How successfully an employer manages hybrid working going forward, at a time when skills are in short supply, will be core to attracting skilled talent. In this article, Partners Emma Bartlett and Andrew Pavlovic consider what employees appear to be expecting, whether such expectations are both realistic and sustainable, and how employers can manage those expectations whilst also ensuring that their policies comply with any relevant regulatory requirements or obligations.
The great ‘working from home experiment’ (also known as the Covid-19 pandemic), largely demonstrated that productivity levels could be maintained (if not exceeded in certain circumstances) for most office-based roles. Although, had the pandemic happened ten years ago, query whether technology was sufficiently available and sophisticated enough to enable relatively seamless moves from meeting to meeting without leaving our home desks.
Prolonged working from home has however created its own issues. For example, workers often found it hard to curtail the working day when their office was within their home environment. Few employers instructed workers to return to their usual hours in the office after the government guidance to work from home was lifted in early 2022. We are 8 months on and firms are still working out what the new norm will be, while operating a more voluntary hybrid working arrangement. In mid-August 2022, the BBC reported recent survey findings showing that UK workers are going into the office just 1.5 days on average compared with 3.8 days pre-Covid.
The question of how to address salary differentials remains though. A large London law firm announced recently that staff could choose between a permanent working from home arrangement with reduced pay or to continue on their current remuneration terms provided they commit to returning to the office 3 days per week. At the same time, civil servants received Jacob Rees-Mogg’s calling card on their empty desks in a bid to encourage all staff to return full-time to the office, as well as facing an office attendance rate league table (with government departments ranked against each other) which has sparked controversy.
The law firm in question received a negative public reaction to its announcement that staff either return to the office three days a week or take a 20% pay cut if their preference is permanent home working. It might therefore be reasonable to assume that workers do not want to be told that they have to work in the office for any minimum period, let alone full-time. Nor, it appears, is a pay reduction expected despite the personal savings in terms of time and money commuting to the office. The firm is likely to be one of many who will take such step. During the pandemic, many city workers moved out of the city. Location based pay is nothing new. Firms with regional offices already pay different salaries depending on where in the UK the office is located. London and other cities have always attracted higher remuneration and the proposal reflects this. The current employment contracts of most of the affected lawyers, in this case, will no doubt specify full-time office working.
Remote working since March 2020 has been a temporary variation to their place of work in order to comply with government guidance and public policy to ‘work from home if you can’. The government message was driven by health and safety concerns, which employers followed, to mitigate against the risk of Covid-19 infection. It did not however mean a permanent variation to workers place of work and as such, employers are technically within their rights to require such workers to now work in accordance with the terms of their contracts. It appears, the law firm in question has read the room and understands that being office based full-time is not what the majority of workers want; reflecting a current societal trend that hybrid working is here to stay.
The way we work has changed substantially since the 1800’s when the average working week was 100 hours over 7 days. Leading companies scaled back the working week in 1914 to 40 hours over five days and a few religious organisations reduced theirs to allow time off for the sabbath. Legislation started to emerge in the early 20th century to improve worker rights in health and safety. This, combined with employees expressing their needs and wants to lead to the 5-day working week, became the norm. In the mid 90’s, the European Union introduced legislation to set a maximum average working week for European members states of 48 hours. The call now is for a 4-day working week – a debate which will continue for some time, although the current consultation appears to be going well. (Read our article The 4-Day Working Week Pilot – “The New Frontier for Competition?”)
In 2021, Paul Swinney, Director of Policy and Research at Centre for Cities, predicted that a hybrid working arrangement would endure for two years with a return to full-time in the office within two years. At that time the implications of further waves and strains of Covid were unknown, and perhaps we are only at the start of his two year prediction rather than half way through it given the recent BBC report referred to above.
The benefits of working with colleagues in-person however should not be underestimated. One reason cited for remote working generating such productivity is the reduced interaction with colleagues which may otherwise interrupt our flow or offer distraction during usual working hours. Lunch invitations are possibly fewer at home, and as lunch time decreases working hours increase. A similar correlation occurs with the removal of commuting time as at least part of it may be converted to working time. In the long term, there is concern that such changes to working habits could erode social skills, create resentment at the loss of personal time, reduce business and learning development opportunities and, ultimately, career development. As a long-term hybrid worker, I have found it necessary to maximise valuable interaction while in the office to create a balance between home and office environments.
