Remote Working: Planning For Beyond The COVID-19 Pandemic – Financial Services – Germany –

Challenges and opportunities posed by remote working,
navigating the EU (and global) regulatory considerations for
financial services firms

Executive summary

COVID-19 has had a transformative impact on traditional office
workspace arrangements. Despite some initial (very welcome)
improvements to the COVID-19 outlook in Europe, future variants and
mutations of this present virus or indeed new (prolonged) pandemics
could mean a more frequent return to increased restrictions on
working from offices or even a return to recurrent and rolling

As has become evident during the pandemic, a number of these
restrictions have differing arrangements, including within the same
jurisdiction and often segmented vaccination status and/or job role
notably for those categorised as “key workers”. In large
parts of the EU, these restrictions coupled with a prolonged shift
to remote working across sectors, notably in financial services,
are reshaping the role of the office as well as, in some part,
working behaviours. Over the longer-term, financial services firms,
market participants and indeed regulatory and supervisory
policymakers may need to consider how to adapt regulatory
principles and supervisory expectations originally designed for an
office-centric environment to meet what might be a longer-term need
or even a preference for what is fast becoming a new working

The emergence of the Delta and the Omicron variants of COVID-19
are already a proof in point that remote “working from
home” (WFH) as well as more longer-term “location independent working arrangements”
(LIWAs) whether in the form of short(er)-term “workcations” or on-going “Digital Nomad”
(DN) arrangements may be here to stay and for
longer than originally expected. For the most part, such
arrangements have largely worked well both in terms of business
continuity and performance of financial services firms and the
counterparties, clients and communities they serve. The same can
also largely be said for financial services policymakers and
supervisors equally adapting to this new working dynamic. For
employees, such new working arrangements have also been welcome,
even if, for some households, new challenges have emerged. Yet this
new working dynamic may also carry (new) risks including those that
are specific to such arrangements.

For financial services firms, getting the balance of WFH, LIWA
and DN is more than adopting a defensive strategy. Accordingly, if
more agile, digitally empowered location-independent working is
here to stay, then successfully attracting, retaining and managing
staff (and doing so regardless of borders and bricks and mortar
locations) will be key to any talent strategy as well as for growth

This Background Briefing assesses the lessons learned from 2019
through to 2021 and considers the outlook for financial services
for the remainder of 2022 and further ahead. This Background
Briefing should be read in context with other Client Alerts and
coverage from PwC Legal’s EU Regulatory Compliance Operations,
Risk and Engagement (EU RegCORE) centre.

Background and lessons learned

For the most part of modern financial history, firms and their
staff conducting financial services activity have largely done so
in an office-centric and certainly location-bound working
environment. Financial services and markets activity have however
become infinitely more electronified and digitised and not just
through email as well as handheld devices allowing for more
business to be done away from an office and on the go, including
outside “traditional” working hours.

While technology has steadily advanced, and become a staple tool
that empowers how business is transacted, the laws and regulations
(beyond just financial services) that apply to a person’s work
are generally based on the jurisdiction where that work is
performed. This is the case even if the employer is located
elsewhere. Furthermore, financial regulatory compliance obligations
along with regulators’ supervisory expectations apply both to
the firm as well as the persons carrying out regulated activities
on behalf of the firm (regardless of the working relationship i.e.,
employee v. contractor v. leased employee).

mportantly, in the EU-27 and in most G-20 jurisdictions,
financial services regulation and supervisory expectations have
largely been conceived with a focus that regulated activity is
conducted in an office-centric work environment as opposed to on
WFH basis and certainly not for a prolonged period nor on a LIWA or
DN basis. This also applies to employment and tax laws as well as
for the scope of insurance coverage for financial services firms
and employees. The move to a new remote working environment has
demonstrated that a lot of the office-centric rules and regulations
might be in need of a more permanent rethink.

Such a change may need to build upon the lessons learned from
quick fixes and adaptions that legislative and regulatory
policymakers as well as employers have implemented during the
COVID-19 pandemic and prolonged lockdowns.

