Remote working around the world
With advances in technology and changes in workplace cultures and practices following the pandemic, many employees are now well-placed to work from anywhere – be it home or far away from home. Employees may want to spend time working in another country for a number of reasons, for example, to add a couple of weeks onto a holiday or where they are staying with family who live abroad, and where the work can be done just as well, employers may be happy for them to do so. It can assist with employee satisfaction and retention and allows the employer access to a broader talent pool and other markets. People are used to remote working and are equipped for it, so at first sight these arrangements may seem simple, particularly where the period is short. For the practicalities, that may be true, but there are many legal issues which mean it is not so straightforward and could cause unintended difficulties for both employers and employees.
Just by working in a different jurisdiction, some employment laws of that jurisdiction may apply to the employee. In many places there will be mandatory employment laws which will apply which cannot be overridden, even if the employee’s contract purports to say otherwise, or has a ‘choice of law’ clause specifying that the laws of the ‘home’ country apply to the employment. Similarly, if things go wrong, an employer may find itself having to sue or be sued in the courts of the country in which the employee is performing the work.
The law varies around the world, and this is particularly true for legal issues relating to employees. Something lawful in one country may be a criminal offence in another. A contract which works perfectly in one place may be invalid in another. This note provides an overview of the main legal issues to consider with remote working around the world.
Not having the correct immigration permission can result in employees being refused entry to the new country of work and, in some cases, both the employer and the employee would be committing civil and criminal offences. In some cases, there may not be a suitable immigration category and the employee will not be able to work lawfully in that jurisdiction. Visa applications can take some time. For these reasons, it makes sense to consider the immigration position as early as possible in the planning process.
- Employees may need a particular visa or work permit to work in the new location. Sometimes, but not always, the trip may fit the requirements for a ‘business visit’, which may not require a visa. However, business visitor status is usually very limited in terms of the activities the employee may undertake.
- Post-Brexit, UK nationals do not always have the right to live and work in EEA states, and vice versa.
- Where an employee has a work permit or is otherwise subject to immigration control in their usual country of work, they will need to take care that spending time working in another country does not affect this, or any subsequent immigration application for the first country.
Tax and social security
Another issue to consider as early as possible is tax:
- Payroll taxes: an employee working in another country may trigger the payroll taxes of that country, even if they are included in the payroll of the original country of work. This can be complicated but is important to get right. Otherwise, the employer and employee may commit offences and/or be liable to pay taxes under two tax regimes at the same time. Early planning will help to make sure any applications to the tax authorities or relevant forms can be completed before the employee travels.
- Corporation tax/permanent establishment: if the employee does a certain type of work whilst in another country, this can trigger corporation tax obligations for the employer in that country. This can be significant, and is therefore something to consider at the outset, as it could be a ‘make or break’ point. Sometimes, there will be a double taxation treaty between the two countries, setting out special tax rules which will apply.
- Carried interest: spending time working in another country can have an impact upon the tax treatment of carried interest. Sometimes, generally for private equity executives, an employee will benefit from a share of profits from a fund. This is known as carried interest. Working in other jurisdictions can have unintended consequences for the tax treatment of the carried interests.
- Travel and accommodation expenses: where the employer will be meeting travel and accommodation costs, bear in mind that some countries have rules about whether this is tax deductible, and, if so, for how long.
Employment documents and terms
The employee’s existing contract of employment may not be sufficient or adequate if they are going to work in another country. For example:
- Information to be given: There may be legal requirements for the information which must be given to an employee, and the format in which the information is given. In England for example, s1 of the Employment Rights Act 1996 sets out certain information which must be given to employees within a certain period of starting work. In practice of course, most employers will want to put in place contracts of employment which contain more extensive terms and conditions.
- Collective agreements: there may be collective agreements which automatically apply to certain categories of employee, set at a national level. In some countries collective agreements are rare, in others they cover many employees.
- IP and post termination restrictions: provisions which are included in the employee’s usual contract of employment in order to protect the employer’s business may not work properly if the employee is working in another jurisdiction. This is particularly the case for intellectual property and post termination restrictive covenants. A restriction that is valid in one country may be void in another.
- Within the EU, the Posted Workers Directive may apply to an employee working in another EU state. This would affect the employee’s terms and conditions of employment. Following Brexit, this no longer applies where an employee moves between the UK and an EU member state. In circumstances where it does apply, it can mean, for example, that the employee is entitled to be paid more.
By working in a country, even if it is not the usual or original place of employment (and even if the contract states otherwise) an employee may benefit from the statutory employment rights of that country. There is considerable variance in statutory employment rights from jurisdiction to jurisdiction, particularly in respect of:
- Working time;
- Minimum wage;
- Family friendly rights, for example maternity leave and pay;
- Sick pay
- Notice periods;
- Health and safety;
- Data protection.
Depending on the circumstances, the employee could even benefit from the statutory rights of more than one country at the same time.
Health and safety
Health and safety obligations may vary significantly between jurisdictions and there will be some specific requirements in some countries that go beyond the employer’s duties under UK law. It will therefore be important for the employer to seek local advice and ensure it is possible to comply with local health and safety requirements.
In the UK, employers have a legal duty to protect the health, safety and welfare of their employees including in respect of stress and mental health. Employers must conduct a risk assessment of the work activities carried out by their workers, including homeworkers in the UK and abroad, to identify hazards and assess the degree of risk. Where employees are working remotely other issues employers need to consider are equipment, the use of electricity, first aid and accidents. A serious accident or injury at work must be reported to the employer wherever it occurs, and the employer should ensure it has a proper reporting procedure.
The employing entity
In some jurisdictions, an entity registered abroad is not permitted to be the employing entity of an employee working in that jurisdiction. There are various options for structuring the employment where this is the case and the employer does not wish to set up an employing entity or branch in that jurisdiction, but these may not be attractive options where the employee only proposes to be in that jurisdiction for a short period.
Data protection laws vary from country to country. This means that the employer may owe different, or additional, obligations to the employee in respect of the personal data of an employee who works in a different location.
In addition, if the employee will process the personal data of others as part of their work, it is important to ensure that both employer and employee know how to comply with the relevant data protection laws of all applicable jurisdictions. This is less of an issue within the EEA than where the employee will work in a location which is not subject to the GDPR.
Registering with the authorities
In some jurisdictions, the employer must declare the employee to the authorities by a set deadline.
Insurance and security
Employers will need to ensure that they comply with any mandatory insurance requirements for employees, for example, employer’s liability insurance, and check whether the existing cover is adequate. The usual policy may not provide cover when the employee is outside the usual jurisdiction and the employer should check, for example, whether the employer will be covered if the employee has a work-related accident while working abroad. Similarly, insurance to cover the employer’s equipment, for example laptops and mobile phones needs to be checked where the equipment will be used in another jurisdiction.
Employers will also need to consider whether the employee’s intended location and workplace gives rise to additional security considerations – for personal security, for equipment and for the employer’s confidential information.
Conclusion and further advice
Remote working is here to stay. The most important thing for employers who want to require or facilitate employees working in a new jurisdiction is to ensure that they take early advice on the legal issues set out above so they don’t face unexpected legal consequences.
We have 11 offices covering the UK, Europe, the Middle East and Asia and can advise on English and local laws on all the issues in connection with remote working. Where we don’t have offices, we work with leading local law firms and have a network of almost 200 jurisdictions worldwide to provide a seamless international service wherever your legal needs are.