Businesses are looking to the post Covid future and for many, following the successes seen with remote working during the pandemic, it is likely that this will entail smaller office spaces and permanent hybrid working arrangements for employees.
In this article, we will consider some of the legal issues involved in downsizing office space, and the practical and contractual issues relevant to hybrid working.
1. Closing office premises
If you are a tenant of office premises, you cannot simply hand back the keys and walk away from the lease before it expires. Instead, the options that may be available are:
Exercising a break clause
You should check if your lease contains a break clause. Timing is critical as most breaks can only be exercised on specific dates during the lease and you will have to give a certain number of months’ written notice to exercise the break. There are lots of possible traps in exercising a break clause correctly, such as detailed requirements for how to serve the notice and conditions that need to be satisfied (such as leaving the property in a proper state of repair). It is always safest to ask your solicitor to check the lease and serve the notice on your behalf. Importantly, you will still remain liable for dilapidations.
Surrendering your lease
If you do not have a right to break, you could approach your landlord to negotiate ending your lease early by surrendering it. Your landlord is under no obligation to agree but if they have another possible tenant lined up or they are planning a redevelopment or a change of use they may be agreeable.
If you surrender your lease you will be released from any future obligations, but you are still liable for anything you were required to pay or do while the lease was in place. This means that when negotiating a surrender, you should expect to reach some sort of agreement about outstanding payments and the cost of any repairs needed to the property. You may even have to pay an additional premium to compensate the landlord for loss of the rental income they expected. It is safest to ensure the surrender is properly documented and we can assist you with this.
Imminent Lease Expiry
If your lease is coming to an end your solicitor should check whether the lease contains a right for you to renew it. If it does not have a right to renew this is also known as being “excluded from the Landlord and Tenant Act 1954”. The steps you need to take to leave the premises when the lease expires depends on whether the lease has a right to renew or not and it is important to seek legal advice on this. If the lease does have a right to renew, you may even decide it could be worthwhile to stay. We can provide further advice on your options and the steps you need to take.
2. Issues to consider in taking on a new lease
If you are taking on a new lease, you should look for flexibility. This could be in the form of permission to sub-let part of the premises and the option to have regular break clauses. You may wish to consider taking on a shorter lease but should also check whether the lease will contain the right to renew (as mentioned above).
3. Hybrid Working
If you are a business considering hybrid working, a really worthwhile exercise is to find out from employees about their experience of homeworking. This can be done through an anonymous survey, team meetings or employee representative groups. Important questions include, which work activities went well remotely and which did not? Do they have any concerns about Covid-19 when coming back to the workplace or commuting?
You should also consider the practical issues of implementing hybrid working arrangements, such as:
• Do you need to insist staff come in for a minimum number of days each week or will it be optional?
• Will employees have the right to choose which days they come in?
• Will there be enough desk space if you operate hot desking and staff can choose their days to come into the workplace?
• Do you want all employees to come into the office on the same days for team meetings and collaborative work?
• Can employees work from abroad? Look out for any immigration or tax implications.
We recommend introducing a policy that sets out your expectations on hybrid working. Other policies may need updating such as those relating to homeworking, data protection, confidentiality, IT, use of company equipment and anti-harassment to address online bullying.
Changing contract terms
It is crucial that new arrangements are reflected in the contract of employment or statement of particulars. This includes any requirement to come into the office, whether on specified days or as required by the business. Not only are you legally required to ensure that the contract is updated within a month of changes to the place of work, but clearly setting down the arrangements helps avoid disputes.
What if employees resist the changes?
Check the employee’s contract as it may allow you to make changes. A word of warning; this may not give you carte blanche to introduce any changes immediately. We can advise you on how to bring about changes safely. Even if the contract does not give you flexibility, we can help you make the changes if the employee does not agree.
In both cases, you need to listen to the employee’s reasons for objecting to the changes. There may be an indirect discrimination claim waiting to happen. For instance, younger employees’ home environment may be less conducive to homeworking, with less space, in shared accommodation or with small children at home.
As we set out in our article on Hybrid Working, there are a number of pitfalls which employers will want to avoid when formalising hybrid working and we can help you do so and get your business fit for this new model of working.
Should you require any assistance regarding the issues above, please do not hesitate to contact Thackray Williams on 020 8 290 0440.
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