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Global workforce reorganization part 3: legal compliance considerations of new working arrangements

  • United Kingdom
  • Employment law

06-08-2020

The global response to the COVID-19 pandemic has transformed from crisis management to a more nuanced potentially longer term restructure of working arrangements and a consideration of new ways of working. However, it seems that this is not the same across the world, with employers in some countries more ready than others to embrace remote working or a hybrid between remote and workplace working.

Where changes to working arrangements have been made, formalizing those working arrangements was often overlooked in the rush to secure jobs and keep businesses going in the early days of the pandemic. Where it was considered, it was often deemed unnecessary to formalize arrangements in light of the expected temporary nature of the changes. As restructuring of working models look increasingly likely to become more long-term, employers are now taking steps to formalize these arrangements. Further, employers are considering whether changes should be made to future-proof contractual arrangements and policies, for example where existing documents have proved not to be fit for purpose in the new working environment.

Our Global Workforce Reorganization Planning Tool offers a checklist of considerations for global employers considering a restructure of working arrangements. Further, in our previous briefings Global Workforce Reorganization, Part 2: Working Across Jurisdictions briefing and Working arrangements during the pandemic briefing, we highlighted some of the issues for global employers to consider when workers are working across jurisdictions and the impact of implementing new arrangements, including remote working, on matters such as working time, annual leave and rest periods. In this briefing, we consider some of the practical and legal compliance implications in relation to the formalization of new working arrangements.

Contractual variation – general considerations

For multi-national employers, restructuring working arrangements can be a formidable task, requiring consideration of a number of separate elements and the application of the interplay of those elements to individual circumstances.

Unless there is appropriate flexibility built into existing contracts of employment, working arrangement changes are likely to require variations to the existing contractual position, which will usually require consultation and consent. This often requires detailed planning and time, particularly where workers are spread across multiple jurisdictions. Whilst most workers quickly accepted working remotely without dissent during the early days and peak of the crisis, as life begins to return to ‘normal’ these matters need to be regularized. Further, employers should reserve the right to change the terms should new working arrangements prove unsuccessful in the medium term.

For many employers, the pandemic highlighted deficiencies or inflexibilities within their contractual documentation with workers. This meant that many employers were restricted in the measures that they could take or increased the legal risk in taking such measures. For this reason, many employers are now considering their existing contractual arrangements and making changes to provide for greater flexibility in the future, for example in respect of such matters as workplace location, role, travel, absence and the contractual ability to lay-off employees.

It should be remembered that local employment laws may apply and override any intended laws governing the relationship, which will impact on any changes to the intended contractual position. Where changes are to be made, an analysis should be undertaken of the individual circumstances in order to establish the employment and regulatory laws that will apply. Often, it will be more beneficial to ensure that the stated contractual position is aligned with applicable local employment laws, to ensure clarity.

Further, formalizing or making changes or flexibilities to working arrangements is likely to require wider consideration than just the arrangement itself. For example, remote working will have implications for health and safety, data privacy, disciplinary and grievance arrangements, as well as potentially impacting pay and hours. This may therefore necessitate wider changes to policies and processes. Of course, the complexity of different laws and practices in different jurisdictions governing these matters will often make harmonization of approach across a global workforce challenging.

Effecting change

The formalities of effecting a contractual change should also be considered. In many cases, it will be necessary to obtain the consent of workers and/or work with works councils, unions or employee representative bodies to ensure the change is effective and/or avoid financial penalty. In some jurisdictions, it will be necessary to reissue the employment contract, in others, a side letter or annex to the existing contract will suffice. What if the employee refuses to accept the change? Can the employer terminate and re-employ on altered terms? Again, the answer to these questions will vary across jurisdictions, presenting a challenge to a harmonized global approach. There will likewise be very different penalties for breach of contractual terms across different countries.

Further, there may be requirements for the amendment document to be in the local language and/or prescribed methods of execution. An electronically-signed variation document will not be legally effective in some jurisdictions, meaning the document will instead need to be in paper hard copy with a wet ink signature. This can cause difficulties where employees remain absent from the workplace or postal services are disrupted. If documents cannot be signed electronically, arranging signing will therefore need to be factored into the timescale and process.

Remote working – formalizing arrangements

In some jurisdictions, there will be specific legal requirements for the formalization of a remote working arrangement. For example, in the Philippines, a new law enacted last year gives employers the option to offer a telecommuting program enabling workers to work remotely from outside the workplace, subject to mutually agreed terms and conditions. Those terms must allow the worker the same treatment as comparable workers working at the work premises, along with other provisions including contact with colleagues and certain data privacy measures. In other jurisdictions, the formalities are more limited. In India, for example, there are no formalization requirements and the remote working arrangement can simply be notified to the worker by email, with no requirement to consult, obtain written consent or issue any new contract/addendum.

As remote working or a hybrid arrangement becomes the norm in some jurisdictions, further government regulation is likely to be required to regulate these arrangements, including in relation to contractual terms and the protection of health and safety. Many jurisdictions are starting to consider this for the first time, others are considering adjustments to existing legislation. For example in Russia, where a number of major changes are proposed to the existing rules on remote working, with the introduction of new concepts of “temporary remote working” and “combined remote working” and associated contractual protection.

