Many businesses have undergone a period of rapid change as a result of the pandemic, forcing many employers and employees to reassess where and how they work. Coupled with this, the strains of the pandemic on employees’ personal lives, combined with travel restrictions have resulted in many employees working away from their normal place of work - whether by design or by accident.
While most of us, naively perhaps, assumed that the disruption to our lives caused by the pandemic would be temporary, we now find ourselves almost a year down the line still working in unusual ways and from unusual places.
How do employees end up working from another country?
Many HR teams will be all too familiar with circumstances where an employee has started working remotely – perhaps from a different country so they can be closer to friends or family - or where employees have been stuck working in a different country due to quarantine requirements or travel restrictions.
Of course, these are only the employees that HR is aware of. There are likely to be significant numbers of other employees who may have obtained permission to work abroad directly from their manager (who may have agreed to their request without consulting HR), or where the employee has simply got on a plane and started working remotely without telling anyone at all within the organisation. After all, so long as their work is getting done, will anyone notice that they are logging on from overseas?
As we emerge from lockdown, we’re also finding that this increased flexibility means that employees may be reconsidering their personal arrangements. It seems inevitable that employees who have been working remotely for the last year may want to continue to do so, potentially from other countries. The genie is well and truly out of the bottle when it comes to remote working.
So, whilst operationally it might be as simple as packing up your laptop and mobile and working from wherever you choose, what are the legal implications of remote working in another country?
Whilst managers and employees might assume that so long as the employee has a wifi connection they can work from anywhere, working from another country triggers a whole host of legal and practical issues, that can cause significant headaches for employers.
Employment Law issues
Firstly, it’s important to be aware that employees working in other countries may well benefit from employment law protections, both in the UK and in their new country of work.
Whilst some of their rights will be governed by what the employment contract says, employees may well benefit from specific legal protections in the country where they are working, simply by virtue of working there (and irrespective of what their contracts might say).
For example, employees might gain specific rights relating to the termination of their employment or minimum notice periods, simply by virtue of working in a specific country. In some country’s employers need to notify (or even obtain consent/approval) from appropriate local authorities or an unemployment agency prior to or on termination of an employee’s employment. Other countries might have mandatory procedures that must be followed when terminating an employee’s employment which are set down in law or applicable labour codes. Failure to do so can result in damages claims.
These rights are often mandatory and unavoidable. They can also be very complicated and entirely different from what employers are used to dealing with in the UK. Unless the employer takes local employment law advice, they will not know what laws might apply, which could lead to claims or legal liabilities arising in future.
Immigration Law Issues
A second issue to consider is whether the employee has the right to work from their new location.
Whilst this is unlikely to be an issue for a returning resident, a UK national asking to work abroad will need to make sure they have the relevant immigration permission to work from the country in question.
In other words, a Spanish passport holder is unlikely to face any right to work issues if they return to Spain to work, but a UK national wanting to work from Spain would need to make sure that they have the correct immigration permission to do so. Failure to meet these requirements could result in both the individual and the employer being at risk of illegal working penalties or immigration offences abroad.
This is a particularly important issue post Brexit. The end of free movement means that UK nationals need to make sure that they have appropriate immigration permission to work in each EU Member State should they want to work from there. They can no longer rely on free movement to work across Europe (as was the case before 31st December 2020).
Employers will need to understand whether the individual needs a work permit or some other immigration permission to allow them to work in their chosen country. Typically, this will depend on how long an individual plan to work in the country in question, along with exactly what they are proposing to do whilst they are there. Employers will need to take country specific advice on the immigration requirements as each country’s immigration requirements are different (including across each of the European Member States).
There might also be immigration issues should the individual want or need to return to the UK in future. This might be the case if the individual is required to return to the UK for meetings, appraisals or specific projects, or if the international arrangement is only a temporary one. Whilst this wouldn't be an issue for a UK passport holder, it might be problematic for non-UK nationals as they may need a new visa or work permit to allow them to re-enter the UK for these purposes.
Employers and employees will almost certainly need both English and local immigration advice on these subjects to avoid potentially significant fines and liabilities.
Tax and Social Security
Another significant consideration are the tax and social security liabilities arising from these sorts of arrangements. Does the employee working abroad trigger a tax or social security liability for the individual or the business?
Depending on what is being proposed and, in particular, the duration of any arrangements, this may be a simple issue to resolve. In some cases, individuals may be exempt from paying local taxes so long as they pay taxes in the UK, particularly where their relocation is temporary. However, this won't always be the case and, in particular, if their relocation is longer term or permanent, the business may be required to account for tax locally or set up a foreign payroll or specific overseas vehicles to deal with paying the employee and deducting and accounting for tax. It is worth noting that whilst there were a number of COVID-19 concessions issued in the wake of the pandemic to take into account cross border working, many of these were short term only and have long since expired.
The requirements surrounding both the tax requirements and social security obligations are very complicated and could result in significant financial liabilities for both the employer and the employee. Businesses will almost certainly need both English and local advice from specialist tax advisers on these issues.
Practical Issues
Employers will also need to think about how they will deal with the practical issues arising from remote working from a different country.
For example, how will employees be managed effectively? How will they be supervised? Will they be required to return to the UK and if so, who will meet their travel costs? How will you deal with any time differences? How will you deal with data security and any specific data protection risks? How will you manage any health and safety concerns, in particular making sure that any local health and safety considerations have been complied with? How will all of this be documented in their contract of employment or assignment letter?
Ideally businesses would bottom out these issues before agreeing to any international relocations, but our experience is that it is all too common for HR to find out too late – and for the employee to have already started working abroad (in some cases for some time) before they are alerted to the issue. This can leave businesses exposed to significant liabilities.
With this in mind businesses may want to consider adopting a policy for dealing with these requests. This might cover how requests should be made and who will have authority to grant these requests. It might also include parameters around what requests will be considered and which will not; some businesses may only be willing to consider very short-term requests to work remotely - due to the increased likelihood of triggering liabilities (for tax in particular) where the arrangements are longer term.
As part of this, it would also be advisable to provide clear instructions to all employees that they must keep you informed of any changes to their location (and in particular the country in which they are working) to make sure that you have the information you need to address these issues before any significant liabilities arise.
Global Working requests – A guide
We have prepared the checklist to help businesses understand the key questions to ask when assessing the risks and practical issues arising from international working. Please click here to download the 'Global Working requests - a guide'.
We are assisting increasing numbers of clients in navigating these complicated and tricky issues, so if we can be of assistance or if you have any concerns about your global workforce, please get in touch with the Brabners Business Immigration Team.
