Remote working is now the new normal for many employees, and it’s hard to imagine that everyone will want to make a full-time return to their regular commute and usual workplace.

By late June 2021, most employees who have been working remotely will be expected to return to the office. Some staff will be happy to do so, but many won’t. Some employees may want to continue to work full time from home, on a temporary or permanent basis, and for some their home could be overseas.

If you’re an employee and you want to continue working for your employer from abroad, then here are a few things you'll need to consider.

Tax

Normally your host country taxes you on the income you earn while you’re living there, even if this is just for a short period of time.

Many countries have double tax treaties and arrangements with the UK which mean that you could be exempt from paying income tax locally, but you will need to meet certain conditions, including showing that you’re not a local tax resident, and you’re not present in your host country for more than 183 days over a 12-month period, regardless of the reason or length of each stay. The UK currently has a double tax treaty in place with many countries, including all 27 EU states, so a short stay abroad in many locations, usually won’t mean that you become liable for local income tax.

In some situations, your employer may have to set up new ways to pay you, using foreign jurisdiction payroll systems through which they can deduct and account for tax.

Normally any UK employer has obligations to keep on making the usual deductions for tax and NIC's and pay employer NICs for you.

If you’re expecting to live abroad for a year or more then you can apply to HMRC for a no tax PAYE code. If this is granted then this will mean you don't have Income Tax deducted, but your employer may still have to pay NICs on your behalf.

If your host country decides that you have established a permanent residence there, then it will expect you to pay taxes locally.

Social security

Generally, social security obligations arise in the country where you’re physically working, and this means that you may have to pay a health fee.

If you are currently living in the EEA, normally social security payments will only be due in one state at a time.

This position will be different for those working outside the EEA and Switzerland. In countries such as the USA, Korea and Japan where there is a reciprocal agreement in place with the UK, it is possible to remain within the UK social security system without paying the local social security contributions for up to five years provided you have a valid certificate of coverage. In other countries where no such agreement exists, such as China, India and Australia, your UK employer will remain liable for employee UK NICs and for employer NICs for the first 52 weeks of the arrangement. Further, your employer may also be liable to pay social security contributions in the host country in addition to any contributions that are made in the UK.

However, the rules around social security are complex and could be subject to change, particularly in light of Brexit.

Immigration

Immigration issues will also be another important consideration, and you will need to work out how this may affect you. Depending on the length of your stay and what country you’re in, you may be able to enter as a business visitor, but this could limit what work you can do while you’re in that country.

If you don’t have a permanent right to remain in the UK, then living abroad could also adversely impact on any future UK visa application you may wish to make, and you could find that having temporarily left the UK, it is then much harder for you to return.

If you’re an EU national then you will usually have to prove that you haven’t left the UK for more than 180 days in a 12 month period to be able to apply for a settled or pre-settled status by no later than 30 June 2021, and this could potentially cause problems for EU citizens who have returned to their homeland during lockdown.

Employment protection

If you work abroad, then potentially local employment law will apply to you, including in relation to issues like minimum rates of pay, paid annual holiday and health and safety, so it’s important for you and your employer to be aware of this. In some cases, you may be able to argue that you still have rights under your UK contract and English law. It will be particularly important for you to know what employment protections are in place if you are working abroad and your employment terminates.

Data protection

If your role involves processing personal data, then you will need to make sure that you and your employer are on top of the legal requirements that will apply around transferring data from the UK to your host country. The laws around this will also likely soon change due to Brexit.

Health and safety

If you work abroad then your UK employer will still remain liable for your health and safety. They should have safe systems of work set up for you which also comply with local laws.

Line Management

You will also have to think about how this will change your working relationships and the dynamics within your team.

Working from home during a period of lockdown while everyone else is in the same boat is different to being the only person in your team who is still fully remote working moving forward, especially if current covid restrictions lift in June.

How will you feel if you are not able to even visit your workplace as everyone else returns? How will you feel if you’re not able to attend the Christmas party in person?

If there are meetings in the UK that you want to attend then what happens in relation to your travel costs?

Is it worth it?

Making arrangements with a UK employer for you to continue to work for them from abroad is a minefield.

If you are working with a company which is unused to this, they may be unwilling to accommodate you unless you’re a key employee.

If you are able to agree this with them, then your contract of employment should be amended to reflect the changes being made to the working relationship.

Key points to agree will be:

  • Who will pay any additional tax due
  • What will happen in relation to expenses
  • Who will pay your travel costs
  • What is expected in terms of UK office attendance
  • What happens if after some time the arrangement doesn’t work out
  • What happens if disputes arise

Ultimately it will be important for you and your employer to have a clear understanding of what happens if problems arise, and it is likely that you will both want UK jurisdiction to apply in the event of a legal dispute. Both you and your employer will have to take practical steps to ensure remote working from overseas is dealt with lawfully and with minimal risk.