Many office workers have been working remotely since the start of the coronavirus pandemic, and this looks set to continue for the foreseeable future following the Prime Minister’s announcement on 22 September that those who can work effectively from home should do so. As a result, we are seeing an increasing trend of employees wanting to work remotely from overseas.
From the employee’s perspective, working from abroad may be preferable for family or lifestyle reasons. Technology enables many employees to perform their role from almost any location in the world, and where an employee physically performs their work may have no discernible impact on their role or output. Indeed, many employers may be unaware of where each of their employees is currently working. Employers should, however, be aware of a number of legal and practical issues that arise when an employee works remotely from overseas.
Employees working remotely from another country may become entitled to the same rights as local workers simply by virtue of being present in that country when logging on to perform their role. These local rights may be more generous than those to which the employee is entitled under UK law and might include holiday entitlement, enhanced maternity and other family friendly rights, as well as additional rights on termination of employment.
Employers should be aware that their UK sponsorship licence may be invalidated if a sponsored migrant works remotely from overseas, and the employee may no longer be permitted to return to live and work in the UK. It could also lead to the Home Office taking compliance action against the employer.
Tax and social security
An employee working remotely from another country may become subject to local income taxes and, consequently, their employer may be subject to tax reporting and collection obligations in the host country in addition to those under UK Pay As You Earn (PAYE). Employers may also have local social security reporting and collection obligations.
An employee working remotely from overseas may create a taxable presence, known as a “permanent establishment”, of the employer in the host country for corporation tax purposes. The employer’s VAT position may also be impacted.
Data protection and security
A number of data protection issues can arise when an employee works remotely from overseas and employers should ensure that appropriate safeguards are in place in respect of the transfer of any personal data. Working remotely from certain locations may also increase the risk of hacking and cyber fraud, and employers should consider whether their security practices are adequate to mitigate such risks.
Employers have a duty to take reasonable care of the health and safety of their employees and to take reasonable steps to provide a safe workplace and a safe system of work. These duties extend to employees working remotely from overseas and employers should, therefore, conduct risk assessments in respect of such employees and their proposed working arrangements. Employers should also ensure compliance with applicable health and safety legislation in the host country.
It may be difficult and costly for an employer to arrange for adequate home-working equipment to be transported overseas for the employee, and the employer’s existing insurance policies may not cover this.
The employer checklist
While working overseas is an attractive option for employees suffering from remote working fatigue, it can quickly become a headache for the business. Employers should, therefore, ensure that internal policies, procedures and employment contracts are updated to address these issues. Each request should be considered on a case by case basis, to avoid discriminating against certain groups of employees. When requests are granted, employers should enter into a formal written agreement with the employee, clearly documenting the terms of their remote working arrangement.
First published in Business Vision. Reproduced with permission.