22 FAQs about homeworking and the law
- Do we have to give employees a new employment contract if we ask them to work from home?
- Can we require people to work from home?
- Can we cut the pay of people who work from home?
- Do we have to pay new homeworkers the same rate as employees who worked originally in the office that now work from home?
- How do we work out whether 'piece rate' homeworkers are earning the minimum wage?
- How do we prevent home workers using their time and our equipment to work for other people?
- Can we force a home worker we want to promote to return to the office?
- Can we turn down a request to work at home?
- Can we sack an employee who refuses to work from home?
- How long is reasonable to give home workers the opportunity to change their minds?
- Is there a time limit on issuing a revised statement of employment particulars?
- What are the legal implications, if we ask current employees to work from home on a self-employed basis?
- If we employ people to work from home on a freelance basis, do we have to pay their tax and NI?
- Who is responsible for the health and safety of home workers?
- Do we have to have health and safety inspections for home workers?
- Are home workers entitled to sick pay?
- How do we ensure home workers don't work in excess of 48 hours a week?
- Are home workers entitled to a break after six hours?
- Are we responsible for data kept at a worker's home, or accessible on a home worker's computer?
- If we provide the home worker's equipment, who insurances it?
- If a home worker travels to the office, do we have to cover their expenses?
- If we contribute to a home worker's extra costs (eg heating), what is the tax and National Insurance position?
1. Do we have to give employees a new employment contract if we ask them to work from home?
Not necessarily, although normally it would be advisable to do so unless such a change is provided for in the wording of the existing contract. It depends on how specific you have been in their existing contract. If it involves a significant change in their terms and conditions of employment - for example, a place of employment different from that specified in their contract - you will need to record the amendment to their contract. If you have left matters such as the place and time of work to management discretion, you may not need to worry about issuing a new contract.
2. Can we require people to work from home?
It depends on what their employment contract says. Employers have no general right to require this.
3. Can we cut the pay of people who work from home?
Yes, if the contract of employment permits you to do so, or you reach agreement with the employees concerned. Otherwise no, unless you are willing to risk a claim for constructive dismissal. It could be seen as a fundamental breach of contract - although if your employees continued to work, an Employment Tribunal might hold that they had effectively accepted the change of terms and conditions.
4. Do we have to pay new homeworkers the same rate as employees who originally worked in our offices who now work from home?
Not necessarily. But take advice before you pay them differently, because it could be risky. For example, you risk breaching the equal pay legislation, particularly if the employees you are relocating include a higher proportion of one sex than the employees you are recruiting at a lower rate.
You also run the risk of a case being brought against you under the Equality Act 2010 if the employees you are taking on have another of the 'protected characteristics' that is not shared by the people you are moving to work from home. Protected characteristics are age, disability, marriage and civil partnership, pregnancy and maternity, race, religion or belief, sex and gender reassignment.
In any case, you will have to show that your decision to pay less can be objectively justified (ie, there is an acceptable business reason for doing so).
5. How do we work out whether 'piece rate' home workers are earning the minimum wage?
Under the 'fair piece rate' system, you may choose to pay the minimum wage for every hour worked, or bring in a 'rated output' system.
Under this system you must calculate the average production speed of the people doing this form of work, and use the resulting figure as the basis for calculating how long piece workers should take to do the work given them. Provided you fulfil certain conditions, the average production speed may be used as the basis for calculating whether workers are paid the minimum wage. This is done by multiplying the number of hours piece workers should take to do the work by 120%.
6. How do we prevent home workers using their time and our equipment to work for other people?
You could put an appropriate term in their contract of employment, expressly forbidding such activities. But even in the absence of such a term, all contracts contain implied terms - terms which may not be spelt out, but which are nonetheless binding. One of them is a duty on employees to serve their employer honestly and faithfully, and work with due diligence, skill and care.
If you can prove that a home worker is in breach of this term, you will certainly have grounds for disciplinary action, and may - if they are working for your rivals, or the offence is repeated - have grounds for dismissal.
