Some thoughts on how to work with off-site employees
2020 was the most unusual start to the business year in living memory and it has changed our view on the workplace. We expect one of the biggest changes in working life to be the spread of remote working as an accepted practice. What that means will, to a greater or lesser extent, vary to depending on your situation, but here are some commonly asked, finance related, questions.
- Do I need to change the way I pay my team if they work from home?
No, not usually. There may be a need for some changes, but these are likely to be fairly minor. One possibility is that the cost of employment may change for one or both parties. We are hearing that some employers are reacting to this with salary amendments. If you do want to re-negotiate salaries, it is probably best to speak to an employment specialist to get the lowdown on any contract implications.
- Is it better for my finances to employ home workers?
This is a bigger question than it initially seems. Yes, in theory it will be cheaper because you will have lower costs in terms of premises, heating, lighting and so on. This is only true though if you are in a position where you can practically shed those costs. Your lease contract, the need to still have some on site workers, fixed in place equipment and so on, may make a difference to the long-term financial viability of home worker teams. Another regular cost in relation home workers is the requirement to ensure that the workers you employ are provided with the right equipment to do their jobs. If this means you need to provide them with specialist equipment (high power computers with specialist software installed spring to mind) you will need to assess the impact on this on your budget. We probably need to sit down and look at your cost for staffing and equipment and make an informed judgement on the best outcome for you.
- If my workers are on furlough, can I ask them to work as well?
No. That is not allowed and could get you in some pretty deep water when the lockdown ends.
- Do I need to contribute to the heating and lighting costs for my home workers?
If they are directly employed, you probably do need to consider it. Depending on the circumstances they can probably put in a P87 form and claim back any tax on these payments. This is also a grey area as to where you are actually obliged to by law pay some of their costs and where you may want to contribute, perhaps as a good will gesture. A question that is often raised is the one of internet access. If the employee does not have the right internet access, then you may need to contribute so they can do the job. If they have existing access and the work doesn’t increase their cost, well, then there is an argument for saying no. Speak to a good HR advisor on the legalities of this area. It may be worth thinking about the goodwill a small, even token, contribution could generate. It’s not really our area but evidence suggests contented, happy, workers, are more productive. Call us if you need advice on the P87 and what is taxable and not for home workers.
- Do I still need to pay sick pay, account for maternity and paternity and other workplace practices that have a financial impact on my business?
Yes. Location is not a factor in whether you must pay salaries according to the national legal requirement. For example, minimum wage and rules around paying productivity bonuses etc., all still apply.
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- If I switched to using freelancers, do I pay their National Insurance and tax?
No, if they are not directly employed by you then that would be their responsibility. The only danger here is that if you are under the IR35 rules (and soon we all will be according to HMRC) and you set certain work practices and methods such as time of work, exclusivity, location and other conditions, you could be deemed to be employing them directly. Again, seek advice from a HR specialist on this. The financial implications for your business are quite different of course in either case. The last thing you want is to find yourself suddenly needing to switch a freelancer to employed because HMRC (who will look at this case by case) decide you need to.
Disclaimer time! We are only really here to advise on the accounting and financial aspect of employment so you really must make sure you are taking advice from HR professionals in relation to employment law and the human element of working remotely. There are also many other questions in relation to your finances, and these only scratch the surface. You will need to also make sure you budget for the legal, HR and administrative costs involved for the initial and ongoing employment of home workers.
We all keep hearing this phrase ‘the new normal’ but I doubt anyone could stand, hand on heart, and say they know what ‘normal’ will really mean in the long term. In many cases, there will be a fundamental change in the way we operate our businesses and we need embrace that. However, I would like to throw in a word of caution. When we are facing change, we need to beware of throwing the baby out with the bath water and becoming rash in our judgement calls. Something that will not change is the need to plan effectively and take the advice and guidance we all need to maintain balance.
I heard a wonderful description of the change business will need to go through after the pandemic recently.
‘the long-term effects of the Covid–19 pandemic will ripple on the surface of the business pond for many years and it could be a long time before we can see our own reflections again’.
When things do settle though we may see a very different reflection looking back at us.
Call us when you need us. Everyone at Northants Accounting is working to stay ahead of the curve when it comes to where you stand financially through these changing times.