Consequently, if such WFH, LIWA and DN arrangements are not
managed in a balanced manner then this can expose both the employer
and the employee to new risks. These include, but are not limited
to, extending the firm’s exposure to, certainly where an
employee works from another jurisdiction to that of their office,
to that new jurisdiction’s tax, regulatory compliance rules and
laws. Such risks also arise where an employer attempts to limit,
without justifiable means, jurisdictions from which an employee may
not perform their duties. While these considerations have
long-existed pre-COVID, say where an employee performs their duties
while on holiday or while living in an EU-jurisdiction outside of
where their office is located, the impact of the pandemic and for
many the appeal to work on a location-independent and agile basis
have begun to reshape the discussion and the urgency for more
detailed and sustainable certainty from legislators and firms.

Given the above and the discussion on the lessons learned below,
financial services firms will want to ensure they have appropriate
policies and procedures in place. These should serve to harness and
foster opportunities offered by digitally empowered agile working
while minimising risks and ultimately to ensure their workforce are
not off the grid both literally and figuratively both in a domestic
and international concept. Moreover, these policies should also
look to reach an agreement between employer and worker as to when
staff are required to return to an onsite

Lockdowns led to widespread remote working as well as
location-independent working

Shortly following the onset of the first set of lockdowns, for
those that could, working from home (WFH – is also known as “teleworking” or “remote working”) arrangements
became a sudden and then widespread normality. Firms, their
counterparts and clients but equally regulatory policymakers and
supervisors swapped the office for their spare rooms, sofas and
kitchen tables.

Across many countries, notably in the EU-27 (rolling) lockdowns
entered into force, EU financial services firms were quickly put
under pressure to meet complex public health and workplace safety
restrictions. Often these restrictions differed between
jurisdictions (including across the EU-27) but also within regions
in individual jurisdictions. Firms were required to track and
comply with these requirements as they applied within, but equally
across jurisdictions, often having to take a strategic regional and
global view against a rapidly changing set of restrictions.

In response, many EU financial services firms rapidly focused on
increasing their digitalised working arrangements at an
enterprise-wide level. Making meetings via video-conferencing work
(and to do so smoothly) became day one priorities. Shortly
thereafter, ensuring investments in information and communication
technology (ICT), VPN2 and cloud-based
computing capacity continued to flow followed suit. So too efforts
on improving operational and cyber-resilience resources to meet WFH
realities. In many ways the ability for firms and their employees
to thrive in this new “new normal” rested largely on
making collaboration a success while widespread social distancing
was in place.

Those firms that rapidly embedded widespread and longer-term
location-independent agile working3 arrangements were
able to demonstrate that initial doubts that WFH meant reduced
productivity and higher cybersecurity as well as data protection
risks were largely and quickly dismissed. In most cases those
working remotely were more productive than they may have been in
the office as commute times reduced to nil.

Yet WFH also highlighted new risks and operational challenges.
Some of these included on how to replicate workplace health and
safety arrangements into private homes, especially when households
were dealing with practical challenges of often rapidly assembled
and cramped workspaces. These operational concerns also led to new
legal issues ranging from appropriate desk heights of furniture
that was never designed to cater to office work, length of screen
versus break time and how to generally deal with “Conf Call
Fatigue”4, priorities for managers and human
resources teams across financial services firms quickly moved from
rolling-out WFH arrangements, which at first were temporary and
soon became an established fixture, to also ensuring employees’
wellbeing was being maintained in this new unfamiliar setting.

With the roll-out of WFH on a widespread basis and the rise of
location-independent working gaining pace, new strategic risks and
priorities for Human Resources as well as Compliance teams across
financial services firms arose. These ranged from how to adapt
three lines of defence (3LoD) and compliance
target operating models (TOMs) from an
office-centric set-up to a decentralised model and in
employees’ homes. Equally, considerations and compromises had
to be found to ensure how households with employees from competing
financial services providers could co-habit, co-work and co-exist
with their respective compliance and privacy obligations often in
cramped makeshift WFH set-ups.

Other issues arose about how to balance corporate culture and
workforce equality during WFH arrangements. This ranged from having
to balance how an employer interacts with an employee as to when
they can work from where and when they are to be available as well
as to how to treat holiday allowances along with how to reduce “quarantine envy”.5 Against this backdrop of
change more fundamental questions on the future of the traditional
office-centric working relationship arose across certain firms. For
some firms and indeed their global workforce6 this
included discussions within teams or indeed across the organisation
whether WFH (fully and/or on a hybrid basis) could introduce a
permanent shift in the relationship between workers and employer.
Over time this discussion across some firms also expanded to
consider whether workers could be based further afield and perhaps
on a longer-term basis.

