The Future of Work
Philip Henson and David Yewdall challenge firms to seize the opportunity to change the workplace
Now is a great time for law firms to seize the opportunity to change the workplace, and futureproof their businesses. We set out 10 predictions and explore how we may see a reimagining of adapted (or hybrid) workplaces.
Investment in technology and training
Businesses will likely continue to invest in technology – the more ambitious will go beyond a managed transition to ‘the cloud’ and instruct professionals to create some bespoke solutions.
While Zoom and MS Teams calls can take up a lot of energy, they – and other technology – have allowed many businesses to continue uninterrupted. AI technology, once seen as the exclusive jurisdiction of large businesses, will be embraced by small to medium-sized enterprises (SMEs) as they seek to gain a competitive edge – and to boost their tech credentials.
Smith and Williamson have already seen an increase in research and development (R&D) incentive relief enquiries from the fintech and broader technology sector. One key tip here is to seek to ensure the costs are eligible for R&D tax credits at an early stage (as there may be a way to structure the investment in technology to include additional costs).
SMEs can benefit from an extra 130 per cent of their qualifying costs, as well as the normal 100 per cent deduction, to a total 230 per cent deduction for the tax year. Even SMEs which are not currently profitable can take advantage of R&D tax credits and can receive up to 33 per cent of their qualifying costs back as cash. Finally, for large businesses, this credit is usually 13 per cent – so all worth their weight in savings.
Flexibility will be as highly regarded as pay when it comes to being the employer of choice in the future.
Another trend in which we have seen exponential growth over the past few months is the number of requests made by employees seeking to work remotely from overseas. Considering the effects of lockdown on many people working in the UK, many individuals have adapted quickly to the concept of remote working, while many overseas nationals took the opportunity to spend as much precious time as possible with loved ones back in their home countries.
In terms of connectivity and productivity, this has taught us one simple thing: a flexible workforce is an effective workforce, no matter the location. As time goes on, this will have a profound effect on business travel and client interaction.
With any change comes risk and it is crucial that employers remember that granting these requests on a permanent basis will cause domestically-based organisations to manage the risks of an international workforce, resulting in possible overseas tax exposures, local payroll administration and other costs. But a key trade off will be employee wellbeing versus corporate risk and, ultimately, the retention of key talent.
Flexible working requests
Dusty old flexible working policies – often buried deep within staff handbooks – were effectively binned overnight at the start of the pandemic. Employers were forced to analyse who could work from home and many concluded almost all office workers could work remotely.
Forward-thinking employers sought to engage with their teams and ask what they now wanted and needed in terms of flexibility. In response, some introduced core hours during the day when the team should be available; and flexibility for team members to have daily exercise. Meetings were organised at sensible times and even work socials (whether quizzes, virtual drinks or interactive events) took place at suitable times.
When government guidance changes and a managed reopening of offices is announced, employers and HR/people directors will need to be ahead of the curve to plan their new approach to flexible working requests. The law provides that once a valid request for flexible working has been submitted, the employer has certain obligations:
- They must deal with it in a 'reasonable manner';
- They must notify the employee of its decision on the request within a period called the 'decision period'; and
- They may only refuse the request if they consider that one or more of certain defined grounds for refusal applies.
An employer may refuse a flexible working request on grounds that include:
- Burden of additional costs.
- Detrimental effect on ability to meet customer demand.
- Inability to reorganise work among existing staff.
- Inability to recruit additional staff.
- Detrimental impact on quality.
- Insufficiency of work during period employee proposes to work.
- Planned structural changes.
- Detrimental impact on performance.
We suggest that any refusal has to be viewed through the prism of lockdown. Consider how you would have treated a flexible working request before the first lockdown, as opposed to how you would treat such a request now. For those who have been recruiting during lockdown, flexibility will have been discussed at an early stage.
We think that level of engagement will continue. Indeed, we anticipate that one of the pressing questions from applicants at interviews will revolve around understanding the potential employer’s attitude to accommodating flexible working arrangements. We suggest that, in discussions with new recruits, employers start keeping an open mind and explore and agree key areas, such as flexibility and hours of work.
The formality of the process may lead to informal requests, which should nevertheless be considered carefully by employers.
Formalised hybrid workplace
Under the legislative regime regarding flexible working requests, a statutory request can be made by an employee to change the hours they are required to work or the times they are required to work; or change where they are required to work (as between their home and their employer’s place of business).
When offices can reopen, we anticipate some employers – notably those who have not consulted with their staff – will be surprised when they receive pushback from employees who have enjoyed working from home and the flexibility it has provided.
Tech business were pioneers in recognising that work can be done entirely from home, and some announced that their teams can now work entirely from home, if they chose to do so, forever. Having discussed plans for a return to the office with business owners – many of whom have enjoyed being at home – we think it likely that there will be certain days of the week or month when staff are to come to the office for specific reasons, such as client events/pitches, business development or social events.
It is likely that those who carry out business development and networking will seek to schedule certain days of the week when they are either ‘in town’ or out and about at prearranged meetings.
HM Revenue and Customs (HMRC) were considerate to businesses early on in widely offering the homeworking allowance (from 6 April 2020) of £6.00 (or £26 a month for employees paid monthly) to employees caught up in a homeworking arrangement.
