The impact of digital transformation on HR | Trends and themes across Europe

Written on 22 Nov 2019

Digital transformation is being felt in the HR function in a number of ways.  Ensuring effective management of the impact of technology on the workforce can be critical to driving the success of these initiatives.  Moreover, the HR function itself can be supported and augmented by software and tech tools.  Digital transformation can also generate the need for new policies as workplace practices evolve.

More generally, widespread disruption of a sector can throw up issues which have a wider relevance than just the private employer/employee relationship, generating issues for government and society to consider.

These themes and issues were the focus of a panel discussion at Osborne Clarke’s recent European employment event, which brought together colleagues and clients from across our International Employment/HR practice.

New ways to deliver HR services

Digital tools can support the HR function in many ways, including candidate selection, generating employment contracts, or  sharing important (potentially statutorily required) information.  Care is needed to design and develop such tools in line with legal requirements and market practices.  For example, online platforms can be an efficient way to present employees with options within a flexible compensation plan, but the system must be designed to generate adequate proof of consent for the choices selected.  A tool must generate the correct contract language for a contact in jurisdictions such as Belgium where there is more than one option.  In some jurisdictions, the implementation of new tech will need consultation with employee bodies such as works councils.

Tools for signing documents electronically are another way to streamline processes.  Again, local requirements, constraints and appropriate authorisation have to be considered.

Although automation can be powerful and drive cost efficiencies, retaining human oversight of processes typically remains sensible, whether to apply common sense checks or to think about nuances for the particular employee.  For example, an automated contract tool might generate the usual non-compete provisions, where they are not actually needed for the employee in question.

It is also important to bear in mind that a significant proportion of employee data will be “personal data” for GDPR purposes, including potentially “sensitive personal data” with enhanced GDPR protections.  Care is therefore needed to ensure that digital tools are designed with data protection compliance built into the system – the GDPR principle of “privacy by design” is very much in play in this context.

Technology affecting terms and conditions and workplace policies – what is permitted?

Technology-driven changes generate new workplace issues.  Policies around the use of technology and information, as well as training and policies to ensure the workforce understands data protection and cybersecurity issues, may all need to be introduced or reviewed and reissued.  IT policies and data security policies are often necessary to make sure employees are informed about risks of data breaches and cybercrime, and terms and conditions may need to clarify disciplinary issues around these policies.

Tools which are introduced to support workplace tasks may also generate data about the employee using the tool.  Employee privacy policies may be needed (developed in consultation with works councils or union representatives, where necessary) to make clear when the employer can legitimately monitor the employee and when it cannot.  In some jurisdictions, tech tools which are specifically aimed at monitoring employees’ activities, are not permitted, but monitoring for safety, or for the location of assets, may be permitted.  Employee privacy and clarity about what is and what is not permitted will need to be carefully mapped out.

Social media policies typically need to strike a balance between stopping employees from acting on social media in a way which causes harm to the employer, and unfair remote monitoring of employees’ personal social media accounts.

Automation driving a need to reskill the workforce as an alternative to dismissal?

Technology is turning investment in retraining existing workers into an urgent business priority in some sectors.  Tech-focused businesses on a fast growth trajectory will need to ensure that their workforces are “future fit”.  This may mean that employment contracts and job descriptions need to be reviewed to ensure there is sufficient flexibility for upskilling and developing individuals’ respective tasks and roles.

Some of our clients are implementing “internal academies”, not only as part of career track support, but to enable retraining for implementation of digital transformation projects.  Works councils are increasingly seeking collective agreements that require employers to up-skill employees first, instead of exiting them.

Where employees are resistant to change, this can trigger performance management processes and ultimately may cause dismissals.

Using technology in recruitment – beware of unintended consequences

Software tools can be used to conduct a first sift through applications for a vacancy based on pre-determined criteria.  Some such tools use artificial intelligence, which can bring real value in the recruitment process, offering a fast, efficient way to identify the particular skills and qualifications required from a large amount of information.  Automating the selection process can support a multicultural and multidisciplinary business approach by finding candidates who might otherwise have been overlooked.

