Employees working from abroad: What employers need to know

Last updated: 9 September 2021

Estimated reading time: 10 minutes

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Particularly because of the Covid-19 pandemic, businesses have had to embrace agile working. This means even where there were not previously systems in place to work at home, these have now been set up for staff to work remotely, where possible. 

But how about if an employee is working from outside the UK? Below are some of the key considerations for your business, if one or more of your employees asks to work abroad. 

Jump to:

  1. What does employment law say about employees working abroad?
  2. What does immigration law say about employees working abroad?
  3. What are my business’ potential liabilities?
  4. What are the data protection considerations?
  5. What tax considerations are there?
  6. Key tips to minimise risk for my business?

What does employment law say about employees working abroad?

Even if your employee’s contract states that it is under English jurisdiction, it is written in English and an employee is paid in £ sterling, an employee might also acquire local employment rights if they work in another country. This can include minimum pay, annual leave and rights on termination of employment.  

As many countries have enhanced employment rights when compared to the UK, your employee might seek to rely on those enhanced rights if their employment does come to an end. So, awareness of these rights before agreeing an employee can work in a particular location is recommended. 

Another point to check is whether the employee’s employment contract allows for working abroad. You may need to agree a variation to the employee’s employment contract to allow for the change in location and may need to look at what locations and durations of work abroad are acceptable, and which are not. If you are unsure about making changes to an employee’s terms and conditions, please contact one of our specialist employment solicitors. 

Some of the employee’s contractual benefits may also be affected if they choose to work abroad, such as private medical insurance and pension. So, you should review terms of 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 before they start working abroad. 

It’s crucial that you deal with all requests to work overseas fairly and consistently, as you would a flexible working request to ensure you are not falling foul of discrimination legislation. 

What does immigration law say about employees working abroad?

There may be visa requirements in the country the employee is hoping to work in, and this will need to be properly investigated before the employee is able to start working abroad. Also, if a business visitor visa applies, there are sometimes restrictions on the type of activities that can be carried out even for a short period of time.  

Even for areas of the EEA, following the UK’s exit from the EU, there is no automatic right to work there now, so specific advice relating to the country the employee wants to work in will need to be sought. Liability may attract to your employee and your business if your employee breaks a host country’s rules whilst working abroad. 

If your employee is a foreign national and has the right to work in their home nation, if they spend too much time abroad this may affect their current ability to work in the UK and future prospects of settling in the UK.  

What are my business’ potential liabilities?

Wherever your employees work, you will still be responsible for providing them with a safe system and place of work.  

  • 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  photos of 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.  

  • 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. As part of minimising 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 any regulatory issues and, if you have one, whether your regulatory body allows for working abroad and under what conditions. It is critical that you also look at whether you need to comply not only with UK but also with local health and safety laws and to 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). 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?  

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.  

What tax considerations are there?

Potentially the employee and your business could incur a further tax liability as a result of an employee working abroad and so this is worth checking in advance.  

What tax will become due in respect of an employee will depend on where the employee carries out their work, where they are resident for tax purposes, the terms of any double-tax treaty and there may be Covid-19 tax concessions which apply.   

Generally, if an employee is tax resident in the UK, you will need to make PAYE deductions as usual. If the employee is working in an EU country or another country with reciprocal social security arrangements, even post-Brexit, bilateral agreements are in place to prevent double taxation. You will generally apply for a certificate from HMRC to allow NICs to continue to be paid in the UK, and exempt the employee from local social security payments. If your employee is working in a country without such an agreement, you will need to seek specialist tax advice on deductions from employee pay, dependent on the country your employee is working in. 

If there is a double-tax treaty, a short stay abroad of up to 183 days in a 12 -month period (whether working or just present in that country) will not usually have any tax implications. However, if over the course of 12 months an employee works outside the UK for more than 183 days you should seek specialist tax advice, as the employee’s tax residency status may change.  

If it is determined that your employee has created a ‘permanent establishment’ for your business in the country they are working in, this could also lead to further income tax complications, VAT and corporate tax implications on supplies and profits made by your employee whilst working for your business abroad. This is unlikely, but the more senior your employee and the longer they remain working abroad, the higher the risk of local corporation tax being applied, which may be higher than the UK rate.  

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 some potential pitfalls to this arrangement and so how do you minimise the risks to your business? Here are some tips: 

  • As stated in our article on home working, you will need to consider what should physically be in place, whether in terms of documentation, equipment or processes, before an employee is able to work away from the office.  
  • You will need to check that the employee’s contract allows for working abroad and any conditions on this. 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.  
  • Put a written agreement in place clearly setting out the new terms relating to working abroad and agree as to whether this is for a set period of time or whether there will be a trial period. If there is more than one employee asking to work from abroad, you may consider drafting a policy relating to ‘working from abroad’. If you would like help with drafting such a policy, our employment lawyers can help. 
  • Carry out a health and safety risk assessment, by video conference and by asking for photos if not in person. 
  • 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.  
  • Depending on the role of your employee, if the relevant employee processes data covered under the GDPR and Data Protection Act, it is critical that sufficient protection is provided by your systems and processes.  
  • Check your insurance arrangements, the tax and immigration consequences of employees working abroad and local laws. You should take a view as to whether any liabilities are worth it, before you agree to your employee working abroad. 
  • If you are not prepared to accept any additional liabilities, stating that the employee will agree to cover additional liability relating to tax and social security in a written agreement, is advisable. You should also state in any written agreement that the employee shall be responsible for their own personal tax advice relating to working abroad.   
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What next?

If you need advice on employees working abroad or any other area of employment law, our solicitors can help. Get in touch on 0800 689 1700, email us at enquiries@hjsolicitors.co.uk or fill out the short form below with your enquiry. 

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