COVID Spurred Tech-Revolution – The Telecommute

Key Legal / Contractual Issues for Employers to Consider

“Survey: Who is the driver of the digital transformation of your company? 

a) Chief Executive Officer

b) Chief Technology Officer

c) COVID-19

Majority Answer: c) COVID-19”

Introduction

Telecommuting is not new. For the tech sector, working remotely has been around for as long as the internet has existed. Despite the concept having been around for nearly half a century, telecommuting remains a novel idea for traditional professions (e.g. legal, accounting, finance, etc.). 

Everything changed when COVID-19 struck and made telecommuting a necessity. 

Catalyst for Change – Major Advantages for Adopting a Telecommuting Policy

Health reasons aside, there are real reasons why telecommuting should be taken onboard seriously. The following are three major advantages of a telecommuting culture:

1. Rent/operational costs savings: One of the biggest sunk costs for businesses in major financial centres is office rent, but much of the work for a professional is done on a computer connected to the internet. Office space is therefore nothing more than a glorified and expensive study room. Office space is only really needed for client meetings, and even the necessity of such physical meetings is being challenged. By removing physical back offices, organizations stand to streamline their value chain significantly. 

2. Access to international talent pool: One of the most expensive costs for organization is the relocation of talent from overseas. When foreign talent is recruited, the costs of onboarding can be extravagant. By implementing a telecommute culture, organizations can recruit overseas talent without uprooting their entire families.

3. Reduced employee expenses: The need for physical work space also means sunk costs for employees. Travelling to work (especially for organizations located in cities infamous for traffic congestions) requires both travelling time and costs. Such inefficiencies translate into losses in time and costs that employees will never recover. Telecommuting can resolve such inefficiencies by reducing the need to travel and each employee can also contribute to saving our planet’s environment!

Employment/Legal Issues to Remember When Initiating the Telecommute Revolution

Organizations preparing to jump into this digitization movement should also be mindful of various employment and legal issues. These include:

1. Data Security & Confidentiality: Companies should make sure that they have the proper technology in place to ensure the integrity of confidential information. Companies preparing to move portions of their value chain to the remote space should ensure that employee contracts have the proper confidentiality clauses in place, that employees receive sufficient IT security training and that the remote set-up is well maintained and regulated by the IT department.

2. Privacy: Conversely, employees who will be telecommuting should also be briefed about their privacy rights (and the Company’s rights to oversight). For instance, to ensure work efficiency (and proper internal controls over employee conduct), employees should note that just because they are working from home the organization will not be able to monitor or inspect their progress. Companies should have the necessary privacy policy drafted, implemented and maintained. 

3. Hourly wage workers: Not all workers are subject to fixed salary. In ages past, time was simply recorded when the employee clocked in, though not all hours were productive. Companies should have the necessary tools to document and record billable hours that employees generate. By implementing a billable hours recording system, organizations will have the side benefit of streamlining both productivity and accuracy in compensation. In this connection, it is also important to properly track how such documentation is to be made in contracts to mitigate risks of future employment disputes. 

4. Employer liability: Employer liability is a huge concern for firms going virtual. This includes multiple issues, such as how liability is addressed when an employee slips and falls at home during office hours, for example. Companies should look into establishing a policy (as well as getting coverage) which specifically identifies how injuries/torts are covered for home offices. 

5. Governing law clauses: This is the part organizations can have the most fun with. Companies should be mindful of how their contracts are to be governed and how disputes are to be handled.

Whilst telecommuting can open up a world of opportunities for organizations, employers should also be mindful that each jurisdiction has unique labour laws. 

That said, much can be mitigated by way of governing law and dispute resolution clauses that set out ahead of time how disputes (if they happen) are handled. By taking the necessary due diligence, organizations can enjoy the ‘world of opportunities’ without turning it into a ‘world of liabilities’. 

Conclusion

Companies should make sure that their legal/internal control/compliance systems are also consistent and up to date. Therefore, do remember to:

  1. Update your employment contract for new work environment; 
  2. Update your organization’s employee and training manual; and
  3. Update your organization’s IT system to accommodate the new world!

– Mr. Joshua Chu, Consultant, ONC Lawyers

– Ms. Anna Lau, Partner, Ravenscroft & Schmierer (Solicitors & Rechtsanwälte)

Jurisdictions: 

Solicitor, ONC Lawyers

Joshua Chu is a Litigation Solicitor qualified to practice in Hong Kong. Before becoming a lawyer, Joshua worked in the healthcare industry serving as the IT department head at a private hospital as well as overseeing their procurement operations.

Since embarking upon his legal career, his past legal experience includes representing the successful party in one of Hong Kong’s first cryptocurrency litigation cases as well as appearing before the Review Body on Bid Challenges under the World Trade Organization Government Procurement Agreement concerning a health care industry related tender.

Today, Joshua’s practice is mainly focused in the field of dispute resolution and technology law.

Aside from his legal practice, Joshua is currently also a Senior Consultant with a regulatory consulting firm which had been founded by ex-SFC Regulators as well as being a management consultant for the Korean Blockchain Centre.

Partner, Ravenscroft & Schmierer, Hong Kong

Anna is a Hong Kong qualified lawyer and is responsible as a partner at Ravenscroft & Schmierer for the commercial litigation department. Aside from her legal background, Anna is also an advisor to the Ohkims Blockchain Centre in South Korea and Hong Kong qualified lawyer and a regulatory consultant specialized in IT control and compliance.  

Before starting her practice as a lawyer, Anna worked closely with the United States Patent and Trademark Office (USPTO) and US Food and Drug Administration (FDA) on intellectual property and FDA regulatory matters. 

​Since embarking on her legal career, Anna was part of the team that defended a party in Hong Kong High Court proceedings involving the jurisdiction’s first cryptocurrency cases where she leveraged her science and engineering skills extensively to help improve her client’s case’s position. This feat was repeated again shortly after when Anna again leveraged her science background in a healthcare-related tender dispute. 

​Today, Anna is proactively working on various Distributed Ledger Technology related projects where she combines her love for science and technology together with the logic behind regulatory framework.

Partner, ONC Lawyers

Michael Szeto is a litigation partner of ONC Lawyers and heads the firm’s Employment practice. Prior to joining the firm, he had practised with various prominent law firms in Hong Kong. He has many years of experience in handling complex commercial dispute resolution, shareholders’ and joint venture disputes, bankruptcy and insolvency matters, debt recovery and mortgagee actions. He also routinely deals with regulatory actions and compliance matters under the Securities and Futures Ordinance, the Hong Kong listing rules and anti-money laundering laws and guidelines.

On the employment side, Michael often advises on various contentious and non-contentious employment matters, covering contract reviews, termination disputes, injunctive relief, discrimination and harassment claims, data privacy matters, as well as advice on matters relating to team moves, remuneration packages and employee incentive schemes. He is a frequent author of employment articles in industry publications and presenter to legal and human resource professionals.

Michael’s broad clientele includes listed companies, directors, shareholders, local and overseas banks, financial institutions, local and international corporations as well as statutory bodies.