Generous employers are still able to pay this to employees tax free on top of their monthly pay, but if this is not feasible employees are able to claim this amount back directly from HMRC. Shrewd employers may have already communicated this to their employees.
Equally, other reporting and tax concessions were introduced on providing home office equipment and supplies to employees, and these are still in place through the current tax year.
Employers now have an opportunity to rethink and rebuild their employees’ working patterns. We have all heard widespread talk about whether large offices with expensive leases are still needed; should businesses instead be considering more flexible workspaces once restrictions are lifted? Employers should be aware of some changes to working arrangements that they could consider, such as seeking to switch employees’ employment contracts from office to home-based. In some cases, this could result in income tax relief becoming available where employees are required to travel for meetings.
Incentives for staff return
We must all accept what many commentators view as inevitable: there will soon be a price to pay for the economic costs of the past year.
The coronavirus job retention scheme (CJRS), which took effect from 1 March 2020, has been a lifeline to organisations. In terms of retaining staff, the Chancellor of the Exchequer, Rishi Sunak, had widely promoted the £1,000 per head JRS Bonus payment, claimable between 15 February and 31 March 2021, as a one-off (taxable) payment to businesses for each eligible employee that has been furloughed and kept continuously employed until 31 January 2021.
What would be an impressive and bold approach for the Government to take, and perhaps one which may soften the blow or counteract the inevitable costs of the next budget, is if the concessions in place for permanent home working from a corporate and individual standpoint are continued. An alternative might be rolling out a more generous form of business tax rate relief on leases.
Undoubtedly, there will be long-term effects within the real estate commercial property market. The demand for long leases on commercial premises will, in the short to medium term, be significantly reduced. Right now, with opinion divided and the consensus for many businesses to move to a hybrid working model between remote work and permanent large office spaces, it’s too early to say what specific support could be put in place.
A smart move would be for the Government to acknowledge in some way that the nature of work has certainly changed and supporting businesses who need to adapt, while also reviewing initiatives available to corporate landlords.
The return of the business lunch
City centre-based restaurateurs will, understandably, be nervous of the home working trend. While face-to-face lunch meetings may be refreshing – and certainly feel novel – when the government guidance changes and there’s a gradual return to the office, businesses will start to feel the impact of increased staff expenses and may question the return on investment (ROI).
Previously, organisations have quickly curtailed expenses to reduce overhead costs so, to counter this, we suggest that the government considers a form of tax relief which would incentivise people to make use of these businesses once again, and to conduct business over lunch once it’s safe to do so.
Renewed focus on staff wellbeing
Many have dabbled in meditation, mindfulness, online yoga, more exercise and healthier eating during lockdown. Some employees will be used to their daily lunchtime cycle ride or run. Instead of eating an expensive sandwich at lunch, they may well just want to go for a run, have a shower, eat their pre-prepared lunch and get back to work.
Could law firms adopt a new approach by offering staff the flexibility of an extended lunch break of two hours, with an adjustment at the start or end of the day? This type of ‘wellbeing time’ might be welcomed and particularly suit employees who have really felt the pandemic pressures and may be on the verge of burn out.
Increased holiday or unpaid leave
We anticipate employers may be more flexible in allowing employees to roll over untaken holiday further into the new holiday year; and in encouraging employees to take holiday from time to time to allow them to have a proper break – even if they are not able to go anywhere.
We expected to see a trend for employers to either increase the amount of days’ holiday available or consider more requests for time off (most likely unpaid).
Blended work/holiday time
We anticipate a more flexible approach from employers to blended work/holiday time, such that if an employee books three weeks away then they can ‘work from holiday’ in smaller chunks, adding up to a week over that period.
Encouraging personal development
During lockdown, many resolved to learn a new language, musical instrument or brush up on a new skill. We think many employees will want to continue to develop themselves and be keen to demonstrate to their professional network that they are doing so, such as via Coursera or LinkedIn learning.
Employers may choose to seek out development opportunities to support this, or encourage their teams to continue sourcing their own development opportunities. We anticipate that along with the usual and important HR and regulatory training, some employers may create formalised development budgets for each employee.
Employee wellbeing should be high on the agenda for any business leader and it’s worth knowing that government guidance is helpful in this area.
For example, the provision of tax free recreational facilities is available to employees. If an employer has the space to do so (and let’s face it, too much office space may be an issue going forwards) and if they choose to seriously invest in inhouse gym facilities, these can be offered to employees tax free at a convenient location to fit in around work.
Aside from this, attention to employee mental health should be a high priority right now. We have seen the recent rise in health-related apps such as Headspace, Calm, MyFitnessPal and Happify and have personally seen higher employee engagement with these recently.
While these are not tax-free subscriptions, the government may want to explore how the trivial benefits rules could apply so that employers could provide these tax free. Under these rules, the benefit value must be under £50 per head (including VAT); not in the form of a cash voucher or cash; not a reward for service; and not specified in the employment contract.
A complication would be that there must not be a ‘legitimate expectation’ for these benefits to be provided.
The road ahead for working life is going to be full of interesting turns which have no doubt been enhanced by the events of the past year. It will be up to businesses to choose how they wish to adapt and evolve to suit the needs of their teams.
Philip Henson is head of employment at ebl miller rosenfalck solicitors millerrosenfalck.com
David Yewdall is a partner at Smith and Williamson smithandwilliamson.com