how will the office of the future work? · work, whilst in work and when travelling between sites....
TRANSCRIPT
i
How will the office of the future work? |Legal implications of changes to building management
Insight report | July 2020
1
Introduction
For a large percentage of the UK population, working from home has become the new norm, and over the last few months we’ve seen how reduced commute times and different ways of working have positively impacted the environment, work/life balance and productivity.
As businesses and their employees start to return to the office, our How will the office of the future work? series considers some of the legal and practical implications around employment, health & safety, regulatory, real estate & planning and data protection & privacy issues. Joining these discussions was Simon Peacock, Lead Director South & Wales Region at JLL, who shared his insights from being on the frontline of supporting employers with reopening their offices. You can listen again to the webinar and Q&A session we held on this topic in June (passcode 7a=D#61u).
In this report, we look at some of the immediate issues businesses are facing as they return to the office, from social distancing to letting arrangements and employee testing. We then consider some of the longer term issues including the continuation of flexible working, the impact on data privacy, and the reconfiguration of office space and introduction of Covid-19 lease clauses.
‘...over the last few months we’ve seen how reduced commute times and different ways of working have positively impacted the environment.’
2
Social distancing
As of 23 June 2020, government guidance states that in England (only), employees should maintain social distancing of either two metres or, where that’s not viable, one metre with risk mitigation. This should be implemented wherever possible to include arriving at and departing from work, whilst in work and when travelling between sites. Clearly, this guidance impacts office occupancy.
Potential occupancy under the 2m and 1m rule
25–30% at 2m
50% at 1m
With a two metre rule, offices are generally capable of being occupied at around 25-35% of their pre-Covid capacity, although with significant variations being seen. While the one metre plus rule could allow an increase in occupancy to 50% of pre-Covid capacity or higher, some of the mitigation measures required to facilitate this within an office environment may be seen by occupiers as too onerous to implement at this stage.
For example, it is easy to see the appeal of bringing back-to-back desks into operation, but employers and occupiers are likely to shy away from the idea of putting in wholescale protective screens and introducing facemasks for all employees. With government guidance still emphasising working from home wherever possible, the demand for desk space may not be such that it merits these additional costs.
Looking forward, the one metre rule introduces an element of flexibility that may be helpful to occupiers who need to scale up more quickly in order to facilitate a return to work. It could also be useful in the context of short term co-working arrangements.
Could a positive approach to flexible working help with reduced occupancy levels while social distancing and other health & safety regulations are in place?
3
Letting arrangements
With social distancing affecting available office capacity, employers will want to understand the impact of not being able to use all of the desks allocated to them under letting arrangements. This is an issue in co-working arrangements, which often permit use of a certain number of desks rather than a specific area, as is the case with traditional leases.
The answer depends on the specific terms and conditions and the nature of the letting agreement. For example:
However, there may be other clauses in the agreement that will impact the obligations of the parties. Therefore, each business is going to need to review its own agreement and associated terms and conditions, and use this as a basis for dialogue with their landlord or building management company – even if that is to negotiate more space for a reduced number of desks.
The serviced operator market is starting to show signs of recovery. The number of occupiers that have taken the opportunity to vacate is balanced by larger occupiers that are looking for extra space in the short to medium term to accommodate social distancing. Where enquiry levels had significantly dropped, they are slowly rising back to pre-Covid levels; and to encourage this further, operators may offer additional discounting.
‘Therefore, each business is going to need to review its own agreement and associated terms and conditions.’
An agreement to permit the use of six desks The landlord would need to provide six desks, regardless of the amount of space required for this with social distancing mechanisms in place.
An agreement to permit the use of a certain area The risk falls onto the occupier’s side, in that it will result in a reduced number of desks being available.
4
Covid-19 risk assessment
Health and safety within office spaces has previously been under the regulation of the local authorities. However, going forward it is likely that the HSE will take a much more substantive approach in the enforcement of social distancing and other protective measures that are required for a return to the workplace.
What do you need to consider when completing your Covid-19 risk assessment?
While there isn’t currently a requirement to have your Covid-19 risk assessment checked externally by the HSE, government guidance states that it should be placed on the company website if you have more than 50 employees.
