- Employers should be cognisant of relevant employment agreements, enterprise agreements and awards
- The work from home policy should be seen as part of a broader HR policy response to coronavirus
- Ensure you claim the correct amount of deductions when preparing your annual income tax return this year
Some employees are also proactively suggesting they work from home and not just because of personal health concerns. Coronavirus may disrupt established childcare and school arrangements, requiring working parents to tend to their children at home or elderly relatives may need to be cared for.
Some businesses have established processes and systems which allow for this however there will be many employers who need to quickly grasp the many issues involved, according to CA ANZ Australian Tax Leader Michael Croker.
And while we recommend you contact your local Chartered Accountant for general business advice during tough times, there are some specific issues to bear in mind.
1. The legal side of things
Workplace health and safety laws in Australia generally require businesses to eliminate or minimise risks to the health and safety of workers in a way that is reasonably practicable.
Sending workers home because of coronavirus concerns may fall into this broad duty of care. However, employers who let their employees work from home or remotely also need to assess the risks and ensure employee safety in that external environment. This can be challenging without established processes, and in some cases, it will be a matter of balancing competing risks.
Employers should also be cognisant of relevant employment agreements, enterprise agreements and awards when either mandating work from home arrangements or responding to employee requests to do so.
Where an employee initiates the request, note that the Fair Work Act caters for flexible working arrangement requests where the employee has worked for the same employer for 12 months.
In the context of coronavirus, such requests can be made by carers and workers aged 55 or older. The employer can decline the request but only on reasonable business grounds and must provide a written response with reasons within 21 days.
Communicating work from home policies relevant to coronavirus is essential. Ideally, these policies should be online, readily accessible to the workforce and a "question and answer" document should be developed to address commonly raised issues.
As always on employment law issues, seek legal advice.
2. Workers compensation, public liability and professional indemnity cover
Regardless of the location, employers must provide a safe workplace. Employees should have access to workers compensation insurance if any injuries or illnesses arise while working remotely, but it may also be prudent to review the scope and cover of other insurances, such as public liability, professional indemnity and other business protection policies.
Normally, employers should carry out a home workplace safety assessment if only to address workplace health and safety issues, but the spread of coronavirus makes this more difficult. Some written guidance or checklist on safe home workplace practices backed by telephone check-ins might be a more appropriate response. Check with your State or Territory health and safety regulator and your insurer.
Public liability cover should also be reviewed if a home-based employee conducts face-to-face business activity from home, for example they see suppliers or customers.
Businesses offering professional services may need to review their professional indemnity cover (or at least notify their insurer that employees are now working from home due to coronavirus). Professional indemnity insurers may seek details of the supervision arrangements for work from home employees.
3. Develop a robust work from home policy
Much of what follows falls under this heading, but it's important for employers to have guidance to which employees can refer. For example, not all employee roles lend themselves to home-based work, so eligibility criteria should be developed.
Importantly, the work from home policy should be seen as part of a broader HR policy response to coronavirus, dealing with issues such as:
- Informing the employer of illness
- Staying away from work if feeling unwell (even if the worker has no sick leave entitlements)
- Assurances around the confidentiality of health-related information
- Sick leave entitlements
- Mandating work from home arrangements
- Remuneration where no leave entitlements remain
- Leave without pay
- Reduced paid work hours
- Compliance with hygiene standards
4. Be clear about work from home ground rules
Employees generally rate highly a business that offers flexible work arrangements and working from home can boost productivity. With no commuting time, it's possible to get more done on both work and domestic fronts.
But unstructured, poorly supervised work from home arrangements can be detrimental not just for the business but also for workplace relations if some employees perceive they are working harder than others.
So it's important to clearly state the employer's expectations and boundaries around work from home arrangements. For example, the employee should commit to working the same work hours (although not necessarily a standard "9 to 5" work day where there are family care obligations) with the same level of output. They should plan their day, set goals and focus on outputs just as they would if supervised in the employer's workplace.
Managers and supervisors should schedule regular check-ins.
For employees, remaining "visible" in a virtual sense, contactable and fully engaged in the business should be a key objective.
Good communication is vital. Use instant messaging functions not just to communicate down-time (e.g. "away from desk, leave voicemail"), but the reasons and expected time when back online (e.g. "picking up the kids from school 3pm to 4pm").
Here are some other tips for employees:
- Be "present" by your work "presence" and equate working from home with working from the office. Multi-tasking work and domestic chores is great, but not when you need to be a fully engaged participant in a teleconference with an important client.
- Establish a home workspace that helps you work efficiently. Remember, standards around data security apply just as equally at home.
- Keep track of tasks and accomplishments. Communicate with supervisors regularly and succinctly. Be mindful of email fatigue and keep using the telephone to maintain personal rapport (and remember the mute button to cancel out domestic background noise).
