Employees who work from home

Extended flexible working rights, technology and social change make working from home — an increasingly cost-effective and attractive option both for organisations and the individuals who work for them.
 This briefing outlines:

  1. Which jobs and individuals best suit homeworking.
  2. The key management issues.
  3. The benefits and risks.
  4. The technology involved.

1 Does it suit?

1.1 Jobs which particularly suit full-time or part-time homeworking include:

  • Sales, marketing and customer service.
  • Support and maintenance.
  • Computer programming.
  • Consultancy and professional services.
  • Training and education.
  • Writing, editing, research and translation.
  • Some administrative and secretarial work.
  • Jobs where home acts as a base for work carried out on the road.

The key question is to what extent the employee needs to attend the office.

1.2 Individuals need the right skills and personality traits to be effective homeworkers.
Training can help employees develop suitable skills. Typically, good homeworkers are strong on:

  • Time management and self-discipline.
  • Motivation, self-sufficiency, initiative and the ability to work alone.
  • Communication. For example, they have a good telephone manner and the ability to get on with new people.
  • Lifestyle management. They have the ability to manage the split between home life and working life.
  • Technology. They have the ability to cope with IT and telecommunications equipment.

2 The home office

2.1 Minimum requirements for a home office include:

  • A work space and reasonable working environment. Homeworkers may need to gain the co-operation of others who live in the same place.
  • Secure premises and a lockable cupboard or desk. Homeworkers should avoid leaving valuable equipment or sensitive information on display where there is a risk of theft or confidentiality breaches.
  • Compliance with health and safety regulations (see 2.2), including suitable furniture.
  • A business telephone line and broadband access.
  • A computer with internet and email access, office software and access to a printer (see 7).
  • Adequate insurance.

    Home contents insurance normally excludes business equipment. However, most employers’ insurance policies cover "any place of business", so employers and homeworkers should check their policies. Additional insurance may be required if homeworkers have visitors or business meetings at home.

2.2 Health and safety requirements apply equally to homeworkers and those who work in an office.

An initial risk assessment must be carried out, although this can be done by the employee. Areas to consider are:

  • The seating and layout of the employee’s computer workstation.
  • Electrical equipment. Has it been tested and certified?
  • Extension leads for telephones, PCs and printers. There should be no trailing leads.
  • Adequate lighting levels, ventilation and room temperature.

Employers need to give homeworkers simple, specific health and safety advice and record what has been done.

2.3 Planning permission is unlikely to be required if all the following are true:

  • Only one room is used for homeworking.
  • Only those who live in the house work there.
  • The work does not lead to a substantial volume of visitors, nuisance to neighbours or extra car parking.

2.4 Tax and business rates are not usually a problem.

Homeworkers can ensure the room used has a secondary purpose (eg as a guest bedroom) to avoid paying:

  • business rates.
  • capital gains tax on the sale of the property.

3 Benefits and risks

3.1 The main benefit of working from home is increased productivity, through:

  • More efficient use of time.

    Homeworkers often face fewer interruptions and spend less time commuting.

  • Improved employee retention.

    Homeworking often suits parents who need to fit in with school-age children.

  • Reduced levels of sick leave and stress.
  • A better chance of recruiting the most able candidates. Potential recruits may prefer the option of full-time, part-time or casual homeworking, or flexitime.
  • Control over the office environment, eg noise, heat, ventilation and lighting.

3.2 The main problems with working from home are similar to those of running a decentralised business.

Particular risks and problems can include:

  • Losing touch with employees and difficulty in arranging ad hoc meetings.
  • Increased initial training requirements and expenditure on setting up home offices.
  • Reduced loyalty due to increased isolation.
  • Deterioration in employees’ skills and work quality.
  • Difficulty in controlling the security of information.
  • Poorly-managed homeworking can lead to confused goals, standards, expectations and systems.

Effective management of homeworkers can overcome most of these problems.

In many businesses, informal homeworking goes on anyway, whether or not there is an official policy of allowing it. It therefore makes sense to tackle the issues and make the most of the opportunities.

Flexible working options

Flexible working is a catch-all phrase that covers any working pattern other than the normal one.

Employees may work in different locations.

  • At home - employees without suitable home premises may use a local business centre.
  • Commuting - sales, support staff and employees with long journeys may be able to work while travelling.
  • At customers’ premises - employees working at a customer’s premises need to be managed in the same way as any other worker.

Employees may work on a different basis.

  • This may involve changes to the hours and times worked, eg flexitime, compressed hours, annual hours or staggered hours.
  • Employees might have a job-sharing arrangement.
  • Shift work, part-time work and term-time work also count as flexible work.

