Over the past century, regulation of businesses and employment has gradually developed to protect workers, support societal goals, and drive economic growth. While the level of regulation varies by region, industry, and type of company, general rules are applied in relation to working conditions, hours and pay, diversity and inclusion, privacy, and other important aspects. These regulations have slowly evolved to balance the needs of businesses, workers, and societies, so what happens when those needs change dramatically and rapidly, as we have seen with the COVID-19 pandemic? How can we regulate new, dynamic, and flexible hybrid work models?

“The conversation has shifted to a wholly reimagined model of work; one that isn’t reliant on a centralized office for conducting business. Some employees will continue to work remotely from locations all over the world and some may be ready to return to the office. Most likely, staff will expect the flexibility to do both,” says Robert Cruz, VP of Information Governance at Smarsh. “Regulated organizations may have initially been reluctant to embrace this change. But more and more, financial services and other regulated industries are acknowledging the need to adapt. No matter what geographical configuration a company is following on any given day, the show must go on. And internal policies and regulatory obligations still need to be maintained.”

Existing regulation around remote work is outdated. In the US, public sector regulation on remote work is based on the Telework Enhancement Act of 2010, which does suggest that public servants “work from home to the maximum extent possible” but leaves room for interpretation on what is possible and who decides. As the pandemic took shape, that guidance was reinforced to public sector agencies while encouraging a collective approach to deciding the extent employees work in the office and remotely. And, in the first year of the pandemic, digital privacy laws emerged but barely addressed the needs of the worker.

“Despite the passage of the California Consumer Privacy Act (CCPA) that took effect in 2020, how data is collected and used about people in US workplace settings and most industries is still largely unregulated,” reads our most recent Global Digital Workplace Market research. “While California’s landmark consumer data privacy law was hailed by many privacy advocates, legislators also mostly exempted employees and contractors from the law when it came to their data privacy rights at work.”

In Europe, remote work regulation is based on the European Framework Agreement on Telework of 2002, which contains provisions on health and safety, equipment, and principles of non-discrimination. It also enables working from home to be terminated by individual or collective agreement. The addition of the EU General Data Protection Regulations (GDPR) in 2018, covering important digital elements of the workplace, has positioned Europe particularly well to face the regulatory challenges of remote and hybrid work.

“With the introduction of the GDPR, Europe seems to have become the most advanced place globally in terms of protection of employees’ privacy. However, the degree of protection of employees’ privacy still varies from country to country,” reads our new report. Indeed, certain European countries have individually accepted the long-term implications to work and are updating their regulations accordingly. In Italy, public sector organizations are now required to consult with unions; in Luxembourg, teleworking arrangements are based on “collective bargaining”; and in Germany, legislation has been proposed to create “a right to telework” for all employees.

In the UK, which no longer abides by EU frameworks, the British Financial Conduct Authority (FCA) has set out what regulated firms should consider if their employees continue to work remotely or in a hybrid manner after the pandemic. The FCA published its ‘Remote or Hybrid Working Expectations for Firms’ guidance in October 2021 and has committed to regular updates as the global crisis progresses. Firms pursuing the remote and hybrid working route must be able to prove that the new working model does not affect its location in the UK or its ability to meet threshold conditions for the activity it is regulated for, nor prevent the FCA’s ability to carry out its regulatory functions. 

“The FCA is quite clear that there should be no diminution in service or compliance as a result of people working regularly from home. However, perhaps some employers – and employees – will not have appreciated the FCA’s ability to visit any address from where services are provided and that includes residential addresses. In agreeing to long term remote and hybrid models firms need to ensure that employees are completely clear as to expectations and potential consequences,” said Elizabeth Budd, financial regulation expert at Pinsent Masons.

“The risk of adverse impact on staff in terms of well-being and diversity and inclusion is likely to be mitigated where working from home is optional – but for firms mandating such an approach, the FCA appears likely to take an interest in how they have evaluated the impact on these two important human resources aspects,” added Pinsent Masons’ employment law expert, Anne Sammon.

Around the world, governments are trying to find the right regulatory balance to serve workers, businesses, and society in this new landscape of work. After the pandemic subsides, remote work will likely persist but this does not mean the end of the communal workplace. Instead, a hybrid model will emerge that will demand physical offices to provide a flexible ‘company space’ enabled by a range of existing smart building technology. The real challenge in finding that regulatory balance will be working out who decides when and how much remote work is allowed, determining rights and wrongs, then defining laws, standards, and guidance that will benefit workers, businesses, and society fairly in this new normal.

“The conception and regulation of working from home is shifting from an individual flexibility, to a ‘collective flexibility’ available to a wide array of workers, collectively negotiated and governed by increased regulation. While industrial instruments were varied to accommodate public health requirements and the need of organizations and employees to work from home, these shifts were temporary,” reads an April 2022 paper by Sue Williamson and Alicia Pearce. “We argue that working from home provisions should rightly be regulated as a collective entitlement. We raise these issues to extend debates around how working from home can be regulated to benefit employers and employees as we move towards COVID-normal.”