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Will workplace flexibility be a casualty of the cost-of-living crisis?

People want to split their working lives between home and HQ – and most employers seem happy to accommodate them. But there’s a chance that spiralling fuel and energy bills could jeopardise such arrangementsu0026nbsp;

The hybrid model has emerged as the number-one choice for workers in the knowledge economy. Research published by McKinsey in April found that 85% of people who are dividing their working hours between home and the office want to continue doing so. 

Part of the popularity of this approach can be attributed to the money that exponents can save, particularly on travel. MoneySuperMarket has estimated that the average UK office worker would be £576 better off each year by commuting three days a week rather than five. 

But the financial picture is rarely as clear as it might seem, according to Peter Cooper, director of people partnering at HR software firm Personio. 

“It’s hard to generalise about the impact of hybrid working on employees’ wallets, because people’s experiences can vary a lot,” he says. “While working from home might enable you to reduce your costs of commuting and having lunches out, say, the extent of those savings will depend on myriad other factors.” 

For instance, further increases in domestic energy costs will encourage more people to work in the office rather than spend excessive amounts to heat their homes. On the other hand, spiralling petrol and diesel costs will have the opposite effect on employees who drive to work.

A poll of nearly 3,000 workers by recruiter Randstad UK in April found that 45% were thinking about asking their employers to let them work more time remotely in a bid to mitigate price inflation on the forecourts. Conversely, a survey of nearly 1,900 workers by Electric Radiators UK in November 2021 found that 49% of remote workers were considering a return to full-time office work to reduce their domestic gas and electricity bills. 

Such costs affect employers too, of course. In October 2021, for instance, a poll of small and medium-sized firms published by smart meter provider Smart Energy GB found that 30% were thinking about closing their offices during the winter, as some were facing a 250% increase in their energy bills. 

Businesses shouldn’t make hasty decisions in this respect, according to Cooper. 

“If there’s one thing we’ve learnt over the past couple of years, it’s that people policies shouldn’t be reactionary, created on a whim in response to sudden surges in employee demand,” he says. “So, while rising energy bills are a clear concern for many employers, it’s important for them to take time to understand the issues that really matter to their employees. This ensures that any policies they put in place are properly considered and sustainable.”

But that can be easier said than done for many employers, because of the uncertain ground that they have found themselves on. Companies that have adapted quickly to hybrid working often don’t have steady procedural or legal precedents to draw upon. 

“This is a typical conundrum concerning how culture and work modelling have moved more quickly than people-related laws,” says Charlene Brown, co-founder and MD of employment law firm Howlett Brown. “On the face of it, it sounds quite simple: work from home partly or work from home fully. But it’s far more complex from an employer’s perspective – there are so many potential problems.”

For instance, businesses that adopt remote working may need to conduct health and safety assessments at employees’ homes, as well as contributing to energy costs incurred on company time. For those that have retained a central office and adopted policies such as hot-desking, health and safety checks on those premises become more difficult. 

On the face of it, it sounds quite simple: work from home partly or work from home fully. But it’s far more complex from an employer’s perspective

In Brown’s experience, firms eager to bring their employees back to HQ have far outnumbered those that are happy to retain a high level of remote working. She believes that employers will continue with hybrid working for the foreseeable future. 

“I think most companies are engaging in it purely to retain talent and ensure the right culture, as opposed to managing any kind of legal risk,” Brown says. 

As living costs in the UK are expected to increase even further this year, what can businesses do to preserve hybrid working? 

N-21, a group of media agencies based in Newcastle upon Tyne, recently announced a flat annual salary increase of £1,500 for all employees. 

“We set it as a fixed amount, rather than a percentage of salary, because we all know that people on lower incomes tend to suffer more,” explains its CEO, Neil Robbins. “In the end, it came down to doing the right thing. We sat down with our finance department and worked out that we could help, so that’s what we did.” 

With employees spread across north-east England, as well as in the US and Australia, N-21 saw a clear business need to give them the flexibility to work wherever they wanted. As such, there’s no expectation for people to attend the office for a set number of days each week. Robbins believes that the universal pay rise underlines the business’s commitment to flexibility. 

“We try to create an environment that simply enables people to choose what works best for them,” he says. 

For companies that can’t afford to follow N-21’s example, a greater focus on supporting employees’ financial welfare is required. So says Joanna Bean, people director at Cushon, a fintech firm that helps employers to do this with products such as a pension that invests only in net-zero environmental projects. 

“This is about implementing the tools that employees can access from anywhere to support their financial wellbeing, as well as their physical and mental wellbeing,” she says. 

While there is no legal imperative to provide such support, it could become a crucial part of talent retention alongside a commitment to flexible working. A poll of 2,000 workers published in September 2020 by financial wellbeing platform Nudge Global found that only 33% thought their employers were doing enough to support their financial wellbeing.

Cushon helps its clients’ employees to manage their money more effectively with a suite of tools. For instance, it provides articles and webinars to guide people through their immediate budgeting concerns and build towards achieving longer-term financial security.

Unsurprisingly, Bean reports that these services have become increasingly popular in recent months. “I don’t think you can get too basic with your support,” she says. “If everyone understands how to budget better, you’re halfway there.”

While businesses may have to provide more immediate support and perks such as shopping vouchers and immediate advice about regular outgoings, she argues that a holistic approach to ensuring people’s financial wellbeing is needed. 

“How do you save better? How do you budget better? What are the pensions available to you?” asks Bean, who believes that further increases in the cost of living might require businesses to be even more flexible. “If you look at the whole picture, people will notice a difference in their take-home pay.” 

Like N-21, Cushon doesn’t mandate a set number of days for its employees to attend the office. This policy accommodates the varying routines of staff in its three locations, two in Greater London and one in Belfast. Even with different needs, and potentially different drains on resources based on location, the best approach remains the same, according to Bean. 

“There’s no real group opinion anymore,” she says. “You can’t have a one-size-fits-all approach. It just won’t work.”

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