4 Introducing homeworking

4.1 Employers should put the groundwork in place before starting to implement homeworking.

  • Prepare a homeworking contract (see 5).
  • Introduce a training plan.
  • Prepare written procedures for the tasks involved.

Attempting to change working procedures at the same time as introducing homeworking can lead to problems.

4.2 Employers should start with a small pilot scheme.

  • Limit the size of the pilot people to a manageable amount.
  • Give employees the option of participating.


    Many employers find they do not need to advertise the scheme and employees who are interested come to them.

  • Begin with part-time or casual homeworking.
  • Keep costs down. The only significant cost should be for training and home-office equipment.

If the pilot is successful, the employer can then roll the scheme out to other employees.

4.3 The introduction of homeworking needs to be planned and managed like any project.

  • It requires formal review, evaluation and measurement.
  • The key to success is to manage flexible workers in terms of their output rather than their attendance.

    Attempting to maintain the same direct control over individual activities is usually doomed to failure.

5 Contracts

Not every situation demands a new contract. As long as output is quantifiable, an employer can usually offer a standard contract. Employers may, however, need to renegotiate if conditions change.

5.1 It is easier to negotiate homeworking contracts if the terms and conditions offered are as good as they are for employees who work on site.

Employers should agree a letter of modification to the standard employment contract with employees. A simple letter might state:

  • Where the employee will be based.
  • That both employer and employee have the right to terminate the homeworking arrangement at any time.
  • That the company will supply and insure the necessary equipment. The equipment remains the company’s property and is not to be used for private purposes.
  • That the company will supply and pay for a telephone line and provide internet connection for business use.
  • That the employee must comply with relevant health and safety and security guidelines. The company will pay any costs involved.
  • That there is no change to other employment terms and conditions such as pay, hours of work, holiday entitlement and pension contributions.

Employers should ask employees to sign the letter to indicate acceptance.

An employee who feels unduly pressured into accepting a new arrangement who quits may have a case for constructive dismissal.

5.2 Homeworking is not self-employment.

  • HM Revenue & Customs is unlikely to accept an individual with only one customer (the employer’s company) is self-employed.

    This is especially unlikely if the individual was previously employed by the same company.

  • Introducing self-employment for whole departments which move to homeworking can cause legal problems.

    This is a complex area that involves the Transfer of Undertakings (Protection of Employment) Regulations or TUPE.

6 Staying in touch

6.1 Telephone and email are the best ways to maintain contact.

  • Regular telephone calls can replace most face-to-face meetings.
  • Frequent short calls can be as effective as long conversations.
  • Email does not interrupt work as much as the telephone. Homeworkers can choose when to read messages and when to respond to them.

A face-to-face meeting is still best if an employer has to give an employee bad news.

6.2 Various telecoms options provide efficient ways of making contact with homeworkers.

  • Email is essential.
  • Voicemail enables employees to receive and send messages.
  • Telecommunications suppliers can provide a facility automatically routes incoming calls to the employee.

    Individuals can purchase a personalised number to achieve the same effect.

  • Mobile phones are particularly effective for people who travel a lot.
  • Intranets and PC-based video-conferencing offer additional means of keeping in touch, although videophones remain unpopular with many homeworkers.

6.3 Employers may need to convert paper-based processes into electronic ones.

  • It is easy and quick to share electronic files with homeworkers, but not to pass around sheets of paper (see 7.2).

    File sharing works best if everybody uses the same version of the software.

  • Employers should consider investing in contact management software if they have a mobile sales team or need to update customer data regularly.

7 Using technology

It is safer for homeworkers’ to save their output directly onto the employer’s systems, rather than locally-sited equipment. This reduces the security risk of data lost in transit and limits the employer’s exposure to the provisions of the Data Protection Act.

7.1 Homeworkers can access any information that you keep online.

  • Your site can be accessed anywhere by any computer with web browser software.

7.2 You can enable homeworkers to connect to your existing computer network.

  • This gives them access to relevant files and systems on the company network, and to resources on the company intranet.
  • The major cost, for an existing network, is the connection fee.

    A fast ISDN or broadband line makes it easy to exchange information.

7.3 Understanding the pitfalls.

  • There is a danger of people gaining unauthorised access to your systems. Where confidentiality is essential, issue "work only" computers protected with passwords, firewalls and anti-virus software.
  • Faster technology costs more money.
  • Homeworkers may need training.
  • Employees may not use the technology productively.
  • Employees may fail to back-up information stored on home PCs and laptops.