With the rise of remote and flexible working, more UK employees are asking to work from abroad, sometimes temporarily, sometimes for the long term. While the idea can seem straightforward, the legal and practical risks for employers are anything but.
This guide is for business owners, HR teams and managers navigating the complexities of employees working from outside the UK. It sets out the key legal, tax, immigration and regulatory issues you need to understand before giving the green light. You’ll learn how to balance flexibility with compliance and protect your business from unexpected liabilities.
If you need help reviewing overseas working arrangements or want a clear, risk-based policy tailored to your business, our employment law solicitors can support you.
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Considerations for your business
When one or more of your employees asks to work remotely from outside the UK, there are several key legal and practical considerations to keep in mind:
Employment rights
Employees working abroad might be entitled to the local employment rights of the host country in their new location. This could mean more generous benefits like additional annual leave, higher minimum wage, or enhanced maternity leave. It is crucial for your business to understand and respect these rights to avoid any legal disputes.
Right to work
Can your employee legally work from the chosen country? Does the employee have the relevant passport or visa to enter and work? Would the work your business requires them to carry out breach any restrictions? Illegal working can have drastic implications for your employee and your business.
Local laws and regulations
It's important to be aware of and comply with the local laws and regulations of the host country. Will the posting of your employee trigger local registration obligations for your business? Does the placement trigger social security liabilities?
Tax implications
An employee’s tax position can become complicated, leading to potential double taxation issues. Seeking specialist tax advice at the earliest opportunity is crucial. Both the employee and employer need to be aware of the tax obligations in both countries to ensure compliance and avoid unexpected tax liabilities.
Health and Safety
Even when employees are working remotely, employers still have a duty to ensure their health and safety. This includes conducting risk assessments of the home working environment and providing suitable equipment.
Data Protection
With remote work, data security becomes even more critical. Employers must ensure that robust measures are in place to protect sensitive information, such as secure connections, encryption and appropriate restrictions on sharing and processing.
Employment Contracts
Adjustments might be needed in employment contracts to reflect the new working arrangements. This could include changes to location, working hours, reporting lines, and any specific terms relating to remote work.
The degree to which these considerations will apply to your business will depend on:
- the length of the arrangement,
- the host country from which your employee will work,
- whether your employee has been seconded to a local entity,
- whether your employee has been recruited locally from the host country or whether your employee has been recruited in the UK before being posted abroad.
We explore these points a little more below.
What does employment law say about employees working abroad?
If employees are working in another country, they may fall within the scope of the employment law of that country. Even if your employee’s contract is written in the English language, states that the terms and conditions of the agreement are governed by the laws of England and Wales, and the employee is paid in pounds sterling, your employee might still acquire local employment rights of the host country. This can include minimum pay, annual leave, family leave rights and rights on termination of employment.
As countries may have enhanced employment rights when compared to the UK, your employee may rely on those enhanced rights if their employment does come to an end. It could be that the rights are not more beneficial than the UK employment rights. However, your business could be placed under the additional managerial and administrative burden of managing two different employment law frameworks.
The threshold for this varies depending on the host country, so awareness of local rights before agreeing to an employee’s request is recommended. You should consider the likely length of the arrangement and, if the employee is carrying out a regulated role, whether there are any additional regulatory implications. This information will enable your business to obtain legal local advice from the host country.
Your employee’s contract may also need amending to allow for working abroad. You may need to agree a variation to the employee’s employment contract to allow for the change in location, and hours of work, reporting obligations, etc.
Some of the employee’s contractual benefits may also be affected whilst working in a host country, such as private medical insurance and pension. So, review the terms of these benefits or contact your benefit providers to see what the impact would be of an employee working abroad. You can then communicate this information to the employee in response to their request, and factor it into the terms of any acceptance of their request. Will your business provide alternative cover while they are working abroad, or will the employee source their own?
If you are unsure about making changes to an employee’s terms and conditions, please contact one of our specialist employment solicitors.
It’s crucial that you deal with all requests to work overseas fairly and consistently. It may be the case that some locations and durations of placements abroad are acceptable, and others are not. Whilst your decision can be judged on a case-by-case basis, your approach should be uniform. Refusing a request to work from abroad isn't inherently discriminatory. However, it could be if it disproportionately affects certain groups and isn't objectively justified. Employers should carefully consider each request and ensure their decisions are fair and well-documented, as you would a flexible working request, for example.
Immigration law and the right to work
Each host country will have its own set of rules relating to visa and/or permit requirements and associated costs. Your business may have relied upon business visitor visas in the past for short-term work-related activities. However, specialist advice is required when an employee intends to participate in ongoing employment abroad. Your business should consider whether it will cover the associated costs arising from the immigration process or whether it will be the responsibility of your employee.
