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Brian Napier QC - Remote Working

Remote working and employment rights Recent events have shown both the scope the internet offers for working away from the office, and the readiness of many employers to contemplate such a change in the working patterns of their white-collar staff. While there are many reservations about the net benefits of remote working (not least because of the impact on city centre businesses struggling to survive with a reduced customer base), there are indications that a fairly major shift in practice is taking place.

On 30 August, BBC News reported that outsourcing firm Capita intends to close one third of its UK offices, a change that will have a serious impact on the working arrangements for its 45,000 workers. That is just one example of many. Several large organisations engaged in white-collar work – including the civil service and at least one magic circle law firm – have moved to give staff the option of working from home for at least a substantial proportion of their working time. A survey carried out by The Times at the end of August reported that three quarters of Britain's biggest employers were looking at a permanent shift to flexible working.

The Cabinet Office guidance for England, published on 22 September is quite clear: “office workers who can work effectively from home should do so over the winter”. Whether and to what extent there will be a reversion to traditional full-time office-based work after that period remains unpredictable.

An obvious plus point for employers is that homeworking offers a number of financial advantages, not least savings in rents and utilities. But at the same time there are big challenges for employers and their staff. There are health and safety issues associated with workers spending long hours in less than ideal working conditions. Loneliness and a feeling of isolation is a common problem, as is the challenge of having to carry out duties relying on technology less user-friendly and more tiring to operate than the equipment left behind in the office. Questions of data security and insurance often remain unaddressed, and the practicalities of converting part of one's home into a permanent workstation are not always straightforward.

On the other side of the coin, the employer's managerial tasks also become more challenging; for example, retaining team spirit and enthusiasm within the workforce is harder when that workforce is dispersed. Keeping control over training, and monitoring working patterns and sickness absences, are more difficult when staff are not physically present at a single location.

Statutory rights: back to basics

From a purely legal point of view there are also a number of issues raised. There is first a fairly obvious impact on the operation of certain basic statutory rights. The written particulars of employment required under s 1 of the Employment Rights Act 1996 (“ERA”) oblige an employer to state “either the place of work or, where the worker is required or permitted to work at various places, an indication of that and of the address of the employer” (s 1(4)(h)). Any changes must be notified within one month: s 4(3)(a). So a change that requires or permits the worker to work from home, exclusively or for part of the time, has to be notified in writing.

Should the employer fail to give such notification, the formal sanction is relatively weak – an award of two or four weeks' wages in limited circumstances (s 38, Employment Act 2002). It would, however, be a mistake for employers to neglect the opportunity s 4 offers to define the parameters under which remote working is being introduced and, importantly, when it may be brought to an end. A simple change in practice left wholly unregulated could, over time, result in a variation in the terms of employment, making the worker's contractual place of work now the home and not the office.

Secondly, a change in the “place of work” has an impact on the statutory definition of redundancy. The definition incorporates the situation where the employee is dismissed because his employer ceases or intends to cease to carry on the business “in the place where the employee was... employed [by the employer]” (ERA, s 139(1)(a)(ii)), or where dismissal is because the requirements of the business for employees to carry out work of a particular kind have ceased or diminished or are expected to cease or diminish in that place (s 139(1)(b)(ii)).

It is well established that having a mobility clause in the contract will not, of itself, support an argument that the place where an employee has in practice habitually worked is not the “place of work” for redundancy purposes: see High Table Ltd v Horst [1997] IRLR 513. But if in practice an employee moves from office to homeworking on a permanent or semi-permanent basis, then their dismissal following a cessation or diminution of work at the former workplace may not entitle them to a statutory redundancy payment. It may also remove entitlement to a contractual redundancy payment, since many voluntary schemes incorporate the statutory definition of redundancy. Again, this underlines the importance of employers making clear to the employee, exactly what is being permitted by way of remote working and the likely duration of any such change.

