Is employment law keeping pace with technology? The rise of digital nomads and the challenges faced by tech disrupters
Lucy Gordon
Walker Morris, Leeds
Lucy.gordon@walkermorris.co.uk
Introduction
The rapid development of technology in the past ten years has revolutionised the way we live and work. The ability to communicate instantaneously, to order items for same-day delivery and to attend meetings virtually has enabled existing industries to evolve and a whole host of new businesses to form, providing technology solutions for everyday issues. Such businesses thrive on disrupting tradition and expected norms, and this can create tension with seemingly outdated legal concepts. What is the extent of this development and can the law keep pace with the changing world of technology?
What is the problem?
The rise of businesses such as Deliveroo, Uber and CitySprint has led to well-worn litigation in the UK and many other jurisdictions on the issue of employment status, with businesses arguing that drivers and couriers are independent contractors, and critics arguing that they should be treated as workers or employees with associated rights. But that is not the only issue to come out of technological advancement – businesses looking to benefit from international expertise are experiencing limitations on the harnessing of the global workforce.
We have seen the rise of employees requesting to work from home at the same time as the decline of office space following the Covid-19 pandemic. This, coupled with the Millennial and Gen Z workforce expecting more freedom, more flexibility and more control over their working life than any other workforce before, employers are being increasingly required to manage these expectations around working from home and balancing the needs of their employees with the requirements of the business. We have seen a huge increase in individuals wanting to work from a ‘home’ overseas, whilst travelling and at traditionally ‘anti-social’ hours of the day and night.
Tech disrupters are thirsty for new ideas and creativity. They want people who challenge expected norms, and by extension, those employees often want the same for their personal lives – they too thrive on flexibility and variety. These businesses are using cutting-edge technology to allow their employees to work in an ever-mobile and fast-paced environment, at any hour of the day and in any location to suit the individual. These disrupters utilise artificial intelligence (AI), technological advancements and ‘out of the box’ thinking to develop unique selling points for their customers but continue to face what could be unnecessary hurdles when trying to make the best use of international resource, when they are constricted by outdated restrictions on working hours and potentially unnecessary administrative requirements which vary considerably from jurisdiction to jurisdiction. Trying to have a global workforce on comparable terms can seem like an impossible feat to achieve.
The rise of digital nomads
Digital nomadism is a term used to describe the practice of employees becoming ever-fluid in their working locations. Digital nomads are professionals who leverage technology to work remotely from anywhere in the world. This trend has been facilitated by advancements in communication and collaboration technologies, which have made it possible to perform many jobs from virtually anywhere. The Covid-19 pandemic has further accelerated this trend, as companies have been forced to adapt to remote work models and are now heavily reliant on platforms such as Microsoft Teams, Zoom etc. Some countries, such as Spain, offer specialist visa opportunities or tax breaks to digital nomads.
However, the rise of digital nomadism presents unique legal challenges. One of the primary difficulties lies in legal and regulatory compliance. Under Rome I,[1] regardless of the chosen governing law of a contract of employment, certain ‘mandatory rules’ of the country where the employee works will apply automatically and cannot be waived.
We advise a UK-based tech disrupter which provides UK-regulated services to UK customers via an app. This business recently faced considerable challenges when trying to employ a workforce with individuals based in various European countries, Australasia and Africa, in order to make use of specialist skills and individuals in different time zones to provide a truly '24/7/365' experience for UK customers. The client was astonished to learn of restrictions on working hours in many European countries, which banned work in evenings and on weekends except for certain professions, rules which the client considered to be entirely uncommercial and out-dated in a world of technological change. Similar restrictions applied in relation to collectively negotiated minimum wage laws, tax liabilities and health and safety regulations. While these laws were clearly developed to provide protections for employees who might otherwise be exploited, we found that the employees in this case wanted to work ‘anti-social’ hours and patterns as they were more compatible with their less ‘traditional’ personal lives. One Swiss employee wanted to work solely in evenings and weekends as this was when her partner was at home to look after their young children, enabling her to earn an income alongside his more traditional employment routine. However, restrictions on night and Sunday working made this difficult to achieve in the way she would have preferred.
Non-compliance can lead to legal disputes and penalties, making it a significant concern for employers, particularly when employees may not stay long in one place, which makes regularising employment for each location a costly business.
And that was the most significant issue – some of those cases were complicated enough to resolve, but when a worker is a true ‘nomad’, they may be working and travelling at the same time. One employee of this tech disrupter enjoyed making use of her sailing boat, sailing around the Mediterranean and the Adriatic, stopping off as she pleased at various locations. Which jurisdiction’s employment laws should apply when a digital nomad employee is constantly moving from one country to another? How do companies ensure compliance with diverse employment laws, tax regulations and social security systems?
What steps are being taken?
In the UK, recent legislative change has been made in an attempt to match the mood of the workforce and build on the growing trend of working remotely and with as much flexibility as possible. There is now a statutory entitlement for all employees (regardless of length of service), to request flexible working arrangements up to two times in any 12-month period. This development is bolstered by additional legislation that is due to come into force in September 2024, to give all employees, workers and agency workers the right to request a predictable working pattern in any situation that their current patterns are unpredictable.
However, the UK is relatively relaxed in comparison to some European jurisdictions over issues such as working hours. We have comparatively light restrictions on night work and a right to opt out of Sunday working in specific roles rather than any limitations on work on that day.
After the UK general election on 4 July 2024, a Labour government has been elected for the first time in 14 years. We can expect a significant change in employment laws in the UK with more protections being given to employees, with plans for wide-sweeping changes to employment status laws. The new government will need to balance its policy aims of protecting employees without stifling technological development in the UK.
Labour have announced proposals for a ‘right to disconnect’ and ‘day one employment rights’ with ‘single worker classification’. These proposals, along with a likely strengthening of trade union rights and a ban on zero-hour contracts could inadvertently alienate millennial and Gen Z workers by placing more restrictions on how and where work is performed.
The need for reform
The rapid evolution of the tech industry has outpaced many aspects of traditional UK employment law. These laws were originally designed to protect workers and maintain fair employment practices, but the system often fails to account for the diverse and flexible working models common in the tech industry. Gig workers, consultants, remote workers and digital nomads need and demand flexibility and ingenuity in working patterns and relationships.
Moreover, the law struggles to accommodate the international nature of tech disrupters. To address these issues, UK employment law needs to evolve to reflect the realities of the modern workplace. This needs to reflect the flexible, ever-changing dynamism of the tech disruptors (and the technology industry as a whole). In many cases, courts are left to interpret outdated laws in the context of new employment models, leading to inconsistent and unpredictable outcomes that stifle technological change.
Looking further afield, could it be time for countries to consider the possibility of a ‘nomadic employee’? Could a set of harmonised terms be respected by each jurisdiction to allow certain local laws to be relaxed to accommodate digital nomads and/or employees who would actively choose to work at anti-social times?
Any reforms clearly need to strike a balance. On the one hand, they must provide adequate protection for workers, particularly those in uncertain roles, such as the gig economy. On the other, any reform must avoid stifling innovation by imposing undue burdens on tech companies. It is a difficult challenge to meet, but tech disruptors have shown that with innovation, new ideas and solutions can be created, and they will demand the same from the legislature.
[1] Regulation (EC) 593/2008 on the law applicable to contractual obligations [2008] OJ L177/6.