In addition, in sectors that have been open throughout the pandemic, there is anecdotal evidence of the HSE carrying out virtual inspections to ensure that one-way systems have been implemented, a certain number of hand washing facilities have been established, etc. In short, they want to know how the whole system operates.
Therefore, start by checking the latest government guidance on the arrangements that need to be put in place for offices. Run through it in as much detail as you possibly can and apply it to your workplace.
Review the HSE’s website. It contains a lot of useful information (and templates) about how to carry out a Covid-19 risk assessment.
Make sure that your risk assessment is:
■ appropriately documented
■ communicated to employees. This point is of upmost importance, according to JLL who have been on the frontline of supporting employers with the return to their offices. They note that firms really need to over communicate their detailed plans for re-entry, as a well developed approach that’s poorly communicated is likely to fail.
And that as an employer you are keeping up to date with the latest developments.
5
Returning to work
Employers will need to recognise and be sensitive to the fact that some employees may have concerns about returning to the workplace. This could be for a number of reasons, such as:
Commuting to/from the workplace
Mixing with people outside of family or immediate bubble
Health issues or living with people with health issues
Childcare issues – schools have not returned and alternative nursery or family provision is not in place
Taking action
There needs to be careful consideration before any disciplinary action is taken, for two reasons. First, this may not be the best route to solving the problem. Second, there is heightened statutory protection against both dismissal and detriment for employees who raise genuinely held health and safety concerns.
This means that employers need to be careful they are not subjecting an employee to a detriment because they have raised a health and safety concern about their return to work.
Employers may also want to consider the cultural implications. If employees are concerned about being disciplined if they voice their concerns about health and safety issues, will they then come into work on occasions when they shouldn’t? For example, could this cause an employee to come to work even when they are displaying symptoms of Covid-19, because they are concerned about being disciplined if they don’t?
Therefore, while in principle an employee who didn’t have their own health concerns, didn’t live with someone with health issues, had no childcare issues and was simply refusing to attend without good reason could, in theory, be subject to disciplinary action, this route should only be considered as a last resort.
Currently, government guidance encourages employers to work with their employees to address issues and concerns. In addition to undertaking a Covid-19 risk assessment, employers are urged to consult with staff and talk to employees on an individual basis. It would seem that this is a more preferable route for employers to consider in the first instance.
66
Covid-19 testing
Health data that is collected as a result of requiring employees to take Covid-19 tests, or to share their results, doesn’t necessarily require an employee’s consent. Employers need to demonstrate that there is a lawful basis for the processing of personal data and that a processing condition is in place as well.
Guidance from the Information Commissioner’s Office suggests that the regulator would see legitimate interests as an appropriate lawful basis for collecting health data. This means that an employer can demonstrate that it has a legitimate business interest to collect that data and the rights and freedoms of the individual employees don’t override those legitimate interests.
A processing condition can be fulfilled if processing is necessary for employment law rights and obligations. If the processing is necessary to fulfil the company’s health and safety obligations to ensure that there’s a safe working environment, then that can constitute a processing condition, meaning that employee consent is not needed.
Consent may not be needed legally, but in reality employees could still refuse to be tested. Employers should carry out a data protection impact assessment (DPIA) and consider what alternative solutions may be available if an employee doesn’t want to be tested. For example, could they continue to work from home? A DPIA should also cover, for example, how data will be kept up-to-date and deleted.
Another factor that can mitigate risk is to make employees feel comfortable with the process by sharing the DPIA and giving them a mechanism to discuss concerns. If they can see that risks have been considered and their data is protected, this is likely to reduce the risk of employees raising objections in the first place.
While addressing the data protection and privacy issues is essential, employers should be mindful of the fact that their employees may also be concerned about being subject to the Covid-19 test by their employer. At a personal level, this might be a higher priority for them than how the data is going to used.
‘Consent may not be needed legally, but in reality employees could still refuse to be tested.’
7 77
Covid-19 testing continued
Transparency and sharing the Covid-19 risk assessment is key to ensuring collaboration between employer and employee when it comes to both the data privacy & protection and employment considerations around testing.
Employers need to mindful that their ability to compel employees to undergo testing depends on the reasonableness of their request. The Covid-19 risk assessment needs to demonstrate why the employer’s request is reasonable – given the workplace, the work that is being done and the environment it is operating in.
