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The workforce of the future: key HR legal considerations

Over the last couple of years, organisations have been working through a significant transformation journey in the way they work and operate. Automation and technology are replacing or significantly impacting human tasks and jobs, changing the skills that organisations require in their workforce. At the same time, workforces are demanding a new ‘deal’, with organisations exploring more flexible ways of working through non-traditional working patterns.

This already fast pace of change has been accelerated further over the last 16 or so months by the Covid-19 pandemic.

The ongoing change and pace of transformation will mean that general counsel and in-house lawyers are kept very busy. Advising on and managing risk for an evolving and non-traditional workforce bears significant complexity and challenge.

We consider below some of the key HR legal considerations that organisations are having to consider and get to grips with as they develop their workforces of the future in a number of key areas. These HR legal considerations are part of a broader jigsaw of legal (real estate, data privacy etc), regulatory (in financial services and other regulated sectors) and HR (eg workforce strategy, culture, taxation, mobility and reward and benefit) considerations, which cannot be dealt with in isolation because of the level of interconnectivity between them.

Remote and hybrid work

The pandemic proved that people could transition and adapt quickly to remote work. Indeed, a recent PwC Hopes and Fears survey (February 2021) of 32,500 members of the public across 19 countries found that a remarkably low percentage of people who find that they can work remotely want to go back to the office full time – just 9% want a traditional commute and work environment full time and 72% prefer a mix of in-person and remote working.

There has been much publicity over the last few months in terms of how organisations will approach the future location of their workforce, ranging from some organisations moving to a pure remote working environment, others looking to bring their workforces back to the office on a full-time basis with the majority looking to implement a hybrid working model. In the case of pure remote working and hybrid working, there are some key HR legal considerations.

Organisations will need to carefully review and amend their contracts of employment and policies and procedures. Do contracts of employment reflect the flexibility of new working arrangements to be implemented and, as importantly, reflect any minimum requirements on office based work, eg for training? While specific remote working policies are not mandatory, policies that organisations may wish to consider reviewing and amending include flexible working, equipment and expenses as well as data privacy and confidentiality policies to ensure that information remains secure.

Managing health and safety obligations is often more complex for a remote workforce, including that remote workers have a safe place to work but very importantly ensuring the well-being of the workforce. How can working hours be effectively monitored when the lines between work and home life are more blurred in a remote working environment?

It can be more difficult to stay close to your workforce when face to face contact is limited. For example, measures and processes may need to be set up or adapted to review mental health and well-being. The approach will ultimately differ across different industries and between organisations.

At the same time, the implementation of remote working and hybrid working policies should be reviewed carefully to ensure that the workforce is treated fairly and consistently. The Office of National Statistics in April 2021 released data that employees who worked mainly from home were around 38% less likely on average to have received a bonus compared to those who never worked from home (between 2013 and 2020) and employees who mainly worked from home between 2012 and 2017 were half as likely to be promoted compared to other employees, when controlling for other factors. The impact of any increase in permanent home working on geographic pay differentials remains to be seen – even where changes are driven by the market, they should be monitored to ensure any equal pay risks are identified.

It will therefore be critical to ensure that appropriate measures are put in place to ensure that differences in pay and benefits (including incentive-related pay), progression and every other aspect of working arrangements are equivalent between those coming into the office for all of their working hours, the hybrid workers and those working only remotely so as not to inadvertently detriment employees, or groups of employees, because of any protected characteristics. For example, if certain employees are unable to attend the office for health-related reasons. As well as having appropriate policies and procedures in place, the training of HR and decision-makers, especially those with line management responsibilities, will be key.

There are also other considerations that organisations should consider when implementing remote and hybrid working, including: understanding how employees are spending their working time without infringing on their privacy; and re-evaluating and changing performance management policies and procedures especially where they are focused on measures and metrics that might no longer be appropriate for the new ways of working.

Global remote working

With the move to remote working, many employees do not wish to be confined to working from home within the UK or their normal country of work. According to a number of recent surveys, almost half of UK employees would like to work from abroad when travel restrictions are lifted. While some of the same challenges and considerations as are outlined above will apply, there are some additional complexities that GCs, in-house lawyers and HR specialists need to be aware of.

