As a result of COVID-19, many employees are working remotely. For most this means working from home, but some employees might want to work abroad while workplaces remain closed. A checklist of the practical implications for employers of employees doing so is set out below.
- An employee working abroad temporarily could benefit from mandatory local employment protections including rights in relation to paid leave and on termination of employment. Where the protections are greater than in the UK, the employee might seek to rely on those enhanced rights. What protections apply, if any, will depend on the country in question.
- In the EEA the Posted Workers Directive provides that workers who are posted by their employers to perform temporary work in other member states should enjoy the protection of the same 'floor of employment rights' available to other workers employed in the host country. The Directive is unlikely to apply where an employee unilaterally decides to work abroad; however, employees could be protected if, for example, they work in a local office of the employer or for a local client.
- Take advice if there is a dispute with an employee who is, or has been, based overseas as working out which employment rights apply can be complicated.
Tax & social security
- The tax implications of working abroad will depend on where the employee is based, and therefore what their residence is for tax purposes; the terms of any double-tax treaty in place; and whether any tax concessions have been issued in light of COVID-19.
- If there is a double-tax treaty a short stay abroad of up to 183 days will not usually have any tax implications. The UK employer would continue to deduct income tax and employee National Insurance Contributions and account for employer NICs.
- If an employee is working outside the UK for more than 183 days in any 12-month period, this may impact their tax residency status. The situation, therefore, becomes more complicated.
- If the employee is working in another EEA country or in Switzerland, the employer should apply for a certificate from HMRC to allow NICs to continue to be paid in the UK and exempt the employee from local social security liabilities. Elsewhere the position depends on whether there are reciprocal social security arrangements in place.
- There are also potential income and corporate tax implications if it is found that an employee working abroad has created a 'permanent establishment' for the employer in the host country. The risk of this happening is low but could arise, for example, if the employee's role involves concluding contracts on behalf of the employer.
- An employee intending to work abroad (even from home) needs to check whether they can do so without special immigration permission. This will depend on the length of their stay, their nationality and the restrictions in the host country.
- Visitor type visas usually permit some sort of business activities; however, this depends on the jurisdiction. Most business visas are restricted and will not allow ongoing productive work; the longer an employee stays and works abroad the less likely it is that it can be categorised as a business visit.
- Time spent working abroad might, therefore, necessitate a work visa or permit. Although UK and EEA nationals currently have the right to live and work in an EEA country and Switzerland this will change for UK nationals from 31 December 2020.
- There may also be immigration issues in connection with a return to the UK. EEA and Swiss employees might want to apply for settled status or pre-settled status before they go to work overseas if they qualify. Also, periods spent abroad can impact eligibility for citizenship, indefinite leave to remain and permanent residency in the future.
Data protection & confidentiality
- If an employee processes personal data, there may be data protection issues, especially if they are working from a country outside of the EU. Under GDPR, personal data cannot be transferred outside the EU unless the recipient provides adequate protection for the personal data or other safeguards are in place. Check the terms of your data protection policy and privacy notices.
- Confidentiality and data security are always important considerations when homeworking. Remind employees of their obligations both while travelling and when working abroad.
Insurance & benefits
- Periods spent working in another country might impact on group insurance policies and on an employee's ability to participate in benefits e.g. private medical cover, life assurance, travel insurance, income protection and pensions.
Health & safety
- UK employers are under a duty to protect the health, safety and welfare of their employees, irrespective of where they are working. Carry out risk assessments, considering any local health and safety requirements.
- Employees working abroad will need to comply with the relevant public health guidance (including any quarantine rules) both on arrival and when returning to the UK.
- Think about whether to draft a policy on working abroad temporarily - existing homeworking policies are unlikely to cover this. Do you want to require employees to ask permission before working remotely in another country?
- Ensure that requests are dealt with fairly and consistently. Relevant factors to consider will include whether the job can be done effectively from the host country; and the length of time the employee is proposing to remain out of the UK.
- Take specialist advice on the employment, tax and immigration implications of having employees working in a foreign country for extended periods.
- Review policies and benefits which might be impacted by time spent working abroad; and inform employees if this is the case.
- Make it clear to employees that any agreement to work abroad is temporary and that they continue to be bound by their existing contractual terms, unless expressly varied. Set out what is agreed in writing.