Where remote working (or a hybrid) is considered, employers should consider whether to introduce the arrangement on a trial basis to determine whether, outside the extreme circumstances of a pandemic, wholescale remote working proves to be successful. Further, whether to include flexibility in the arrangement, for example to provide a right for the employer to require the worker to return to the workplace for specific events, in specific circumstances or after a specific time. In addition, any rules connected to the remote working arrangement, such as the location of the home office, recording of working time, absence, communication and conduct. How do employers manage conduct and culture, for example, when they do not have visibility of staff? Whilst agility will be a key concern for employers, in the longer term a dispersed workforce will require close and careful management. Cultural communications and engagement with staff must be embedded into any new working arrangements.

Additional concerns include confidentiality of information and data protection. Laws will vary, but the central principles of protection of information and data are core and universal. With a dispersed workforce, mass reliance on remote connectivity and a proliferation of personal devices is likely to mean that the employer’s control systems are stretched to the limits. It is essential that policies and procedures are adapted for a remote workforce and regularly tested to ensure they are sufficiently robust. Monitoring and surveillance systems should be adapted to local laws, but strong enough to detect where the employer’s confidentiality of information has been compromised.

Health and safety considerations for remote working

It is important not to lose sight of employee welfare and engagement. Different health and safety rules apply depending on the location of the worker, such rules often applying as mandatory local rules, irrespective of what is stated in any contractual document. The specific rules in each location will therefore need to be understood and applied. However the employer will generally be under an obligation to provide a safe place of work, often extending to where the worker is working remotely. Moving from the crisis scenario to a more formalized arrangement will entail much more thought and planning, not least to minimize the risk of litigation further down the road.

In many jurisdictions, employers must undertake a risk assessment in relation to working arrangements and take measures to address any identified risk. There are obvious practical difficulties in carrying out risk assessments in respect of workers based in a home office in another country, which is often surmounted by requiring employees to undertake a self-assessment of the remote working environment. In some countries, such as Spain, a health and safety evaluation for remote working is mandatory. Additional steps are also often legally required or taken voluntarily, including notifying employees of (and requiring compliance with) regulations, guidance and policies concerning health and safety.

Employers should review health and safety policies to ensure that they remain fit for purpose in view of new working arrangements, including remote working, and track regulatory guidance where it is anticipated there will be a move to ensure more stringent and robust policies for home workers are introduced (currently the Health and Safety Executive which governs safety in England and Wales does not place such duties on employers for ‘temporary’ home workers).

An entitlement to expenses when working remotely?

When calculating the cost and savings benefits of remote working, employers should factor in the payment of incidental expenses (such as utility costs); indeed even rent compensation has been queried as part of defining what should constitute expenses of regular working from home in some countries. In many jurisdictions, employers will not be legally responsible for incidental expenses, but may nonetheless fund these in order to maintain goodwill. In others, payment of certain expenses or a specified lump sum will be a legal requirement.

For example, under Swiss law, reimbursement of all expenses necessarily incurred in the performance of the work is mandatory where remote working is required. A case in the Swiss Federal Supreme Court last year illustrates how far this can extend for remote workers. In that case, the employer did not provide the employee with a suitable workplace and had required the worker to work from home. The employee claimed, among other things, compensation for the use of the employee’s private room when working for the employer. The court determined that the employer ,who had saved on office rent as a result of requiring an employee to work from home and had used the employee’s private room as an archive, was required to pay the employee a monthly rent reimbursement.

To ensure certainty on the issue of expenses, employers should take steps to understand the mandatory legal position and be clear on the position in contractual documentation to avoid ambiguity and dispute.

Example practical considerations – global at-a-glance comparison

We have produced this at-a-glance comparison document outlining practical considerations.

Summary

Whilst economic uncertainty challenges continue and reorganizations take place, reviewing policies and contractual arrangements with workers risks falling down the list of priorities. However, those employers taking the time now to analyze existing arrangements with workers and utilize lessons learned from the pandemic are likely to better placed in the long-term, ensuring arrangements that are fit for purpose on an enduring basis and thereby reducing costs and risk.

Employers should therefore confront the task of formalizing new arrangements and future-proofing existing ones, whether as part of ongoing reorganization exercises or as separate programs. For multinational employers, this will often require consideration and planning to ensure that local requirements are understood, legal (including employment law, regulatory, tax and immigration) issues are considered and practical issues addressed. In addition to the terms of the arrangement itself, wider policy and process considerations and the required formalities of effecting the change should not be forgotten


Our extensive global footprint means that we are well placed to help employers, wherever they have a presence. Our teams across the world have been supporting employers to steer through the legal and practical employment implications of the global shift in the working landscape.

Please contact the following partners if you require advice and assistance:

 

Global:

Diane Gilhooley
Hannah Wilkins
Elizabeth Graves
Constanze Moorhouse

US:

Scott McLaughlin
Michael Woodson
Michael Hepburn
Marlene Williams

Asia:

Jennifer Van Dale
Jack Cai

Europe:

Frank Achilles
Deborah Attali
Valentina Pomares
Ingrid van Berkel
Wijnand Blom