Working from Home, Abroad - Key Considerations for Employers

by Breda O'Malley September-17-2020 in Employment Law, COVID-19

COVID-19 has propelled a vast majority of businesses into the world of remote working overnight and with that, several employment law considerations have arisen for employers. Many employees are carrying out their duties from home. For some, this new way of working has prompted the question of what working from home means?  Does it mean working from home, but in the country where the employer is based, or working from home, where the employee lives? This article explores the key considerations for employers who are faced with employees who wish to work from home outside of Ireland.

Accrual of Statutory Employment Rights while Abroad

Depending on the length of time the employee spends in the Host Country, the employee may begin to acquire employment rights in that country. For example, an employee could accrue rights to additional statutory annual leave together with termination rights and redundancy and indemnity payments, if their contract is terminated.

This is also a consideration for the employee as they may be losing statutory employment rights in Ireland the longer they spend abroad, such as the right to statutory redundancy under the Redundancy Payments Act 1967, if they are no longer resident in Ireland.

Disputes may arise over the governing law of the contract, whether that of the Country of the employer, or the new home base of the employee. There can also be disputes about the appropriate adjudicative fora for addressing employment-related disputes.

Is the Employee a Posted Worker?

Is the employee being sent to work outside of Ireland by the employer or, are they moving of their own accord? If an employee is posted in another Member State on a temporary basis under the direction of the employer, the European Union (Posting of Workers) Regulations 2016 (the “Regulations”)¹ apply. These Regulations do not apply to employees who choose to work in a different Member State.

This Directive has been amended recently by Directive (EU) 2018/957, increasing the obligations on the employer when posting workers abroad. Where an employee is deemed to be a Posted Worker, there are several considerations for the employer to bear in mind, such as length of time that the employee will be working abroad. Under the new Directive, employees who are posted in another Member State for more than 12 months, (which can be extended to 18 months), are deemed to be governed by the Member State in which they are based. Further, there is an onus on the employer to ensure that the employee receives the same remuneration as local workers carrying out the same role as the employee.

Governing Law

As a rule, the Rome I Regulation states that the parties to an employment contract are free to choose what law governs that contract. Where this has not been decided or cannot be agreed on, the contract will be governed by the law of the country that the employee carries out their duties. An exception to this can arise where the contract is more “closely connected” to another country. As mentioned above, the governing law could change where the employee is a Posted Worker carrying out their duties in another Member State for more than 12 months.

Tax Implications

It is imperative that employers speak with their tax advisors prior to approving an employee moving abroad. There could be tax, social insurance and corporate tax implications for both the employer and the employee when working from a different country. Employers will need to consider and explore with their tax advisors whether there is a Double Taxation Agreement between Ireland and the other country. The implications will vary depending on the country in which the employee is basing themselves (the “Host Country”).

Ascertaining and clearly documenting the length of time which an employee will be working abroad allows the employer to put in place the necessary tax and employment measures required in advance. Generally, the shorter the period the employee is abroad, the less risk that arises from a tax and employment law perspective. If an employee is working abroad for more than 30 days, employers should assess the ongoing working situation.

Could a Permanent Establishment be triggered for the Employer, for Tax Purposes?

A Permanent Establishment is defined as a “fixed place of business in the State in which the business of the enterprise is wholly or partly carried on.”² This can be triggered when a fixed place of business is established in another country which may then require the reporting and payment of taxes to the relevant authority in that country.  Employers should be mindful of this when authorising employees to work from home in another country, as their presence could give rise to a permanent establishment for the employer.

Other Considerations

Health & Safety: - Where an employee is working remotely from a different country, the employer’s duty of care to that employee remains.  The Safety, Health and Welfare at Work Act, 2005 sets out the obligations an employer has to its employees, regardless of the country that they are in. Employers must ensure the safety, health and welfare of its employees at work, insofar as is reasonably practicable and risk assessments should be carried out in line with the Health and Safety Authority’s guidance.

Working time & Holidays: - Employers should be mindful of employees’ right to rest breaks and annual leave. The same obligations of maintaining working time records applies.

Employees Relations: - Regular communication systems with managers and colleagues should be put in place while working abroad to ensure that the employee is adequately supported in their role.

Agreement should be sought from the employee that they will continue to adhere to the employer’s policies and procedures whilst abroad and given the current circumstances, that they will adhere to the public health guidance in both jurisdictions, particularly so when travelling between countries.

Data Protection: - Employers should also be mindful of the processing and transferring of personal data, particularly where the employee is based in a country outside of the EEA. Consideration should be given to how a potential data breach is managed when the employee is working other than in Ireland.

Intellectual Property of the Employer: - Local laws may differ to those of Ireland in respect of intellectual property. It is important to learn of the local intellectual property legislation, so as to protect the employer’s proprietary interests.

Visa & Work Permit Issues: - Visa issues may also arise. However, if the employee is an EEA national, they have the right to live and work in any EEA country.  This will change for UK nationals from 31 December 2020, when the transition period following Brexit will end.

Criminal Prosecutions: - Where employers or their officers or managers are prosecuted for regulatory breaches, whether in company, competition, health and safety, data protection law or otherwise, the inaccessibility to the evidence of the employee based abroad is an additional complication for an employer’s defence and reputation.  

Key Points

• Given the pandemic and increasing rise in employee interest in working remotely from other countries, it is advisable that employers implement or amend their Remote Working Policy outlining the employee and employer’s duties and obligations;
• Employers should establish whether the employee can competently carry out their duties while abroad and if there are any external factors that would obstruct the employee’s performance e.g. time zone;
• Employers should consider the local law implications for workers, if an employee relocates for more than a 30-day period, to another country;
• Employers should consider corporate tax, income tax, and social insurance implications of an employee working abroad;
• Rights of employees and employer’s obligations may change depending on the duration of time spent working abroad;
• Issues may arise over the relevant jurisdiction should disputes arise;
• The Employer’s duty of care remains the same when an employee is working abroad; and
• In order to minimise any potential disputes, the agreement to work abroad reached between the employer and employee should be documented before the employee leaves Ireland. The employer should reserve the right to require the employee to be working in Ireland with a short notice period to relocate, in order to protect the employer’s business.

For further information on any of the issues raised above, please contact Breda O'Malley bomalley@hayes-solicitors.ie.

¹ Council Directive 96/71/EC

² https://www.revenue.ie/en/tax-professionals/documents/double-taxation-treaties/u/uk.pdf

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About the Author

Breda O'Malley

Breda is a partner in the Employment Law Team at Hayes solicitors.

Breda advises on the full range employment issues across a broad range of sectors, for established business clients and senior executives.