Having advised on many flexible working applications where employees were looking to work from home on a regular basis to assist with caring responsibilities or for health reasons, employers’ concerns pre-pandemic would invariably be driven by a lack of trust that the worker would work and sustain productivity levels as well as remain available to work efficiently with clients and colleagues. This wholesale ‘working from home experiment’ has largely debunked these assumptions. When considering flexible working applications pre-pandemic, we did find that there was relatively little discussion about the boost to creativity that could be achieved through in-person collaboration and the boost to wellbeing from being present with colleagues rather than working in isolation. These were seemingly underestimated but will now no doubt contribute to employers’ decision making processes when planning the new norm.
Returning to the London law firm’s proposal that those workers on permanent office contracts are asked to commit to 60% minimum time in the office reflects what many city firms are currently encouraging albeit not with a concomitant permanent contractual variation. The proposal does however provide some certainty as to what the office/homeworking hybrid arrangement will be going forwards and a different proposal if workers do not want hybrid at all. Such a hybrid option would not have been easy to secure pre-pandemic; working parents in particular, would have envied such arrangement to help with childcare. By and large, making such applications were either ‘not the done thing’, even though it would help immensely with childcare pick up and drop off and energy levels generally, or employers were reluctant to set a precedent and agree them.
A 20% salary cut does not appear to equate to London weighting, or reflect the likely lower living costs of employees living outside London and travel costs, but it is possible that it represents the value of in-person collaboration with colleagues and the added value colleagues have on another’s development and wellbeing.
The higher cost of living is not the primary reason for higher salaries in London. Typically, London and other cities such as Bristol have been seen as the identity of ‘business’, where premium work is offered and therefore premium salaries paid for those prepared to come into London to do the work. Cities are seen as a place for excellence, with importance placed on the training and development opportunities in such environment. Of course, working remotely does not prohibit team collaboration or training, but it was traditionally not without difficulties (e.g. Zoom fatigue, isolation, not knowing when to contribute) and in the long term is unlikely to prove a sustainable alternative which a hybrid option can offer.
Cyber attacks remain a constant threat, with professional services firms holding confidential client data that is particularly vulnerable to ransomware attacks. There have been a number of such attacks publicised in recent months. One law firm was recently fined by the Information Commissioner nearly £100,000 for having insufficiently robust systems in place to resist a cyber attack. It is not known whether remote/hybrid arrangements played a role in these attacks, but it is clear that hybrid/remote working arrangements present particular risks from a cyber security perspective which need to be managed to avoid both reputational damage and potential regulatory action.
At the same time as grappling with contractual and cultural issues, employers need to ensure that their working arrangements comply with any relevant regulatory requirements. In the legal sector, for example, law firms are required to have effective systems for supervising client matters and must also ensure that managers and employees are competent to carry out their role. Hybrid arrangements present challenges in terms of supervision and training, particularly for junior solicitors, who require more supervision and benefit from a training perspective in being in the presence of senior people and observing their interactions with others. The recent SRA Thematic Review on Workplace Environments indicates that firms have responded well to this challenge so far, with respondents to the accompanying survey commenting positively on the steps firms had taken to put in place appropriate channels of communication for the purposes of supervision, albeit with some commenting that their supervision had become more structured and formal.
For the financial services sector, the Financial Conduct Authority’s guidance dated October 2021 sets out their expectations for remote/hybrid working. It requires organisations to have plans, policies and risk assessments in place to manage the risks associated with hybrid working, with a particular focus on data, cyber & security risks. Organisations are also required to have policies in place to reduce the potential for financial crime arising from the new working arrangements.
If you are a multinational employer and would like to discuss hybrid working arrangements further, or if you have any questions arising from this article, please contact Emma Bartlett or Andrew Pavlovic.