When home is where the work is

An increasing number of employees work from home, at least for some of the
time. But out of sight must not mean out of mind, warns Sean Nesbitt. There are
still many legal and practical issues to consider

Although often described as atypical, homeworking is an established and
growing component of many employees’ working arrangements. In July 1999 a
report indicated that one in 20 of the UK workforce now works from home at
least one day a week.

This form of flexible working is especially widespread in technology-based
services, such as call centres, as well as in the dotcom world. Reports also
indicate that more established professions such as law have significant numbers
of employees working from home, at least part time.

Homeworking frequently strikes a chord for those reviewing working practices
because it may assist in meeting a traditional management target – driving down
costs – as well as in the search for the modern Holy Grail, the work-life
balance. For employers, overheads may be reduced and homeworking may also sit
well with flexible working practices, enabling employees more easily to fulfil
caring duties.

The duties of homeworkers, and the forms which homeworking may take, are
diverse. However, homeworking carries with it certain core issues that need to
be considered at the start of the relationship and addressed in management
practice and employee contracts.

Homeworking also acts as a magnifying glass for issues which may be relevant
to all employment, but have particular difficulties for the employer when they
arise during this kind of employment relationship.

Health and safety

Under the Health and Safety at Work Act 1974 employers have a statutory duty
to provide a safe system of work for their staff.  Failure to comply may result in criminal proceedings, not just
against the employing entity but against directors or managers who are
complicit in a default.

It is also an implied term in every contract of employment that the employer
will take such steps as are necessary to provide a safe system of work, and
failure may expose the employer to proceedings in negligence (for example, for
stress as well as for conventional physical injuries).

Subsidiary legislation, primarily in the form of the Management of Health
and Safety at Work Regulations 1992 and the Display Screen Equipment
Regulations 1992, set out more detailed practical obligations on employers.
Under the former, employers should carry out a risk assessment of the working
environment and methods of homeworkers, as they should for staff who work on
their own premises.

Ideally, employers should send a staff member to visit the premises a
homeworker would occupy, in the same way that a risk assessment would be
carried out at the conventional workplace, looking at any obvious hazards.

However, as the HSE guidance notes, homeworkers can also help in identifying
the hazards for their employers.

Many employers will wish to carry out a screening exercise, at least as the
first step, involving the employee completing a questionnaire detailing
physical working methods, who else is in the home and provisions for security
and rest breaks.

According to their resources, where hazards or risks are identified,
employers would then respond with visits to examine the issue further and
assistance with corrective action (including, for example, provision of fire
equipment, an appropriate desk or work station, and so on).

It may be appropriate for employers to provide employees with guidelines on
their conduct while working at home. While the essence of homeworking is to
devolve responsibility and a degree of control to the worker, employers cannot evade
this statutory duty and the drafting of clear and specific guidelines relating
to the activities to be carried out should not only improve the quality of work
and productivity, but also reduce the chance of legal action if things do go

Employers should consider adapting existing handbooks on employee policy to
contain specific provision for homeworkers. These guidelines should include,
for those working with VDUs, specific provisions which will be familiar in the
more conventional administrative environment of many offices such as:

– A reminder that workers should take breaks on a regular basis, including a
description of any necessary stretching exercises.

– A reminder about setting up lighting so that glare is reduced.

– A reminder about regular eye testing, which many companies will pay for,
together with appropriate spectacles if required as a result of VDU use.

In order to reduce risks on a cost-effective and consistent basis, larger
employers may provide homeworkers with a uniform style of workstation and
keyboard/screen equipment.

But all employers should, as a minimum, consider a specific written document
highlighting risk areas for staff and practical working measures as to how to
reduce them.

This applies both to physical risk and to working practices. Staff should be
able to shut out the domestic environment, but not so that they become
overworked or stressed without appropriate breaks and without colleagues around
them with whom they can relax.

Third party notification/consent

Where equipment such as computers, an ISDN line, telephones or answering
machines are provided, these are unlikely to be treated as taxable benefits to
the employee.

Strictly, section 155(2) of the Income and Corporation Taxes Act 1998
provides an exclusion for PAYE on non cash benefits and expense allowances
which relate to the provision by the employer of workplace facilities in
premises occupied by the employer. There may be some doubt as to whether this
includes a part of a worker’s home.

Employers may insist that certain equipment is provided for business
purposes only. However, there is a growing realism about the difficulties of
policing this division, manifested in the recent abolition of tax on mobile
telephones where employees use them for personal purposes. In practice,
employers should discuss with the Inland Revenue what is to be provided and
obtain clearance as to the appropriate tax treatment, confirming this to the
employee at the start of the homeworking relationship.

Other third parties who should be consulted or informed about the
relationship include mortgagees or landlords. There may be restrictive
covenants or terms in lending documentation which prevent particular uses for a

Again, in order to reduce the risk of the employee infringing his or her
personal obligations, many employers will adopt as a term of their homeworking
policy a requirement for the employee to check for the need for third party
consents and for the obtaining of those consents as a condition of the relationship
continuing. Employers may wish to draft appropriate notifications for their
employees to use.

