With employment costs rising, and many firms reducing staff numbers, businesses will want to do “more with less” in terms of headcount to ensure they remain productive and profitable.
There are, of course, many measures an employer could take when seeking to boost employee productivity – some “carrot”, others “stick” – with varying levels of intrusiveness and effectiveness.
Technology now permits ever more surveillance of employee activity (and inactivity), whether that’s in terms of attendance at the office, time logged on, or even the number of keystrokes on a user’s computer. Then there is the “DOGE” approach, in which federal employees were asked to send a weekly email setting out a detailed review of what they did in the previous week.
But what are the legal limits of measures such as these?
1. Changing an employee’s role and responsibilities
Many employment contracts will – and all employment contracts should – specify the employee’s job title and key duties, with the detailed responsibilities set out in a separate job description.
Well-drafted contracts should also contain an express provision allowing the employer to modify the role, responsibilities, reporting line and/or place of work of the individual.
These types of “flexibility clause” can, at least in principle, allow the employer to realign the duties of members of staff where more hands are needed at a certain task, without having to enter into a negotiation over an amendment to contract terms.
However, there are legal limits: all contracts will feature an implied term that the employer will not act in a manner which is “calculated or likely” to destroy or seriously damage the relationship of mutual trust and confidence between employer and employee.
This does not mean that flexibility clauses can never be invoked, but they must be exercised in a way which does not undermine trust and confidence. This does not quite mean the same as a duty to invoke these clauses in a reasonable manner, but employers should proceed with caution and consult before doing so.
2. Increasing working time
Some employers will want to increase the working hours of their employees as a means of increasing productivity, or at least increasing output, even if there are diminishing returns.
However, there are obstacles to this, even if the employment contract has an obligation to work additional hours where the needs of the business require it, and employers should be wary of:
- The Working Time Regulations 1998 (“WTRs”) limit the hours an employee can work each week. Most employers will ask the employee to opt out of this limit, either within their employment contracts or via a separate document. However, an employee is able to give three months’ notice withdrawing their confirmation to opt out.
- In our practice, we are seeing a significant number of cases of stress at work from overworked employees, frequently due to unmanageable delivery expectations. High expectations as to time commitment, without adequate support from the employer, could breach the implied term of mutual trust and confidence.
- Similarly, cases involving a diagnosis of acute stress, where an employee may require involved medical support, could lead to personal injury claims. Bringing a claim for stress-induced psychiatric injury is often difficult for an employee, since the injury often does not meet the legal threshold of being “reasonably foreseeable”, but where an employer is on notice that an employee is struggling with their mental health, failure to support them could lead to personal injury claims. These would typically be brought in the civil courts, rather than the Employment Tribunals.
- Employers wishing to squeeze additional working hours from their staff should also be mindful of health and safety law, which obliges them (as a matter of criminal law) to provide a safe workplace and safe system of work. This not only extends to physical hazards in the workplace but also risks to mental health.
- Increasing hours could also put certain groups of employees at a particular disadvantage, such as those with a disability or those with childcare commitments. This could give rise to an indirect discrimination claim unless the employer is able to show that the increase in hours is a proportionate means of achieving a legitimate business objective – see more on indirect discrimination below.
However, the UK government’s move towards a ‘right to switch off’ has stalled and this proposed measure has not made it into the Employment Rights Bill. However, it may in future be introduced via different means, such as a code of practice.
3. Monitoring employee input and output
With rising labour costs, a firm will be more interested to assess how employees are filling their working days, both in terms of quantity and quality.
For this a firm may require timesheets recording the amount of time worked on different tasks. This will be familiar for fee earners in professional services businesses, but there have been reports that firms are increasingly requiring timesheets from non-fee earning support staff, purely for internal purposes. Although the merits of this are debatable – timesheets record input rather than output – this is likely, at least in most cases, to be within scope of an employer’s right to issue an employee with reasonable and lawful instructions. If not, there is a greater risk of provoking grievances and/or constructive dismissal claims in the case of particularly unreasonable requests.