If an employer’s request is reasonable in the context of the Covid-19 risk assessment, and they have good grounds for requesting Covid-19 testing or temperature testing as people move in and out of premises, and an employee unreasonably refuses to comply with the request, then that can be construed as a disciplinary offence – although an employer should only consider disciplinary action as a last resort and should first look to discuss and resolve any concerns with the employee.
While an employer can compel its employees to undergo testing with good reason, in the first instance employers should look to communicate with their employees so that they can discuss and understand what their concerns are and try to resolve them.
Health & Safety considerations
While testing employees and being able to feed that information into the Covid-19 risk assessment is going to reduce overall risk, employers need to think carefully about the overall risk assessment in relation to the tasks carried out by the employee and the nature of the work – testing shouldn’t be the only measure.
In addition, employers should be mindful of the extensive powers that are in place under the Coronavirus Act for public health officials to request and obtain relevant data under very wide investigatory powers. For example, if there was a local outbreak, public health officials would be within their powers to request the Covid-19 testing data held by companies in that locality.
8
How will the office of the future work? From reconfiguration to flexible working
9
Looking to the future
While recent months have thrown up challenges for many businesses, employers have at the same time experienced a number of positive changes – from flexible working to agile practices and office usage.
In our recent poll we asked decision-makers, what is the most positive thing that has resulted from the Covid-19 pandemic for their business.
There is now an opportunity for employers to embed these benefits into their business models more widely. In the following sections, we consider some of the trends and legal implications that may arise.
Increased remote working means we can reduce office space and rental costs
Recognition across the business that all staff can work well remotely
Successful remote working means we can recruit from wider geographical area
Already planning for agile working, this has accelerated our plans
4%
60%
18%
18%
‘...employers have at the same time experienced a number of positive changes – from flexible working to agile practices and office usage.’
10
Reconfiguring offices
In our recent survey many of the respondents, even those who had not worked from home before the pandemic, said they are looking to incorporate home working into their week. However, they flagged a number of positive reasons to return to the office, including:
Human interaction
Socialising with colleagues
Building face-to-face working relationships
Having a professional environment
Top reasons for working from home included:
Not having to commute long distances
Increased flexibility (and productivity)
£ Enhanced work/life balance
Reducing impact on the environment
While, recent JLL research similarly indicated a change to the way offices are used as a result of increased home working, it also highlighted that employees still want to be in the office for the majority of the week to come together, be creative, explore ideas and share a culture and team spirit.
Therefore, the question that many employers will be considering is whether changing working practices mean that they need to look at reducing and/or reconfiguring their office space. Our poll suggested that reconfiguring office space – either for social distancing in the short term or for different purposes in the longer term – was more likely (figures as %).
0 5 10 15 20 25 30
Yes – we will be trying to dispose of space soon as possible
Not in the short/medium term – we will need the space to adhere to social distancing rules
We’re likely to use the space differently, but don’t think we’ll need less
‘...employees still want to be in the office for the majority of the week to come together, be creative, explore ideas and share a culture and team spirit.’
11
Reconfiguring offices continued
Therefore, while the trend for many employers will be to have a larger percentage of employees working more flexibly, the office still has a key role to play in a business’ commercial operation and how its employees work and integrate.
So what will the reconfigured office of the future look like – communal areas, bean bags and no desks? We asked occupiers if they were planning to reconfigure their office space to create more collaborative areas.
It is worth noting that prior to Covid-19, we were already seeing trends in reduced dedicated desk space, increased hot desking and large communal areas. The next phase will be an evolution of this, which also compasses a continuation of home working. Indeed, JLL are already seeing firms approach them to reposition their space and explore new ways of working that will inspire and excite employees
The reconfiguration of offices is also happening in terms of location, according to JLL. A trend that started in London but which is expect to ripple out to other large cities, is seeing employers with employees who commute fair distances setting up smaller office hubs in the commuter towns around the main city.
By doing this, employers are providing a safe environment for colleagues to have that important face-to-face human interaction and build a sense of team.
Over the next few months we’ll see whether this is a short term trend or something more substantive. Changing working practices may well result in office space requirements being pushed out from London and other large cities into regional hubs and commuter towns.
However, this is unlikely to change the shape of our cites in the short term. Any office space that is immediately surplus to requirements will either be reconfigured or taken up by large organisations that need to accommodate social distancing measures.
