According to a number of recent surveys, almost half of UK employees would like to work from abroad when travel restrictions are lifted. With office-based staff having worked from home successfully for over a year, many now feel that they could do their job just as well from a home in another country. In addition, some companies have closed their offices and introduced permanent work-from-home positions meaning there may be no business need to be based in the UK.
If productivity and performance are not an issue, is there any reason why employers shouldn’t let staff swap Basingstoke for the Bahamas or Milton Keynes for Marbella?
Unfortunately there are a number of complexities involved in working for a company based in one country whilst living in another. Employers need to create a clear policy that will help to manage employees’ expectations, create a consistent approach to dealing with requests to work remotely abroad and minimise risk to both the company and the individual.
Below we discuss four key issues employers should consider when dealing with such requests.
Employees working abroad, even temporarily, are likely to benefit from the employment rights and protections of the country in which they are working possibly in addition to any rights they have in the UK. This is the case even if an employee’s contract is specifically stated to be governed by the laws of England and Wales. Employers should be mindful that their employees may be entitled to more generous rights or protections in relation to paid leave, minimum wage or rights on termination depending on the jurisdiction they are working in. For example, Sweden, France and Denmark offer more paid leave than the UK’s 28 days. To minimise any unforeseen issues, employers should seek local legal advice before terminating or altering the employment of their staff working remotely abroad, and should be mindful of any inequalities being created between employees who remain in the UK and those who are working from another jurisdiction.
Employers with employees working abroad should also be particularly mindful of local immigration laws, a breach of which could result in civil or criminal liabilities, or affect the immigration status of their other employees. Specific advice should be sought on the immigration requirements of particular jurisdictions, bearing in mind that visas or work permits may be required depending on the employee’s length of stay, their nationality, and the nature of the work being carried out.
There are often financial consequences when an employee works remotely abroad. For example, an employee may acquire tax residency in another country or jurisdiction. This usually won’t be the case if an employee works remotely outside the UK for less than 183 days in a 12-month period. However, care should be taken to monitor any other factors that might trigger residency in addition to days spent in the jurisdiction. If an employee does work for more than 183 days in another country, specialist advice should be sought immediately.
Employers should understand their obligations in relation to reporting and collecting tax in other jurisdictions and should bear in mind that they will be held responsible for ensuring their employees’ tax payments are calculated correctly and that they comply with any local social security reporting requirements.
There are also potentially significant corporate tax implications if it is found that an employee working remotely abroad has created a 'permanent establishment' for their employer in the relevant jurisdiction. The risk of this happening could arise if the employee's role involves concluding contracts on behalf of their employer, if the employee is senior and conducts significant client-facing or if they perform business development work.
Employers should be aware that they have an obligation to ensure the health and safety of their employees even when they are working remotely or from a non-office location. This may also require meeting any local health and safety requirements in the jurisdiction the employee is working from. These obligations can encompass both the physical and mental health of staff. Less control over employees’ physical environments and the inability to apply wellbeing practices face-to-face can make both of these aspects harder to manage.
Making use of technology to encourage conversations between management and staff is vital, and employers should also provide managers with systems and/or advice on how best to tackle sensitive subjects surrounding remote working; such as stress levels, working hours and team interactions.
Employers should consider whether an employee working remotely presents a higher risk in relation to the secure transfer of data. The security of internet connections at employees’ homes may be less reliable than in a controlled office environment, and the storage of confidential data may be more difficult to supervise, especially if an employee is often travelling between locations or working abroad.
If an employee processes personal data, there may also be data protection issues to consider, especially if an employee is working remotely in a country outside of the EU. Under GDPR rules, personal data cannot be transferred outside the EU unless the recipient provides adequate protection for the personal data, or other safeguards are in place. Employers with a remote workforce should review the terms of their data protection policy and privacy notices, and consider providing updated training for employees in this area.
If you would like to discuss these topics further and explore the support that PwC can provide, please contact Tilly Harries and/or Rebekah Primrose in the Employment Law team at PwC.