Home Working & The Risks of Working from Abroad

During the pandemic many companies have allowed, or indeed been directed that their employees work from home. Some employees have returned to their home countries where they have continued to work virtually.

Due to modern technology does it really matter where someone is physically based? Over time these employees may want to remain with their families where perhaps it is warmer and there may be a better quality of life. Many employers are sympathetic to this; however, they may not be aware of the many challenges this could present.

As the vaccine rollout develops and the lockdown measures begin to be relaxed, people are starting to think of returning to normality. However, many companies are considering allowing employees some flexibility including an element of homeworking.

The pandemic has demonstrated that employees can often work very efficiently and effectively from home which has led to many companies considering whether they still need the amount of expensive office space they currently have. This may mean that certain employees may continue to work from abroad, but employers are rather oblivious to the risks that this presents.

Employees are generally upfront with their employer and explain where they are working from. However, one of my clients recently discovered through an IT audit that an employee was logging in from an IT address in Turkey. The employee in question had been in Turkey for the beginning of the pandemic but had stated that she had returned to the UK and in the negotiations for her return to work from maternity leave had asked for a flexible working request and had given details of a nanny and other arrangements thereby giving the employer the impression that she was working at home in the UK. The reality was that she had remained in Turkey thereby potentially exposing the employer to some of the risks set out in this article.

These risks include the following:

1. As Britain has now left the European Union there may be immigration requirements relating to the time that British citizens can work in another country.
Whilst the employee may have a European Passport this may not matter but since business visitors are allowed into countries for a limited period and for limited purposes, an employee living and working in that country this may create immigration issues which need to be addressed.

2. An employee living and working in another country may be entitled to utilise the laws of that country.
An English employer may therefore take action, compliant with English law but then find that the employee then takes action under the law of the country they are living and working in. I had a client who dismissed an employee on ill health grounds fairly under English law but then that individual brought a claim under Dutch law, which was very different. As the employee lived and worked in Holland, he was entitled to use Dutch Law. Employers may need to check the law of the other country before taking action.

3. There may be taxation issues which result from an employee working abroad and these tax implications are not only for the employer but can also potentially affect the individual.
This could include additional corporation tax issues and social security issues.

4. There could be health and safety issues; for example, if an employee is living and working abroad there may be a requirement to comply with the health and safety laws of that country rather than just English law.
With so many employees working from home, how does an employer check that the employee is not exposing themselves to unnecessary risks, for example in terms of the electronic equipment they are using and/or in terms of their seating, posture, working hours and taking breaks etc. If the employer does not have a homeworking policy which sets this out; then health and safety issues or liabilities could arise.

5. Many employers provide medical insurance as a benefit.
Will the terms of the policy apply if the individual is living and working abroad? There may be other insurances which the employer obtains for example professional indemnity insurance, professional liability insurance, and again will they apply to an employee working abroad?

6. Country registration – in certain countries this is required from a labour, tax and social security perspective.
What are the requirements of the country in which your employee(s) are operating?

7. What about confidentiality?
If an individual is living and working aboard and from home, what are the safeguards that the employer has put in place to protect their confidential information and that of their clients? What about IT licences and are there adequate protections in place if data is being transferred between countries?

8. Compliance concerns
Are there safeguards in place to ensure the compliance requirements of the employer are being dealt with and complied with abroad?

In summary

These are just some of the potential implications of allowing an employee to work from abroad. Before employers agree to such requests, they need to take advice from competent tax and social security advisors, employment lawyers and immigration specialists who may need to work collectively to advise employers about allowing this practice to continue.

Employers should therefore think twice before allowing what appears to be an easy decision to take place to help their employee(s) but without considering the above they run the risk of all sorts of liabilities which they would not even contemplate.

About the author

Nick Hine, Employment Partner
Constantine Law


All articles are the opinion of the author and do not represent the views of the EAGB.

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