20/07/2020 - 15:00

WFH could be losing some of its gloss

20/07/2020 - 15:00


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The shift by large parts of the workforce to working from home has been one of the few bright points to emerge from the COVID-19 pandemic.

Empty office space due to COVID-19 restrictions could have implications for commercial real estate.

The shift by large parts of the workforce to working from home has been one of the few bright points to emerge from the COVID-19 pandemic. 

Thousands of workers are rolling out of bed each day and into makeshift offices in their kitchen, living area or home theatre for the start of the WFH shift. Some don’t even crawl out of bed to start the day’s work.

Indeed, given the overwhelming success of WFH, many bosses are champing at the bit to maintain this arrangement for a percentage of their staff on a more permanent basis, downsizing office space to save big dollars on lease payments in the process.

But not everyone shares the bosses’ newfound excitement about a permanent move from office cubicle to comfy couch.

The WFH movement has commercial property owners bracing for what many fear could be a massive hit to the office real estate market.

So, as cash-strapped bosses seek to downsize office space to reduce overheads because of continuing economic uncertainty, how high is the threat of an office real estate apocalypse?

The answer is, relatively low, and the explanation might surprise you.

WFH could be starting to lose some of its appeal.

Among the emerging downsides to the practice is a lack of social interaction, while there also are emerging legal issues with respect to an employer’s duty of care for those toiling away in the home office.

However, an overseas court ruling with renewed relevance during this pandemic could have local ramifications for how we think of WFH in Australia.

In what must be music to the ears of commercial property owners in today’s environment, Switzerland’s top court last year ruled a company must contribute to employees’ rent if they were being asked to work from home.

The decision came after an employee argued that, because he had been forced to establish a home office, which occupied a significant percentage of his residence, reimbursement of rent was warranted.

To support his case, the employee added that because he was not occupying any portion of the company’s leased headquarters, the savings accrued by his employer through his absence ought to be passed on to defray the cost of the home office space.

At the heart of the company’s defence, the employer argued the worker would have paid rent regardless of WFH and that no agreement in relation to compensation had been struck.

But the court ruled the expenses incurred by the employee would indirectly benefit the employer, comparing the situation to the use of a private car for work-related travel.

To be clear, the Swiss ruling does not automatically entitle everyone who works from home to reimbursement in some shape or form. 

A key factor of the ruling is whether an employee was asked to work remotely on a permanent basis or whether they chose to do so. Only in case of the former is reimbursement a likely outcome.

The message for business, in Switzerland at least, is that bosses who require staff to work from home may have to compensate employees for the business use of their residence.

This landmark Swiss court ruling – should it reach Australia’s shores – could close the front door on many who choose to work from home.  

Newly aware that WFH might not be as financially rewarding as employers had originally hoped, the prospect of having to contribute to workforce rent or mortgage payments – at a collective cost greater than the impost of housing workers in a single office-based location – could spell the end to the permanent WFH situation.

It could also spell the end of any fears held by the office real estate market that their business model is set for a major hit because of COVID-19.

• Professor Gary Martin is the chief executive officer of the Australian Institute of Management WA


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