COVID-19 has made remote working the ‘new normal’ for many employees across the UK and some are even working remotely from other countries.
At first glance, working from abroad seems harmless. However, there are complicated issues that both employers and employees should seriously consider when it comes to working remotely from other nations. These include compliance with income tax liability, employment rights, immigration, and data protection, as well as adherence to health and safety regulations in other jurisdictions.
The first question the employer needs to ask is whether the employee has a legal right to live and work in the other country. Travelling abroad for a holiday or a short business trip is different from living and working in another country. As an example, UK employees who have relocated to Europe will need to consider the basis upon which they remain there, as Brexit has affected their right to live and work in EU countries. Also, those employees who are either sponsored by the employer to work in the UK, or those EU nationals who have pre-settled status but have been out of the UK for some time, may be jeopardising their right to return to the UK.
How does compliance with tax regulations affect remote working?
As a result of the pandemic, a few tax authorities have relaxed their residence rules. It is therefore important to check whether the country that the employee is physically working in will have the main taxing rights over employment income earned. If a double tax treaty between the country and the UK exists, employees will typically be exempt from paying tax in that country. However, there are many factors to consider before that conclusion could be drawn. For example, in some jurisdictions, only a short period of residence is required in order to trigger tax residence. There is also the risk of creating a permanent establishment for the UK employer in that country. If a permanent establishment is created, the profits attributable to that establishment would be subject to local corporation tax. The longer the employee remains in that country, the higher the risk of that employer unintentionally creating a permanent establishment.
Are UK employees entitled to different employment rights in other countries?
Furthermore, employees working abroad will be in a different legal jurisdiction, potentially subject to different employment rights from those in the UK. While an employee’s contract might be UK based and governed by the laws of England and Wales, employees can often benefit from local employment rights by virtue of performing their services in that jurisdiction. Employers should be aware of these rights, which might be more generous than those in the UK. They can include a higher minimum wage, increased notice entitlement on termination, and higher levels of annual or maternity leave. Therefore, special attention should be given to potential additional employment rights when considering an employee’s application to work abroad.
What are the data protection implications for remote workers?
Data security is a very important matter to consider whilst an employee lives and works in another country, as it is likely that data is being transferred overseas. Therefore, it is highly advisable that employers should conduct a data risk assessment and ensure they have the appropriate data security safeguards in place to prevent data being lost or stolen. Employers may need to update their data protection policy and privacy notices, especially where the employee is living in a country that lacks an adequacy notice, or if the existing data protection documents do not include provisions for transfer of data overseas. Employers may wish to remind employees of their rights and obligations regarding data, including any enhanced requirements whilst working abroad.
Have all the risks of remote working abroad been considered?
Additionally, employers should carry out risk assessments to identify any particular risks associated with working in another country, as they have a duty to take reasonable care of their employees’ health and safety. This duty is extended to those working from home or even those working remotely abroad. Further, employers should be aware of any local health and safety requirements for the host country.
It follows then that the employers should have a policy which compels the employees to inform their managers of their residence whilst homeworking. This policy should be applied fairly and consistently. A written agreement covering the terms of their remote working overseas is essential when remote working from overseas has been agreed.
Increased levels of remote and flexible working are likely to stay with us even after the threat of the pandemic has diminished. Therefore, it is a good practice to update contracts and policies in order to reflect the growing trend towards remote working, as well as seeking specialist advice to ensure avoidance of any legal or taxation pitfalls. Feel free to contact our solicitors for more information if you are considering the legal implications of working in another country.
Farideh Moallemi is an employment solicitor. She has over 5 years of experience in advising employees and employers on employment law matters. Farideh has represented clients in the employment tribunal and County Courts. Farideh is a member of The Law Society. To contact Farideh, visit the Contact Us page. For media enquiries: firstname.lastname@example.org