Urban Dynamics | Managing risk around the shift to hybrid working

Our Future of Work team has been working with a number of our clients to review and reset their legal risk registers, ready for their growth strategies post-pandemic and beyond 2021. A particular focus for US businesses active on the other side of the Atlantic may be the ramifications of hybrid working for a workforce which enjoys strong employment protections – although this is not the only area of impact.

Rethinking "normal"

The timings for when we can settle into post-pandemic patterns of working remain unclear.  Quite what our new working habits will look like is also still a work in progress. However, some common trends are already emerging. Businesses are recognising that remote working has been a success and we've seen a real shift in positive attitudes. The majority of employees (particularly less experienced workers) want a return to the office in some form, but most are hoping for hybrid working with one or two days a week working from home. The ability to work remotely is also now a key consideration for a higher percentage of job seekers than in pre-Covid times. In response to this, we are expecting businesses to take a variety of approaches to hybrid working, shaping a blend of remote and office-based working as best suits the needs of the  organisation and its people.

What do businesses active in Europe need to consider? The experience of lockdowns and closed offices has highlighted many of the legal and compliance risks associated with remote working. As these new patterns start to emerge, it is important to recognise that the courts and regulators will move to ensure that laws are complied with and rights respected.

Employees' terms and conditions

There is a tangible risk of increased personal injury claims if health and safety measures are inadequate for workers in their home-working environment. Businesses need to adapt their risk assessment procedures to encompass both home-working and the fact that the assessment itself may not be possible in person. As well as the ergonomics of a proper workstation set up, responsible employers need also to consider their employees' mental health. Extended remote working is creating new pressures on workers, and new challenges for employers to monitor and support their mental health: employers need to take care to support and encourage a healthy work/life balance.

Remote working also has a potential financial impact if pay levels within a business are linked to geography (such as higher rates for London-based UK workers). Whether geo-pay differences reduce may depend on how "office-centric" employers ask their employees to be in the future. In order to avoid employee challenges, staff in all locations need to feel appropriately incentivised.

More generally, a greater degree of flexibility is being expected from employers. Businesses will need to have a coherent and consistent policy towards flexible working. Increased numbers of requests for flexible working from existing or newly recruited workers result in an increased risk of inconsistency in how such requests are treated – and a consequently increased risk of employee discrimination claims.

Finally, some businesses are restructuring their workforce as part of post-pandemic repositioning. Employment laws across much of Europe provide for strict policies and consultation procedures around redundancies and restructuring, which require care and sensitivity.

Tax issues

If remote-working employees move into a different jurisdiction, a combination of potential risks around tax, immigration and employment law arise. Employees may discover that they have triggered unanticipated tax liability in their new location. For the employer, there is a risk that their staff might be considered to have created a permanent establishment in that jurisdiction, creating potential issues around corporate tax, VAT, licences and work permits etc.

Shifts in working practices are coinciding with post-Brexit immigration rule changes in the UK. Movement of workers between the UK and the EU may now be impacted by visa or work permit requirements. The picture is complicated, and care and planning is needed.

For some businesses, increased remote working has augmented the business case for engaging contingent staff. Such arrangements are under increasing scrutiny in the UK and mainland Europe and terms and conditions need to be shaped carefully to avoid employment claims from workers or tax-related enforcement actions.

Data, tech and IP rights

Although technology certainly offers secure and effective ways to connect remote workers into office systems, it also involves new data flows and cybersecurity risks. The former may need privacy policies to be updated. The latter may require a greater emphasis on cybersecurity in supply chains – including tech suppliers. Clear employee communications and potentially updated HR policies may be required.

Internal information security also needs to be considered. Measures to protect the business from the misuse of confidential information or intellectual property need to be updated to reflect remote working, particularly if workers are permitted to work in public spaces, or for workers living in shared accommodation. Procedures may need updating to ensure that licence conditions around third party intellectual property are respected by employees working from home.

Real estate portfolios

The successful shift to remote working has had a direct impact on perceptions of what office space is for. The office is being rethought as a destination and a collaborative team space, not simply the primary place for undertaking work tasks. Commuting into the office needs to be purpose-driven rather than just coming to work at a desk.

Many of our clients are reviewing their real estate portfolio – not in crisis mode to preserve cash in the business, but with a view to aligning it with future needs. We are supporting our clients around Europe to restructure their property portfolios to better meet anticipated future needs.

Culture and values

We've seen how important culture, business identity and having a sharp values agenda have been during 2020. These are set to become even more critical as businesses move towards hybrid working models as they are what binds staff together and connects the workforce. Issues to consider include ensuring that workers have a consistent, standardised employment experience regardless of where they're based, retaining a "one firm" identity.

We're also seeing our clients actively review how they deliver against core values around new issues like sustainability and having a positive impact in the local community. These goals are more challenging with a disparate workforce – but not getting them right risks a detrimental impact on brand, recruitment and standing in the market.

New ways of working

As each business's hybrid working strategy evolves, it is sensible to take proactive steps along the way to ensure risks are identified and mitigated, in order to reduce the risk of commercial and employment disputes down the line.

Time spent mapping out these risks, considering prevention, mitigation and remedies and updating policies and procedures, will ensure that businesses are not wrong-footed. In many businesses, lockdowns and enforced remote working have boosted communication and engagement around company values and culture, and those positive impacts should be leveraged to drive consultation and feedback as new hybrid working patterns are developed and trialled.

Our Osborne Clarke specialists are working with a wide range of clients to prepare them for the post-pandemic "new normal" of hybrid working and helping them "stress test" how well they work and function within a blended model. Our Future of Work team has mapped the issues which businesses active in Europe need to consider, monitor and mitigate in order to protect the bottom line.