The Future of Work: New Employment Practices

To complement this article,  HR Solutions recently presented and recorded a webinar regarding new employment practices which you can watch on demand.

It is inevitable that the world of work will have to change in response to Covid-19. We are already needing to change the physical set up of our workspace, but what do we need to do more broadly post Covid-19 to retain competitive advantage and come out of this unprecedented period more successful?  

Whilst the vast majority of people are still employed in traditional full time jobs with one employer, we explore  how a move towards creating a more atypical form of workplace may allow businesses to respond to the Covid-19 in a way that means they can become more competitive and successful.  We will therefore be looking at the different types of employment contracts, the use of flexible working and home working as well ways to upskilling in this new world of work.  

How Covid-19 is Affecting Business

Covid-19 has caused devastation across the world in so many ways.  Over the last 5 months, businesses have had to close, operate at half capacity and have seen less customer demand.  All of which has led to redundancies occurring and as warned by the Chancellor back in May, it is very likely the UK economy will face a significant recession.  

Whilst the UK is effectively out of a national lockdown, we are seeing localised lockdowns occurring as a result of increased infection levels, and there is a real threat that these lockdowns will continue and become part of the norm whilst we await a vaccine.  

For these reasons, businesses will need to re-build stronger and a crucial part of doing so, will be to look at the way they operate and manage employment practices moving forward.  

Achieving Competitive Advantage

For an organisation, people are its biggest cost yet most essential asset.  How employment practices are managed will be vital to its ongoing success.   

The future world of work will see organisations who are trying to rebuild, fighting to secure the best candidates and candidates will want to seek out the best employers.  Employers will also want to retain their employees to avoid further disruption.  

One area to consider when rebuilding is to think about the Employee Value Proposition (EVP).  An EVP is the unique set of benefits that an employee receives in return for the skills, capabilities and experiences they bring to the organisation.  The ability to accurately define your own organisations’ EVP can enable you to effectively attract and retain the best talent.    

Having an effective recruitment process as well as an employee retention strategy clearly aligned to the organisation’s vision and values will help the organisation to stand out from its competitors, which at this present time, when there is a competitive labour market you will want to do as much as you can to stand out.  

What does the future world of work look like?  

There is no doubt that the world of work will need to change.  Businesses will need to adapt and become flexible to respond to the continued Covid-19 challenges and threats of further lockdowns.   We will now examine what avenues are available that could help businesses rebuild and become stronger as we continue to respond to the pandemic:  

Using Different Types of Employment Contracts  

One way in which an organisation can become more flexible and be in a better position to respond to ongoing Covid-19 challenges, is by considering what type of contract of employment is best when hiring.  Consider how you are best protecting your business as well as potential future costs.  There are many types of contracts of employment that can be utilised:  

• Open ended contract
  Perhaps the most traditional, common type of contract.  These contracts essentially offer “permanent” employment, either for full time hours, or part time hours, which would be specified within the contract.  Where an employee is part time, pay, benefits (holiday, sick pay) would then be prorated based on their weekly part time hours.

• Fixed term (temporary) contract
  These contracts last for a specific time, typically used either for specific projects, or to provide cover for long term absences, such as maternity leave.    The employee would have the same employment rights as a permanent member of staff, the only difference being is that their employment is for a specified period, agreed in advance.  The term “temporary contract” is sometimes used to refer to this type of arrangement.

• Annualised hours contract
  Annualised contracts set out the number of working hours to be worked during a year, which means the hours worked are likely to fluctuate week to week, and month to month.  It can be particularly useful where an employer has varying demands for their products or services over the course of the year, and so, the employees can be managed around business need.  This type of contract will need a certain amount of planning in advance based around known predicted peak operating times.  It is usual for a certain amount of the annual hours to be set out in advance, but then allow for a reserve period whereby the employee can be called upon, based on business needs.  The employee will have full employment rights, just as somebody who is on a regular weekly hour open ended contract.

• Zero hours contract
  This type of contract is for somebody who only works when the employer has work available, and so there are no specified or agreed set number of hours to be worked.  It also means that when hours are offered, the individual is not obliged to accept. They only receive pay for hours worked.  It is for an organisation to determine based on the circumstances whether the individual will be taken on as an employee, or as a worker.  It is important that organisations have sufficient information to enable them to decide how to classify the individual and engage them under a zero hours arrangement as depending on how an individual is classified will determine their employment rights. There has been criticism of the zero-hour contract due to potential exploitation of vulnerable workers; however, they are also regarded as an essential flexible working option that helps the UK economy and those seeking work. 

• Casual worker agreement contract
  Casual workers are those who truly provide ad hoc work on an irregular basis; the organisation is not obliged to offer work, and the individual is not obliged to accept.  Whilst they do not receive continuity of employment in between periods of engagement, they do accrue certain statutory entitlements during periods of work, such as a right to annual leave, the national minimum wage, right not to be discriminated against.

• Contractor (self-employed) agreement
  This type of agreement enables you to buy in the services or skills of an individual directly, or through a separate company.  They may also be known as freelancers.  Individuals who work in this way are responsible for their own tax and national insurance but for the organisation buying in the services, it is vital they make their own assessment to determine if the engagement is deemed “employment” for the purposes of IR35 off payroll rules.

