Property and employment support for businesses in a post-COVID world

Nearly every aspect of our lives has felt the impact of the COVID 19 pandemic.

Everything from our health and how we meet family and friends to our shopping habits and how we  spend our leisure time has been affected by COVID regulations.

Probably the most long-term impact that will be felt by businesses will be the from the change in our working culture.

There was already a clear and increasing trend to flexible working before the pandemic, and the year and a half of enforced remote working has demonstrated that there will be no going back to the pre-COVID workplace.

Businesses have noted:

• employees reporting a better work life balance,
• time saved in commuting,
• an increase in productivity

and above all, there is the realisation that work is a thing that you need to do, rather than the place that you have to attend.

This doesn’t, however, mean the end of the workplace.

People:

• thrive on social interaction
• they miss their colleagues and the pleasure of face to face meetings
• they both teach and learn from colleagues by spending time together

and above all don’t want to lose the relationships with clients, customers and colleagues that are built up over years of face to face interaction.

It seems clear that society will move towards a rebalancing of the role the workplace plays in our lives. Instead of being a place that people are forced to attend every day, the office will become a place where people want to go to collaborate with colleagues, to meet and share ideas and to learn from one another.

What will this mean for businesses?

We’ve set out below some of the ways we can help you navigate the property law and employment law aspects of the workplace as we move to a new work culture.

Property

What do tenants want from office space in a post-COVID world?

In a word they need flexibility – ideally, the ability to use only that space which a business actually needs. We can help with your current leases, what you need to consider when taking up new leases, and advise on freehold sales, options and conditional contracts.

Current leases

Many tenants find themselves stuck in a long lease where it’s clear that their business does not need the space.

Leases cannot be brought to an end simply because a tenant realises that it doesn’t need the space it thought it needed after all.

Break clauses

• Where there is a break clause in a lease, we can of course help ensure that it is correctly operated. Notices served by tenants to break leases are often subject to the tenant complying with various restrictions, and failing to comply will make the break notice invalid.
• Where leases are protected (i.e. the security of tenure provisions of the Landlord & Tenant Act 1954 Part 2 apply) a tenant is entitled to receive a fresh lease for the same term once an existing lease expires. Normally landlords insist on granting the same length of term when the tenant asks for a new lease. In a post-COVID world, with demand for office space falling, we think there is room for tenants to negotiate a shorter new lease with their landlords.
• We can help with assigning current leases to new tenants, and in the grant of underleases (subleases) where you do not need all your current space.

Variations and negotiations with the landlord

• Where your lease has a few years left to run or where you will soon have the chance to serve a break notice, you should consider approaching your landlord and use this a starting point for negotiations to vary the lease to make it more flexible.

Landlords are conscious that demand is falling and may be prepared to concede some or all of the following to keep a tenant happy, rather than have a tenant leave as soon as it can:

• A variation to reduce the amount of space occupied by the tenant. The parties can agree to bring an existing lease to an end and replace it with a lease of smaller space.
• A reduction in the term, so that the tenant does not have to occupy the premises for as long as envisaged by the existing lease
• An opportunity to take up a smaller space as above coupled with an option given to the tenant to take a longer lease if required in the future
• Physical flexibility – the opportunity to make internal alterations to create COVID safe spaces with partitions
• The opportunity to make external alterations to allow access to such spaces without having to use common parts and so maintain social distancing
• Flexibility in assignment and underletting. If you do not need the whole of the space, you may be able to underlet some of it to another tenant and offset the rent you receive against the rent payable to your landlord. If the lease doesn’t allow this it is worth requesting a variation to permit underletting.

New leases

We can advise on making new leases as ‘COVID secure’ as possible, reflecting the matters set out above.

In addition, we can:

• Draft a lease that means you only take up space that is needed, coupled with options to take up further space where required.
• Ensure that the rent is to be suspended during the period of any future lockdowns by requiring the landlord to add the occurrence of lockdowns to the usual list of insured risks.
• Where you require space on multiple floors of a building or multiple parts of a development, ensuring that separate leases are granted with their own break clauses so that you can end occupation of parts that prove to be unnecessary in the future.
• Negotiating break clauses that are easy to operate and that occur more frequently, and incorporating break clauses that are specifically linked to any future lockdowns.

