Employees Who Work from Home

5. Contracts

Not every situation demands a new contract. As long as output is quantifiable, you can usually use a standard contract. You may, however, need to renegotiate if conditions are changed.

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

Agree a letter of modification to the standard employment contract with the employee. A simple letter might state:

• Where the employee will be based.
• That both you and the 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 for any costs involved.
• That there is no change to other employment terms and conditions. For example, pay, hours of work, holiday entitlement and pension contributions.

5.2 Homeworking is not self-employment.

• HM Revenue & Customs is unlikely to accept that an individual with only one customer (namely your company) is self-employed.This is especially unlikely if the individual was previously an employee of yours.
• Introducing self-employment for whole departments which move to homeworking can cause legal problems.This is a complex area that involves the TUPE Regulations (which protect employees when a business changes ownership).