Employers do you permit your staff to work remotely overseas in the interest of offering flexibility
The ability to work from home or in an overseas country offers employees increased flexibility in their working arrangements. UK employers are keen to attract and retain talent, therefore many organisations permit their employees to work overseas for a maximum number of days per year.
However, there are several considerations for UK employers before agreeing to these types of arrangements.
Immigration
There may be immigration restrictions in place which would prevent an employee from working in another country. In many countries, workers may be permitted to work if they are a citizen of the host country, or if they hold a visa permitting them to work.
Employees who return to their home country for a holiday or a short business trip are less likely to be affected, provided their work is ancillary to their visit and the work does not generate new business for the UK entity. Several countries particularly in the Europe Union (EU) require UK entities to operate a payroll company for their UK employees working in the host EU country. If you need advice on these arrangements, please get in touch.
The EU will soon open the ETIAS travel approval scheme similar to the ETA in the UK. All UK nationals visiting the EU will be requried to apply for the waiver, which will be issued for up to 3 years, permitting entry to the EU for a maximum of 90 days in any period of 180 days. The EU will open the EES scheme which records entry and exit to the EU, which is part of the preparation for implementing the ETIAS later this year. We understand the EES will need to operate for six months before the ETIAS to ensure the correct collection of data. Fines will be imposed for individuals who exceed the permitted days and overstayers could also receive reentry bans. The rules and fines levels vary depending on the country.
EU residents in the UK with pre settled status will lose their status if they remain outside the UK for 2 consecutive years or 5 consecutive years for those with settled status.
Similarly sponsored workers will usually be ineligible to apply for indefinite leave to remain if they have spent more than 180 overseas in any 12-month period.
So, whilst global mobility appears to be a benefit to employees, it may affect immigration status for employees in the UK or the host country. There are two further considerations for mobile employees, employment rights and tax, which I will look at in turn.
Employment Rights
Employees working from abroad may attract employment rights in the host country (which may be more advantageous) while continuing to benefit from UK employment rights. Where an employee is planning to stay overseas for an extended period, employers should consider whether it would be appropriate to move the employee to a local contract of employment tailored to the host country or consider other secondment arrangements ensure compliance with local laws.
Employers in the UK have duties toward their employee’s health and safety, therefore employers should be aware of any local health and safety legislation imposing further duties on the employer.
Working overseas arrangements may also give rise to data protection issues, particularly where the employee’s role involves processing personal data. Employers should ensure that they comply with any local data protection laws and that they have sufficient organisation measures in place to protect data.
Tax
There may be tax implications for employers whose employees are working from abroad, particularly where an employee’s stay overseas becomes extended or indefinite. The longer the arrangement continues, the greater the risk that an employee’s activities or presence in another country will create a permanent establishment in that country for tax purposes.
Employees too, will also need to consider how their residency in another country will affect their individual tax status and whether they will need to register with any local tax authorities in their host country.
We would encourage any employer considering a remote working overseas arrangement to seek appropriate tax advice.
This is a complex area which presents both practical and legal challenges. Any requests from your employees to work remotely overseas should be treated with caution and plans should be made accordingly. We recommend that employers seek legal advice in both the UK and in the relevant jurisdiction to ensure legal compliance. We have an international network of legal and tax contacts and can put you in touch with an appropriate adviser from overseas.
If you would like to know more about what we can do to help, please get in touch with [email protected] or [email protected].