Preferences for longer-term hybrid or full WFH arrangements also
became apparent during COVID-19 lockdowns in changing real estate
markets where demand, in certain markets and financial centers, for
more spacious surroundings in suburbs or in the countryside saw
increases. Equally, many households also began to debate the issue:
If WFH and home schooling was set to go for longer why not take a “workcation” or move to a more permanent “digital
nomad” arrangement either domestically or internationally?
Location-independent working would allow a break and a change of
scenery from domestic surroundings to often sunnier surroundings
with less COVID-19 restrictions and often a more efficient cost
and/or higher standard of living.7

For some firms, notably those operating in jurisdictions where
amendments to employment law meant that these firms would have to
enter into amendments to employment contracts to reflect documented
WFH arrangements, challenges also arose in defining the place(s) of
work. Defining one or more places of work is relevant for those
engaging in WFH domestically as well as considering how and whether
to do so internationally. This consideration also became relevant
relevant for employers and employees and their insurance coverage,
in particular for work-related accident and occupational health
insurance (both offered by statutory and/or private
providers).8 A number of insurance firms have more
recently begun to consider and/or launch WFH and even digital nomad
tailored insurance products but also occupational health insurance

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1. Such policies also serve to replace any informal
arrangements that might be put in place with immediate bosses under
informal arrangements and ensure that location-independent working
and/or travel are within an employer’s knowledge and risk
management framework. If travel is conducted without a firm’s
knowledge, employers may wind up breaking employment laws as well
as regulations and laws without any awareness that are they are
doing so.

2. Virtual private networks extend a private network
(such as an office’s) across a public network (such as that in
an employee’s home) and allows permissioned users to share data
as if their devices were connected directly to the private

3. Crucially, agile working seeks to treat work as an
activity as opposed to a place where people processes, connectivity
and technology as well as time and place come together to find the
most appropriate and effective way of working to carry out a
particular task.

4. Conf call fatigue (see also Quarantine envy below) is
an undefined firm that emerged during 2020 as the boom in
videoconferencing meant that for many, their working day started
earlier and ended later due to a higher frequency of meetings
taking place via conference calls than would have been the case in
an office-centric environment. Some researchers have attempted to
show that excessive amounts of close-up eye contact and the
increased cognitive load (i.e., nonverbal communication is more
difficult) via video calls can be demanding on workers. This
coupled with the increased amount of calls may mean a reduction in
usual mobility and an ability to stretch or recharge during

5. Quarantine envy is an undefined term that however over
the course of 2020 began to gain traction to refer to the envy felt
amongst co-workers or colleagues at competitors as to who could
work from home or further afield versus who could not and what that
meant for surroundings i.e., more spacious and affluential WFH
based settings versus those that were not fit for prolonged
pandemic situations, cramped and uncomfortable when compared to the
office. Quarantine envy, if not controlled by firms and promoting
equality amongst employees in what may be offered to them
(regardless of what they may make of it) can spur discontent and
even “Quarantine Schadenfreude” which, generally does not
bode well for collegiality and thus collaboration.

6. Notably for those staff working from cramped kitchen
or coffee tables or spare rooms.

7. Some EU-27 Member States have also considered Digital
Nomad visas as a strategic option given the infringement actions
the EU Commission has taken against notably Cyprus and Malta
investor citizenship schemes, details of which are available here
and here. It should be noted that a Digital Nomad visa/work permit
scheme is very different to the investor citizenship schemes.
Equally a Digital Nomad visa is also different from an entrepreneur
or freelancer visa or work permit such as that offered by say

8. This itself is in its own right a question that is
highly driven by the nature of the existing insurance, the
insurance policy and ultimately the provider and their relationship
with the employer. As an example, under most EU jurisdictions,
statutory accident insurance cover is usually limited to the
territory of where that person is employed. If the employment
contract sets out that the place of work is Frankfurt (and the
employer can direct the employee from other locations –
usually limited to Germany) then it may not cover accidents that
occur in a WFH basis if the employee is working from their second
residence in say Mallorca, Spain.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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