Yes
No
Undecided
12 1212
Covid-19 lease clauses
New leases
Covid-19 lease clauses are being negotiated in new leases. This provides a rent cesser in the event that the tenant cannot occupy the premises for a period of time.
The way that the rent cesser operates depends on the sector. If, for example, you have a pub that has been ordered to close by the government, then the cesser is likely to be linked to that compulsion to shut the premises. However, a different approach is needed if a tenant is not able to occupy their premises because government guidance requires employees to work from home. In such cases, the negotiation will focus on what constitutes a ‘Covid-19 event’ (which leads to the rent cesser). Rent cesser cannot be considered in a vacuum. Other points to consider include:
Should service charge be reduced where there is reduced occupation owing to social distancing?
What is the impact of any rent cesser on rent free periods?
Should there be a break option in the event that a rent cesser period exceeds an agreed set period of time?
What happens where works being carried out under an agreement for lease are delayed because of Covid-19? This could be because staff or materials are unavailable, or social distancing policies require less work people to be on site at any one time.
Varying existing leases
In addition, tenants are looking to vary the terms of existing leases to cushion some of the effects of Covid-19. They may be looking to change rental payment terms, or to include a rent cesser, and this may be by way of a rent concession letter or a formal lease variation.
If tenants are looking to explore this avenue then they need to consider the fact that an increase in the length of the term equal to the period of the rent cesser can amount to a deemed surrender and re-grant of the lease. This has SDLT implications. Perhaps more critically, if the lease is contracted out of the security of tenure provisions of the Landlord and Tenant Act 1954, the statutory procedure will not apply to the re-granted lease. Consequently, the tenant could obtain security of tenure.
13
The city of the future
Increased home working, an emphasis on carbon reduction and ESG policies, and the potential trend for regional hubs may change the face our business districts, especially if the traditional “head office” becomes a thing of the past.
While the change of use from office to residential can already be carried out under permitted development rights (which means that planning permission is not required), the recent restrictions on movement caused by Covid-19 have raised concerns around conversions that have resulted in very small flats without sufficient natural light.
On 1 August, changes to the current permitted development regime will be introduced. These should take steps towards allowing developers to meet housing demand, whilst ensuring that conversions to residential use provide adequate natural light.
Another proposed change is being considered: the option to demolish office space and build something new through permitted development rights. It is likely that prior approval will still be needed in most cases.
The government has announced a “shake-up” of England’s planning system. Depending on what is revealed in the coming months, this may have a significant impact on our future cities.
‘The government has announced a “shake-up” of England’s planning system. Depending on what is revealed in the coming months, this may have a significant impact on our future cities.’
14
Flexible working
In our recent poll, we asked decision-makers how much of the week they thought employees would spend in the office, once people are able to return to the workplace without social distancing restrictions.
With an increase in the number of employees wanting to work from home in the future, what do employers need to think about?
Flexible working requests
We are likely to see an increase in formal flexible working requests following the return to the office because people have become used toworking in a different way and they will want to continue with that. The first technical point to consider is whether the employee qualifies to make such a request under the legislation we have in place.
An employee needs 26 weeks’ continuous service to make the request, and they can only make one formal flexible working request within a 12 month period. For example, if an employee who came back from maternity leave before lockdown had already made a request to reduce hours or vary working patterns, technically they are prevented from making another request within the 12 month period following their first request.
That said, employers can deal with requests outside of that formal process and many employers will have policies in place that enable employees to make a request at any time, and irrespective of length of service.
The regulations do, however, set out a procedure for flexible working. This is a good framework for employers and employees as it provides information about meetings, consideration, appeals and timeframes. In addition, ACAS provides guidance on how to put a flexible working process in place. You can also listen to our podcast episode on the future of flexible working on the TLT website or your podcast app.
75% or more
around 50%
20-50%
leass than 25%
8%
31%
33%
28%
15
Flexible working continued
Trial periods
Trial periods can be used to test a flexible working request and these can be helpful for two reasons. Firstly, they can provide an employer with hard evidence of why a request would not work and this can support a rejection of an employee’s request. For example, if an employer thinks there is going to be a detrimental impact on performance, they can use the trial period to gather supporting evidence.
