A Global Guide for In-House Counsel: Doing business in a rapidly changing world

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Employment – Transient Workers

Are you seeing a shift in employee/ workforce expectations in your jurisdiction, when it comes to flexibility, length of contract, remote working, hours of work, etc? How can clients both reflect this and protect their business interests in employment contracts?

There is no question that employees now expect a flexible workplace. The traditional concept of commuting to a physical office five days a week increasingly seems like something from a bygone era, and there is a growing body of evidence that there is no going back to the way things were. There is a greater demand for flexibility, whether in terms of location, length of contract or the ability to decide working hours, and this is especially notable with younger workers and employees.

The UK government for its part is in favour of flexibility and has recently announced planned legislative changes that will allow new employees to request flexible working arrangements as a “day one” right instead of having to wait six months to do so. They will also be able to make up to two requests per year and employers will be required to respond to these requests more quickly.

The debate has now mainly shifted to what the new method of working looks like, but there is no generic answer here. For every Elon Musk that decrees their employees must either return to the office or “pretend to work somewhere else”, there is an example of a successful business embracing the different things that people want out of work without compromising productivity.

A traditionalist employer shouldn’t need to make significant changes to their employment contracts at all, as any temporary arrangements made during the pandemic have almost certainly come to an end and there have been few notable developments in employment law in recent years. In other words, they are free to carry on as they were – even if this means turning a blind eye to the changing times. The duties to respond to statutory flexible working requests and to avoid discrimination remain, but these are not new considerations.

For those who recognise there is a paradigm shift and are open to change, this is an opportunity to modernise working practices and enhance the wellbeing of your workforce at the same time. The starting point is to understand the needs of your business and how the productivity of your employees is measured. The likelihood is that this has less to do with a constant office presence and more to do with responsiveness, delivery of tasks and communication. It is also advisable to consult with your staff, and to do this widely, so that you maximise inclusion and gain “buy in” across the business.

Once you have these components and know what is needed, these can be formalised via employment contracts and written policies, commonly contained in an employee handbook. Care is needed to avoid the risks of imposing unilateral variations on existing employees, but this is unlikely to be problematic if properly managed and given you are introducing positive changes, which will probably be welcomed by the workforce.

I recommend ensuring that new employment contracts make it clear that any flexible or hybrid working arrangements are capable of being changed from time to time in order to suit the needs of the business. There should also be a specific right to require employees to physically attend the office at the reasonable discretion of management. These measures will ensure that you retain control over the new regime and can be responsive to future changes if needed.

“The traditional concept of commuting to a physical office five days a week increasingly seems like something from a bygone era”

What is the biggest benefit, and the biggest risk, to businesses facilitating a more transient workforce?

I think businesses will generally prefer a more agile workforce than simply a more transient one. This is because businesses will still value retention and reliability of workers, even if the location, means, and delivery of their work is becoming much more flexible. For example, allowing an employee to work from home for three days a week or to decide their own workload does not mean that you don’t want them to remain with the business on a long-term basis. Of course, some sectors will prefer a more contractor-based or freelance model which favours short term working arrangements, but even that is different to actively promoting a more transient pool of resource.

The biggest benefit of facilitating a more transient workforce is the flexibility this will bring in terms of being able to scale labour costs up or down to match the needs of the business. By contrast, the biggest risks are the lack of a reliable core of workers, the challenge of maintaining a consistent company culture and the likelihood of much higher staff turnover which will in turn require more investment in training and recruitment.

TOP TIPS

Preserving company culture and retaining staff in flexible working arrangements

  • Does your business still need a traditional working model to maintain productivity? If not, then you may gain a happier workforce by introducing a degree of flexibility and prioritizing output over presenteeism.
  • Consult your workforce so that you understand what they value and can make changes that are aligned with this.
  • Aim for fair pay and a more productive work-life balance, so that workers can pursue happiness that aligns with their personal tastes and preferences.
  • All team members should be present in the office when needed, but they should also be trusted to manage their own deliverables where possible.
  • When attendance in the office is required, make sure the experience is worth the commute. Managers should interact with colleagues when they are in the office and also invest time in team-building activities that promote inclusion and interaction.

How are you helping your clients to manage legislative and taxation issues around their transient workforce? For example, are there bilateral agreements with other jurisdictions or tax provisions to be aware of?

I have already touched on the starting steps for moving away from the traditional workspace model and how these changes can be implemented without friction through contractual variations and changes to staff policies.

Where a business wishes to facilitate a more transient workforce, this will naturally lead to questions of employment status and taxation. This will include examining the operation of the IR35 legislation, which was introduced to crack down on tax avoidance through the use of a company to avoid paying employee income tax and national insurance contributions. Those rules will not apply where the worker’s company supplies the worker’s services to public sector clients or medium or large private sector clients that have a UK connection, but in those instances, the off-payroll working rules become relevant instead.

There are additional legal considerations when dealing with requests from employees to work from abroad for more than one month. This requires consideration of the existing employment contract, the host country’s employment laws and applicable tax arrangements including tax residence status.

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