection legislation, notwithstanding the respect that, despite leaving the European Union, we still have to follow the data protection requirements, largely from Europe. But nevertheless, that's something that we would, even if it's within Europe, even if it's within the EEA, I would suggest that the employer would still need to have done a check and make sure that for data protection issues, for IT security issues, it was safe where they were, in the country where they're residing. If they don't know they're there, they can't have done those checks. So, yes, they're absolutely a number of issues, which is why, in any policy that governs hybrid working, I would encourage the employer to make it absolutely clear that hybrid working was at the normal residential place and that any long term working and you can define that, but any long term working away from that place, and certainly overseas, needed specific permission before that was allowed.

Karen Plum: 23:14

Are you seeing many cases like this coming up these days?

Ewan Keen: 23:18

Absolutely. You look at a number of organisations now and how attractive it is to have somebody who is, say, tech or IP or IT. There's an awful lot of knowledge out there and a lot of expertise from people that have no intention of residing or working in the UK. A lot of those roles can be done at any time. It doesn't matter if there's a time difference. It can be done remotely. So I think for a lot of organisations, particularly entrepreneurial organisations or organisations in particular niche areas, it's absolutely widened the area within which they can recruit. So it's very attractive for both parties to have that kind of arrangement.

Karen Plum: 24:02

There's a minefield there, isn't it?

Ewan Keen: 24:04

Yeah, I just think of difficult and if you're entering into that kind of arrangement, it tends to be more that it's a consultancy arrangement that you would have, not an employment relationship. I think the difficulty is where there is either complete remote working or hybrid working that allows long periods of time working out of the office and then people choose to go and work abroad without r eally clearing that. That's where the difficulty tends to come.

Karen Plum: 24:34

Yeah, suddenly you're on a conference call and it looks really sunny where they are and you don't recognise what's behind them.

Ewan Keen: 24:45

And most of the time if people are away on holiday. But I know a number of organisations that say, hey, if you're going to take two weeks during your summer holiday, take four. Work for the first two weeks or work for a week either side. So you're actually working, you're properly working, we know you're working and when you're on holiday, you're on holiday. But you can have an extra two weeks in that villa in Italy where you can stop in the evening and still have time with your kids. There are lots of organisations doing that and that's very different because it's not a permanent arrangement. It's unlikely to have any tax or immigration aspects, but you might need to have insurance in place. You still need to have the right data security procedures in place, but that kind of thing is something I see a lot of employers now looking at as a perk to take advantage of this new way of working that technology allows and to let people have extended periods abroad. The difficulty is when it starts becoming permanent, particularly if that's not known.

Karen Plum: 25:45

Yes. Brad. Are you seeing clients making those sorts of offers? Is it becoming a competitive thing when people are being recruited?

Brad Taylor: 25:54

Well, certainly, I think for a lot of recruiters, a lot of firms recruiting, they see it as an opportunity to increase diversity as well across the organisation.

Brad Taylor: 26:05

We can recruit from areas perhaps that are outside our immediate geographical zone, which, and that means we can bring other people into the organisation that perhaps wouldn't normally be within our catchment area. I think this is the big thing again that we need to ensure is that line managers, we give line managers as much support as possible, because this is a whole new environment for them that they're having to manage. They're the ones that get the inquiry on a day-to-day basis. My parents live in Italy. Can I go and work from there for six months? Is that okay? If the line manager says yes and then realizes, oh crikey, HR doesn't really allow that, they've got to backpedal. Or even things about as a line manager, how do I understand what the difference is between now flexible working requests and hybrid working? I think it's well worth employers taking the time just to work these things through, arrive at these conclusions about this is our position on it and then ensure that managers are properly trained and supported.

Ewan Keen: 26:59

I think what Brad says there in terms of the difference between hybrid working and a formal flexible working request, that's what a policy should make clear. People now should be absolutely clear - am I still on a contract that says my normal place of work is the office? However, there is currently a policy in place that allows me, with the discretion, with the permission of my employer, to work in this way. That's very different from a permanent contract change. Maybe that policy and I think I'm obviously generalizing here, but I think most organisations that have moved to hybrid working, have a policy of two to three days a week in the office.

Ewan Keen: 27:38

They don't necessarily prescribe which days. And for their policy to be flexible and work well for an employer, they probably want to retain the ability to say there isn't a set day you work from home, because we might need you to come in for a training course, we might need you to cover for someone that's absent and had to be in the office that day. You might have roles where ordinarily you couldn't work from home, but actually, if you spread working from home, we can, but if we don't know what day you're going to be coming in, that won't work. So there's all sorts of reasons why the employer would keep flexibility.

Ewan Keen: 28:10

If, however, someone says, but no, that doesn't work for me. Hybrid only works for me if I know specifically what days I'm traveling. Because I've got to organize child care issues, or I've got to know for commuting perspectives, because there's a difference in cost between commuting two days a week and three days a week outside of London. So that might then be well okay, but that would have to be a formal, flexible working request, so that if you need to have specific days and specific hours and they can't be changed, then that would tend to move away from what most organisations' hybrid working policy would be.

Karen Plum: 28:46

Right, that's really helpful, thanks for that Ewan. So final question, just wondering what piece of advice you find yourself giving clients most often at the moment?

Ewan Keen: 28:57

So me it would be - don't be rash. Think about what policy you want and why you want it. Think about how that works for both sides of the equation - what's right for the business, what's right for the individual? There's no point putting in place something that is going to constrain the business later, there's no point putting in place something that's going to disincentivize people to stay or not encourage people to join. So think about what you want and don't be rash. And then, when you put it in place perhaps no surprise from an employment lawyer my advice would be to retain as much flexibility as possible going forward.

Karen Plum: 29:33

Oh, I thought you were going to say - take some advice! So, Brad, how about you?

Brad Taylor: 29:40

I think m ine would be - don't think it's all just common sense and the whole thing will sort itself out. I've heard a number of organisations talking that way. It's not. Common sense isn't very common. People will perceive hybrid working in different ways and therefore it's important just to take time as a leadership team to think about what it means for you. Listen to employees. So what are they getting from the experience and what are they not getting from it at the moment? And to come up with a set of principles and approach that can then be clearly cascaded to everyone and line managers can be equipped as needed to be able to implement this clearly and consistently across the organisation. It can be done, and it can be done to great effect, but it does need a little bit of thought and practice.

Karen Plum: 30:29

So don't assume it's just all common sense and don't be rash. It's been really interesting hearing your thoughts and lots of great advice there, so thanks very much for spending time with me today.

Ewan Keen: 30:40

Thank you very much.

Karen Plum: 30:42

So, as long as your hybrid policy is clear, you don't need to change your employment contracts, unless someone needs a more fixed arrangement when a formal, flexible working application might be more suitable. My thanks again to Ewan and Brad for sharing their expertise and advice and for showing us where some of the potential pitfalls might be, so that at least we can try and navigate our way around them. If you'd like to hear future episodes of the DNA of work, just follow or like the show. You can contact us on our website, advanced-workplace. com. Thank you so much for listening. See you next time. Goodbye.