Whilst many companies are continuing to work flexibly from home or have a hybrid model of office/home based working, several of our clients are starting to consider employing staff from abroad due to the many staff shortages we are experiencing in the UK or reviewing whether current employees can work from other locations such as family homes outside of the UK.
This can be a great way to get the best talent into your business. However, where an individual works has a number of legal considerations including tax (both corporate and individual), health & safety, immigration, and employment law.
So, if you are considering employing people who will be working from a location outside of the UK you need to understand the legal and practical issues to consider when hiring someone based entirely in a different country. Here are just some of the things you will need to consider and we will help you to figure out:
- What employment contract will they be on (UK or overseas) and what employment rights will the employee therefore be protected by?
- Will they be working for a UK based and registered company or a branch of the company based overseas? If you are not sure, having an employee work in a different country to the UK could create a legal entity for your business in that country and therefore you may be liable to tax and social care payments for that employee.
- Is the employee legally entitled to work from the country they will be based in? So, just like someone having the right to work in the UK, you need to understand whether they are a citizen, have permanent resident status or require a working visa.
- Does your business have policies and practices set up to accommodate remote workers? There are a number of things to consider when drafting a remote workers policy such as; how you are going to communicate with employees in different time zones, what equipment and resources will you give them, how you will ensure you are not discriminating against those employees or your employees based in the UK, how you will involve remote workers in team meetings, 1:1’s and how are you going to transfer data between different countries and ensure you are meeting GDPR and ensure confidentiality of company materials.
- How and where are you going to pay the employee, and in what currency? There may be additional social security and benefit costs associated with employing the individual. We often think that the UK is an expensive place to employ people but wait until you see what the social costs are of employing someone in France or Germany for example!
- What are the tax implications of the employee working outside of the UK are if they are a UK national wanting to work and be based outside of the UK? They may be paying tax in two locations if this is not considered and reviewed carefully.
- Is the employee creating a permanent establishment for your business in another country? If this would be considered a fixed place of business, that generally gives rise to income or tax liability for you as the business in the location they are working in.
So, hiring someone overseas or allowing a UK employee to be based in another country is not as straight forward as it may seem! However, we work with a number of specialists that we can call upon to help you if this is something you are considering. We will help you to make sure you have completed your due diligence before making any offers of employment or promising something to an existing employee who wants to work from their holiday or family home in Spain, that the company is unable to legally or practically provide or financially afford.
