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Implication of an employee “working from home” outside the UK?

19 November 2020
Implication of an employee “working from home” outside the UK?

The main implications of an employee asking to work from home from a foreign jurisdiction will depend on the particular circumstances, including the contractual position and the nature of the employer’s business.

From an employment law perspective, the following points may be relevant:

  • UK statutory employment law rights. Employees of a UK employer may still be covered by British employment rights even if they are working in a different country. In this particular homeworking scenario, their employment would arguably still have a greater connection with Great Britain and British employment law than with the jurisdiction in which they are temporarily working from home. 

An employee living and working abroad may also acquire local employment law rights in that country.

  • Immigration status. If the employee is not a UK national, a prolonged absence from the UK may affect their immigration status or right to work in the UK.
  • Documenting the arrangement. As with any homeworking arrangement, if it will continue for a substantial period of time,  you will want to agree how the employee will do their job and be monitored while they are working from home abroad. You may want to consider confirming it in writing, in a side letter to the employment contract. You may wish to include the day-to-day details of the new arrangements setting a clear timeframe and explaining the circumstances in which the arrangement will be terminated. 
  • Tax. There may also be tax implications of the employee returning to their home country. A UK employer is under the usual statutory duties to operate PAYE on earnings paid to employees.  However, you should seek a direction from HMRC to determine the portion of earnings subject to PAYE if the employee is:
  1. Not resident in the UK but liable to tax on UK source earnings.
  2. Likely to be entitled to split year treatment.
  3. Likely to be entitled to overseas workday relief under the new or transitional rules.

An employer may also need to consider local law advice in the jurisdiction the employee will be working in, to determine whether or not there are any tax implications in that jurisdiction.

  • Company law issues. Local law requirements in the relevant jurisdiction will determine whether you would be considered to be operating in that jurisdiction and therefore subject to local company law requirements.
  • Data protection. Where an employee works abroad, the employee’s personal data will still be covered by the UK data protection legislation and this should not generally be an issue for you. However, you should consider whether the employee has access to any personal data about others (such as customers, colleagues, suppliers etc.). If the employee will be based outside the EEA, then you should consider whether this triggers any overseas data transfer requirements. A strict interpretation of the GDPR could mean this could constitute an overseas transfer, however, the ICO takes the view that the personal data remains within a GDPR bubble and is protected under the compliance regime of the employer and therefore nothing additional is required. You may also wish to consider whether any additional security is required for personal data and document this with the employee. The ICO has issued guidance on working from home in the context of the COVID-19 pandemic: https://ico.org.uk/global/data-protection-and-coronavirus-information-hub/

Organisation will be tempted to agree to employee’s request to “work from home” outside the UK, but they should do with caution as although it may appear straight forward initially and employer’s want to assist employees, they may face more challenges than expected. If, employees request to be with their families during the pandemic, consider annual leave or perhaps shorter working from home periods, but take the above considerations in to account.

For advice or assistance on working from home or employment contract and/or policies contact our Employment Law team on 0207 903 6889 or email contact@davenportsolicitors.com.

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