AS travel restrictions begin to ease, it’s likely employers are going to start facing a regular question from their teams: ‘Can I work from abroad?’
According to a number of recent surveys, about half of us want to work from abroad when we’re able to travel more freely again. We’ve proven we don’t need to be in an office to do our jobs - so why not put in the hours in the sunshine?
And when some employers are reducing office space and introducing permanent work-from-home positions, what’s the issue of switching Ballymena for the Bahamas or Magherafelt for Marbella?
Before you dust off the passport - there are a number of complexities to consider when 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.
Employees working abroad, even temporarily, may 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 UK laws.
Employers should be mindful that their people may be entitled to different protections in relation to paid leave, minimum wage or rights on termination. For example Sweden, France and Denmark offer more paid leave than the UK. To minimise any unforeseen issues, employers should seek local legal advice before agreeing to staff working remotely abroad and be mindful of any inequalities being created between employees who have stayed in the UK and those working in other jurisdictions.
There is also the issue 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 what is required, bearing in mind visas or work permits may be needed.
There are often financial consequences when an employee works remotely abroad. An example would be if an employee acquires tax residency in another country. This wouldn’t normally be the case if it was less than 183-days within a 2 month period but care should be taken to monitor any other factors that might trigger residency.
Employers should also understand their obligations in relation to reporting and collecting tax in other jurisdictions and bear in mind they will be held responsible for ensuring their employees’ tax payments are calculated properly and comply with any local social security reporting requirements.
There are also potentially significant corporate tax implications if it's found that an employee working remotely abroad has created a ‘permanent establishment’ for their employer - if their role involved concluding contracts on their employer’s behalf.
The world of work is changing and employers do need to adjust or risk losing their best talent. But before acting, you need to know what the risks are and get advice on how everyone can stay safe.
:: Tilly Harris and Rebekah Primrose are director and manager in people and organisation at PwC