Employers should also check with their insurers that the terms of any of
their insurance policies apply. It is surprising how frequently copies of the
insurance policy are not readily available to the employer or the policy is
significantly outdated.

Where valuable equipment is to be provided for the employee to use at home,
it may be possible to devolve to the employee responsibility for maintaining
adequate insurance cover for the risk of loss or damage to the equipment.

General legal issues

Given the duties relating to health and safety and other third party rights
referred to above, an employer might consider it more appropriate to structure
the relationship as one of independent contractor. The provisions of the
Regulations and HSWA do not apply to these forms of relationship, which may be
advantageous given the potential difficulties in carrying out risk assessments.

However, where employers need to maintain the certainty and control that
comes from the employment relationship, this will not be a viable option. In
these cases it will be necessary to consider the following.

The Working Time regulations

These apply to homeworkers as well as other staff. The employer may need to
give thought to ring fencing any period in which it would not wish homeworkers
to take holiday, or ensure that it has sufficient flexibility and speed of
response that it can act quickly to defer holiday where business needs require,
in accordance with the Regulations.

Employers will also need to consider how they comply with the general
monitoring and record-keeping obligations imposed by the Regulations. In
practice, many employers find there is a danger of homeworkers overworking – in
this regard, regular time sheets, management monitoring and, where possible,
monitoring technology such as the number of hours an employee has logged on to
a network, may be valuable.

Minimum Wage regulations

There is a risk that with a flat-rate wage and autonomy as to hours worked,
staff may end up with an hourly rate below the statutory minimum. Employers may
wish to impose a maximum number of weekly hours to be worked commensurate with
a flat rate of pay.


According to circumstances, employers may also need to consider the impact
of other legislation including, in the case of collective redundancies, whether
an employee is to be treated as working at an "establishment" for the
purposes of triggering collective consultation under the Trade Union and Labour
Relations (Consolidation) Act 1992.

Depending on the composition of the homeworking force, there may also be
pitfalls in the equal pay or sex discrimination legislation. Where homeworkers
are part time, employers have to assess the impact of regulations under the
Part Time Workers Directive (97/81/EC).

Fixed-term contracts

Homeworker policies will also need to be reviewed in the light of the
framework agreement between the social partners on fixed term work (Directive

It is possible that where employers combine the flexibility of homeworking
arrangements with other working practices designed to reduce the impact of
statutory rights, such as avoiding the accrual of continuous employment, the
scope for loopholes will be reduced.

Sean Nesbitt is a partner and London head of employment law at Garretts,
a member firm of Andersen Legal

Checklist: terms and conditions

– Draft flexibility as to place of work, with employer rights to recall
employee to premises.
– Draft flexibility as to hours/shifts.
– Require employer access for risk assessments and property recovery.
– Clarify/delegate responsibilities for insurance, notifying landlords, etc.
– Clarify appropriate use of equipment for expenses/tax purposes.
– Draft appropriate internet/e-mail policy.
– Draft appropriate policies on data security, computer use and Data Protection
Acts 1984 and 1998 (especially where employee is using personal data relating
to others).
– Draft protections on maximum working hours and record keeping.
– Ensure compliance with equal pay and discrimination legislation.
– Provide for return of equipment, refund of employer loans and so on

Case study: The AA

In 1997, the AA began to explore homeworking to allow more flexibility for
coping with fluctuations in the volume of motorists’ calls. It now has about
150 people working entirely from home. Work is identical to that in a call

Staff wishing to telework have a home check to ensure adequate light,
heating and electricity supply for the equipment and a comfortable environment.
They are provided with special equipment, insured under the AA’s corporate
policy, including a foldaway, lockable desk, chairs identical to those in the
call centre, fax, telephone and computer. All teleworkers undergo a workstation
assessment of risk of RSI, eye strain and other health and safety problems.

Home-based team managers manage up to 20 teleworkers each. They visit their
staff twice a month and are in frequent telephone contact. They carry out
continuous assessment of the teleworkers through on-the-spot monitoring,
listening in to calls and taping calls.

All teleworkers are asked to sign a special agreement, key features of which

– Requirement to work flexibly and change work patterns with notice.
– Requirement to allow employer to undertake risk assessments and other health
and safety checks
– Provision and use of equipment
– Insurance responsibilities
– Computer and data security
-Home environment, covering potential disruption, care arrangements and so on
– Expenses and tax implications
– Training and supervision
– Requirement and obligations where there is a change in personal circumstances
– Requirements should they wish to stop teleworking
– Requirements for access to home
– Requirements regarding any contract termination
– The AA managers in charge of the teleworking project give the following best
practice tips.
– Team managers should be used to avoid social isolation.
– Professional equipment to be provided in an appropriate environment
– Selection procedures at the start should identify those best suited to work
from home.

Source: Industrial Society Managing Best Practice No. 68: Remote

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