Written by Nicola Gater

Working from home abroadMost of us now know that WFH means Work from Home. But increasingly, employers are also having to consider the implications of WFA – Working From Home Abroad. As many employers now recognise that remote working can suit their businesses, they may be receiving requests from staff asking can I work from home abroad. Or when recruiting, they may be considering candidates who live abroad. This can present challenges if your business does not have a presence in the foreign location or is not used to having people working there.

Here are some of the things to consider:

Is it a temporary move?

Working remotely from a tropical paradise might sound more appealing than being stuck in the house! Since lockdown came into effect in March 2020, increasing numbers of employees have moved to work from other locations. These may be both within and sometime outside the UK to be near family or work from their holiday homes.

Whilst it might seem that, practically, it doesn’t matter where in the world you are when remote working, it’s not as easy as just packing your things and going. Firstly, an employee who intends to start working from home abroad will need to be sure that they don’t need any form of special permission such as a visa or work permit, even if just working for a few weeks.

They may also become subject to income tax and social security tax in the country in which they are based. However, if they have travelled abroad to work for just a short period then this is unlikely. You should discuss and agree who will cover any local costs for services such as health care. Remember with Brexit approaching things like EHIC cards may become invalid.

If the working arrangement continues for a longer time, local employment laws, rights and protections would also need to be considered. Considerations such as those in relation to paid leave or termination of employment, and this will of course vary depending on the location.

If a UK worker relocates to another country just temporarily, it should be fine to continue working under their existing UK contract for a short period. But as soon as it becomes permanent or longer term then you’ll need consider whether the existing contractual arrangements can continue without risk to them or you as the employer.

When working from home abroad is more long term

Undoubtedly, things get tricky if an employee wants to relocate on a longer term basis, but also remain working for you. Especially if your company has no office or business presence in their new location abroad. Because of the issues discussed above, you will need to consider a new contractual relationship if you don’t want to lose your employee. There are a few routes you could go down including:

1. Self-employment

Your employee could resign and then set themselves up as self-employed in their new location abroad. They would then agree a Contract for Services with you, and under this new contract they would not be an employee but a contractor/consultant. They would simply invoice your organisation each month for the services they provide. They then accept total responsibility for their own liabilities for local taxes and social security, and for conformity with local employment legislation. In terms of working from home abroad they would not receive employee benefits from your organisation. As such they would need to organise their own life insurance, medical cover, pension etc, and of course, you would not provide paid holiday or sick pay.

In establishing and agreeing a rate of fees for which they should invoice you each month you may take into consideration the salary and benefits they received on their previous contract with you.

2. Use an overseas “agency”

You could identify a local agency, recruitment firm or even lawyer in the country they now live. They can then employ the person locally and set up a commercial agreement to provide services to your company in the UK. This has its costs, but in the long run it may be a less risky and less costly route that having to navigate major tax and employment law issues. The local employer would manage local compliance, payroll, employee benefits and any HR related issue that arises. It could be an excellent option if you don’t want the headache of dealing with it yourself.

Just a reminder – when the person’s contract comes to an end, be sure to review the arrangements with a local lawyer to ensure you can continue in this way. Employment law and legislation may have changed so it’s important to involve someone with up-to-date knowledge.

Continuity of employment

Whenever one type of employment contract ends, and another begins, there can be concerns around whether length of service continues. When moving from employment to self-employment, there are also risks around whether the individual is truly self-employed or are there any factors that may give rise to a claim that they are actually still an employee in practice?

Given the current pandemic and possible recruitment issues arising from Brexit, employers are likely to want to be flexible and accommodating so they can retain and attract talented staff. However they will also want to minimise any risks that may be specifically attached to working from home abroad, which is where HR outsourcing will help. Therefore before agreeing to any requests it’s important to take expert advice from those with both UK employment expertise and knowledge of employment law and practices abroad. We can help you navigate the often complex issue of International HR.