Following the UK’s exit from the EU, there is no automatic right to work within the EEA. The UK Government currently recommends seeking further information from the relevant UK–based embassy, which may be a useful exercise before seeking advice.
If your employee is a foreign national and is subject to existing rules and restrictions, advice should be taken in relation to the impact of their request on your business, particularly if they intend to return to the UK in the future. They should be encouraged to seek their own independent advice.
Our team of specialist business immigration solicitors would be happy to advise your business on a case-by-case basis. We can also help in developing a longer-term immigration strategy.
What are my business’ potential liabilities?
Wherever your employees work, your business has a duty of care towards them, including a legal obligation to provide a safe system and place of work. When your employee works in a host country, the local health and safety laws of that country will apply as well as the UK’s Health and Safety at Work Act 1974, (the primary piece of legislation covering occupational health and safety in Great Britain).
- Risk Assessment: You will need to carry out a risk assessment of the work activities carried out by your employee, and of their working environment and equipment to identify hazards and reduce or eliminate risk, where possible.
A risk assessment in person may be difficult if you or a colleague do not generally travel to the location the employee wishes to work from, and so you may be required to use video conferencing to see the lay out of the work space and assess hazards and fully discuss any issues the employee may have, or to ask for details and photosof equipment being used to be sent to you.
You should ensure the employee has everything they require to perform their role effectively and safely, including sufficient lighting and a first aid kit, the contents of which will depend on the role.
Taking a more holistic view, your business has a responsibility not to expose its employees to foreseeable unnecessary risks, so for employees working abroad this would cover travel arrangements, the environment in which the employee works, whether it exposes them to a threat of crime, poor standards of health and hygiene, political unrest or terrorism. It would also be sensible to ask your employee to seek advice from their GP about any immunisation requirements. - Reporting Procedure: A clear reporting procedure should be in place so that the employee knows what they should do if they do suffer an accident or injury whilst working or exposed to a risk of harm. To minimise this liability for your business, equipment will need to be serviced, inspected , and if required, replaced regularly. Also consider, when working abroad, different equipment or adaptors may be required, and different voltages might be available than in the UK.
- Workplace Stress: Workplace stress of staff is a potential liability for a business wherever an employee works, but if an employee is working alone and in a foreign country, stress and isolation may be an issue and so it is advisable to think about communication, supervision and support which can be offered to the employee from the outset, to minimise this potential liability.
- Regulatory Issues: You should check if there are any regulatory issues and, if you have one, whether your regulatory body allows for working abroad and under what conditions. It is critical that your employee understands their role in upholding health and safety requirements. Together, you should look at whether they need to comply not only with UK but also with local health and safety laws and have a good knowledge of what these laws are. You may require a local expert to guide you on this to ensure your business is not creating additional liability for itself by falling foul of local laws.
- Insurance: You should have insurance in place to cover incidents involving the employee and damage to company property. If you are not able to insure this under your company policy, this should be arranged by the employee, and if this is at an additional cost to them, you may need to discuss whether you reimburse the employee for this.
What are the data protection considerations?
Specific training will need to be provided to employees working abroad to ensure that where they deal with data falling under the General Data Protection Regulation (GDPR) and the Data Protection Act 2018 (DPA 2018), it is stored and processed correctly. Measures should also be put in place to prevent unauthorised or unlawful processing of data that identifies individuals and to prevent accidental loss or destruction of, or damage to personal data. For more information, see our data protection FAQs.
A recommended first step is to carry out a data privacy impact assessment of the data protection implications of employees working abroad, as you would for anyone working remotely. Questions will need to be asked about the security of any laptops or other electronic devices, such as:
- Who will have access to the employee’s computer and the data stored on it?
- How secure is the computer when it is left alone?
- Is equipment password protected, and are passwords frequently changed?
- Can data be safely transmitted physically and electronically between home, office and other locations it is required to be sent to whether electronic or physical files?
- Will data be transferred outside of the UK and if so, will it create a restricted transfer?
All of this should be considered in advance, and evidence kept that you have made best efforts to protect data and put systems in place to keep it safe, to avoid fines by the Information Commissioner’s Office. If you have any questions about data protection, our data protection solicitors can help.
If data is transferred from outside the UK, additional data protections will be required and any potential data protection law breaches, both in the UK and in the host country, will need to be considered. Further information can be found on the website of the Information Commissioner’s Office. Our data protection solicitors can advise you on a range of data protection issues.
What tax considerations are there?
Potentially, both your employee and your business could incur a further tax liability as a result of an employee working abroad and so it is important to obtain specialist tax advice in advance of any arrangement being agreed.
What tax will become due in respect of an employee will depend onwhere the employee carries out their work, where they are resident for tax purposes, and the terms of any double-tax treaty.
