UK: Teleworking - A Potential Minefield for Employers

Last Updated: 25 February 2004
Article by Jonathan Mounteney and Sara Sawiki

Teleworkers now make up six per cent of the UK workforce, and the number is increasing by over ten per cent each year, due to the advantages to employers and employees. However this opens up a range of potential pitfalls in the areas of employment law, facilities, health & safety, intellectual property and taxation. In this advisory we consider each area in turn and outline the key issues that employers of teleworkers need to review.

Employment Law

Employment contacts - Particular aspects of a teleworker's contract may need to be amended or specified, including:

  • place of work and connected establishment 
  • hours of work and contactability 
  • agreed responsibilities and duties
  • procedures for reporting 
  • treatment of expenses 
  • facilities 
  • procedure for return to office work
  • particular termination issues.

Flexible working - The Employment Act 2002 introduced the right of employed parents with children under 6, or disabled children under 18, to request flexible working, and this includes teleworking. Employers are required to give proper consideration to an employee's request, although there are a number of business grounds on which a request may be refused, such as costs, inability to reorganise, quality or performance, and existing plans.

Working Time Regulations 1998 -These restrict teleworkers' flexibility to manage the organisation of their working time. Teleworkers must either validly opt-out, or comply with the provisions limiting total working hours and breaks.

Stress - Long spells away from the employer's workplace can be stressful for some teleworkers, usually because of the isolation that some may experience. Therefore feedback is important, and contingencies may be required if employees find teleworking unsuitable.

Facilities

Equipment - The division of responsibility for equipment used by a teleworker should be considered and agreed prior to the commencement of telework. Employers will usually be responsible for providing and maintaining the necessary equipment The teleworker would be responsible for its care and protection. Other considerations will include whether equipment may be used for non-employment purposes.

Insurance - Both the equipment, and the risks to teleworkers and others, should normally be covered by insurance. Again the division should be agreed. Either the teleworker premises should be added to the cover the employer maintains, or business risks should be added to the teleworker's domestic policy. Many domestic insurance policies restrict the use of the insured premises, so teleworkers should make appropriate arrangements for business use.

Health and safety

The Management of Health and Safety at Work Regulations 1992 (Directive 89/391/EEC) makes employers responsible for the protection of the occupational health and safety of workers, including teleworkers. Employers are required to make a risk assessment of all the work activities carried out by their workers, including teleworkers. Employers should also make adequate first-aid provisions, depending on the nature of the telework. Directive 90/270 on visual display units also needs to be complied with in relation to the provision of eye-tests and optical aids.

Intellectual Property

Software licenses - The employer will need to ensure that all software used by the teleworker is appropriately licensed. Software and digital information can be difficult to police, so it is important to be able to monitor compliance at teleworker premises.

Copyright - As teleworkers will generally be dealing with and creating copyright works in the course of their activities, provisions on copying and ownership may also be required.

Data protection - The Data Protection Act 1998 renders the employer responsible for appropriate measures to ensure the protection of personal data used and processed by the teleworker for business purposes. Employers and teleworkers should be careful to ensure that other household members do not have access to personal data.

Security - Employers need to prepare for their confidential information being on teleworker premises. Remote working raises specific issues of data security and conformity with ISO17799 / BS7799 on Information Security Management may be required in some circumstances.

Privacy - The employer must respect the teleworker's right to separate work and home lives. Monitoring is unlawful without the knowledge of the worker, and should be proportionate (the Information Commissioner's ‘Monitoring at Work Code’ provides useful guidance).

Taxation of Telework Expenses

Employer Payments - Tax relief may be available in respect of expenses incurred by a teleworker as a result of remote working. Where the employer compensates the teleworker for his or her reasonable costs then relief may be available under a provision introduced in the 2003 Budget. Broadly, any such payments to qualifying employees will not be taxed. If the payment exceeds £2.00 per week the Inland Revenue will require evidence to justify the sum. Generally, providing computers or mobile phones is not regarded as a taxable benefit.

Employee Expenses - Where the employer does not pay compensation, the teleworker may themselves be able to obtain relief by deducting the expenses (including travel between home and workplace, insurance or utilities costs) from their taxable income. The relevant provisions are more restrictive than the Employer provisions of the 2003 Budget. The Inland Revenue states that duties carried out at home must be 'substantive duties' of the employment. They also require that the work being carried out at home (and nowhere else) is a characteristic of the employment - a requirement concerning which the Inland Revenue adopts a restrictive view. For example this relief would not be available simply because an employee regularly completes office work at home, even if it is not possible to complete the work within office hours.

Property

Rates - The previous advice of the DTI guide, ‘Working Anywhere’, gave rise to concern that tax could arise on parts of private homes used for work, including telework. However in September 2003 the Land Tribunal settled that business rates will not arise provided structural alterations have not been made and other employees do not use the domestic premises as their work base. Covenants - many homes have title restrictions on carrying out business; advice should be obtained for each particular circumstance.

Planning permission - Planning permission is not usually needed, provided the business activity does not change the overall character of its use as a residence. However problems could potentially arise if it causes a potential nuisance to neighbours such as increased traffic or excessive noise.

Summary Checklist

Employment law 

  • Are employment policies and contracts appropriate? 
  • Do policies include a procedure to 
  • consider a request for teleworking? 
  • How do you monitor compliance with working time regulations? 
  • Do you monitor the continued suitability of teleworking? 
  • Do you have provision to monitor stress in remote employees?

Facilities

  • Do you have clear policies 
  • regarding the provision, 
  • maintenance and insurance of equipment? 
  • Do your policies cover what costs will be covered and how they may be claimed?

Health & Safety

  • Do you have a procedure to monitor compliance with Health & Safety regulations? 
  • Who is responsible?

Intellectual Property

  • Is all software licensed appropriately? 
  • Do you have appropriate copyright licenses? 
  • How do you ensure data protection compliance? 
  • How secure is your information?

Taxation

  • Do you make payments in excess of £2 per week towards 'teleworking' expenses? 
  • Are you aware of any employees claiming tax relief in respect of 'teleworking' expenses? 

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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