Secondly, trial periods can be a useful tool to demonstrate to an employee that the flexible working request they have made is not the right solution for them either. In this instance, the positive outcome might be a modified request or a different option that suits all parties.
Of course, the other benefit of a trial period can be to establish that whilst the employer may have had concerns about what the employee was asking for, it can actually work in practice.
Refusing flexible working requests
The regulations give eight prescribed grounds for rejecting claims. These are relatively broad and include the burden of additional cost and the inability to organise work around the hours that somebody has requested. This gives employers a lot of discretion in rejecting a flexible working request. In the majority of cases employers are likely to rely on the “detrimental impact on quality” and the “detrimental impact on performance” grounds to refuse a request and require people to work from their offices.
While not prescribed in the regulations, when refusing a flexible working request it can be helpful to back up a rejection with some further detail. If the employer can provide an example of something that has not worked or a particular activity that had not been progressed as well as it could have been because the employee has been working from home or working different hours, this will help to communicate the reasons why the request has been declined.
16
Protect your company data
When thinking about data protection, there are several issues that businesses need to be aware of both in the context of working from home and in relation to hot-desking.
When hot-desking, there is a risk of employees having access to data that they are not authorised to see, for example if employees using the same desk space have different levels of authorisation. Employers need to make sure that employees are aware of their confidentiality obligations and are complying with the company’s clear desk policy.
Working from home raises different issues, such as:
■ use of personal devices and non-work platforms such as WhatsApp to communicate with colleagues;
■ shared work spaces with friends or family who can see documents on a laptop screen which they’re not authorised to view; and
■ a spike in scams and phishing attacks.
However, there are a number of things that employers can do to help mitigate these risks.
■ Regularly update all remote access solutions and software.
■ Ensure employees are using company devices wherever possible.
■ If employees are using a personal device, security measures should be used to protect the company system, e.g. a VPN or a firewall. Remind employees to keep anti-virus software up-to-date.
■ Raise employee awareness. Make sure your policies around home working and the use of personal and company devices are up-to-date, and share these with your employees.
■ Make sure employees know that they should only be using authorised devices to store personal and confidential data, and that this sort of data shouldn’t be shared on platforms such as WhatsApp on personal devices – even with colleagues – because that is not an authorised platform.
■ Consider implementing cyber security refresher training. The increased risk of phishing attacks and cyber attacks means that this is a good time to review the training employees have undergone recently and think about refreshing that in the upcoming weeks.
17
Sustainability
Clean energy and sustainability are seen as essential to the UK’s economic recovery. Businesses from all sectors can play an important role in paving the way to achieving carbon neutral by 2050, if not before, and boosting a green economy.
Different working practices have already had a positive impact on the environment. Businesses have experienced significant reductions in their carbon footprint – travel, energy usage and document printing have all played a part in this.
And with sustainability already high on the boardroom agenda, businesses are likely to use the momentum gained during Covid-19 to accelerate their plans. Alongside remote and agile working practices, employers may look to consider additional measures including more sustainable transport, on-site generation such as energy storage and solar rooftop, electric vehicle charging points, improved recycling and firm-wide no travel periods.
It is also worth considering that employees have a heightened sense of their own carbon footprint and an organisation’s ESG polices. Benefits that accentuate sustainability are likely to be important in recruitment and retention going forward.
‘...with sustainability already high on the boardroom agenda, businesses are likely to use the momentum gained during Covid-19 to accelerate their plans.’
18
We hope you enjoyed our report
We will be continuing our How will the office of the future work? series in September. If there are specific topics you’d like us to consider or you would like to register for future events email [email protected]
If this report has raised specific issues you would like to discuss, a list of key contacts can be found on the next page.
Thank you
Maria Connolly
Head of Clean Energy & Real Estate | TLT LLP
Key contacts
Maria Connolly Head of Real Estate & Clean Energy
Katherine Evans Partner | Planning
Simon Peacock Head of South & Wales and Project Management UK Regions | JLL
Philip Collis Partner | Real Estate
Esther Smith Partner | Employment
Alex Holsgrove Jones Legal Director PSL
Duncan Reed Partner | Health & Safety and Regulatory
Emma Erskine-Fox Associate | Data Protection & Privacy
tltsolicitors.com