Generally, if your employee continues to be employed and paid by your business, and your business is a UK entity, National Insurance should be payable (and your business will be required to deduct employee NICs and pay employer NICs), for the first 52 weeks of the placement in the host country. Local social security agreements and rules could also apply or impact the UK rules. It would therefore be sensible to find out whether the UK has a social security agreement with the host country and, if your preference is for the employee to remain on the UK system, what the requirements are to make that possible.
With reference to income tax, if your employee continues to be employed and paid by your business, your employee may be entitled to rely on an exemption under a double tax treaty that the UK may have entered into with the host country. This may reduce the employee’s ultimate income liability. However, the specific terms of exemption should be checked in the context of the employees’ individual circumstances. If there is a double-tax treaty, a short stay abroad, typically up to 183 days in a 12-month period should not usually have any tax implications. Nevertheless, it is important to determine how that is counted and over what period it applies in the host country. If it is likely that your employee will work outside of the UK for more than 183 days, you should seek specialist tax advice, to enable you and the employee to prepare for any change in the employee’s tax residency status.
Your business could still have an obligation to withhold and/or report in the host country, even if the employee benefits from certain exemptions. Local advice is recommended to check the requirements for triggering such obligations.
Finally, advice should be sought as to whether the placement in the host country could impact your business’s corporation tax position.
If it is determined that your employee’s placement had created a ‘permanent establishment’ for your business in the country they are working in, this could also lead to further income tax complications, plus VAT and corporate tax liabilities, on profits made by your employee whilst working for your business abroad, (or similar duties and potentially, other local taxes). This is a complex area of law and therefore specialist advice should be sought from the UK, and locally.
Key tips to minimise risk for my business?
Whilst working from abroad may suit your employee’s personal circumstances and could be helpful to their productivity and so your business, there are potential pitfalls to this arrangement and so, given the considerations we have already addressed, how do you minimise the risks to your business? Here are some tips:
- Put a policy in place. A clearly communicated policy explaining that working abroad is dependent on preapproval, granted only on completion of the appropriate application, and in the prescribed form. The policy should state that each request will be considered on a case-by-case basis. The policy should explain when and how the employee can make a request. If you would like help with drafting a policy, our employment lawyers can help.
- You will need to consider what should physically be in place, as you would do with any other home-based employee. This should be done before entering into an agreement with the employee and is likely to include relevant documentation, equipment or processes. We looked at this in detail in our article on home working.
- One of the first questions your business should ask an employee is whether they have the necessary passport and/or visa to enable access and legitimate working status.
- You will need to check that the employee’s contract allows for working abroad and any conditions on this.
- Carry out all necessary risk assessments to include the risk of any liabilities for your business and associated costs, including issues of governance, validity of current insurance arrangements and the cost of additional obligations, immigration consequences, taxation liabilities, employment protections and data compliance, both in relation to UK rules and those of the host country. You should take a view as to whether any liabilities are worth it, before you agree to your employee working abroad.
- Put in place all necessary protections, insurance cover, systems and processes, to ensure that your business is compliant and to remove any identified risks. This should be done before the employee relocates.
- Carry out a health and safety risk assessment of your employee’s place of work both in terms of envisaged working location before the employee relocates and again by video conference, with supporting photographs, following the relocation.
- If you are not prepared to accept any additional liabilities,you must clearly communicate this with your employee. In relation to certain liabilities, it might be possible to mitigate the impact on your business by reaching an agreement with your employee that they will cover those additional costs. This could potentially apply to tax, social security and/or insurance, for example. This should be confirmed in a written agreement, ideally including an indemnity to benefit your business. It is also advisable to confirm the employee’s responsibility and liability for their own personal tax advice relating to relocation and work abroad. This can be incorporated into an amended contract of employment. Our specialist employment lawyers would be happy to assist you in drafting the relevant documents.
- Put in place an amended contract of employment clearly setting out the new terms and conditions relating to working abroad. The terms of the arrangement should include the agreed length and details of any trial periods, and arrangements for the employee to return to the UK, (and if necessary, factoring in notice requirements for the employee if they wish to return to the UK). You can include any necessary systems of review for the arrangement within the contract or in the covering.
- If an employee is working in a different time zone you will need to discuss what hours the employee will be working so that you and your business’ contacts will know what times they will be contactable, addressing any impact a difference in time zone would have on supervision requirements.
- Establish an agreed frequency and mode of communication and stick to it, so that you are aware of any practical issues the employee has with equipment or systems, as well as any concerns they might have, to be able to deal with them before they become a bigger issue and impact on your business.
Our employment law solicitors can help you assess individual cases, minimise risk, and develop a robust policy that works for your business. Get in touch today for practical, commercially focused advice tailored to your needs.
