During the COVID-19 Pandemic, employers had no choice but to allow employees to work remotely from their home location due to restrictions that were in place to minimise the spread of the COVID-19 Virus. Many employees who were currently working abroad at this time, remained in that country due to travel restrictions.

The post-pandemic world of work has placed significant focus on the benefits of hybrid/remote working for employee wellbeing and productivity.

Global remote working appeals to many employees, and many don’t see any issue with this or indeed don’t make their employer aware of their change in location if they travel overseas and bring their laptop with them… sure as long as the work is being done?

What are the implications of employees working from anywhere?

It is vital for employers to be aware of their employee’s location whilst they are working for them. This is for the purposes of security, data protection, employee health and safety and it is also an employer’s duty of care to know the whereabouts of their employees. Whether an employee changes their working location from home to a relative’s or friends house, they should still notify their employer.

Where it becomes more complicated is when employees take a trip abroad; perhaps bringing their work laptop with them on holiday and deciding to extend their stay and work from that location without notifying their employer.

There are a number of legal risks for businesses with employees working abroad such as the right to work in that particular country, employees accruing overseas employment law rights, data protection implications, health and safety concerns and whilst these risks are extensive, they are quite minor in comparison to the hefty burden of tax. Activities of an employee can unintentionally trigger corporate tax presence in a country overseas, even if the company is not registered in that country.

Where employees are only working abroad from a country for a short period of time, they are most likely to retain their UK tax status; however, the country in which they are working from may have their own laws around tax and it will be the responsibility of the employer to manage this. National Insurance contributions, social security or other contributions are also the responsibility of the company. Many countries will demand contributions in this respect if an individual is working within that country.

Depending on what duties the employee is undertaking within a country, which generates income for an organisation, that country may tax the organisation as the employee is generating income from within their borders and they will want their share of this.

Some countries require organisations to register within the country the employee is working from and as a result brings about taxation. Each country will have their own rules; however, it will depend on the duration of work. It is important to note that some countries operate double tax treaties, meaning you cannot pay tax in two countries.

Other areas of concern are around different employment laws. If an employee is working overseas in a different country, they would be entitled to benefit from local employment laws and entitlements which could include different annual leave or other rights.

If you feel your organisation is facing something similar to this, feel free to contact our HR Team to discuss the particulars. We can also point you in the direction of our wider AAB taxation team, who can advise on different tax requirements in particular countries and how you might go about setting up or registering a company overseas for taxation purposes.

Managing and Motivating Remote Workers | eLearning Course

Are you responsible for overseeing the implementation of training for all employees in your organisation? Since the COVID-19 pandemic, organisations have offered office-based workers remote working options on a permanent basis. Therefore, it is necessary that managers are trained to optimise team performance. They also need to protect the wellbeing of each team member, whether they all work remotely, or some are based in the office and are part of a hybrid team. Legal Island has created an eLearning course in partnership with Think People Consulting that will provide managers of remote workers with the tools to manage and motivate their teams, optimise performance, and achieve organisational goals.

Click here to view our course on managing and motivating remote workers.