Remote and Hybrid Work – Legal Issues that Employers Need to Know By Helen Colquhoun, Partner, DLA Piper；David Smail, Of Counsel, DLA Piper；Yolanda Wong, Trainee Solicitor, DLA Piper

Remote working has been adopted by many employers globally in response to the health and safety challenges posed by COVID-19. As remote working has become widely accepted throughout the Asia-Pacific region, both employers and employees have been attracted to the mutual benefits. For employees, it means having more independence over their working location and flexibility over their working hours. For employers, there are obvious tangible benefits in terms of reducing office space and lowering operational costs, as well as creating a culture that is forward looking.

However, working from home as opposed to a traditional office environment has brought about a number of operational and legal challenges. This article looks at some of the key issues employers should be considering from an employment law perspective.

Can employers require their employees to work remotely?

There are no statutory provisions in Hong Kong which allow employers to compel their employees to adopt remote working arrangements. Whether an employer can do so is ultimately a matter of contract.

The employment contract will normally provide that the employer has the right to decide where the employee will be based for the performance of their contracted job duties and obligations. The existence of such a clause generally will allow the employer to require its employees to adopt remote working arrangements when necessary. If the employment contract does not include this flexibility and/or specifically refers to the employer’s business premises as the work location, any change to a remote working location will strictly speaking require the employee’s consent by way of a written addendum.

However, employers also have an obligation to take reasonable care of their employees’ health and safety. It may therefore be appropriate for employers in particularly high-risk sectors (e.g. healthcare) to require employees to work from home if there is a material risk of endangering their health and safety. In practice, at least to date, most employees have been amenable to requests or instructions to work from home.

Working from overseas

Remote cross-border working is also an accelerating trend. Employers are increasingly dealing with cases of “stranded” employees who are unable to return to their home country due to changing travel restrictions and quarantine requirements, or employees who want to work from overseas locations for an extended period (often to see family members who they may not have been able to see for an extended period). Originally thought to be a temporary issue, this is now no longer the case and employees/employers are faced with the question of whether to make such arrangements permanent or whether to accommodate requests to work overseas for extended periods beyond a normal annual leave break.

It is crucial for employers to specify in the employment contract (or at least in a side letter) any arrangement for the employees to work remotely from overseas. The written terms should address issues such as the governing law and jurisdiction, accrual of dual employment entitlements, immigration and taxation consequences. Employers should assess whether the employee is able to claim local statutory entitlements in the offshore jurisdiction and, if so, ensure the written documentation includes protections to mitigate this risk. If the employee is a national of the offshore jurisdiction, the employee may have a right to work remotely from there. However, if the employee only holds a visitor visa or otherwise does not have the right of abode, he/she is unlikely to be able to do so until local immigration requirements have been satisfied.

From the employer’s perspective, tax and regulatory issues may arise, with permanent establishment tax risks varying by factors such as location, length of time spent in the jurisdiction, whether the employer has an entity in that jurisdiction, and the activities the employee would carry out there. Employers should observe the existence of any double tax treaty between Hong Kong and the offshore jurisdiction. The presence of employees working there and their duration of work may create issues in relation to permanent establishment and attract local salary or corporate taxes. Therefore, employers are recommended to review the situation on a case by case basis and seek legal advice.

Contractual obligations

Employers are still generally required to comply with all relevant Hong Kong employment laws and protections when remote working arrangements are in place. For instance, employees will still be entitled to receive their contractual wages, benefits, and other entitlements in accordance with their employment contract and any applicable company policies.

Moreover, employers still remain liable to make contributions in accordance with the Mandatory Provident Fund Schemes Ordinance (Cap. 485) in the usual way. Remote working arrangements will not impact the employee’s working hours or nature of work unless otherwise agreed. However, it would be prudent to assess whether the employee will still be able to serve the business to the same extent and, if not, to agree on any changes as are necessary with their consent.

Employers and employees both continue to be bound by the employment contract and any other company policies or disciplinary procedures. As such employers can still be vicariously liable for unlawful acts of their employees even when remote working arrangements are adopted. Employers are therefore advised to remind employees of their ongoing obligations and duties even when working remotely including, for example, compliance with the employer’s equal opportunities and discrimination/harassment policies.

Insurance

Employers in Hong Kong are required to have in place an insurance policy that covers the cost of any liabilities incurred as a result of accidents and injuries in the workplace. Employers should consult their insurance provider as to whether remote working arrangements will affect their current insurance policies or whether any amendments are necessary.

On the other hand, employees continue to be under an obligation to promptly notify the employer of any accident or injury they might suffer while working from home, and to let the employer know in advance if they have any health and safety concerns about working remotely. 

Electricity, internet, and other expenditures

There are generally no legal requirements for employers to pay for any electricity, internet, or other expenditures in a work from home scenario, although employers may want to exercise its discretion given the current COVID-19 climate. Employers who do want to offer something are taking a variety of approaches including, for example, paying actual costs incurred by employees or paying a monthly/one-time stipend to them in a specified range. It is also important to note that certain fixed payments may attract tax liabilities resulting in additional financial liabilities for employers. Allowances are also likely to fall under the definition of “wages” and therefore have a knock-on impact on the cost of various statutory entitlements. Employers are therefore advised to clearly stipulate the company approach to these expenses in the terms and conditions of employment contract or remote working policy.

Data security and confidentiality Preserving the security of personal data and confidentiality of information has been a central challenge for employers looking to adopt remote working, particularly those in regulated sectors. Employers should conduct their own risk assessment before implementing any work from home arrangement as employees will be accessing or transferring personal or company confidential information through their home network and/or own devices. If a work from home policy is adopted, employers should include provisions relating to preserving confidentiality and privacy at all times, notwithstanding the fact that employees are not in the workplace. Guidance from the Privacy Commissioner should be factored into data security remote working policies.

Employers should also ensure their IT software and security systems are up to date, and proper technical measures are adopted to minimise relevant risks. They may also want to consider implementing basic guidelines on how to make use of and behave during teleconferencing on platforms. Such guidelines may cover technical issues on hosting virtual events, managing and controlling meetings, the use of customised backgrounds, recordings, camera use, and dress code.

Culture and engagement

While there are obvious potential benefits to remote working for those employees who enjoy more independence over their working hours, remote working also results in physical distancing and an increased sense of social separation. Employers therefore need to be equally mindful of the potential challenges faced by having a less integrated workforce, ensuring that employees receive proper support in terms of mental health when adjusting to changes in homebased working style and demands.

Takeaways

Remote and hybrid working can be beneficial for both employers and employees. It is prudent for employers to have a formal remote working policy that addresses the key issues set out above, so that requests for varied working locations are not handled on an ad hoc basis, or without consideration of the potential impacts such changes to working arrangements can have.

Note: The information contained herein is intended to be a general guide only and is not intended to provide legal advice. This journal, its publisher and the HKIHRM do not assume any legal responsibility in respect of any comments provided in this article, which do not constitute legal advice and should not be taken or construed as such. Independent professional legal advice should be sought as necessary in respect of legal matters and issues raised in this article.