Employer risk is transferred to WFH employees
In risk management terms, employers cannot transfer their risk to employees by asking them to work from home. Both employer and employee can only share the risk. This means that the employee has taken on more risk by agreeing to work from home. There may be no other choice if employees do not trust their employer to provide a safe working environment.
Employers are legally required to provide a safe working environment for their employees wherever they are required to work, even at home.
When employees work from home to perform their employers work remotely, this legal obligation still stays. Employees homes are just an extension of the employer’s workplace. Employers do have control over the work employees do at home. The location is just different.
Therefore, there is a legal obligation for employers to ensure that their employee’s homes are safe for the performance of their work.
What does it mean legally if an employee falls at home while doing their employer’s work? Is there contributory negligence by employees? What reasonable steps have been taken by employers to ensure that there is a safe working environment at home? (See here for more details) Does the employer’s insurance cover WFH workers injured at home?
Employers can provide policies and guidelines for compliance by WFH employees. If an employee is injured at home, can employers point to non-compliance by their employee with their WFH requirements? The burden of proof then shifts to the employee!
More cost incurred by employees
Apart from the issue of contributory negligence, WFH employees will incur more expenses. These includes:
- Higher utility cost — electricity, heating, water, etc.
- Social isolation and increased mental health issues.
- Cost of maintaining a dedicated working space at home.
- Cost of running a home printer (consumables), etc.
Depending on the tax system, some of these costs could be defined as work-related and are tax-deductible. This requires additional effort for employees to maintain the tax records and keeping all receipts to make the tax claims.
Some generous employers may off-set these additional costs via a small sum reimbursement.
If tech workers are fearing for their jobs, its a wake-up call for all of us
Here’s the scary part arising from WFH arrangements.
This large-scale experiment triggered by the pandemic has only proven one thing. That is, most work can be done remotely by anyone and anything, including machines!
KPMG estimated that 67% of employees at U.S. tech companies are concerned about losing their jobs to tools powered by artificial intelligence, machine learning and robotic software. This is in comparison to 44% of workers at companies not within the tech sector.
These workers in the tech industry are the closest to technology. They are often the first to witness the emerging capabilities of machines. More than anyone else, they have a unique understanding of technology and its capabilities. They are more likely to think about how such tools could impact their jobs.
A 2017 McKinsey Global Institute study suggests that roughly 50% of work activities are automatable using current technologies. Another study by Frey and Osborne (2013) argues that 47% of U.S. employment is at high risk of automation. By contrast, a 2017 study by Arntz et al. suggests that only 9% of individuals have jobs that are at high risk.
Although the job risk estimates vary, economists agree that automation and artificial intelligence technologies will continue to transform the nature of work.
If there was ever a good time for the robots-taking-over-jobs argument, this may be it.
These tough economic conditions have accelerated the use of workforce automation
This chimes with a report from EY, which found 41% of employers in 45 countries were investing in accelerating automation as they prepare for a post-coronavirus world.
The pandemic has only triggered the accelerated use of technologies (including machine learning, artificial intelligence, drones and others) even further. The automation imperative will only grow exponentially as a survival response to increasing labour cost, increasing customer expectations for better services and products, challenging economic times, and exposure on dependency on legacy systems.
Employ, train or borrow experience?
With the business environment changing so fast, many organisations will not know what skills they need to change the way they deliver their products and services to meet changing customer preferences.
There are three options available to employers seeking to hire experienced workers:
- Option 1 — Employ the person.
- Option 2 — Train up their existing employees and develop them into job roles.
- Option 3 — Borrow the experience required for a specified period. The pandemic has fuelled the growth of the gig economy even more as businesses become increasingly wary of hiring permanent staff and wanting to minimise their payroll cost.
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Option 3 seems to be the best, even before COVID-19. Employers will scale-up more with contractors for speed and short-term access to hard-to-find-skills.
This may mean the ultimate death of employment. The pandemic may have just accelerated the rise of short-term contracting.
When this occurs, workers in employment will feel the heat as employers hire more contractors. For them, job security will be at stake.
But for job seekers, they are competing with a hundred other job applicants. The change of being hired has diminished significantly with many countries experiencing all-time high unemployment rates due to the pandemic.
If work can be outsourced to a cheaper country, why not
As employers realise that work can be done by someone who cost cheaper, contracting — whether short-term or long-term — has become more appealing.
This means that talent is potentially available anywhere. As a result:
- The competition for workers will change radically.
- The options for acquiring lower-cost workers are expanding.
- It will be easier to recruit diverse talent.
Given that cost is now the key deciding factor for many cash strap businesses impacted by the pandemic, the potential for outsourcing to lower-cost workers and possibly countries have become a viable cost-saving option. With more controls put in place, it is highly likely that more organisations will be considering this option.
Granted that the pandemic has uncovered weaknesses in supply chain management, workarounds could be instituted to mitigate the risk associated with outsourcing.
Ultimately, workers will be disadvantaged
The remote working experimentation triggered by the pandemic has worked well for many employers as a blessing in disguise to save cost and to automate their workplace. Working from home has become more appealing to employers.
The ‘new’ normal will be different for many organisations looking to decrease their operational cost and increase their workplace automation. There will be a transformation of jobs especially for jobs that do not require physical presence to perform the work.
The changing business landscape in a perfect storm for workers who are left to carry additional cost and risks on behalf of their employers, whether as employees or contractors.