Adapting Business Payroll and HR to Flexible and Hybrid Working

Chartered Accountants James Todd & Co, look at adapting payroll and HR to flexible and hybrid working practices following the introduction of the new Flexible Working Bill

The new Flexible Working Bill is set to broaden access to flexible and hybrid working arrangements, allowing employees greater freedoms and placing new obligations on employers. For example, UK businesses must allow new staff members to request flexible work from day one of employment and provide reasons if they decide to reject a request.

While hybrid, remote and flexible work have become far more common post-pandemic, millions of companies may need to consider the way they recruit, employ and pay their workforces, ensuring they have the right infrastructure and policies in place.

James Todd & Co, accountants in West Sussex, explain some of the key considerations for every employer and discuss why preparedness is essential irrespective of whether an employer has already received flexible working requests and whether they currently permit hybrid work structures.

Flexible and Hybrid Working Explained

Flexible work means exactly that – employees can request permission to adjust the hours they work, the number of days they work at the business’s location, or how they manage shift patterns.

In many cases, flexible work is a necessity for people who wish to work but face barriers to entering or remaining in the workforce following a conventional 9 am to 5 pm office-based system.

Examples include individuals with health conditions or neurodiversities who cannot commute, prefer to remain at home, or cannot work productively in certain environments. Parents are also a core focus, where employees might, for example, request the ability to work from home during school holidays or to work hours that are compatible with school opening hours.

The term flexible working covers a wide scope of potential scenarios, including:

• Remote working – where a member of staff works from home.
• Hybrid working – where the individual splits their time between home and a workplace.
• Flexible working – where they work compressed hours, flexible hours, or a specific shift pattern.

Every employer should understand the new legislation around flexible working and have the ability to respond since they will have a legal obligation to consider requests and understand how this may impact other colleagues.

Although a business is not compelled to approve every flexible working request, if the request is denied, it must explain why. If they agree, the employer will need to be able to accommodate the change through their payroll processing and HR processes.

Reviewing Payroll Procedures for Hybrid Work Arrangements

The specific changes to payroll will depend somewhat on the role and the way the employee is paid. A staff member who receives a basic salary may not see any changes to their pay if they are paid the same amount every month, regardless of how they spread their working hours across the week.

In other cases, payroll could become more complex, where employers need to calculate the hours worked or apportion pay depending on the tasks completed or the number of shifts. Businesses may also need to determine how they will pay bonuses or commissions if these are directly linked to the employee's performance or predefined targets.

However the business decides to deal with these factors, they should record the process within published policies and ensure they communicate with the employee. Any conflicts or disputes over pay, particularly where this is linked to a new flexible working agreement, could become complex.

Companies could possibly be exposed to liabilities if they do not put flexible working arrangements in writing and have these agreed upon. For instance, a member of staff may claim they have been treated unfairly or discriminated against if they perceive they have been underpaid due to a flexible working request.

Managed payroll services is a great option, particularly for businesses without a dedicated payroll department or where they do not have the time or capacity to implement new payroll systems to cope with changes to the way the workforce operates.

Outsourcing payroll to an accountancy team ensures legal compliance, accurate tax and payslip deductions, timely production of statutory reports, including P60s and P11Ds and precise payroll processing to ensure staff are paid the correct amount on the right day, either weekly or monthly.

Updating Staffing Policies to Include Flexible Working

We mentioned HR policies and would strongly recommend every business, of every size, think about how they can adapt personnel policies to accommodate flexible or hybrid working. That might include:

• Disciplinary policies, especially where punctuality is cited as a potential cause for an official warning. This clause may become irrelevant where employees were previously expected to ‘clock in’ by a specific time each day.
• Recruitment policies indicating how the business will manage flexible and hybrid work and ensure these requests are dealt with appropriately and fairly across all employees.
• Supporting guidance for line managers and supervisors so they understand how to respond to a flexible working request and how to evaluate the proposal to decide on a suitable outcome.
• Equipment policies, where laptops and other devices are made available to employees working from home, on what basis, and how these devices are linked to company networks or databases and protected from cybersecurity threats.

Businesses with a well-developed flexible working policy should circulate this to all employees and invite consultation and discussion to inform how the organisation adapts procedures or introduces new frameworks for flexible working.

Policies should state the eligibility criteria for flexible or hybrid working requests and set out how an employee submits a request and to whom. They should also clarify how hybrid employees are managed and supervised, who they report to, and how their workload will be handled or shared to ensure the work assigned matches the flexible work agreement and their responsibility level.

Managers will need to consider how hybrid work will intersect with other types of flexible working and what they will do to support staff who continue working in a previous structure, ensuring they are not left with an increasing burden to accommodate other colleagues working flexibly.

Finally, employers should revise employment contracts and ensure the agreement is formalised within the conditions of employment – although it may sometimes be acceptable to accept hybrid work requests informally or on a trial basis before making permanent amendments to the employee's contract.

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About James Todd & Co

James Todd & Co have been providing accounting services for more than 30 years across Chichester, Farnham, Lavant, and Sussex and Hampshire businesses. Their clients trust them to provide bookkeeping, financial auditing and compliance, management accounting and financial advisory services.

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Source Company: https://www.jamestoddandco.co.uk/