Working from Abroad: Issues for employers
As pandemic restrictions across the globe start to ease, business travel is once again on the horizon albeit many companies are less likely to resume former levels of frequent travel. Many are embracing new forms of virtual collaboration, or have health and safety or climate concerns about frequent international travel. More likely justifications will be for a longer-term spate of meetings or projects which require collaboration to bring them to fruition.
Many businesses are also making moves towards remote working to save costs on office space and to bring about more flexible and family-friendly ways of working. For example, Ocado recently announced that its staff can work from abroad for up to one month per year. Some businesses are also recognising the possible benefits of having access to a wider, international pool of talent if recruiting employees based abroad. This raises the question: can UK-based businesses allow their employees to work remotely from abroad? And what are the issues to think about?
There are a number of legal and practical issues which can arise from UK employees working abroad, largely depending on the length of time they do so. Here is an introduction to some of them:
Employment rights: The longer an individual is abroad, the harder it will be to argue that the employee has a greater connection with British employment law and they may begin to accrue rights in their host country. If an employee is likely to be working from abroad for more than the short-term, employers should obtain employment law advice specific to the host country. Minimum wages, rights to time off and dismissal, mandatory reimbursement of work-related expenses and more could be affected.
Equality/Discrimination: When someone from the UK asks to work abroad, make sure you treat each request consistently. When recruiting, be aware that the demographics of the workforce abroad are not the same as those in the UK; employers will need to find ways of avoiding this potential bias to ensure a diverse workforce abroad as well as at home. Ensuring that any discrepancies in remuneration for the same role across different jurisdictions are not for discriminatory reasons is a particular risk to be aware of. At the end of a working relationship, there are obvious red-flags to look out for when making dismissals in relation to discrimination.
Contracts: If there is to be a long-term or permanent change to what is specified in an existing contract, it should be formally varied e.g. by side-letter. If this is at the employer’s behest, the employee should be properly consulted first.
Tax and social security: UK and local tax advice should be obtained as, depending on the length of time someone works abroad, their UK tax residence status could be affected and all social security arrangements are jurisdiction-dependent post-Brexit. In the meantime, an employer should make usual deductions under PAYE.
Immigration: Local restrictions will apply to whether working abroad can be classed as a business visit, and what permissions need to be obtained for this and in the longer-term. Local immigration advice should therefore be obtained. Non-UK nationals may also experience immigration issues on their return to the UK after prolonged absence.
Data protection: Data transfers between the UK and EEA countries are covered by an adequacy decision which means that data can continue to flow on the basis that the UK’s data protection laws remain equivalent to GDPR. Transfers outside the EEA will be governed by rules depending on what data is being transferred and by whom.
IP: What rules govern the creation and ownership of IP in the host country? You should take steps to protect your ownership of any IP created by an employee whilst working abroad.
Pensions: Employers should review pension scheme entitlements and access to any other benefits e.g. private healthcare, to check whether being based abroad will affect current employees’ entitlements. The employee will have to be consulted upon any required contractual changes. Any impact on an employer’s auto-enrolment obligations will also need to be considered.
Health and safety: The Health and Safety at Work Act 1974 does have limited territorial reach and so host country requirements should be considered. Public health guidance remains a key consideration at the moment and employers should ensure their employees are able to comply in their host country and if planning a return to the UK. Risk assessments for home working should be carried out irrespective of where the individual is based to identify and seek to resolve risks.
Insurance: Policies can be geographically and activity restricted and therefore coverage may need to be extended or a new policy taken out.
Corporate considerations: Local company law requirements may apply if an employer’s business is considered to be operating in the host jurisdiction. If they are deemed to have created a ‘permanent establishment’ in the host country, there may be corporate tax to pay.
- Is it possible for the employee to do their job abroad?
- Do they have all of the equipment they need?
- Does any time-difference between the UK and the host country affect the individual’s ability to join meetings and support clients?
- Can you keep track of them and their work as easily as if they were in the UK?
- Do their reporting and supervision-lines need to change?
- Do we need to pay staff more to account for different living expenses, or less?
- Take local legal advice specific to the host country before making changes.
- Implement a working abroad policy. Either update any existing remote-working policy to cover working from abroad, or create a standalone policy which deals with this. Employers should
retain discretion over whether an employee can work from abroad and a system of requesting permission to do so should be implemented. Any such requests should be dealt with consistently and carefully in order to avoid the risk of discrimination or breach of contract claims.
- Audit and update all other affected policies. For example, the data protection (including privacy notices) and communications policies should be updated to reflect data transfers to and from
employees working from abroad, and the health and safety policy to reflect the need to be aware of local public health guidance.
- Audit employment contract. Clauses including: place of work, pay and tax, pensions, benefits and intellectual property may all need revising.
- Review data threats caused by working abroad and any particular danger level in the host country. Implement practical steps to protect against them, e.g. VPNs, multi-factor authentication, employer-hosted and secure communications and data sharing facilities.
- Monitoring. Consider what, if any, additional monitoring to implement to keep track of your employees and their activities when working from abroad.
- Update job adverts. Recruitment materials should be updated to reflect an ability for future employees to be based abroad (following careful review of the risks vs benefits), or based abroad only temporarily.