By Rashmi Pandya, FCCA
With remote working becoming a more common practice in the workplace, it is becoming more important for employers to understand their legal obligations.
Hybrid roles are no longer straightforward and options for short hybrid periods or long-term remote roles are opening up.
Trying to find that balance between creating a successful global workforce and complying with the legal risks can be challenging.
However, with the right preparation and legal help, you can update your policies and procedures to make sure your business is protected.
What are the challenges of international remote working for employers?
Having previously worked with international employees, the appeal can be overshadowed by the complexities of a country’s tax rules and employment laws.
Every country has its own employment laws and it is important to ensure your employees are legally entitled to work there and comply with labour standards.
It is up to the employer to track where and how long their staff are working abroad to accurately manage tax and immigration risks.
Extended overseas work can create a taxable presence and lead to corporate tax and VAT liabilities, even when no office or formal branch exists.
In countries without a double tax treaty with the UK or if an employee spends more than 183 days in 12 months working there, employers could be responsible for deducting and remitting local taxes from the employee’s pay.
Managing tax and payroll correctly can be daunting and with the additional risks of financial penalties and interest charges, international work may not feel worth it.
How to keep your company safe online?
When employees work abroad, the additional worry of company security is an issue many businesses face.
Overseas work can already be challenging to manage without the additional requirements of data and cybersecurity protection.
Accessing company data from another jurisdiction may breach data protection rules, such as the UK GDPR, particularly when data is processed outside of approved regions.
By setting up secure systems, VPNs and cross-border data transfer protocols you can offer employees the freedom to work hybrid and keep your data safe.
How can employers reduce the risks?
Taking those steps to protect your business can be as simple as setting up internal procedures to help manage remote work effectively.
Creating a clear remote working abroad policy for employees can help limit the duration and introduce an approval process to gain more control over hybrid working.
As an employer, you should have a clear understanding of the country’s tax and immigration rules and track your employees’ working days and hours to comply with these.
Employment contracts should also be updated and insurance and pension contributions should be valid for overseas workers.
With all these requirements needed, it can feel that the responsibilities for overseas working lie with the employer.
However, by following the right steps and informing yourself on the country’s laws, you can make sure your contracts comply with the demands of international working.
How can you prepare when employees work internationally?
While the offer of international remote working can improve job satisfaction and employee retention, the hidden tax risks can be hard for employers to take on.
By staying organised and documenting accurate records of employee travel and tax filings, you can protect your business from potential disputes.
If the process is still leaving you overwhelmed, seeking payroll guidance can help you allow your business to support flexible working whilst following overseas regulations.
Wanting to prepare a clear plan for international workers? Contact our team for advice.