Temporary overseas working – Smooth flying for employees whilst avoiding turbulence for businesses
Authors: Peter Finding and Sophie Fletcher Watson
In the lead up to end-of-year holidays, staff show a fresh interest in working from abroad. Whether visiting family and friends, making the most of public holidays or simply enjoying a change of scenery, this leads to a growing pile of temporary overseas working requests.
Supporting staff with work opportunities overseas offers benefits such as employee well-being/satisfaction, and as a result, increased productivity/retention for the employer. Swapping Zoom for in-person planning meetings and joining in end-of-year events are added perks.
As significant tax and regulatory risks can arise from staff working temporarily overseas, in this article, we cover the differences between types of remote work, what information to collect, and provide recommendations for how to monitor and mitigate these risks.
Temporary overseas working versus remote working
The difference between temporary overseas working and flexible, remote working (or working from home), is that it occurs when a staff member works from abroad temporarily. This can range from working online for a couple of days around a holiday, to a short stint working on an overseas project, or attending a meeting or conference with international colleagues and clients.
All overseas temporary working arrangements require closer consideration to avoid risks to staff and businesses which can arise depending on a range of factors.
Factors for employers to consider and balance
Key factors to consider when weighing up the risk of a request:
Length: the length of time the employee spends working overseas including the overall time when multiple trips are broken up over separate occasions and interspersed with working from their home country;
Destination: the destination country’s specific regulations/limits around short-term visitors for work purposes and any specific short-term visas which may be required (a nod here to the increasing popularity of Nomad visas);
Working rights: the individual’s working rights in that country, taking into account country of origin, dual-citizenship, European members and even spousal visas etc (which can also have direct tax implications); and
Work: the type of work to be undertaken whilst overseas (e.g. taking meetings with clients, exploring business opportunities versus working purely online).
Take for example Charlie, a British citizen who wishes to work abroad from Europe for a few weeks over the end-of-year period to manage a project remotely whilst not missing out on a family ski trip. In this scenario, there are less risks to consider than if Charlie were to work from Canada or India for one to six months to explore new client relationships. Charlie working from either Canada or India for that length of time to explore opportunities increases and complicates risks to the business.
Risk categories
At a high-level, some of the risk categories employers must consider for the overseas working stint to run smoothly and avoid unnecessary (and sometimes significant) legal ramifications are:
employment law risks as well as rights and benefits of employees that can change based on an overseas working location;
coverage of business and employment related insurances (for the overseas locations);
employer responsibility for employee welfare and maintaining a suitable working environment;
health and safety;
data protection regimes and control;
intellectual property;
payroll, tax and social security obligations (including ramifications for both the individual and the business);
immigration and working status including controls and limits; and
permanent establishment risks for the business (i.e. a status that can be unintentionally created by a person working/doing business from another location that gives rise to tax liabilities and reporting obligations for a business).
Recommendations
To assess specific legal risk, businesses can collate the places and time periods that are commonly requested, the types of work staff are undertaking, including any overseas programmes, and relevant employees’ working rights.
Based on this information, we recommend designing an assessment and approval process tailored to your business and staff to review temporary overseas working requests, bearing in mind the relevant risk categories.
This publication and/or any linked publications herein do not constitute legal, accounting, or other professional advice or opinions on specific facts or matters and, accordingly, the author(s) and PierFerd assume no liability whatsoever in connection with its use. Pursuant to applicable rules of professional conduct, this publication may constitute Attorney Advertising. © 2024 Pierson Ferdinand LLP.
