What will long-term shifts toward flexible working mean for employers and employees?

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The recent move to home working and flexible hours happened out of necessity in response to COVID-19. Many organisations across the world have decided that, even as restrictions ease, it is worth retaining many aspects of this new and often more flexible way of working. The immediate day-to-day and business impact of these changes seems set to stay at the top of the agenda for some time to come. As the Scottish Government trials a four-day working week and an ONS survey suggests older workers given the option to work from home will retire later, we are now also starting to see some really interesting indications of what the longer-term impact of these changes may be.

Systematic changes in approach to remote working

According to data published by the Office of National Statistics, in 2019 just 26.7% of the UK workforce reported that they had done any work from home. Following the outbreak of COVID-19 and legal restrictions forcing a shift toward remote working, by April 2020 the proportion of employees working from home had increased to 46.6%. Whilst the percentage of the workforce working remotely full-time is likely to decline following the UK nations easing their legal restrictions, it is generally agreed that permanent office working is unlikely to ever return to pre-pandemic levels.

The low percentage of workers who had worked remotely prior to 2020 is reflective of the previous systematic opt-in bias to home working. Full-time office working was generally the norm, with any remote working, even on a part-time basis, tending to come about because of a specific business or personal need. Employees often had a specific reason to work from home, in many cases connected to their own health or caring responsibilities, with the latter frequently leading to a gender imbalance in those who worked from home. Employers were less likely to actively encourage home working, and may have been hesitant about its effectiveness from a personnel management, customer service and IT standpoint. In any case, if you worked from home before March 2020, people usually wondered why. That question now feels obsolete.

Many employers are embracing flexibility to aid recruitment, retention, wellbeing and performance. Employees have reported that remote working has allowed them to enjoy a better balance of home and work life in a way that suits their individual circumstances. Rather than viewing the option to work from home as a luxury, or something relevant only to a small group who have a specific requirement, for many workers it is now an expectation. For the first time, a large proportion of employees have worked from home for an extended period of time, allowing employers to see more clearly the impact of this style of working. Because 2020 home working was born out of necessity, it had to work, and employers that could do so invested in it to ensure it did. It has been embraced from the top down. Day to day we see the level playing field that has been created with video calls becoming the default for meetings, enabling people to call in from anywhere and have the same presence. Companies and employees alike have also developed systems for remote working which go beyond purely temporary measures and allow for long-term hybrid working. And, in those industries and roles where remote working is not a viable option long term, that decision can be based on evidence rather than assumptions about feasibility.

The impact of remote working on older workers

By adding flexibility to the labour system, workers are increasingly able to work in a way that suits them (even if that means moving on to a different role where the flexibility they seek is on offer). We know that those with certain health conditions and caring responsibilities have already benefited. Interestingly, a recent ONS study suggests that the option to work from home could also incentivise older people to work for longer. The study focused on early exit from the labour market (i.e. prior to the state pension age) of workers aged 50 years and over. It found that, in 2019, 13.8% of people aged 50 years were economically inactive, rising to 51.9% by age 64. Often the reasons for early exit from the labour market are related to ill health or caring responsibilities. The study suggests that this has implications for the wider economy, noting that it has been estimated that if the employment rate of people aged 50 to 64 years matched that of those aged 35 to 49 years, it would add more than 5% to UK gross domestic product (GDP).

The ONS report states that, in June and July 2020, those with a longstanding illness, disability or infirmity who work from home were more likely to say they are now planning to retire later (10.9%) compared with those not working from home (4.9%). Additionally, across all ages, those who work remotely had a lower sickness absence rate than those who never or only occasionally work from home. Employers should still be mindful of ensuring that staff do not feel obligated to work while ill and do continue to report sickness absence where it impacts on their ability to perform their role. The shift toward hybrid working could be an opportunity to retain a skilled, diverse workforce now that the option for home working has removed some of the traditional barriers for some older workers to continue their employment.

Flexibility in hours of work

Flexible working is not limited to the location of work. We have also seen in recent years discussions around adding flexibility to the number of hours worked. Different models for shorter working weeks have been tested globally as part of the wider shift to redress employees' work-life balance. Some countries have focused on limiting work emails outside office hours and enshrining a right to disconnect. This month, IPPR Scotland published a report recommending expanding the four-day working week pilot scheme in Scotland to cover more sectors and non-office-based roles. The report found that 80% of those surveyed believed that cutting their days of work with no loss of pay would have a "positive effect on their wellbeing".

This follows a number of global trials of a reduced working week. Perhaps the most successful example is that of Iceland. Following a pilot scheme between 2015 and 2019, it is now reported 86% of Iceland's workforce have either shifted to shorter hours for the same pay or will gain the right to do so. These workers reported feeling less stressed and said their health and work-life balance had improved. Employers may not need to be too alarmed by this shift, as researchers have said productivity remained the same or even improved in the majority of workplaces involved in the trials.

It is worth highlighting that the concept of a reduced working week has been discussed at length for a long time, with little to no substantial change actually arising (at least within the UK). However, as we have all learned, significant and long-term change is clearly possible, even if there is a disconnect between the initial catalyst for change and the long-term benefits it creates.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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