Working from home: what are the contractual implications?

In February 2022 lockdown restrictions were lifted in England. Since then life has started getting ‘back to the new normal’. Shops, restaurants and airports are once again busy but, as People Management (June 2022) reports, “many offices remain ghost towns, particularly on Mondays and Fridays” as people continue working from home.

There has been publicity both for and against the new shift towards hybrid / home working. For example, Alan Sugar tweeted that working from home “is an absolute joke”. Yet when Airbnb announced that their staff could work from wherever they want, it caused a surge of applicants to their careers page. Deloitte have reduced their London office space by a third, making hybrid working permanent.

There are many aspects for organisations to think about with hybrid working such as workplace design, management training, well-being, inclusion and engagement.

It’s true that thought and investment is needed within organisations to truly make hybrid working successful but there is also the immediate question that we are being asked by organisations around whether their contracts are ‘fit for purpose’ with this new way of working.

Why do we need to have an employment contract?

Are your employment contracts reflecting the working from home reality?

There are 2 key reasons, firstly you must – it’s a legal right under the Employment Rights Act 1996. There are also practical reasons – as it sets out the rules and obligations of the employer and employee in clear enforceable terms.

If the contract does not match reality, there can be issues both around what is written as well as what’s not. The contractual relationship consists of expressed (what is written in the contract) as well as implied terms.

Contractual terms don’t always need to be stated, they can be implied by fact i.e., everyone understands it to be so, by law or by custom and practice.

What does working from home mean for organisations now?

As these new ways of working continue, they develop into custom and practice and then could become an implied right.

Some key areas to think about will be work location, working hours and sick pay / process.

Location

Most contracts will state the place of work as the office. If they employee is also working elsewhere you may want to consider including other locations as well i.e. “from the head office and home location”. But would you allow other locations – coffee shop, someone else’s home, shared office space? Think about what does working from home really mean for your organisation?

Some organisations have been caught out with staff moving abroad to work ‘remotely’ during the pandemic, but if you’re not set up for this then there are legal and tax issues for both the employee and employer to consider.

Do you still want the employee to attend face to face meetings and potentially come into the office for certain events? If this is the case, then this can be built into the contract too – with mandatory days stated.

What will you do about travel expenses? If they have no set place of work – are they entitled to full travel expenses or not – again a term worth stating in the contract. There are tax implications here that need to be considered for the employee too.

Potential current challenges may include – my contract states the office is my base, but I’ve been working from home now for 2 years, do I now have any entitlement to this permanently? There isn’t one simple answer to this question – generally an employer can decide where employees must perform their work, but this may depend on the contractual terms and understanding prior to the pandemic, as well as the employee’s situation, custom and practice elsewhere etc.

Hours of work

does your standard term suffice for new ways of working i.e., 9-5pm? Would core hours be better (10-3) and state that those must be worked but there’s flexibility around those.

Sick Pay

Working from home and sickness

if the employee states they are too sick to work but can work from home – is that ok? What if they can only do a few hours .. in this case it may be best to speak to them to see if they are well enough, as resting or recuperating maybe the better option. If they are well enough to part work – what do you do with pay?

Some organisations take the approach that if it’s the employees ‘office day’ then they will be sick, not working from home.

This is where the importance of the contract reflecting the current position needs to be clear. But some organisations say if your unwell and can’t attend the office then just work from home and crack on, or we want to look after you so don’t work and just get better.

Aside from these areas there are many other contractual aspects to consider around hybrid working – H&S, equipment / insurance, Data management and security, confidentiality, restrictive covenants etc.

If you are starting with hybrid working, it’s important to review all these areas and decide what your approach is and whether your contracts need to be updated.

If you do look to update / change contracts, then it is best to get legal / HR advice around the ways to update and amend ensuring you stay within the law. Gaining the employee agreement is always the best way but when this doesn’t work there are other options.