Can My Employee Work Abroad? What UK Employers Need to Know

"Can I work from France for a few weeks?" It sounds like a simple request. It isn't.

With remote working now a permanent feature of many workplaces, requests from employees to work abroad (whether for a few weeks or several months) are becoming increasingly common. For small UK charities and businesses, the temptation is to say yes without looking too closely at what that actually means. After all, if they can log in remotely, what's the problem?

Quite a lot, as it turns out.

Why working abroad is more complicated than it looks

When an employee works in another country, even temporarily, it can trigger a range of legal, tax and compliance obligations that most employers haven't considered. The issues go well beyond whether the wifi works.

Tax liability

If an employee physically works in another country, that country may seek to tax the income earned there. The rules vary significantly by destination. In some cases, short stays are covered by double taxation agreements between the UK and the host country. In others, local payroll obligations can arise surprisingly quickly. Getting this wrong can be costly for both employer and employee.

Social security contributions

Tax and social security are separate obligations and need to be considered independently. Even where an employee isn't taxed overseas, social security contributions in the host country may still apply. Bilateral agreements between the UK and some countries can help, but this needs to be checked for each destination.

Right to work

Employees have the right to work in the UK. That doesn't automatically mean they have the right to work in another country. Many countries don't allow remote working on a tourist visa, and working without the correct permission can expose both the employee and the employer to legal penalties.

Employer's liability insurance

Many employer's liability and professional indemnity insurance policies don't automatically cover employees working overseas. This is worth checking before agreeing to any arrangement.

Permanent establishment risk

This is one of the least discussed but most significant risks. If an employee conducts revenue-generating activities abroad, the local tax authorities in that country may consider the business to be operating locally which can create a corporate tax liability for the UK business. Even a short-term arrangement can trigger this in some jurisdictions.

Employment contract

If an employee works habitually from another country, they may acquire local employment rights that override the terms of their UK contract. Verbal or informal agreements for overseas working provide no legal protection if a dispute arises later.

What your employment contracts should say

At a minimum, employment contracts should make clear that working from a location other than the agreed place of work (including working abroad) requires prior written permission from the employer. Without this, you have no basis to refuse a request or withdraw permission if problems arise.

If you receive these requests regularly, a short working abroad policy is worth putting in place. It should set out your approach, what employees need to do to request permission, what factors you'll consider, and what happens if the arrangement needs to end.

What to do when you receive a request

The answer to a working abroad request might still be yes, but it needs to be an informed yes.

Before agreeing to any overseas working arrangement, check the right to work position in the destination country, review your insurance policies, take specialist tax advice on the implications for both the employee and the business, and make sure you have something in writing setting out the terms of the arrangement.

How we can help

At Bluestone HR, we work with small charities and businesses across the UK on exactly these situations. We have an international HR specialist on hand to help you think through the HR implications of overseas working requests, and we can point you in the right direction for specialist tax and legal advice where needed.

If you've had a request from an employee to work abroad and you're not sure how to handle it, get in touch before you respond.