Employees working abroad – what do employers need to know?

The issue of employees working internationally is becoming increasingly common. As businesses and markets expand, it may be that employers need to post UK employees overseas. With more and more employees working remotely, or in a hybrid working environment, requests to work from overseas are also on the rise, whether as lifestyle choice, perhaps because of family connections, or even to fit around holiday and travel plans to accommodate longer trips.

While the idea may seem simple, particularly with the ease of modern technology, employers need to understand that overseas working can create very significant legal and practical issues and the consequences of getting it wrong can be severe. That does not mean that overseas working is out of the question, but it is very important that employers enter into any agreement or arrangement with their eyes open and with the benefit of proper advice to navigate these issues.

If an employee wants to work from another country, or if an employer needs to send someone abroad, what are the main immigration issues to consider?

The first issue will be whether they need a visa, or whether they can enter the country in question as a business visitor. These are very different and it is important to understand the difference. A business visitor can usually do things such as attend meetings and some limited activities, but they would not be able to perform productive work.  Therefore if an employee is going to do the main part of their job while they are aware, then in most countries they will either need a work visa or other equivalent permit.

If someone spends a period of time working abroad, can that impact on their UK immigration status?

Potentially it can and this is an angle that is often missed. If an employee spends an extended period outside the UK, it might then affect their right to live in the UK in the future. If someone has indefinite leave to remain in the UK, usually there is a requirement that they cannot be absent from the UK for more than two continuous years. If they are away for longer, their right to live and work in the UK may then lapse.

For those who are employed to work in the UK on sponsored visas, it may be even more difficult. If they do not work in the UK for any prolonged period, it may then raise questions over whether they are genuinely employed in the UK at all, which in turn could impact on their immigration status.

What tax issues might there be? If employees are working from abroad, might the business be deemed to have an establishment in that territory?

It is a risk that businesses need to be aware of. If an employee is working in another country on a regular basis or for a prolonged period, and particularly if they are concluding contracts while there, there is a risk that the local tax authority in that country might conclude that the business has established a taxable presence in that country and therefore could be liable to pay corporation tax or the equivalent in that particular country. The financial and compliance consequences that follow can be very significant, including the payment of back taxes, penalties, and the obligation to file tax returns in that jurisdiction.

These initial issues highlight some of the hidden issues that can arise when employees work overseas.  The importance of taking good quality advice in advance cannot be emphasised enough, with the cost of that advice insignificant in comparison to the cost of getting it wrong.

For more information about any of the issues covered in this update, or if you are an employer and need advice on employees working overseas, then please get in touch with one of our employment solicitors.