Making Employment Contracts Greener and More Sustainable

by Jonathan Carr, Partner, Lewis Silkin LLP

As organisations try to find ways to reduce carbon emissions and adopt more sustainable practices, template employment contracts are probably not the first place you would think to look. But there are ideas and potential benefits for those prepared to consider integrating climate issues into the employment relationship.

We’ve written previously about how the climate emergency may shape future employment law and practice. Reducing carbon emissions look set to be a priority for employers in the years ahead. This article considers what changes you could make to template employment contracts to help meet your sustainability commitments.

Why print when you can go digital?

The obvious starting point is to challenge the traditional assumption that employment documents should be printed. There is no compelling need or reason to print. The job offer and terms must formally be accepted but in most cases an electronic signature provides a perfectly good alternative to a wet ink signature. There are also other benefits to moving to electronic records. Employers and employees often struggle to find copies of employment contracts which were printed and filed many years ago. Electronic records may be easier and quicker to find.

Should sustainability be a leadership duty?

In senior executive service agreements employers frequently include long lists of general governance duties (for example “use your best endeavours to promote and protect the business… maintain the highest standards of ethics/conduct… do nothing to damage the business’s brand or reputation”). Given increasing public scrutiny and focus on sustainability, should reducing the organisation’s carbon footprint and furthering its sustainability agenda be more explicitly added to that list? There is no clearer and stronger way for executives to be held to account than through their own personal contractual obligations and objectives.

How environmentally-friendly is your pay and benefit package?

Written statements of employment particulars (sometimes called “section 1 statements”) now require employment contracts to include more information about benefits and paid leave.

We are beginning to see employers adapting employee benefits to make them greener while taking advantage of schemes for non-cash benefits such as cycle-to-work schemes, e-vehicle schemes and workplace charging points. These schemes can be tax efficient as well as popular with employees who are keen to play their part in addressing the climate crisis.

ESG (Environmental, Social and Governance) metrics are increasingly being used as a factor in setting senior executive pay. There are other ideas that can be applied more broadly across the workforce. For example, what about a bonus matching scheme where you commit to giving a percentage of whatever bonus an employee receives to an environmental cause or charity?

Pension schemes are falling under increasing climate-related obligations and are another area where you can look to make greener choices.

The new rules for section 1 statements also require you to spell out all paid leave entitlements. Progressive employers may want to include a right for employees to take paid leave to volunteer for environmental projects or an extra day’s holiday tagged onto their summer break for choosing a green travel option.

Could garden leave be even greener?

Garden leave already sounds quite green, but it could be re-purposed. Instead of just paying employees to stay away from competitors during their notice period (and tend their own gardens), employers could ask or even require them to spend a portion of any garden leave contributing to sustainability projects (whether organised by their employer or separately). This would need to be baked into the contractual terms and reasonable in all the circumstances but is something to be considered where an employee continues to be paid in full, the proposed activity is within their skillset and the time commitment represents only a fraction of their normal working time.

Have you put the climate into your hybrid working policy?

Many employers are currently codifying the extent to which employees are required to commute into an office rather than continue to work from home. This issue can be considered through the sustainability lens. Although working from home might not always be more sustainable than green commuting to a green office, it can reduce the carbon impact associated with commuting to work. Interestingly, whether working from home or the office is better for the environment can depend on the time of year as well as the circumstances of the office and its employees.

What about business travel? If your template employment contract requires the employee to travel on business, should it also reward or require sustainable choices?

How responsible is your return of property clause?

Contracts invariably require employees to return all items of company property when they leave and to destroy confidential paperwork. How many returned mobiles, laptops or uniforms are simply scrapped because they are surplus or a few years old? A more sustainable option may be to allow employees to keep surplus equipment or to donate it to charities for further use. Employment contracts and settlement agreements could require departing employees to ensure and confirm that confidential documents are shredded and recycled rather than simply “destroyed”.

Conclusion

There are potentially costs and trade offs with some of these choices but, for businesses which are genuinely looking to embrace sustainability in the employment context, there are plenty of ideas to consider. In an increasingly competitive recruitment market demonstrating meaningful green thinking to candidates may also give employers a real advantage.

About the author
Jonathan Carr is a partner and specialist employment lawyer at Lewis Silkin LLP with over 20 year’s experience advising on employment law issues. Jonathan’s practice has a particular emphasis on restructuring, employee relations issues, TUPE/outsourcing, transactional support and senior executive exits. Jonathan’s clients are similarly diverse from law firms and hedge funds to football clubs and retail brands.

Although part of his role as a partner involves managing client relationships, Jonathan is still very much a hands-on lawyer. His clients range across all industry sectors although in recent years he has developed more of a focus on the financial services, legal and pharmaceutical sectors. Jonathan has been recognised for his employment law expertise in both Chambers and Legal 500 for a number of years. Jonathan is a member of the Employment Lawyers Association, chair of Lewis Silkin’s TUPE group and Editor of the Sweet & Maxwell Transfer of Undertakings Bulletin.

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