Issues to consider: Key Implications of working outside of the UK
When employing someone overseas the following obligations must be fulfilled. Each obligation varies depending on the country, the complexities and evolving and changing nature of legislation and regulation, the role, the University’s status and activity in the country and the individual’s circumstances. As a result, each overseas working project is different and requires specialist advice (internally, and sometimes externally) in order to assess its implications and associated risks and costs.
It is important to be aware that overseas working is NOT permitted in certain specific countries, unless the employer has a registered entity in the country where the employee is seeking to work.
Not complying with international employment regulations could result in significant risks for both the individual and the University (business, financial, reputational, and in some cases, prosecution or custodial).
An employee that works remotely from overseas, even for a brief period of time, could become subject to a different legal jurisdiction and the employment rights of the country in which they are working. This is the case even if the employee's contract states that their place of work is their employer's premises in the UK and their empployment is governed by UK law and they have their salary paid into a UK bank account.
The University must therefore ensure that all legislative requirements are considered and appropriate advice taken where necessary, before any commitment is given, or any terms are negotiated with the employee. Advice should be sought during the planning stage to ensure consideration is given to contractual, tax, social security and other benefits issues and that any associated costs can be budgeted for.
Working overseas may result in the modification of the terms and conditions of employment with the University on order to comply with the local employment regulations (contract type, hours of work, minimum salary, annual leave, statutory insurances, pension, other staff benefits).
It is important to note that the University may not be able to employ staff in some countries.
The normal expectation is that tax and social security is paid in the country where an individual is living and working. This principle often results in a tax withholding obligation for the employer, which requires the setup of a foreign payroll arrangement. The process can take between 6 to 12 months depending on the country. There can be significant penalties levied on an employer if they do not pay payroll taxes on time. It could also jeopardise the University’s status as a foreign employer in countries where this registration has already been achieved or make it difficult to secure this registration in the future.
As in the UK, there are potential severe penalties for employers who employ migrant workers without the right to work. All new UK-based employees are required to provide evidence of their right to work in the UK before commencing their employment and we should be applying the same employment standards to employment based outside the UK: employment should not commence until HR has received satisfactory documentary evidence that the individual has the right to work for the University of Exeter in a given country.
In some countries, having remote workers, even temporarily or working from a personal home address, may create a Permanent Establishment in the country. This would make the University liable for corporate tax filing and payment in the country. The risk of Permanent Establishment is assessed through the examination of many criteria which differ between countries (number of employees in the country, nature of the activity, work location, local specificities, physical premises, decision makers, recurrence of activity, commercial activity etc.).
Each case of overseas working is a significant investment. To protect the University and its employees, external professional advice is required to comply with immigration, tax, social security and employment law in the host country and there are recurrent costs of running an overseas payroll. In addition, in many countries, employer social security costs are higher than the UK.
As an employer, we have an obligation to know where our employees are located when they are working as part of their employment contract with us This is in order to protect our workforce and be able to act in case of any security, health and safety, or compliance issue. Managers should ensure that they know where their team members are located and inform HR of any overseas working situations within their area using the Global Mobility Initiation Form.
Staff should ensure that their personal details, such as address and contact details, are up to date on Trent Self Service.