Date
06 Oct 2022Category
HR Consultancy Services, Tax, Employer SolutionsAs a result of the Covid pandemic, agile working (including smart working, hybrid working, and intelligent working) has become a much more regular occurrence. In fact, in our recent SME Barometer report, 55% of SMEs advised that they’d introduced some form of hybrid/remote working post-Covid.
The move to agile working models
Agile working should not be confused with flexible working. Employees with at least 26 weeks’ continuous service within their organisation have the right to make a statutory request for flexible working, but they do not have a statutory right to have such request accepted. However, it is becoming increasingly difficult for employers to refuse flexible work requests to make remote or agile working arrangements contractual, but there may be various business reasons for which requests are refused.
As above, a number of our clients have introduced agile or hybrid working, at least to some extent. Employers do generally need to be more innovative now in terms of managing existing and prospective employees’ expectations about what ‘going to work’ means to each side; agile or hybrid working used to be seen as a benefit although it is fast becoming the norm.
We know from recruitment sources that people in the UK are not considering jobs now unless they can work remotely at least part of the week, and the traditional 9-5 job worked Monday to Friday in the office has really become a thing of the past.
According to the CIPD, more than half of UK employees say they have flexible working arrangements in their current role and this number looks only set to increase.
The associated benefits and considerations
The benefits of agile working include a wider recruitment pool for talent acquisition, more trust in employees to work remotely, less travel and therefore less expenses being incurred, more inclusion and diversity, boosting morale and improved job satisfaction, better staff retention, less absenteeism and overall better productivity in many cases with employees able to have more of a focus on work-life balance, but it is not all a positive.
There are additional considerations such as the provision of equipment, security, communication, health and safety including risk assessments of the home environment, employee wellbeing, employee monitoring, and of course there are data protection issues too if confidential or personal data is being accessed from home. Employers should also be considering the following when looking at suitable agile working policies:
On the other hand, employees need to think about:
The tax implications of agile working
Whilst tax should not, some would say must not, drive decisions which are intended to improve both employer business efficiency and employee wellbeing, changes in working practices can result in unwelcome tax consequences. An awareness of the implications is therefore needed.
Perhaps the most commonly overlooked pitfall is in regard to the employee who is now working from home part-time when previously the role had been a full-time office based one. We are seeing two scenarios:
With many employees having spent somewhere north of twelve months working from home, there is some reluctance to return to work full-time in the office. As mentioned, there are significant perceived benefits of agile working and it seems unlikely that there will be a full reversal of current practices.
However, for many businesses it is unrealistic for the employee to never need to go to the business premises. This requirement may only be for a day or two a week, or perhaps even less. The employer may agree that he will pay for the employee’s travel costs on those workdays when attendance is required. Extreme caution is needed here as the work office (and not the home office) may well be, and is indeed likely to be, the employee’s main (referred to as “permanent”) place of work. Whilst the well-meaning employer will pick up such costs, they are likely to be taxable on the employee. This is a complex area and changes in work patterns where employee expenses are paid must be considered very carefully from a tax perspective.
There were some tax easements for employees working from home during the pandemic with employers able to provide essential office equipment and make payments for employees working at home and subsequently using additional energy to heat an office, run IT and so on. These relaxations have largely been withdrawn.
Furthermore, a benevolent employer may decide to let an employee keep his office equipment even where it is no longer used for the business, perhaps if an employee is returning to the office to work full-time. The employer should consider charging the employer for the kit at its current market value to avoid a taxable benefit arising.
Ultimately, there are related tax issues to consider when agreeing to a particular agile working pattern. These issues should not drive the business, they should be planned for when changes to working patterns are being considered. Care is needed; for an employer with a large number of employees, seemingly small changes across the entire workforce can result in significant tax cost.
We are here to help
If you have any queries in relation to agile working policies and the impact on your business, please get in touch with a member of our specialist team or your usual Azets advisor.
