Remote Work & Hybrid Models: Updating Contracts for the New Normal

A practical guide for HR professionals and business leaders to adapt employment contracts for flexible work arrangements in today’s evolving workplace.

Introduction

The COVID-19 pandemic didn’t just change how we work — it transformed where we work. As businesses adjusted to remote operations, what began as a temporary necessity has evolved into a permanent feature of modern employment. Remote and hybrid work models are now integral to workforce strategy, recruitment, and employee retention.

However, many organizations have yet to update their employment contracts and policies to reflect this shift. Outdated agreements can create confusion, compliance issues, and risk. This article explores how employers can legally and strategically update contracts to support the “new normal” of work.

1. Why Updating Contracts Matters

Modernizing employment contracts isn’t just about paperwork — it’s about clarity, compliance, and risk management.

• Legal clarity: Contracts should reflect where and how employees are working. Ambiguity around location or hours can lead to disputes.

• Regulatory compliance: Tax, data protection, and labor laws vary by region. Employers must align contracts with these local regulations.

• Risk reduction: Clearly defined expectations protect both employers and employees from potential misunderstandings about duties, hours, and liability.

• Employee engagement: Transparent agreements foster trust, flexibility, and a stronger employer brand.

2. Defining Remote and Hybrid Work

Before updating contracts, it’s vital to define what these terms mean within your organization:

• Remote Work: Employees perform their duties entirely outside the traditional office environment, typically from home or another approved location.

• Hybrid Work: Employees split time between the office and a remote setting according to a defined schedule or flexibility policy.

Establishing these definitions upfront ensures consistency across departments and teams.

3. Core Contract Clauses to Review and Update

a) Work Location

Clearly state the employee’s primary work address (e.g., home office) and outline conditions for working elsewhere.
Include a clause requiring employer approval before changing location, especially across borders. This helps manage tax, immigration, and insurance implications.

Sample clause:
“The Employee’s primary place of work shall be their home address, located at [address]. The Employee may not perform work duties from another jurisdiction without prior written approval from the Employer.”

b) Working Hours and Availability

Flexibility is key in remote setups, but expectations must remain clear. Define core working hours, response times, and collaboration norms.

Example:
“The Employee shall be available for meetings and communications between 10:00 a.m. and 3:00 p.m. local time. Work outside of these hours may be scheduled at the Employee’s discretion, subject to workload and team requirements.”

c) Equipment and Expenses

Specify who provides and maintains work equipment (e.g., laptops, monitors, internet costs) and set rules for reimbursement.

“The Employer will provide essential equipment and cover reasonable remote work expenses in accordance with company policy.”

d) Data Protection and Confidentiality

Remote work introduces new risks for data security. Strengthen confidentiality clauses to include remote settings.

“The Employee agrees to maintain strict confidentiality of company data and to comply with all security protocols when accessing systems remotely, including use of company-approved devices and VPN connections.”

e) Health, Safety, and Insurance

Employers are still responsible for employee safety, even in home offices. Include clauses addressing workstation ergonomics, safety reporting, and insurance coverage.

“The Employee must maintain a safe working environment and immediately report any work-related injuries or incidents to the Employer.”

f) Monitoring and Performance

Remote work often involves productivity tracking tools. Be transparent about monitoring and data collection to remain compliant with privacy laws.

“The Employer may use performance tracking systems to evaluate productivity, provided such monitoring complies with applicable data protection regulations.”

g) Cross-Border and Tax Compliance

If employees move or work internationally, legal complications can arise — from payroll to tax residency. Contracts should prohibit unapproved cross-border work.

“Employees must not perform duties from another country without prior written consent due to potential tax and legal implications.”

4. Supporting Policies to Accompany Updated Contracts

Updating contracts should go hand-in-hand with formal Remote and Hybrid Work Policies that outline:

• Eligibility and approval processes

• Equipment and expense reimbursement

• Data protection and cybersecurity requirements

• Performance expectations and communication norms

• In-office attendance requirements (for hybrid roles)

These policies can evolve without requiring formal contract amendments, providing flexibility as regulations or company practices change.

5. Risk Management and Compliance Considerations

a) Tax and Payroll

Remote employees in different jurisdictions may trigger tax or payroll obligations. Consult with tax professionals to ensure compliance.

b) Data Privacy

Ensure compliance with data protection laws (e.g., GDPR) regarding remote access and personal data handling.

c) Labor Laws

Different countries — and even states — may impose unique employment rights and obligations. Always localize contract templates accordingly.

d) Permanent Establishment Risks

Allowing employees to work from another country could create a taxable business presence there. Seek legal advice before approving cross-border arrangements.

6. Implementation Strategy

1. Audit Existing Contracts: Identify which employees are remote or hybrid and whether their contracts reflect this.

2. Draft Updated Templates: Create standardized contract addenda for remote/hybrid arrangements.

3. Consult Legal and HR Experts: Collaborate with employment lawyers to ensure compliance.

4. Communicate Transparently: Explain to employees why changes are being made and how they benefit both parties.

5. Document Approvals: Maintain records of all remote work arrangements and policy acknowledgments.

7. Sample Remote Work Addendum Outline

• Employee’s approved remote work address

• Equipment provided by the company

• Expense reimbursement policy

• Data security and confidentiality obligations

• Working hours and core availability

• Employer’s right to modify remote work arrangements

• Termination of remote work agreement (with notice period)

8. Common Pitfalls to Avoid

• Ignoring local legal differences

• Failing to specify primary work location

• Overlooking cybersecurity obligations

• Not updating health and safety responsibilities

• Allowing unapproved international remote work

• Failing to communicate changes clearly to employees

Conclusion

Remote and hybrid work are not temporary trends — they are the future of work. Employers who adapt proactively will not only stay compliant but also build a more flexible, inclusive, and resilient workforce.

Updating contracts is more than a legal requirement; it’s a strategic move that protects your business, supports your people, and positions your organization for long-term success in the new world of work.