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Running away from home office legal minefield


While working from home might be embraced by many, it’s not ideal for everyone and there are very real legal and compensations risks involved. Morry Bailes explains the pitfalls for employers.

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Employers should be afraid, very afraid of the work from home phenomenon currently gripping our workplaces.

It is surprising how quickly the work from home culture has spread. A bit like a virus really. It is difficult to find an industry in Australia that is not experiencing the phenomenon, owing of course to Covid-19. Most of the commentary so far has been about the cultural effects and impact that working from home may have on workers and the work environment.

Of course, many people already work unsupervised, but rarely so in the ubiquitous office environment. Office culture has until now been one which expects workers to turn up, engage in the collegiality of the work environment, and contribute and participate by ‘being there’. Even to join the work social club, shudder.

At first, when the requirement to attend the workplace was removed – indeed, the opposite direction was given, to stay away and work from home – there was a collective sigh of relief, particularly from office workers, whose lives centred around entering the office tower or office block in which they spent a large portion of their lives. And for the most part, we found our technology supported conducting our work remotely, in a way that we had only imagined in the past.

However, the gloss seems to be rubbing off. Firstly, it is very difficult to train new workers without doing so in person. There is something about teaching by osmosis; by allowing a junior employee to learn by what they see and hear, that cannot be replicated in the remote workplace. In the main, work from home then (unless you are in The Confinement State, Victoria), has become a blended approach of spending some time in the workplace and some time at home.

In many ways, it is the flexible workplace that we have long talked about in the corporate world, but until now never achieved. Productivity be damned, we can work listening to Mozart/Cardi B/The Stones, whilst surveying our spring flowers/hipster vinyl collection/alcohol cabinet, and seamlessly blend our work and personal life as never before. Ah, the bliss. Sort of.

Whether the phenomenon of working from home is going to continue in perpetuity, I am unsure. I am one who has doubts about its long-term viability for cultural and practical reasons, but also because there are some significant issues in law that may militate against the attractiveness of the work from home model longer term, that I suspect employers have not yet even begun to think about.

Control is an important issue in the workplace. The more you trust an employee, the greater latitude and responsibility that person is going to have, and the more comfortable the employer will be to allow that person to work autonomously. But control cuts both ways. Employers are open to criticism, and have liabilities in law, for failing to exercise adequate control over employees. This ought to send a cold tendril of fear down the corporate spine of all employers.

There are a number of scenarios that employers must be aware of, but may have not adequately turned their collective minds to.

The first of those liabilities arises in workers compensation law In South Australia the relevant legislation is The Return To Work Act. Whilst that legislation draws a distinction between physical and psychological injury, both can be compensated. Let’s start with physical injury.

As employees work from home, I question whether all employers have an understanding of the physical work environment in which an employee is working. What desk is being used; what chair; what tech is being utilised? Is the proverbial tree going to fall on their house? Is an employee inadvertently being directed to work in an environment of family and domestic violence?

One can foresee a world in which workers compensation claims are brought arising from this period of time when employers had scant regard to the environment in which their worker was working, unlike the accountability of the office. While it is understandable that at the beginning of this pandemic an employer would have experienced difficulty assessing each employee’s home work environment, the more time passes, the less that explanation will count.

What’s more, as our workers compensation scheme is one of strict liability and does not require fault for an injured worker to be compensated, when a worker is physically injured in the homework environment, they will be compensated – end of story.

We are also learning that not all employees are enjoying the work from home scenario to quite the same extent as others.

It is not a stretch to imagine that workers compensation claims will be made by employees for psychological illnesses that they will allege arose as a result of the home work environment.

Working from home can be lonely, it may involve working in conditions that are inadequate and significantly worse than the office environment, and it may involve balancing responsibilities that a worker owes to their family, whether they are young workers still in the family home, cohabitating with others, or with a family and children of their own. Frankly, in all the misty eyed commentary I have read about the work from home experience, no commentator seems to have grappled with the hard facts of how the law will respond to these arrangements.

Employers may take a view that they are insured against the risk of workers compensation claims, and they will live with the consequences, for the time being, of workers working from home. If only it were that simple. In our State the injury of an employee attracts not only considerations under workers compensation law, but also whether employers and officers of employers, such as senior managers, have personal liabilities for disregarding an employee’s safety in the workplace. The relevant legislation is The Work Health and Safety Act.

This legislation is no ‘light touch’. For very serious breaches of work health and safety law leading to injury or death, employers and their officers can be sentenced to imprisonment. There are steep pecuniary fines for less serious breaches, but all told, this is a piece of legislation that employers should be very concerned about and fear being in breach. How exactly this legislation will operate if someone is injured or dies in the homework place is yet to be tested. However, as an employer, The Work Health and Safety Act cannot be ignored in the work from home scenario. It mandates that at the very least the home workplace must be inspected and assessed for its fitness. That is no easy task. As one CEO of 50 employees said to me, one workplace turned into 50 overnight.

Enter to the party the federal Fair Work Act, and employers should again be concerned. Under this legislation an employee may ground a claim for an adverse action against them. It is again not particularly difficult to imagine the circumstance in which an employee seeks to complain or make a claim against an employer for the way in which they were treated in the work from home environment. Has working from home resulted in them missing out on a promotion; on receiving adequate training? Have they been directed to work in an environment that was not inspected by the employer and was inadequate? The Fair Work Act will unquestionably be used against employers for real or perceived adverse circumstances experienced by employees arising from the work from home phenomenon.

Finally, employers have talked up or justified the advantages of working from home with their employees, such as the ability to make claims against the Australian Taxation Office for certain expenses. However, have employers also considered what capital gains tax liability may arise if the home is used more permanently as the workplace? What is the employer’s liability for giving only one side of the tax advice story? Few employers, in giving what they regard as helpful advice, fully understand what they are purporting to explain or how it may impact their own potential liabilities. Imagine an employee acting on that advice and discovering on the sale of their family home that CGT is owed to the ATO? Employers, beware handing out gratuitous tax guidance!

If this seems to be a stretch, think of employers who have openly said to their employees that they believe the work environment so radically changed they may expect to work from home for the rest of their corporate lives. If business expenses are claimed arising from the use of the home in those circumstances, the ATO is going to be interested, of that there can be no doubt. The sale of a home that attracts a CGT liability is an obvious target.

So if it is unwise to claim home office expenses against the ATO, what then? Without doubt employees will line up to claim their expenses against the employer. Just another reason why work from home is bound to skid to a halt sooner than later.

All in all then, as I have read commentary and articles about the contentment of working from home, of the experience of surveying one’s own estate whilst simultaneously contributing to the corporate world, it has struck me how utterly unrealistic these assessments are. It may be that we have experienced a change of rhythm, and that the flexibility that working from home has afforded us has, for a period of time, been pleasant. But as soon as employers wake up to the legal minefield that they are wading through, and the untold damage that unforeseen legal liabilities may have on their businesses, I expect that the nirvana of the work from home experiment may end rather more abruptly than the dreamers had hoped for.

There are seemingly limitless opportunities for the law to be used against the interests of employers arising from the grand work from home experiment, and the courts will be the Petri dish. We haven’t begun to imagine where this may all end up.

Enjoy it while it lasts, because the law will catch up with us soon enough.

And if you’re one of those who prefers to be back in the workplace, I’m not sure you’ll have to wait too long.

The only question remaining is whether you will re-join the work social club?

Morry Bailes is Senior Business Advisor to Tindall Gask Bentley Lawyers, past president of the Law Council of Australia and a past president of the Law Society of South Australia.

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