Working from home: practical recommendations for employers
The past two years have shown us that a relatively large number of work tasks can be carried out remotely. While some employers and employees have welcomed the opportunity to return to the office, others have retained teleworking as a normal mode of operation. Unfortunately, the Czech labour and tax legislation is far from being sufficient to set up a simple and clear teleworking regime. Employers are thus often exposed to the risk of sanctions from the Labour Inspectorate or tax authorities, the potential amount of which increases with the frequency of work from home. The trend towards more teleworking is to be expected given the current state of the pandemic, so the following article provides an overview of basic practical tips and rules.
Working from home cannot be ordered
The employer is obliged to provide the employee with premises for the performance of work – a workplace – or to agree with the employee on another place where the work will be performed. Because of this statutory provision, working from home cannot be unilaterally ordered, even though in some cases ordinary work premises have been closed by mandate or by the employer's decision in response to the pandemic. Teleworking can therefore only be introduced by agreement with the employee, which should be in writing, as is customary in labour law and desirable for the agreement to be demonstrable.
If the employer fails to reach an agreement with the employee, there is no other solution at the time of the closure of the workplace than to apply a modification of one of the obstacles to work.
Need to modify the place of work
If the employer wants to agree with the employee on work from home, the place of work agreed in the employment contract must be examined. If the employee's home is outside the agreed place of work, the place of work must be modified, again in writing.
We recommend that due consideration be given to the formulation of the place of work, as it has implications for other areas such as OHS, compensation, etc.
The employer may even allow the employee to work from home abroad. However, we would like to point out here the possible complicated implications abroad, which vary widely even within EU countries and may lead to foreign obligations for the employer, such as foreign payroll management with local tax and insurance contributions, the need to comply with local working conditions, immigration obligations or the obligation to tax part of the employer's profits abroad.
Reimbursement of expenses and their tax implications
Dependent work is performed at the employer's expense. Therefore, if the employee incurs additional expenses due to working from home, such as increased energy consumption or wear and tear on their own equipment (chair, desk, PC), they should document these expenses for the employer and the employer will reimburse them. Such claims under the Labour Code then enjoy a favourable tax treatment (for the employer it is a tax-deductible expense and for the employee it is not taxable). However, such claims must be properly documented. In most cases, therefore, they must be the actual expenditure of the individual employee.
The above essentially implies the practical unworkability of the favourable tax treatment. In our experience, documenting the actual expenses of each employee is administratively prohibitive and disproportionate to the potential tax benefit. Unfortunately, the current tax rules and their interpretations do not allow for any other alternative to allow for a favourable tax treatment.
Thus, in practice, employers often proceed by setting a fixed amount, for example, per day of teleworking, which is clearly identified in the employment documentation as a contribution to cover any additional expenses associated with work from home. However, this allowance is subject to taxation and related levies. In our view, such an allowance can be regarded as a tax-deductible expense for the employer in certain circumstances.
We recommend paying attention to how the allowance is communicated to the employees, as they are still entitled to account for their actual expenses and the employer is obliged to provide them as such.
Working hours, provision of meal allowance
From a practical point of view, we recommend that the working hours of employees who work from home be explicitly set so that the employer can guarantee their availability within a certain timeframe.
In our opinion, this is also necessary if the employer plans to provide employees with a tax-advantaged meal allowance, which is limited by the requirement to prove that they have worked part of the specified working hours.
SUMMARY: Recommended practice
Based on the above, we recommend that the employer should appropriately address teleworking through a combination of the following documents, the wording of which will be essential in the event of any inspections by the authorities. This also applies to teleworking as a benefit and as the only possibility of continuing to work, e.g. when the workplace is closed.
1. Negotiating a written agreement on teleworking or an amendment to the employment contract. This must be done with each employee separately.
We recommend that the agreement to work from home and the employer's right to request a return to the workplace, the place of work or the working hours be regulated here.
2. Establishing an internal regulation in which the employer regulates the general conditions for working from home. Through this unilateral measure, the employer may not in any way curtail the rights of employees.
Here we recommend setting out the general conditions under which teleworking is allowed, the amount of compensation for increased employee costs, the OSH policy, and so on.