5. Home workplace tools, technology and systems
Work-related telephone and internet access is fairly widespread these days, but employers should check that home technology is adequate for work purposes. At the very least, employers should ensure employees have sufficient reception or connectivity to contact emergency services if needed.
Systems access should also be tested. Nowadays employees need access to much more than office emails. Access to business and document databases, accounting systems, HR, payroll and client marketing software are just some examples where different personnel may need differing levels of access, and for commercial software used in the business, the licences to do so.
As always, cyber awareness is vital. For example, logging into workplace systems via public networks (e.g. the coffee shop just around the corner) should be discouraged.
If the employee's own computer is being used for work, check that workplace IT standard, compatible anti-virus software has been installed.
6. Insurance of work equipment
Every business should have records of workplace equipment, their location and the name of the worker responsible for them.
The employer's general property insurance policy should cover business equipment regardless of its location but check the policy to see if there are exclusions relevant to equipment taken home for work use.
A risk and insurance coverage "gap" may arise if the employee's property is being used for work purposes. That is, the employee's property isn't covered by the employer's policy, and the employee's home and contents insurance policy doesn't cover the employer's business equipment. Damage suffered due to data loss etc (e.g. due to malware downloaded accidentally onto the employee's home computer) may also fall into this kind of insurance gap.
Seek advice from your insurer or insurance broker.
7. Build, maintain and encourage a "virtual" workplace network
We all sometimes take for granted the intangible but valuable networking benefits which workplaces provide. Apart from the social aspect, there's also the sharing of insights and problem-solving that comes from personal contact.
Virtual collaboration technologies such as WhatsApp groups can help fill the void, as can participation in chat rooms and posts with suppliers and customers.
Managers should schedule one-on-one and group "check-ins" to foster a virtual sense of belonging and teamwork.
Remember, coronavirus is a community-wide, health-related emergency. When it comes to successful workplace relations and keeping good employees onboard, managers are the eyes and ears of the business. They need to demonstrate empathy with members of their work teams and be empowered to make decisions which convey the employer's concern for the welfare of all employees, their families and the broader community.
8. Tax issues – Employee perspective
Unfortunately, tax raises its ugly head when income producing activity occurs in the home.
What's tax deductible?
"Home office" expenses such as running expenses, phone and internet costs are deductible provided detailed ATO guidance is followed and substantiating records are kept. Tax depreciation deductions may be available on some assets used for work purposes. There's even a home office deduction calculator available on the ATO website.
Home to work travel costs are a confusing area of tax law. Deductions are generally not available, but there are limited exceptions.
Assuming the employee is simply working from home – as distinct from running a business from home – the main residence exemption under the capital gains tax (CGT) rules will not be impacted.
What's not deductible?
In some cases, expenses associated with working from home will be paid for or reimbursed by the employer (e.g. work-related telephone calls and internet usage, postage and courier charges). Where the employer foots the bill, such expenses are not deductible to the employee.
Private and domestic expenditure – such as house cleaning, hiring a carer for children or elderly parents – is not deductible.
Your accountant will be able to help you claim the correct amount of deductions when preparing your annual income tax return.
9. Tax issues – Employer perspective
Fringe Benefits Tax (FBT)
No FBT should apply where an employer reimburses or pays for an employee's work-related expenses arising from working from home arrangements. Similarly, equipping an employee solely for the purpose of enabling them to work from home should not attract FBT.
However, these employee benefits should be documented to evidence that they relate solely to work. Some FBT may apply where benefits have a dual work and private nature.
Importantly, the FBT law contains exemptions which may apply (subject to satisfying various conditions) where an employer provides an employee with:
- Tools of trade, a laptop, mobile phone or protective clothing (e.g. face masks);
- Medical examinations, screening, preventive health care, screening or counselling;
- "In-house" health care;
- Taxi travel (e.g. from work to home – or vice versa – or to a GP or hospital).
The minor benefits FBT exemption may also apply for minor, infrequent and irregular benefits of less than $300 provided in response to the coronavirus emergency.
Specific FBT exemptions and concessions apply to benefits provided to workers in the health care sector.
What's tax deductible?
For income tax purposes, the employer’s expenditure enabling work from home arrangements should be tax deductible as an expense of employing labour and as an expense necessarily incurred in carrying on business.
Employers should seek detailed FBT and tax advice from their accountant.
10. The longer term…
The potential longer-term ramifications of coronavirus related work from home arrangements should not be overlooked in the rush to cope with the current crisis. Management should monitor the benefits and downsides of working from home arrangements and, after the threat of coronavirus has dissipated, review the outcomes.
Those businesses who successfully switch-on such arrangements now may well embrace more permanent work from home policies after the coronavirus emergency subsides.
If that happens, the ramifications for workplaces, productivity and the demand for business accommodation (e.g. leased office space) will be very interesting to monitor.
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