• Agency worker
  This is to access resource via a 3rd party recruitment agency generally for short term, ad hoc, and sometimes urgent work.  Employment rights of the agency worker are limited, and it will overall be the agency’s responsibility to ensure that their employment rights are protected, however after 12 weeks continuous employment in the same role, the agency worker is entitled to the same rights as permanent employees of the company.

Questions you will want to consider when determining which is the best contract to bring a recruit in on would include:  

• Is there a short or long-term need for the role(s)? 
• Will you have sufficient work for committing to a specified number of hours each week
• Are there peak periods across the year, conversely are you able to identify quiet periods? 
• Are their activities that can be fulfilled sporadically, short term and could be completed through temp work or for fixed periods of time? 
• Could it be more cost effective to buy in the services/skills for any activities?

 Government “A plan for jobs 2020” Schemes   

The Government have announced “plan for jobs 2020” scheme which will help both young people and unemployment levels.  It will recognise that young people are the most vulnerable coming out of the pandemic due to lack of work experience as well as the long-term impact that unemployment will have on individuals and their families.  

One scheme is the kick start scheme, focussing on helping young people find employment and it will fund the direct creation of high-quality jobs for young people.  In addition, the Government has set out its plan to pay businesses to hire apprentices between 1 August 2020 and 31 January 2021.    

They will give employer’s £2,000 for each new apprentice they hire under the age of 25 and £1,500 to employers for each new apprentice they hire who are aged 25 and over.  We are waiting the detail behind these schemes, but these could be further options to help business move forward.  

Support Flexible Working

A statutory right to ask for flexible working has been around for many years, however supporting flexible working now to help your business can be beneficial.  Whether this is about welcoming your current staff to make requests or hiring new people on flexible arrangements, you could consider any number of different flexible ways of working to have a flexible workforce: 

• Part time working 
• Condensed hours (5 days worked across 4 days)
• Term time
• Self-rostering 
• Job share 
• Working from home (either 100% or for part of the week).

Diversity and Inclusion  

Examining your working practices to become more flexible will present an opportunity for the organisation to become more diverse and inclusive.  

A 2018 report by the Equality Commission (Is Britain Fairer) found that only 1 in 10 FTSE 100 executive directors is a women and that 77% of mothers reported having a negative or possibly discriminatory experience during pregnancy, maternity leave or on their return. The report also found that around 42% of women in employment are part time compared with just 13% of men. So, apart from the legal case for managing a flexible working and to avoid discrimination claims, there is the moral case of ensuring the organisation builds a diverse and inclusive workplace for all, regardless of gender.

You can listen to our webinar on Managing Diversity for further guidance.   

Consider a 4-day Work Week  

A group of cross-party MPs have written to the chancellor asking the government to consider a four-day working week.  A four-day work week, as the name suggests, is where full-time employees have three days off in a week.   

The concept is radical for the UK, and may be highly unlikely, however, there is nothing to prevent companies considering doing this to further protect the business, save costs and perhaps avoid redundancies.  One key benefit of a four-day working week for an organisation is that it can help to stimulate their business. 

A move to a four-day work week will be a fundamental change to how the business currently operates and the practical implementation of it is likely to be challenging, especially to small businesses who may not have a dedicated HR function to help navigate through manging the change. 

Since reducing the operating hours of a business requires fundamental changes to the employment contract.  For some organisations, there will be flexibility clauses currently within their contracts of employment allowing them to propose and consult on the idea.  However, for those businesses whose contracts of employment do not allow the employer to make such changes, will mean that a more delicate approach is required to seek mutual consent.  The legal ramifications could be significant and costly, should the process undertaken not be handled carefully or by following a fair and thorough procedure.  However, it is a serious option for consideration. 

Update Your Benefit Offering

Consider reviewing and updating your benefits offering to retain your staff.  Retaining your employees is going to be key for rebuilding your business as you need stability as well as benefiting from having a workforce that holds a great amount of business knowledge and experience. Having an effective, and desired reward package will be key. 

We expect benefits such as income protection, health insurance, life insurance and increased holiday, to be sought after.  The psychological impact of Covid-19 has been significant and perhaps the last 6 months have reminded people of the importance and need to safeguard their future and finances for themselves and their family.  

Building a benefit offering that includes these benefits is therefore likely to lead to a high impact on morale, help retain your staff as well as prove to be a selling point when recruiting. 

Upskilling Opportunities 

Training and development will look very different for some time, given the need for social distancing.  It is likely that we will see more e-learning as well as the use of different technology such as Microsoft Teams, or Zoom to run training sessions.  Additionally, though, what may be an important consideration is whether the organisation will benefit from cross training your workforce to make you more adaptable and flexible.  

Not only will it make you quicker to adapt to current external challenges, but it can build better collaboration, improve efficiency and lead to improved employee motivation.  

Clearly there can be disadvantages including your workforce perceiving it as having added responsibility with no added pay, and there can be a fine line between overloading your employees and the benefits that come with cross training.  Careful thought and planning would be required when considering this. 

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