Regulatory protections: keeping track

A second set of legal issues arise in connection with understanding how various regulatory provisions will fall to be applied in a new working environment. Under the Working Time Directive, for example, there is an obligation on an employer to have in place an “objective, reliable and accessible system enabling the duration of time worked each day by each worker to be reviewed” (CCOO v Deutsche Bank SAE (Case C-55/18), para. 50). That requirement has, by operation of general principle, to be read into the employer's obligation under the Working Time Regulations 1998 to keep records which are “adequate” to show whether the limits and requirements imposed by the regulations are being met (reg 9(a)).

While it might seem enough to measure the hours of a remote worker by reference to internet connection time, such an approach does not take account of the additional offline working that will often be expected and indeed necessary. In reality any accurate record keeping will have to rely on the worker's own system (and honesty) in the recording of times and the keeping of records.

Another area of interest is minimum wage legislation. Different rules apply in calculating working time when work is done from home, as opposed to in the office, and there is an important exception to keep in mind when taking account of any requirement to be available to do work as and when this may arise. Such time would normally count as “time worked” for minimum wage purposes, under the deeming provisions found in the National Minimum Wage Regulations 2015, reg 32, but, as recently noted by Underhill LJ in Royal Mencap Society v Tomlinson-Blake [2018] IRLR 932: “where a worker is required to be available for work but is at home, the hours in question (awake or asleep) will not count for the purposes of the NMW” (para 38). Thus the move from office to home could be disadvantageous, especially since technology allows remote workers to be contacted by their employer outside normal working hours.

But there is a safeguard. If a worker at home is required to be ready to respond during what would otherwise be his free time, case law establishes such time spent in readiness should be seen as comprising work itself (and thus count for NMW purposes), and not just as giving rise to a requirement to be available for work. As it is put in Harvey (Div B1, para 214.02): “if the hours worked do not fall within reg 30 or reg 26(1)(c) then – and only then – will it be necessary to consider the deeming provisions in NMWR SI 2015/621 reg 32 or reg 27”.

Crossing a boundary: territorial rights

A third type of problem is perhaps the most interesting and difficult. It arises not so much from the fact of the relocation of the place of work, but from the special considerations that arise when that relocation involves the crossing of boundaries. For most who make the transition to remote working, the problem will not arise, assuming the move is nothing more than a shift from city centre to a rural or suburban environment. But that will not always be so. Once it is accepted that work can be done remotely, there is no technical reason to place limits on the distances or locations involved.

A spreadsheet can as easily be manipulated from Stornoway as from Bedford and, indeed, Paris (making allowances for time differences). The distinguishing feature of remote working is that the physical aspect of work is separated from the location where the employer is based and where it is intended the value of the work should accrue. How does this impact on employment rights, given as a starting point the accepted principle that the reach of statutory employment rights is largely territorial?

In the leading decision of Serco v Lawson [2006] UKHL 3, Lord Hoffmann made an important observation in the course of considering the territorial scope of the law of unfair dismissal under ERA, s 94(1): “Since 1971 there has been a radical change in the attitude of Parliament and the courts to the employment relationship and I think that the application of s 94(1) should now depend upon whether the employee was working in Great Britain at the time of his dismissal, rather than upon what was contemplated at the time, perhaps many years earlier, when the contract was made… The terms of the contract and the prior history of the contractual relationship may be relevant to whether the employee is really working [emphasis added] in Great Britain or whether he is merely on a casual visit (for example, in the course of peripatetic duties based elsewhere) but ordinarily the question should simply be whether he is working in Great Britain at the time when he is dismissed” (para 27).

If the employee is remotely working in, say, Dublin for an employer who is based in London, under arrangements that are permanent, are they someone who “is really working in Great Britain”? The answer has to be that, as a matter of common sense and language, they are not. Unless, therefore, an exception to the general rule can be found, the individual could find themselves excluded from the scope of unfair dismissal protection (along with other rights in the ERA and other legislation similarly limited by its territorial scope). As Lord Hope remarked in Ravat (para.27), “The general rule is that the place of employment is decisive.”

Since the Equality Act 2010 operates, so far as employment rights are concerned, on similar principles, it follows that, not only could the remote worker in question be excluded from unfair dismissal and redundancy rights, they might also find themselves excluded from protections against discrimination at work. All that would be a high price to pay for the benefit of remote working, and it is one that has not, so far, been contemplated, far less acknowledged.

