I Wonder What Employers Should Consider Before Allowing Their Employees to Work Remotely from Abroad

During the COVID-19 pandemic, our approach to working from home changed drastically. Employers were forced to adapt their working practices, shifting from standard arrangements to allowing employees to work from home and, in some cases, even considering remote working from abroad.

Although it has been five years since the first lockdown, our approach to such working practices has become deeply embedded in everyday life. Data from the Office for National Statistics (ONS) shows that more than a quarter of working adults in Great Britain (28%) were hybrid working in autumn 2024. This demonstrates that what was once considered a rare benefit is now seen as a standard aspect of modern working arrangements - one that continues to evolve.

In this week’s article, we will consider what employers should take into account when allowing employees to work remotely from abroad.

Why Might Employers Consider Allowing Employees to Work Remotely from Abroad?

Hybrid and homeworking arrangements have evolved beyond traditional models, with some employers now considering the option of allowing employees to work remotely from abroad. While this approach is not without its challenges, there may be compelling reasons for businesses to support such arrangements, including:

• Supporting employee wellbeing and life changes – Some employees may wish to work from abroad due to personal circumstances, such as family commitments or educational opportunities.
• Meeting business needs – Businesses looking to expand beyond the UK may benefit from having existing employees temporarily work abroad to support or oversee the early stages of international growth, particularly while a permanent presence or office is being established.
• Attracting and retaining talent – Allowing remote working from abroad can be an attractive benefit that helps a business stand out in a competitive market. As work-life balance becomes increasingly important to employees, this flexibility can play a key role in attracting and retaining talent.

Some of the Legal Considerations Employers Should Keep in Mind

There are several key factors that employers should consider when allowing employees to work remotely from abroad:

Employment Law Jurisdiction

The country in which an employee chooses to reside, and the length of their stay, can significantly affect the employment rights to which they may be entitled. This area of law is complex and should not be approached without first seeking appropriate legal advice.

While the contract of employment is typically the starting point in determining applicable rights, there may be instances where it does not specify the governing law. In such cases, where there is no other reference to a particular country within the contract, the default position is usually that the applicable law is that of the country “in which, or from which, the employee habitually carries out their work” (Rome I, Article 8(2)). If there is no habitual place of work, the governing law will generally be that of the country where the employer’s business is located.

However, regardless of the law specified in the employment contract, employees may acquire certain employment rights in the country to which they relocate, even if they are only working there for a short period of time. This is why employers should approach such arrangements with great caution.

Tax Rules

This issue largely depends on how long the employee remains overseas and where they spend the majority of their time during that period. Tax residency status is complex, and specific guidance should always be sought. In general, however, if an employee spends more than 183 days in a host country within a 12-month period, this is when tax rules may change for that employee.

In essence, employers should not only consider the tax regulations in the UK but also ensure they are familiar with the tax rules in the country from which the employee will be working remotely.

Immigration Rules

Different rules may apply to an employee returning to their country of nationality, compared to one whose country of birth is the UK. As such, employers should carefully consider the immigration requirements of the host country and whether a “Right to Work” check will be necessary.

Data Protection and GDPR Compliance

Consideration should be given to the data employees will be processing, how it is stored, the location of any servers, and the data protection regulations of the host country. Employers should be aware that accessing data outside the UK may give rise to additional compliance risks.

Health and safety

While employers must continue to comply with their standard health and safety obligations to provide a safe working environment, they are also required to adhere to the health and safety regulations of the host country. This may involve conducting appropriate risk assessments.

It is therefore essential that employers familiarise themselves with the health and safety requirements of the country in which their employees may be working remotely.

Permanent establishment

To avoid triggering local corporation tax rules, which may differ significantly from those in the UK, it is important that employers ensure their employees do not create a permanent establishment in the host country where they are working.

Practical Tips for Employers

If you do have an employee who has requested to work remotely from abroad consider the following tips:

• Seek legal advice – It is vital to have a clear understanding of your obligations and the relevant employment law considerations before making any decisions. Consulting a legal specialist can help ensure you are aware of the key issues to consider, and whether it is necessary to seek specific tax and immigration advice in order to fully understand your position before agreeing to such an arrangement. In some cases, seeking legal advice in the host country may also be necessary.
• Review your policies – Introducing a “working remotely from abroad” policy, outlining how requests should be submitted and how they will be assessed, will provide employees with a clear understanding of the process and the potential outcomes.
• Amend relevant documents – Clearly setting out in the employment contract who is responsible for any liabilities that may arise will help to ensure expectations are documented and can protect both parties in the event of a dispute.
• Governing law and jurisdiction clause – Ensure that all written agreements clearly state that the governing law is that of the UK, and that any disputes will be resolved in the UK courts.
• Practical considerations – Employers should assess whether the employee’s role can be effectively performed from abroad. Consideration should also be given to how employee productivity will be monitored, and how benefits such as pensions, or allowances will be affected or administered while the employee is working abroad.

Conclusion

In conclusion, there are several important factors that employers should consider before allowing employees to work remotely from abroad. It is essential to take into account not only the legal implications in the UK but also those in the host country. This decision should not be made lightly and must be approached with great care. Adapting internal policies and documentation is necessary, along with maintaining oversight of the entire process to ensure compliance and minimise risk.

Further Advice

If you have any queries about how to approach employee requests to work remotely from abroad, or if you would like assistance in updating your policies, our Peace of Mind Team is here to provide expert guidance. Our Document Audit Team can also assist in drafting relevant workplace policies.

Contact our Employment Team by emailing employment@warnergoodman.co.uk or calling 02380 717 717.

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