Working for periods of time in another country or countries will mean the introduction of additional mandatory laws that need to be taken into account in the employment relationship. These laws are aside from potential tax (corporate and employment) and social security considerations. These laws may apply for any work performed in that country or will kick in depending on the length of time spent working in a country. In some cases, the terms of any applicable collective agreement may need to be taken into consideration. Employees’ terms and conditions and overall packages should reflect these additional entitlements to the extent they exceed home country entitlements. Organisations should also be reviewing less obvious provisions such as business protection provisions – confidentiality and post-termination restrictions – to ensure they are still appropriate and enforceable for such an international population.

Where an employee is working in a different location to their normal place of work, it may be appropriate to change their employer to a local employing entity where the employee is actually based. One trend we are seeing is for organisations to employ those employees who will be able to work remotely through a specific employment vehicle, commonly referred to as global employment companies or central employing entities to manage risk and create ‘centres of excellence’ in HR, tax and legal functions to manage a more complex population of employees.

Existing data privacy guidance, cyber security measures and training programmes in place should be re-evaluated and updated to ensure they are sufficiently robust and reflective of the new working patterns. In particular, does an employee working remotely overseas present a higher risk in relation to the secure transfer of data? If an employee processes personal data, there may also be data protection issues to consider especially where the employee is working outside of the EU without there being appropriate safeguards in place and the recipient of the data provides adequate protection.

Status

There has been significant focus on status over the last few years, especially focused on non-traditional engagement models such as gig economy workers, and the rights such individuals should receive. This has been a pattern not only in the UK but globally, with countries at different stages of legislating for these new engagement structures. It is likely to be an ongoing area of focus for all legal advisers and may drive new forms of engagement as individuals make new demands on organisations for more flexible ways of providing their services, beyond hybrid working and gig working.

The quest for personalised employee experiences and flexibility that works both for the organisation and individual is pushing the boundaries of employment and engagement models. Beyond the traditional categories of employee, worker and self-employed contractor in the UK, we could start seeing new or hybrid categories such as ‘gig employees’ whereby the individuals work on specific ‘gigs’ but retain some of the security and rights of employment, including some level of pay between assignments, basic employment benefits such as holiday and sick pay, continuity of employment etc. Designing innovative engagement models that maximise flexibility is one key way for legal teams to support the business in developing their employee value proposition, making their organisation an employer of choice.

Employee engagement in implementing change

With such significant change being introduced now and in the future, the key stakeholders to bring on the journey are the workforce and their representatives. Some of the workforce will be anxious about their future given the pace of change; other parts of the workforce will be encouraging and demanding change to create a more flexible working environment. There will also be plenty in between.

However, in all cases, employee engagement, whether legally required or not, will be key to implementing change and retaining an engaged workforce. Those organisations that achieve effective change in our experience are those that focus on communication and consultation with their workforce.

Depending on the level of change and existing flexibility in contractual documentation, introducing change may require employee consent. It might also require prior consultation of employees, employee representatives or trade unions based on the UK redundancy consultation framework and/or depending on the terms of reference of employee representative bodies or collective agreements with recognised trade unions. This will be very likely where job roles and responsibilities will change to meet an organisation’s demands.

To maintain good employee and industrial relations, organisations should in any event consider proactively engaging with representative bodies and trade unions to share information and seek views and agreement on key and evolving workforce topics, including hybrid work, reskilling and the changing make up of the workforce as well as the future relationship between the organisation and the representative body and trade union.

Conclusion

The journey for every organisation to the right workforce of the future will vary significantly. What’s clear is that it touches on so many aspects of business – legal, HR, tax, operations to name but a few – and has no fixed end point. It is also happening in the context of wider societal, legal and regulatory change. Many organisations have environmental, social and governance (ESG) considerations at the top of their board agenda and the article outlines specific areas that impact on ESG – whether it is effectively managing workforce health and safety and well-being for a remote workforce, ensuring diversity and inclusion objectives (including in relation to pay gaps and equal pay) are not impacted, the workforce remains engaged and is effectively consulted on change as well as managing governance in an increasingly regulated environment and for an increasingly varied and complex workforce.

It will be vital for every organisation’s future success that it plans for and implements the right workforce of the future strategy for it and effectively navigates the related complexities, monitors the evolving landscape and retains an engaged workforce.

Contact us

Chris Perkins

Chris Perkins

UK and International Employment Law Partner, PwC United Kingdom

Tel: +44 (0)7595 609623

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