7. Can we force someone we want to promote to return to the office?
In theory, yes - unless you have given them a contract which says otherwise, or have reached a different agreement verbally, or have by your conduct given them reason to think they can work at home indefinitely. It is up to you as employer to decide where the work shall be performed. In practice, however, you have to ask yourself whether it is worth it.
If your employee has decided that the ability to work from home is worth more to them than promotion, at best you are going to end up with someone who is unhappy in the job. You could alternatively aim for a compromise, under which they work two or three days a week in the office, or even better, leave it to them to organise their work in a way to guarantee your overall objectives.
8. Can we turn down a request to work from home?
Almost all employees have the right to ask for flexible working from day one. This can include working from home.
You must consider requests in a reasonable and timely manner (within two months). You can only refuse a request for one of the eight business reasons allowed by the legislation:
- The burden of additional costs.
- A detrimental effect on the ability to meet customer demand.
- An inability to reorganise work among other employees.
- An inability to recruit additional employees.
- A detrimental effect on quality.
- A detrimental effect on performance.
- Insufficient work at the times when the employee proposes to work.
- Planned structural changes.
If you do refuse, you must give your reasons in writing, dating the letter and giving details of your appeals procedure. An employee has no statutory right to appeal but it is considered good practice. If the employee is going to appeal, they must do so in writing, and you must arrange a meeting without undue delay.
All requests, including any appeals, must be decided and communicated to the employee within two months from receipt of the flexible working request. This period can be extended by mutual agreement and confirmed in writing to the employee.
If you refuse again, the employee might decide to involve Acas or another mediator. If your procedure was incorrect, or your decision based on incorrect facts, the employee might decide to take you to an Employment Tribunal. If the Employment Tribunal finds against you, you will have to reconsider the application, and may have to pay compensation - so it obviously pays to get it right the first time around.
9. Can we sack an employee who refuses to work from home?
In certain circumstances, yes, particularly if the contract of employment permits you to change the employee's place of work and the power is exercised reasonably. However, if your employee has been employed continuously for two years, they might be entitled to bring a case against you for unfair dismissal.
Assuming that you have no grounds other than the reorganisation for the sacking, you will have to rely for your defence on 'some other substantial reason' - which means demonstrating the necessity of the change. Depending on how good your case is an Employment Tribunal might or might not accept your reasons. If it does not, you could be liable for a basic award of up to £20,000, and a compensatory award of up to £115,115 from April 2024. Take legal advice.
10. How long is reasonable to give home workers the opportunity to change their minds?
There is no legal obligation on you to keep the option open. If you have used the opportunity provided by home working to scale down your premises, the law accepts that the change may have to be permanent.
However, it may pay you to leave the option open indefinitely if you can. Even with employees who are long established as home workers, circumstances may change, and the reasons for opting for home work in the first place may cease to exist. If you cannot offer them the option to come back to work, they may decide to work elsewhere. You might be able to reach an acceptable compromise by offering a 'hot-desking' arrangement, or providing for the employee to come into work for two to three days a week.
11. Is there a time limit on issuing a revised statement of employment particulars?
A revised statement of particulars should be issued within one month of the change in question.
(A 'written statement of employment particulars' includes the main conditions of employment - read more on the GOV.UK website.)
12. What are the legal implications, if we ask current employees to work from home on a self-employed basis?
You are effectively dismissing them from your employment, so you will have to have good reason, or those who have two years' continuous employment will be able to sue you for unfair dismissal.
Of the acceptable reasons for dismissal (conduct, capability or qualifications, illegality, redundancy, or 'some other substantial reason'), most are inappropriate if you wish to continue to use these people on a self-employed basis. You will probably have to rely on 'some other substantial reason'.
You will also have to persuade HM Revenue & Customs that your employees are genuinely self-employed, otherwise you will still be liable for their income tax and National Insurance contributions. One of the factors HMRC is likely to take into account is the extent to which their income comes from a variety of sources, so you will not be able to rely on using them on a full-time basis.
One way and another, this is a more difficult move than it might at first appear. Think long and hard, and take good legal advice before you make it.