Another route to assessing the quality and quantity of employees’ work is to use technology to monitor computer and email use, keystrokes and/or building access. This is open to an employer from a legal perspective, subject to data privacy law. This requires employers to be up front and clear with the employees about the data they are accessing and the reason for their processing of it. You should seek specialist data protection advice if you are looking to change the amount of data you obtain on your employees and always ensure you stay within the limits of the UK GDPR.
4. Performance-based compensation
There is greater freedom for firms to use a rewards-based system to encourage higher productivity and performance.
Bonuses and equity incentive schemes can help create a “win-win” scenario where the employees benefit if the company does well. However, one risk to bear in mind here is the potential for allegations of indirect discrimination. Operating a bonus system based purely on hours logged, for example, could mean that those with childcare responsibilities (more often women) could allege substantial disadvantage.
More widely, firms should consider the behaviour they are encouraging by the metrics they employ in bonus management. For example, a time recording bonus policy may perversely encourage the practice of ‘time dumping’ (where employees spend much longer than necessary on a task) or potentially fabricated time. A bonus based simply on logged hours could also encourage a culture of presenteeism where employees are simply spending longer at their desks without meaningful further contribution.
Creative thinking about reward management (perhaps linked to client feedback or other output, rather than input), could be a better way to unlock productivity.
5. Increasing office attendance
Attendance at the office is another hot topic in the productivity debate, with an increasing number of businesses seeking to bring back a five-day week in the office.
However, these moves may provoke requests for exemptions in the form of flexible working requests, which can now be made more often by employees and from the first day of employment.
Employers should be sure they understand their legal obligations when reviewing and assessing flexible working requests, which include active engagement with the employee in most circumstances.
However, employers must also be alert to the specific obligations to consider whether measures such as increasing time in the office requires reasonable adjustments in the case of individuals who are disabled for the purposes of the Equality Act. Creating a culture within which employees feel comfortable to raise any issues with how a policy may affect their health will allow these issues to be spotted coming and for reasonable adjustments to be properly considered ahead of time.
The Equality Act underlines the importance of early and meaningful consultation with staff in good time prior to proposed changes in office attendance taking effect.
We will discuss this further in a forthcoming article.
6. Proactive performance management
Proactive management of an employee’s input and output is also an option which businesses could pursue. However, there are limits to this too: there are legal claims that may arise from what employees could view as overbearing or overly critical management.
There is currently no definition of ‘bullying’ in UK employment law and it is not a standalone claim, although the ACAS guidance on the subject lists “constantly criticising someone’s work” as the first of a number of examples of bullying. Overbearing performance management could also be self-defeating by giving rise to sickness absence through stress at work. In addition, many claims of harassment (where conduct by an employer linked to a protected characteristic has the purpose or effect of creating a hostile working environment) have bullying at their heart. Even where the scrutiny of output is justified and the conversations around performance are had in a constructive way, time-consuming grievances are common where an employee feels they are being micro-managed. Micromanagement can also dent employee confidence and discourage them from taking full responsibility for their output.
7. Beyond the law – employee relations issues
From our experience, the legal aspects of employee productivity measures are only one piece of the equation.
Employees are often attracted to a particular organisation for its culture. An environment of increasingly scrutinised time management may not be part of a culture individuals want to join. For example, Barclays UK’s ‘desk time policy’, introduced in 2020, faced fierce backlash and was eventually scrapped following employee complaints. Similarly, EY’s decision last year to track clocking in and out times via swipe cards at the office turnstile was also met with criticism. One critic in the Financial Times highlighted the hypocrisy of employers who present that their employees are their ‘greatest asset’ but then refuse to offer them the ‘trust and empowerment’ to work how they would like to in a new world of hybrid and remote working.
Contact us
If you have any questions about these issues in relation to your own organisation, please contact a member of the team or speak to your usual Fox Williams contact.
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