Energy crisis: Saving gas and electricity becomes a challenge for employers

Energy prices are rising for reasons including the war in Ukraine, and the supply situation has become more uncertain. Some governments have already called on businesses to save energy and have adopted regulations regarding, among other things, the use of air conditioning and heating. In other countries, measures like obliging employees to work from home are being discussed but a legal framework for this has not yet been provided.

The situation in Germany

In Germany, it’s currently being discussed whether employers can require their employees to work from home in winter to save energy. This could provide for a significant decrease in energy consumption, but only when whole departments or floors would remain unused and unheated and employees would work at home in rooms that are being heated anyway. However, experts see the greatest energy saving potential in the fact that no energy is used for commuting when working from home.

But employers in Germany cannot simply order their employees to work from home if there is no corresponding provision in the employment contract or a works agreement, as this would otherwise be an encroachment on the employees’ constitutionally guaranteed right of disposal over their home. Also, employers will not be able to rely on old company agreements on working from home during the Covid-19-pandemic, as these were mostly limited in time and also served a different purpose, namely the protection of employees' health and not energy saving.

Moreover, it remains to be seen whether the German legislator will create new legal provision on working from home due to the gas crisis, as happened during the Covid-19-pandemic. Back then, employers had been temporarily obliged to offer home office working. Employees had to accept the offer if there were no reasons why they couldn’t work from home.

Where home office working is not an option, or at least not an option for all employees, businesses will probably have to take other measures to save energy in winter. Many employers wonder whether they are allowed to cool down their work premises. However, in Germany temperatures at the workplace may not fall below certain minimum levels. The exact temperatures depend on the predominant body posture during work and the heaviness of the work. In an office where employees are only lightly physically active and predominantly seated, the mandatory minimum temperature is usually 20°C, but was recently reduced to 19°C through the temporary Ordinance on Securing the Energy Supply, which came into force on 1 September 2022 and will expire  on 18 February 2023. 

The situation in UK

So far, there has not been a debate in the UK around requiring employees to work from home due to the energy crisis. Instead, some employers anticipate that office occupancy will increase over the winter on the basis that staff will want to minimise their expenditure on rising energy costs by working from the office, thus avoiding having to heat their homes during the day. 

If the UK was to require employees to work from home, slightly different issues than in Germany would arise.

Employers would need to look at individual employment contracts to see what was said about work location. Following the pandemic, some employers changed this wording so as to be able to require employees to work from home. Without that wording, employees might argue that they have a right to work from the office - and, given the cost of living crisis, that preventing them from doing so was unreasonable. Furthermore, in the UK there has been a focus on employers making cost of living payments to support employees on a one-off basis. Pushing employees to work from home might be considered contrary to this support if it meant that employees had higher energy bills. 

Employers would also need to consider whether employees with protected characteristics might be disadvantaged by a requirement to work from home. Arguments like this were common during the pandemic. For example, younger employees argued that an obligation to work from home was indirectly discriminatory as their accommodation was likely to be less suitable for home working than that of older employees.

Besides, many employers are still struggling to get employees into the office as frequently as they would like – requiring people to work from home again may have longer term implications with regard to this.

The situation in Spain

Spain’s gas reserves and supplies have been guaranteed for the forthcoming winter, although the looming of shortages in some EU member states in the next months may compel the activation of intra-EU mutual assistance mechanisms to minimise the potential impact on the population as a whole. This potential activation of cooperation instruments has triggered a commitment by the Spanish government to reduce gas consumption by 7% in line with the EU recommendation to save energy amidst the expected gas shortage for this upcoming winter. Urgent legislation was passed weeks ago and has been very recently validated by the Spanish parliament requiring companies to ensure temperatures between 19 and 27 degrees Celsius, secure ambient humidity ranges between 30 and 70%, and carry out an extraordinary energy efficiency inspection if the last one took place before 1 January 2021. The authorities will closely monitor these provisions, including the workforce’s right to be constantly informed of such metrics within their workplace through visual displays in accessible locations.

These measures apply to all companies, as well as governmental facilities and entertainment and recreational spaces. Employer associations have criticised the measures, which they say impose additional financial burdens on employers which already face high energy bills and increased employment costs following recent increases to social security contributions and statutory minimum salary.

Despite home working proving to be a feasible alternative during the Covid-19 pandemic, the Spanish government has not issued a wide recommendation along these lines. Instead, it has implemented an overall reduction of collective transportation prices for frequent commuters. Reducing the burden on taxpayers has been welcome in the current outrageous inflation times, but fuels expectations of further benefits to citizens during the last quarter of 2022 and a new rise in employment costs to make up for general discontent. 

The situation in Singapore

Singapore has a typically tropical climate, and therefore the vast majority of offices are air-conditioned all year round. As in Europe, electricity prices are increasing in Singapore, driven by rising global gas and oil prices exacerbated by the war in Ukraine.

In Singapore there has not been much discussion on employers requiring employees to work from home for the primary purpose of saving on energy costs. Instead, the discussion has mostly revolved around whether employers are required to reimburse employees for work from home expenses.

There is currently no statutory requirement for employers to pay for work from home expenses. However, some employers choose to reimburse their employees for home office expenses such as electricity and telecommunication charges.

The Inland Revenue Authority of Singapore has also issued some guidance to state that employees who are required by their employers to work from home, and whose resulting home office expenses such as electricity charges and telecommunication charges are not reimbursed by their employers, may be able to claim the expenses incurred for work purposes as a deduction against their employment income for the year, provided that certain criteria are met.