It’s safe to say 2020 has been a game-changer in the business world — particularly when it comes to remote working.

Since the start of the coronavirus pandemic, more of us have been adjusting to working from home, with many companies suggesting workers may not be back in the office until 2021 or even 2022!

This period has only highlighted what many have argued all along: depending on the type of work, employees don’t need to be tethered to a physical location to do their jobs.

In fact, many organisations have found this working-from-home stint so successful for productivity and reducing costs that they’ve decided to scrap offices altogether and shift the entire workforce to remote working.

But what if employees want to pack up their home office and work remotely from another country?

Working from home on a global scale

COVID-19 has left many people stranded far away from their home country and isolated from family and friends based there. Others have simply realised that since they no longer have to go into the office, they would prefer to work from a more desirable location.

As a result, we’re now starting to see more and more employees question whether they can work remotely overseas for an extended period — potentially even for good.

For employers, this raises several issues. You don’t want to lose great employees so will look for ways to accommodate where possible. However, it’s not as simple as just letting employees work from another country; there are several factors to consider first.

Barbados has announced a one-year visa for working remotely that people can apply for online before they travel. But not every country is letting foreigners in right now. For example, Australia and New Zealand have both closed their borders to anyone who isn’t a citizen or permanent resident.

Pandemic aside, many countries will require a visa if employees plan on staying for an extended period — although workers from countries in the European Economic Area (EEA) are free to live and work anywhere within the EEA. However, this could change for UK employees depending on the outcome of Brexit negotiations.

Then you have time zones to consider. If you’re a UK-based company and the employee wants to work in Europe, this shouldn’t be an issue as the time difference will only be up to a few hours. But if they want to work in Australia or the US, the logistics of organising meetings and projects could get a little complicated.

Considering the business implications

Things are more straightforward if your business already has established operations in the host country your employee wants to work in. The real headaches occur when this is not the case.

There are a number of tax, social security and employment implications to think about before agreeing to an employee’s request to work from home in another country. For example, if the employee becomes a tax resident, income tax may be payable in the host country. Social security obligations also typically arise in the country in which the employee is physically carrying out their duties.

Although the risk of creating a permanent establishment is low, there’s a chance it could happen — particularly if the employee has a sales or business development role and is frequently negotiating contracts. If a permanent establishment is created, your profits would be subject to corporate tax in the host country.

On top of these tax and social security implications, you also need to consider local employment laws and data privacy. Even if employees are only living and working abroad for a short period, they can become subject to the jurisdiction of the host country and benefit from the applicable mandatory employment protections. This could include pay rates and holiday entitlement, as well as termination rights. So, it’s crucial to be aware of the local employment laws in that country.

International data protection laws could also cause some issues depending on where the employee is requesting to work. For example, the recent fall of the Privacy Shield agreement might spell trouble for digital transatlantic trade if your company is based in Europe, but your employee wants to work in the US.

Engaging a PEO in the host country

Given the current situation, it’s understandable that you’ll want to be flexible and accommodate requests to work from home overseas where possible. But it’s also essential to minimise any risks.

Companies usually engage a Professional Employer Organisation (PEO) for commercially driven opportunities such as entering new markets or finding global talent. However, more and more businesses are now seeking international employment services to help navigate this new way of working.

A PEO will be able to draw up new contracts and offer expert local advice on any tax, social security, employment and data protection obligations in the host country. They can also provide information about visa requirements and assist with applications if needed.

Has your employee requested to work remotely from another country? We can help you employ them — compliantly — from their chosen location. Get in touch with TopSource Worldwide today to find out more about our employment services.

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Published On: September 10th, 2020Last Updated: May 25th, 2022

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About the Author: Paul Sleath

Paul is responsible for global marketing and communications including brand, advertising, digital marketing, and demand generation. Paul has a wealth of experience previously co-founding PEO Worldwide and was also the former managing director of CPM People/Stipenda.