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
Majority Answer: c) COVID-19”
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.
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’.
Companies should make sure that their legal/internal control/compliance systems are also consistent and up to date. Therefore, do remember to:
- Update your employment contract for new work environment;
- Update your organization’s employee and training manual; and
- 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)