Rethinking Employment Contracts in the Era of Remote Working

Remote work is here to stay.  Our understanding of the traditional employer-employee relationship is gradually becoming altered.  In this evolving world, would the traditional employer- employee contract still be relevant?  If not, then what are the key issues that need to be pondered upon to customise employment agreements to suit the present day needs of remote / hybrid working.  Through this post, we attempt to explore how employment contracts need to be re-thought and re-purposed in this era of remote / hybrid working.

Traditional Employment Agreements vis-à-vis Remote working agreements

Traditional employment agreements inter alia, specify the nature of the job, location, working hours, leaves policies, remuneration, benefits etc.  Employment agreements with remote work at their centre would have to be re-purposed in such a way that they blend the essence of an employment agreement with the operational exigencies of remote working.  Some of the changes that would be required are:

• Location

Traditional employment agreements specify the place where the services would be delivered.  Remote working arrangements would not have any specific location mentioned.  This change, appears trivial but has huge regulatory implications that we would discuss, later in this post.

• Data Privacy

Traditional Employment Agreements often have loosely worded data privacy clauses.  However, in the age of remote working, where, the employee would be able to access confidential and proprietary information from anywhere, it becomes pertinent to impose stringent data privacy obligations on the employees.

• Return of office equipment

In a remote work-setting, it becomes important that the employee returns the company’s assets provided to her/him.  Employment agreements should have strict obligations linked to indemnity clauses requiring the employees to return the Company assets.

• Intellectual Property

Typically, employment agreements deem the works created by employees as works made for hire and any intellectual property in work products created by employees rests with the employers.  However, in a work-from-home arrangement, an employer cannot keep a check on how the employee may misuse, copy, modify or in any way exploit the work product.  Hence, additional language needs to be built in the intellectual property protection clauses, to protect the work product being created by the employees.

• Personal Data

In a remote working environment, many employers use time-tracking software or webcam monitoring to ensure that the employee has worked a certain number of hours.  It is pertinent, that the consent for the collection of such data is included in the employment agreement itself.  A blanket consent from the employee needs to be taken in order to deploy such supervisory tools.

Implications of the Changes made in Employment Agreements

While, there is no doubt that traditional employment agreements would have to be tweaked in order to cater to remote working arrangements, the modifications required, may give rise to certain implications, as stated below:

• Applicability of laws relating to working conditions

Typically, state-specific Shops and Establishments’ legislations are used to determine the legally mandated leaves, benefits, termination process etc.  In the absence of a specific location, the determination of applicability of law would pose a concern.  One way could be to apply the law applicable to the location where the registered office of the Company is located and mention the same explicitly in the employment contract.

• Technical glitches

If an employee is not able to log in the hours required due to network glitches or unprecedented incidents such as power cuts, would that day be marked as absent? Typically, force majeure clauses do not find their way in employment agreements, but would an employer agree to have them incorporated for remote work purposes? If not how would these practical concerns be addressed? These are issues that need to be re-thought of and incorporated in contractual form.

• Expenses

Typically, employment agreements, contain clauses related to reimbursement of expenses incurred in the discharge of services.  However, in a remote-working arrangement, would the internet bills of the employees also be counted as an expense? These things need to be addressed in the employment agreement.

• Benefits

The laws around benefits such as maternity benefits were drafted keeping a physical workplace in mind.  A permanent remote work culture would make it the purpose outlined under these laws, incongruent.  For instance, having a creche at the workplace would lose relevance, if the employees are working from home.

• IT Support

In WFH models the traditional 9-to-5 work timings get blurred and an employee may be working at any point of time.  This puts extra burden on the IT support staff, who now need to be available 24/7 to support work from home arrangements.  This affects the maintenance and upkeep of servers as there is no planned downtime available to the IT support team to address the same.

• Rise of Hybrid working and BYOD Work Culture

The transition to WFH model also gave rise to greater flexibility in terms of on-site work.  When the pandemic had receded, many employers had reversed WFH and even adopted a hybrid working model.  The hybrid working model would allow the employees to work a few days from home and a few days from office.

In order to avoid loss or damage to company equipment, many companies also started the practice of BYOD or Bring Your Own Device.  In pursuance of this practice, employees would bring their own devices to work, instead of using Company property.  While this protected the Company property from getting lost, damaged or stolen, especially when it is uncertain when a WFH model would be reverted to, it also brought to fore the compatibility issues of various personal devices with the ones at office.  While data privacy measures are typically adopted by using VPNs on employees’ devices, there is a good probability of pirated software available on personal devices of the employees.  There is no clarity on who is liable for penal action (the company or the employee), for use of pirated software on such devices.

• The Fluid Concept of Workplace

The notion of workplace has been changing ever since work from home has been implemented.  An interesting judgement of the German Court where a fall on walk from bed to desk was considered a workplace accident begs the question, if such dynamism has application in India.  The decisions of the Indian Courts explaining the concept of notional extension of workplace gives us a cue that the facts and circumstances of the cases as and when they come before the judiciary may warrant a compensation.  Typically, in cases of deaths/injuries caused by workplace injuries, the causal connection needs to be established by evidence that the nature or conditions or obligations of the work caused or accelerated the injury resulting in employee’s death.

The ultimate principle is that if the causal connection between the accident, injury and employment is established, it is not material as to where the accident occurred and when it occurred.

Therefore, taking cue from the precedents, we can say that it would depend on the facts and circumstances of the case and may warrant a compensation if a case like that of Germany happens in India, but the same is still an open-ended question not yet judicially analysed.

Conclusion

Some areas which need to be revised and be moderated for hybrid working employees can be found in the arena of existing Human resources policies, this would include the nature of work and allowing flexible work timings.  The managerial conduct shall also be scrutinized, since team functioning and lack of offline availability may curb the efficiency of an employee.  Hence, an amendment to include an online interference for conducting meetings and communication will benefit remote workers.  Another area of importance is identifying any tax implications for remote functioning, this may include expenses incurred as part of working at home or for the equipment used as part of the employment or training period.

Although the first response of employers was to encourage remote functioning, a question was raised in the Californian Supreme Court, asking about the responsibility to provide remote working tools for employees, focusing on who would bear the expense of this cost. The finality of the decision prodded that employers may have to reimburse employees functioning remotely for reasonable and necessary home office expenses.  As part of this judicial interpretation on this issue, including this reimbursement clause in a remote employment contract would be of much value and essence to the employees.  Thus, where an employer breaches this would be bound by contractual obligations and shall be sought to refund the entire cost of the proceeding.  Labour issues are often treated as dismissive, but under the context of the pandemic, suffrage has augmented to various levels of shortcomings.  These remote employment contracts must be carefully and specifically curated to meet the needs of all employees struggling to earn a living.

Further, Remote functioning should not derail the level of exposure an employee obtains and hence employers should ensure that home workers do not experience mistreatment or unfavourable treatment as compared with other offline employees.  In case remote functioning is availed by an individual of disability, then a paramount amount of consideration must be owed and explicitly stated in the contractual relationship.