When working remotely means working overseas, what should employers consider?

Posted on: September 18th, 2020

With a sudden increase in remote and home working following the COVID pandemic, it is unsurprising that employees are starting to re-evaluate how and when they work, together with where they carry out their work.

As a result, our Employment Team have received a number of queries from businesses asking what they need to consider if an employee asks to move abroad or work from an overseas home. We outline some of the key areas of consideration below:

Tax
Our recommended starting point is to speak with your financial and tax advisers to establish the potential tax impact for both the individual and the company. Sadly, this can sometimes be commercially and administratively burdensome, so it is worth investigating the tax position before considering the next steps.

Homeworking generally
In agreeing to a permanent or majority homeworking arrangement like this, you will need to consider the usual homeworking quandaries, including the following points:

  • Can the role actually be carried out overseas and done so effectively (from a clients’ perspective, but also in relation to liaising with or managing the employee’s own team or direct reports)?
  • Does the role involve data processing? If so, can such processing securely take place in the applicable country?
  • Will the employee be required to return to the UK for any specific business meetings, social occasions or client events? If so, who will bear the cost of such travel?
  • Will the employee be in breach of any restriction or covenant by which s/he is bound (for example, a mortgage agreement, tenancy, or home insurance)?
  • Will the hours of work remain as per UK time? How will the business manage working time and ensure that the employee is taking the rest breaks and periods s/he is entitled to?
  • Who is responsible for the provision of equipment to carry out the role? If the employee, should you retain the ability to inspect or check the equipment (in relation to suitability and security)? Plus, who is responsible for insuring the equipment?
  • From a health and safety perspective, does the employee need to complete a DSE or other workstation risk assessment from their overseas home or working location?
  • Who is responsible for utility costs (for example, the cost of WiFi, telephone use, printing etc.)?

Contract

  • The employee’s contract of employment will need to be updated to include clauses to reflect each of the homeworking points above, together with the new place of work. It would also be sensible to ensure that the contract covers the following:
  • Whether any employee benefits are no longer applicable (see ‘Employment Benefits’ below);
  • Confirmation that the employment contract is subject to UK law and jurisdiction (see ‘Employment Rights/Protections’ below);
  • Any recommended tax provisions, following the obtained tax advice; and
    The position on local customers or contracts i.e. whether the employee has the ability or authority to grow operations in their overseas location.

Immigration
An employer will of course need to consider whether the individual will actually have the right to work in the country concerned. This will depend upon the immigration rules of the relevant country, together with the nationality and right to work status of the employee.

If the employee wishes to work from an EEA country and s/he is a UK national, it is worth noting that the Brexit transition period will end on 31 December 2020, meaning that it may be beneficial for a move to take place prior to this date.

However, we strongly recommend that local immigration advice is taken at the material time to ensure working abroad does not result in illegal working. Further, non-UK national employees should be encouraged to take their own independent immigration advice (including any impact their absence from the UK may have on a return in the future).

Insurance
Employers should speak with their current Employers Liability Insurance (ELI) provider to establish whether the current ELI will cover an employee working overseas. Additional or local cover may need to be obtained.

Employment Rights/Protections
Where employees live and work abroad, they can become subject to the jurisdiction of the overseas country and benefit from the local mandatory employment rights regardless of what is stated in the contract (i.e. local laws can potentially override express contractual wording). This may, for example, include health and safety obligations, rest breaks, paid annual leave, family friendly rights, pension entitlements and, typically the most onerous, rights on termination of employment.

We recommend that employers seek local advice on this point to understand the likelihood of foreign employment rights and protections applying and, if so, what steps can be taken to avoid this (if any).

Employment Benefits
Dependent on the nature of the relevant schemes or policies, the employee’s participation in company benefits (such as pensions or private health care) may be impacted or invalidated by a move abroad. You will need to speak with your applicable providers to determine this and also ensure the employee is fully informed before making the move.

Setting a Precedent
Given the pandemic and the sudden prevalence of remote and home working, requests to work from alternative locations (such as family homes, holidays or overseas) are on the rise. As a result, it is worth considering that other requests to work overseas may follow, particularly if you do approve one employee’s request.

Whilst employees do not have an automatic right to change their place of work and a move will of course depend on an individual employee’s circumstances or role, it may cause friction or be difficult to reject a future employee’s request in similar circumstances. As such, in communicating an employee’s move abroad, it would be wise to highlight the one-off or discretionary nature of the arrangement.

If you have any questions about the content of this article, or you would like assistance with considering or responding to an employee’s request to work abroad, the Employment Team at Coffin Mew would be happy to help so please do get in touch.

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