Home-based Working post COVID-19: what does the "new normal" look like?

Vinciane Istace,  Leader of People Process Outsourcing and Diversity & Inclusion and Nelly Mazzarol, Managing Director of People Process Outsourcing at PwC Luxembourg share their vision about the new ways of working.

How did remote working evolve, if you compare 2019 with the current situation?

Many organisations, especially in Europe, tended to consider Home-Based Working (“HBW”) as an alternative working practice that still required strong monitoring and clear limitations. Many companies anticipated a negative impact on profitability if managers could not keep an eye on their direct reports. As a result, HBW was usually only available as a special arrangement to accommodate families in specific cases. It was then common for businesses to allow their employees to work from home once or twice a week.

Vinciane Istace

The current Covid-19 crisis pushed many of us to experience HBW on a large scale. Though it was out of immediate necessity, we are coming out of it with some positive feedback. Both from employers’ and employees’ perspectives, HBW has gained in appreciation and popularity. The common fear, that a loosened control of the work performed may harm efficiency and productivity, was gradually replaced by more trust and better time management. The actual experience is a positive impact on working with a greater focus:  due to less interruptions and time lost in commuting …or multiple meetings.

It is very likely that post-Covid-19, many organisations will then review their ways of working and more systematically propose remote working possibilities. This time it will no longer be the response to the urgency of a situation but truly an evolution in our way of working. It is not only about working from home, but also interacting digitally with colleagues, clients and providers.

Hence the importance of technology to connect to people such as teleconferencing and various mobile-data services to promote the development of remote working.

Will home-base working stay the “new normal” even after the crisis?

In a company like PwC with around 3,000 people, we had (fortunately) introduced home-based working prior to the crisis, and we had reflected on the implementation of relevant HR policies. A HBW framework was already in place to encourage the right behaviours in terms of risk awareness, timely communication, team and client meetings’ priorities, compliance with the standard office hours and tax and social security obligations. HBW was proposed as an option to our employees for greater work flexibility. Like many organisations, it was certainly not a recurrent working pattern, as limited to one day a week.

Crises are often a crash test for management, people and existing infrastructure. There were some good lessons learned from this unusual period. And the most important one is simply that we can work efficiently and successfully from home. It will certainly trigger a reflection for the way forward in terms of a larger acceptance of HBW both from the employer and employees’ perspective. It is especially relevant for a country like Luxembourg where 50% of its workforce consists of cross-borders aspiring to spend less time commuting.

From the moment that it is no longer necessary to define your workspace as the office you work in, you can also anticipate that remote working new habits will have a great influence on office design in the next couple of years. There might be a need for less office space and though it is premature to quote any precise figure, there is a realistic possibility of a 20% reduction.

nelly mazzarol

How much flexibility should be granted to employees, in order to be able to consider personal needs as well as firm objectives?

When it comes to flexibility, it is essential to define the core elements: - what is expected in terms of presence time to enable client and team interactions; - what are the communication protocols and the level of transparency deemed necessary, - what are the standard key performance indicators (KPIs) for both management and employees. Remote team members have to be aware of expectations and their performance can be monitored

Organisations should improve their remote work policies and capabilities and define a clear framework to promote the appropriate use of this flexibility but also to display the right behaviours towards your remote workers as they deserve the same (digital)  attention as on site workers.

The level of flexibility that could be granted in terms of work location is however limited by regulatory constraints which are unequal according to the country of residence of your workers.

All the border states have concluded a double-tax treaty with Luxembourg enabling them to recover part of the salary taxation on the non-resident cross-border salaries when they are working partially outside of Luxembourg for their Luxembourgish employer.

Over the past eight years, amendments to these treaties have introduced some tolerance to that principle. Each border country has granted a different threshold for days worked outside of Luxembourg for which the taxation will remain in Luxembourg (maximum 19 days per year in Germany, 24 days in Belgium and finally 29 days in France as from 2020). If the days worked outside of Luxembourg exceed these thresholds, the concerned employees should be taxed in their country of residence on the related portion of the salary and the employer in Luxembourg will have to run heavy calculations to exempt this same salary portion in Luxembourg.

These differences in the treatment from one country to another create more complexity to offer the same working conditions to all the employees. These various taxation systems constitute a first serious limit to the HBW for the non-resident employees.

Nevertheless, the European social security rules represent an even stronger limit. These regulations give the right to contribute on the whole salary to the country of residence when a non-resident taxpayer is working 25 % of their working time or more in their residence country.

These social and tax constraints will seriously limit home-base working. The double-tax treaties as well as the EU social security agreement were agreed more than 40 years ago for some of them. We must acknowledge that they do not meet the needs of our economic world today anymore which requires more mobility, flexibility and efficiency as well as a reduced carbon footprint.

Besides home-based working, are there any other “new ways of working” that will become popular alternatives?

This Covid period has given us more confidence in our IT systems and an in-depth knowledge of its possibilities. The technology allows us to work from anywhere, but HBW has its legislation constraints. However, enabling employees to work a few days per month from a hub in Luxembourg when located at the border can also ease their daily life: save time by avoiding troublesome commuting while reducing the carbon footprint at the same time! It requires clear rules and investments, but it is mostly appreciated, and it can be an alternative to HBW when living abroad. However, the flexibility has other components than the workplace.

It is already 70 years since the 40-hour week was adopted as the standard to which countries should aspire! It is no wonder that working time is at the edge of undergoing in-depth mutation. The latest circumstances are a clear call for a different and more customised approach. In Luxembourg, already 21% of workers are enjoying Flexitime solutions while the European average is around 15%.

The work can also break out of the standard 9am to 5pm pattern, and more autonomy could also be granted over working hours. Freedom to change the starting and ending time of the work, ability to change the number of hours you work per day or week or ability to accumulate those hours to take days-off.

Flexibility will certainly combine a degree of autonomy on both your working place and time. This will lead to revisiting the terms of employment relationships...to the extent permissible by European regulations and Luxembourg statutory provisions (Labour Code and Grand-ducal regulations) that may not move at the same pace.

Which are the most important lessons learned by PwC Luxembourg that you would like to share?

We all learn every day but learning by experience is a powerful accelerator towards change. Everyone was completely immersed in a different working environment. We learnt individually about our own resilience and collectively about our agility as a team.

A special tribute to all the parents who face the double set of constraints of taking care of their kids while delivering the job due to the closure of schools and care structures during the Covid-19 pandemic.

Some of the key learning points can be summarised briefly as:

1. A happy digitalisation: technology was a true enabler (thank you to our IT teams!) to navigate through this period and we all gain knowledge on our digital tools;

2. A better environmental footprint: 72% of our CO2 emission are coming from commuting to the office...imagine the impact;

3. The booster of trust: when you allow your people more discretion and more control over their work, you actually get better performance outcome and better productivity;

4. Family friendliness and work life balance: autonomy gives more control to adapt the work to other spheres of life;

5. Human interaction: nothing can replace face-to-face contact and we all miss our project teams, our coffee corner chat and human interaction which strengthen the sense of belonging. However, we need to remain attentive as these new ways of working unfold and become the new normal. Autonomy + flexibility certainly leads to extra time… that can also be spent working and with a greater intensity.

Let’s be careful of the “ideal worker” syndrome being permanently connected, never sick and perpetually available for work.  It is very important to think about the various effects on our daily lives as these new working practices expand.

Source: https://www.hrone.lu/actualites/home-based-working-post-covid-19-what-does-new-normal-look

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