Freehold sales and conditional contracts

We can of course help you in selling property if you believe it to be surplus to your requirements.

Sales can be made conditional on a buyer obtaining planning permission, for example upon achieving planning permission to convert the premises for residential use.

We can help with overage – that is, putting in place clauses that will allow a seller to receive some of the increased value when property becomes worth much more after the sale, for example, where the buyer achieves a planning permission allowing a redevelopment.

We can negotiate options to acquire new space where you are not certain of your requirements, but are keen not to lose an opportunity.

A time to buy?

Whilst many businesses have come to the realisation that office space is not in fact as necessary as once thought, the fact that a lot more office space may shortly come on the market may present an opportunity for buyers.

We can of course help:

• In purchasing a freehold property
• In the subsequent grant of occupational leases as an investment
• In buying a property subject to planning permission for redevelopment
• In the development of new property, and
• Advising on planning and environmental issues when buying property with a view to development

Employment

Working from home as a response to the pandemic was for many employers, born out of necessity and urgent, public health reasons. However, as remote working is tipped to become the ‘new normal’ for office-based workers, employers need to bear in mind various considerations and issues that may arise with these arrangements.

These include:

A right to remote working?

Unless the contract of employment is expressly clear that remote working is permitted, employees will be expected to return to their contracted place of work when able to. This may well be to an office-based setting.

There is currently no right, as such, to work from home. Eligible employees do however have a statutory right to make a flexible working request. This could involve asking for changes to their working hours, work pattern or place of work. The request can be made for any reason and is not limited to requests for childcare or to care for a dependant.

Employers must deal with flexible working requests in a ‘reasonable manner’ and may only refuse a request for one of eight reasons set out in legislation. This could prove to be harder in a post-COVID world, where many employees have shown that they can successfully carry out their role remotely, without having a detrimental impact on performance. Having a clear flexible working policy is key when dealing with flexible working requests, as is ensuring it is applied fairly and consistently.

In our experience, employers are keen to avoid a new area of conflict with their employees. As we navigate the new way of working, they are beginning to take a more nuanced view of having their employees attend a place of work every day and are re-assessing clauses in employment contracts that stipulate that people must work in a particular place. Equally, clauses in contracts that stipulate that former employees may not work within in particular distance of their old workplaces are also going to need to be re-thought.

A right to disconnect?

While increased flexibility has been welcome for many during the pandemic, conversely this can bring fewer opportunities for employees to disconnect outside of normal working hours. Remote technology means that it can be harder to switch off, and some employees are reporting an impact on their mental health and wellbeing. There is no ‘right to disconnect’ law in the UK, although employers are bound by the Working Time Regulations, and have a legal duty to ensure workplaces are safe and healthy by carrying out risk assessments. We are increasingly seeing employers introducing wellbeing policies, which address these issues.

Successful remote working

With home working becoming more permanent, employers are looking at implementing home working policies, to incorporate the range of issues home working raises. A home working policy should address issues such as:

• What standards are expected and how employees will be supervised and managed. Employees should also be made aware if they are being monitored, and the reasons why;
• Managing data protection and confidentially to ensure compliance with data protection laws;
• How expenses will be dealt with and the provision of equipment.

Diversity and inclusion

Employers need to be mindful that certain groups are not disadvantaged by working from home.  For example, those with caring responsibilities, disabilities or other individual factors.

It is important to make sure that diversity and inclusion policies extend to those who are remote working, and that employees are able to raise any disadvantages so that suitable adjustments can be made.

We can assist you with a review or preparation of wellbeing, homeworking or flexible working policies, and advise you in respect of issues that arise with a remote workforce.

Further support

If you have any queries or require further guidance on the issues covered in this article, please get in touch with our Commercial Property or Employment teams today.

This content is correct at time of publication