Connecting factors?

There is, however, probably an answer to this particular difficulty, in the shape of judicial creativity. As Lord Hope in Ravat went on to acknowledge, the rule as to territoriality is not an absolute one. Underhill LJ summarised the law in The British Council v Jeffery [2018] EWCA Civ 2253: “there will be exceptional cases where there are factors connecting the employment to Great Britain, and British employment law, strongly in the opposite direction to overcome the territorial pull of the place of work and justify the conclusion that Parliament must have intended the employment to be governed by British employment legislation” (para 2(4)).

It would require no great leap in judicial imagination to categorise the situation where an employee has moved to work remotely from a location outside the territorial scope of the relevant statutory right (but where otherwise the conditions of employment remain the same) as one where there is a “sufficient connection” with the law of the home base to overrule the “territorial pull of the place of work”. It might of course be otherwise if the individual had never worked within the jurisdiction, or was a foreign national living abroad hired by a British company to work remotely, but where there has been a relocation of an existing employment relationship, the legal analysis is likely to be fairly straightforward.

One relatively minor matter, relevant to the specific situation where the employer is in England or Wales, and the remote worker is in Scotland (or vice versa), relates to the presentation of claims to employment tribunals. In the above situations the employee who makes a claim can probably choose the particular jurisdiction they prefer. Under the ET Rules, a claim can be presented in England & Wales if the contract is performed partly in England & Wales (rule 8(2)(c)), even if the respondent is carries on business in Scotland. Rule 8(3)(c) is to similar effect when the respondent carries on business in England & Wales. The remote worker who lives across the border from their employer thus has a choice of tribunal forum that is not available in the standard case, where the employee works in the same jurisdiction as that in which their employer carries on business.

Proper law

The above examples are illustrations of how the notion of the “place of work” has a role to play in the operation of domestic employment law, and show questions (and possible answers) to a few possible difficulties. Looking beyond the list of specific entitlements, there are also wider legal considerations in any move towards remote working across borders.

The proper or applicable law of the employment contract, for example, is governed by the rules found in Rome I (Regulation (EC) No 593/2008 of the European Parliament and of the Council of 17 June 2008 on the law applicable to contractual obligations), a regime that will continue in force after 31 December 2020. Contracts of employment are given special treatment, and where the parties have not otherwise expressed a view as to what should be the governing law, article 8.2 applies.

This provides: “To the extent that the law applicable to the individual employment contract has not been chosen by the parties, the contract shall be governed by the law of the country in which or, failing that, from which the employee habitually carries out his work in performance of the contract. The country where the work is habitually carried out shall not be deemed to have changed if he is temporarily employed in another country.”

That would on the face of it make the employment contract of the remote worker coincide with the law of the country where they are remotely located – at least where their change of location is not seen as temporary. But there is a saving provision to be found in article 8.4: “where it appears from the circumstances that the contract is more closely connected with a different country, the law of that country shall apply”.

It is at least open to argument that in the example given, the remote worker's contract has a closer contact with Britain, but it would not necessarily be so if, for example, the worker has moved their family and domicile to the new location. And it should not of course be assumed that a British connection would automatically be more favourable to the worker – it depends on the particular circumstances in play and the rules of the legal system where the individual is situated.

Watch this “place”

All these questions are, for the moment, hypothetical, given that the higher courts have not to date had to consider the consequences remote working may have for individual employment rights. But it is unlikely that this state of affairs will continue. It seems probable that COVID-19 will continue to encourage employers to put in place new arrangements allowing staff to do their jobs remotely, and such arrangements will do doubt give rise to disputes and grievances as and when the employer seeks a return (or partial return) to previous practice. That, in due course, may well lead to litigation in the employment tribunals or civil courts.

Lawyers will have to develop their understanding of what constitutes “the place of work” for the important sub-category of workers for whom home is the new office.

Brian Napier QC, Themis Advocates

Remote Working