The “Digital Nomad” Lifestyle: Do your employees want to work remotely from abroad?

According to a survey by Finder UK, 1 in 5 British adults intended to work remotely from another country this year.

This new way of working was particularly popular amongst Generation Z, with 39% reporting they would be working from another country in 2023. Popular destinations for remote work included the US, Germany, France, Spain and Pakistan.

This increase in so-called Digital Nomads raises several issues for their UK employers. Businesses must consider how a temporary period of remote working abroad will affect their usual systems of work and identify whether this will have any impact on the employee’s employment rights.

Must employers accept a request to work remotely from abroad?

Requests by employees to work abroad should be managed in a fair and consistent manner. If an employer prohibits employees from working remotely from certain countries, this may give rise to indirect discrimination claims. Employers should, therefore, ensure that there is an “objective justification” for all decisions to reject requests to work remotely from abroad.

Rejecting a remote working request may be justified by reference to:

• the economic and operational requirements of the business;
• specific requirements of the role such as training obligations; or
• concerns about an employee’s wellbeing, for example, where there is conflict in the country or political instability.

What are the practical considerations when an employee wants to work remotely from abroad?

There are several practical considerations when an employee requests to work abroad. In particular, an employer must ask:

• Can the employee carry out their work lawfully and effectively?
• Will the employee be working from a different time zone and will changes to working patterns, team meetings and deadlines be required in order to accommodate this?
• When abroad will the employee have a safe and suitable working environment with all required equipment?
• How will the employee communicate securely and effectively with their colleagues in the UK?
• How will the employee be supervised?
• How will the employee continue to access support and opportunities for training and promotion?
• Can the employee be required to return to work in the UK?

Before accepting a request for work remotely from abroad, employers should review employment contracts and existing policies and procedures relating to flexible and remote working to identify whether these are still appropriate in the context of an employee working in another country.

What compliance issues need to be addressed?

There are a number of compliance areas which need to be considered and may require legal advice from specialists in the UK and/or in the country where your employee is to work:

• Does your employee have the right to work in the country of their choosing? and Do you incur any risks by allowing them to do so?
• What are the tax implications of your employee being based overseas?  Should you still operate UK PAYE?  Must you comply with the tax/social security regime of the other country, register as an employer there, and operate payroll locally?
• Are you going to be transferring personal data to this employee?  What additional considerations need you take account of when transferring data outside the UK?  Need you ensure compliance with local laws on data protection?
• How do you comply with your health and safety obligations for an overseas employee? Do you have any obligations under local health and safety laws?

As may be gleaned from this list, as well as specialist legal advice, multi-jurisdictional tax advice is also likely to be needed.

Will working remotely abroad affect my employee’s employment rights?

The primary position is that parties are free to choose the law which will govern the employment contract. As such, if there is any doubt about the law which applies to the employment relationships, it is important to specify this in the contract.

However, even if an employment contract states that Scots law will apply, for example, employees may still be able to rely on employment legislation in the country in which they are working, if there are “mandatory provisions” of the local legal system which apply irrespective of the choice of law.

Therefore, if an employee is regularly working abroad, it is recommended that you seek specialist legal advice to determine how this impacts an employee’s rights under employment law.

It will often be necessary to take advice from an employment lawyer in the country your employee wants to work in. BTO is a member of the Mackrell International network of law firms and can put you in touch with an appropriate specialist lawyer.

If you would like any more information regarding remote working, please do not hesitate to contact our team for more information.

This update contains general information only and does not constitute legal or other professional advice.