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21 Oct 2020
by Dawn Lewis

rebaLINK: International home working arrangements

The coronavirus pandemic is without doubt throwing up some unusual scenarios that previously hadn’t crossed the minds of many employers. Yet as the crisis continues, and it becomes increasingly apparent that we are unlikely to return to normality any time soon, employers are having to deal with more complex working arrangements.

One such scenario was raised by one of our Professional Members who asked the following question on rebaLINK – REBA’s online member-only networking and due diligence platform:

Question: Due to COVID restrictions, and with all of our employees currently working from home, we have a situation where we have employees working from home abroad. Can anyone share how they have approached this from a policy standpoint?

For example, has your organisation said 'no' outright to these types of arrangements or, have you set up a limit on the amount of time an employee can do this?

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This is certainly a highly complex area. Not only are there tax, immigration and employment implications, but they could also be knock-on consequences for pensions and benefits such as risk insurances and private medical insurance (PMI) – issues that our helpful Members highlighted.

This is a bit of a minefield. Our policy position is for no cross-border working (and this includes different states in the same country) as it is very likely to create employment tax compliance risks, employment law compliance challenges, potentially corporate tax and even visa/immigration compliance risks. There is no set time after which those liabilities arise, it can be from day one of the arrangement depending on the jurisdiction.

We have an exceptions process, where if there is a true business need for such an arrangement it must be reviewed by the tax, global mobility, HR and reward teams to identify compliance risks and propose (and cost up) mitigations or any alterative arrangement that we could use (eg employ them in a local office in their country of residence). The process also makes clear that any personal tax implications that might arise from such an arrangement are down to the employee to handle and we cannot give them advice on their personal tax arrangements.

Another Professional Member added that they too were facing a similar situation:

For UK contracted employees, we've sought assurances from our pension and group risk providers that cover and/or membership can carry-on regardless of actual location (UK registered address and NINO being held). PMI is practically difficult and we are considering international policies where the 'move' is company sanctioned rather than employee's preference. We're yet to tackle non-UK contract holders living outside their home location.

Other Members outlined their organisations’ policies on dealing with these types of situations, and agreed that many businesses were now facing this issue.

We've recently set out a policy where we're comfortable that employees can work abroad for a maximum of 20 working days across the year. Any requests for time beyond that we are saying no, although we would entertain a request on a really exceptional basis if there was a wellbeing/health issue. We're a UK only company and therefore it's reasonable that our employees work in the UK. We will seek advice from our tax advisers for any cases we do agree and ensure that we don't give rise to any permanent establishment risks.

Another Member added:

We are happy to consider requests, but not more than three a year, and with a maximum of one week on each occasion, added on to holiday taken. There are concerns from a tax perspective and also from a regulatory perspective, so we allow for non-front office roles (back office/support roles) only. However, each case has to be approved by our CEO on a case by case basis.

Often the course of action will depend on the type of organisation, where it is based and perhaps even the internal appetite for allowing employees to work from home abroad, which could potentially be costly. Whatever policy direction an organisation chooses to take, it is clear from our Members that seeking professional advice, particularly around tax issues, is worthwhile.  

The author is Dawn Lewis, content editor at REBA.

REBA Professional Members can access rebaLINK via our website. It is a confidential forum for industry peers to ask questions about policies, suppliers and wider reward practices both for the UK and internationally. It provides access to a collective body of industry professionals and their expert knowledge.