13. If we employ people to work from home on a freelance basis, we have have to pay their tax and NI?
If they are genuinely freelance, no. However, HM Revenue & Customs decides this on a case-by-case basis, looking at a range of factors such as:
- who controls when and how the work is done
- who carries the financial risk if the work is not up to standard
- who provides and maintains items of equipment
- who decides where the work shall be done
- who carries the losses, if any
- to what extent do the workers work exclusively for you
If you control what the workers do, when they do it and how they do it, and if you carry the financial risks of the business, HMRC is likely to find that you employ them, whatever their employment contract (or lack of an employment contract) says about the matter. And if you employ them, you are responsible for their tax and National Insurance.
Read more about employment status on the HMRC website.
14. Who is responsible for the health and safety of home workers?
You are. All the normal health and safety legislation (including the Health and Safety at Work Act 1974, the Display Screen Equipment Regulations, and the Provision and Use of Work Equipment Regulations) continue to apply, and you have the usual duty of care to your home-based employees.
15. Do we have to have health and safety inspections for home workers?
You need to be able to show that you have discharged your duty of care. If possible, it is good practice to get your health and safety officer (or a manager trained in health and safety) to make an initial inspection, and at regular intervals thereafter to get your home-based employees to complete self-assessment forms which are reviewed by your health and safety officer, or by a manager trained in health and safety.
16. Are home workers entitled to sick pay?
Yes. Apart from the change in their place of work, their terms and conditions will, in most cases, remain the same.
17. How do we ensure home workers do not work in excess of 48 hours a week?
With difficulty. It is your responsibility to ensure that they do not breach the Working Time Regulations, and a recent case at the European Court of Justice has emphasised that this is a positive rather than a negative duty - ie you must ensure that your workers take rest breaks, and not just that they can if they want to.
Consider using time-tracking software and apps to monitor working time. At the very least get them to do time sheets - which are checked - and look out for obvious signs of an inability to switch off (such as emails sent out in the middle of the night). Alternatively, you may wish to agree with the employee that the 48-hour limit does not apply (although you may then have to keep more extensive records of working time, and ensure that no employee exceeds 65 hours a week).
18. Are home workers entitled to a break after six hours?
Yes, although it will be difficult for you to manage this, other than by relying on time sheets. You should make sure they know that they are entitled to such breaks; after that you will have to rely on them.
19. Are we responsible for data kept at a worker's home, or accessible on a home worker's computer?
Yes. If your employees will be dealing with information on other people, you should make data security an issue in the initial checks you make on employees, to find out whether they would be suitable as home workers. You should have a policy on data security which should cover home workers. You will certainly want to ensure that they can lock their work away when they are not working on it.
20. If we provide the home workers equipment, who insurances it?
This is a matter to be decided between you and the home worker: it could be either. However, if it is to go on the home worker's home insurance policy, you should ensure that the insurer has been informed, and ask whether there will be any premium variation. If there is a premium variation, it would be reasonable for you to pay it.
21. If a home worker travels to the office, do we have to cover their expenses?
This is a matter for negotiation. Some organisations do; some don't. They could reasonably argue that they are travelling between one place of work and another.
22. If we contribute to a home worker's extra costs (eg heating), what is the tax and National Insurance position?
In theory such payments are taxable, and they will have to be declared. In practice HM Revenue & Customs may allow a local dispensation, of up to £300 a year, on expenses incurred for work and related purposes, including heating, lighting, the metered costs of increased water usage, increases in the cost of home contents insurance, business telephone calls, etc. The expenses must be 'reasonable', and may not include the costs of alterations to the premises, or purchase of furniture.
If you do not make such payments, the worker can claim the cost against their tax liability, though this means less than full recovery. They can also claim for setting aside one room for working at home. This may give rise to a capital gains tax (CGT) liability, but in many cases this can be offset by the annual CGT exemption.
Working from home and hybrid working | Acas guide
All eligible employees have the right to request flexible working - which can include working from home on a full-time or hybrid basis.
Read this guide to homeworking and hybrid working from Acas.