However, care is needed to make sure that recruitment tools do not result in unintended consequences such as discrimination.  Many forms of discrimination are unlawful, but even those which are not can still generate significant adverse publicity for the business concerned.  For example, excluding candidates who have periods of unemployment in their CV could be discriminatory against women who have taken career breaks for family reasons.  If the characteristics of the existing workforce are used to drive selection criteria, problems can arise if its composition is insufficiently balanced.  Equally, care needs to be taken in some jurisdictions where there is a preference for a particular type of candidate to redress an existing imbalance, if there are restrictions on positive discrimination.

We generally find that these tools are best used to support the human decision-making process, rather than to replace it.  Human oversight plus strong ethical policies, can ensure that automated tools bring speed and efficiency as part of a wider selection process, which assesses applicants’ profiles ethically and guarantees the application of non-biased criteria.  After all, sometimes someone whose CV looked less than ideal turns out to be the perfect candidate – it probably needs the lateral thinking of a human to spot that.

It’s also worth noting that a privacy policy might be needed for applicants in a digitised recruitment process (the employee privacy policy will not be applicable).  Care also needs to be taken to make sure that data concerning rejected candidates is not retained for longer than permissible.

Tech enabling remote and flexible/smart working patterns

Technology enables remote working, which in turn facilitates employees working agilely, often with much more flexibility than has been common in the past.  This can give employees much more freedom to work at times other than standard office hours, allowing them to combine their work and private life more easily.  Clearly, clarity will be needed in employment contracts around the duties to be performed, how the employee’s required working hours can be fulfilled, any limitations on where the employee can be physically located when working, and any other parameters which define what “flexible” or “remote” working actually permits in practice.

From the employer’s perspective, offering these working arrangements can generate good relations with the workforce.  However, flexible and remote working also create challenges.  Procedures and policies may be needed to ensure that flexibility for the employee can be combined with compliance by the employer with its legal obligations to the workforce.  Moreover, some jurisdictions have developed specific legal requirements for provisions which must be included in flexible or “smart” working arrangements.

These forms of working usually require time worked to be logged or monitored in order to ensure compliance with working hours limits, overtime controls or obligatory rest periods.  Hours may also need to be recorded to ensure tax and/or social security contributions can be accurately calculated.

Employers may also need to make provision to adapt the place of work for health and safety reasons.  This is clearly more complicated to control in relation to remote workers, particularly those who work in many different locations, not just the employer’s premises or their home.

Provisions and/or policies may also be required around the use of computers and mobile devices.  Many jurisdictions have a formal “right to disconnect” which must be provided for, sometimes including the identification of periods when the employer may not contact the employee.

Challenges of the gig economy

Technology, particularly online platforms, has boosted the gig economy, adding visibility and flexibility to securing the right talent or finding the right role.  But it also generates significant debate around the level of rights and the status of gig workers.  There are high profile cases in many jurisdictions, including at EU level, about whether certain workers are employees or self-employed workers or something in-between – with conflicting outcomes within the EU and even within individual Member States.  The legal status of gig workers clearly has significant ramifications for their employment law rights (including minimum wage, statutory holidays, sickness provision, etc) as well as whether collective bargaining agreements are applicable and the correct tax and social security treatment.

Given the extensive debate and calls for greater clarity, many jurisdictions have looked or are looking in detail at these issues, with wide-ranging public reviews and new legislation in some jurisdictions.  The tax angle is also significant, given concerns in many jurisdictions that workers may be hired on a consultancy basis as a tax avoidance mechanism.  Reforms are being introduced to make such schemes more difficult to implement.

Overall, there is undoubtedly increasing scrutiny of the rights and exploitation of gig workers and the increased casualisation of labour.

The need for diversity of workforce talent

Digital transformation projects, like all others, are boosted by having many different types of people contributing their thinking and ideas.  Promoting diversity in all its forms in the workplace is a very topical issue and an increasing priority for many businesses.  There is a growing recognition that creativity is maximised in an environment which promotes collective intelligence, which welcomes questioning and challenges, where there is no uniformity of thought.

Understanding the diversity profile in a body of employees clearly raises data privacy and wider employment law issues and so must be conducted with care and in a compliant manner.

Approaches for boosting neural diversity can include reviewing recruitment practices to ensure they don’t unintentionally exclude or put off neuro-divergent talent, ensuring working and management practices (such as the working environment, competency frameworks and assessments) are adjusted and reviewed, and making sure that, culturally, neurodiversity is visibly embraced and promoted to ensure everyone feels respected.