In part two of our discussion of the survey results, we consider whether employees are using hybrid working as an opportunity to relocate away from the office. We also analyse the tricky legal and practical issues associated with employees wanting to work remotely from abroad.
The first part of our discussion looked at your approach to hybrid working according to the results and we also provided top tips for making hybrid working a success. You can read the first installment here.
It was predicted during the height of the Covid pandemic that employees would abandon UK cities in favour of the countryside, as their employers transitioned to home/hybrid working on a permanent basis. But now the dust has settled, do the statistics support that conclusion?
It would certainly seem that employee relocation is a relevant issue for many businesses. Hybrid working has removed the need to commute to the office on a daily basis.
The knock-on impact for 45% of the respondents to our survey has been an increased number of employees relocating further away from the office. Interestingly, 14% of respondents don’t know whether their employees have relocated or not, which implies that geographical location is not considered have a significant impact on business strategy and productivity levels.
The feedback received on this issue also confirms that employee relocation may bring positives for both the business and its workforce. For example, one business was able to close its office and save costs following a staff relocation request.
Other feedback suggested that employers are now able to take advantage of a wider recruitment net: they have unlocked a wider pool of candidates not only geographically but also in terms of employee diversity, because hybrid jobs are accessible to a wider group.
Despite the benefits, the recruitment of remote employees is not without its HR headaches, particularly when it comes to setting pay levels.
Some employers will have reduced pay levels to match a relocation away from London, or will offer a lower starting salary to new recruits from other parts of the UK. This is often justified by reference to reduced commuting costs and the cheaper cost of living outside of London. For example, one law firm has offered employees the option of working from home on a permanent basis, but with an associated 20% pay cut.
While some employees may consider this attractive, others may question whether homeworkers are being treated less favourably compared to their office-based colleagues doing the same job.
If this has a disproportionate impact on employees with a protected characteristic under the Equality Act 2010, such as female or disabled employees, an employer could be open to challenge via an indirect discrimination claim where it would be called upon to justify its approach.
In contrast, other employers will adopt the safer approach of maintaining existing pay levels and focussing on employee output and performance, rather than working location or pattern.
Setting aside the legal risks, this option will avoid a dent to employee morale and no doubt help with future recruitment.
Relocating further away from the office in the UK is one thing, but employees working remotely from abroad is quite another. An increase in such requests is more likely over the summer months, as employees jet off on holiday, or visit friends and family abroad, and consider ways to extend their time in the sun.
Employers may be rightly concerned about the legal and practical impact such working arrangements can have on the business. This is certainly reflected in the response to our survey question, with 100% of respondents expecting their employees to work from the UK, rather than abroad.
That said, the feedback we received to this question does suggest that some employers allow flexibility, with employees able to occasionally work from abroad on a temporary and short-term basis.
This demonstrates the need for a clear and well-communicated policy on working from abroad, both to manage employee expectations and to set out the key factors which an employer will consider when dealing with a request. Four key examples are set out below.
1. Contractual issues
Employment contracts usually specify the “place of work” and in most cases this is still likely to refer to the employer’s main office location. This will still be the case now despite more than two years of hybrid working, as this is often expressed to be discretionary.
A clear policy on working remotely from abroad is a useful way to establish the need for employees to get prior consent, so that any change in working location does not end up being in breach of the employee’s employment contract.
Employers will also be keen to ensure that ad hoc conditional approval (perhaps for family reasons, or in response to travel disruption) does not develop into a broad practice and inadvertently create a contractual right to work overseas.
If the employee working from abroad is a non-UK national, there may be immigration implications for at the point at which the employee returns to the UK.
It is important to ensure that the employee continues to have the relevant permissions to work in the UK without restrictions, and there could well be significant timing implications, given the current Home Office processing backlog.
Employers should consider this issue as soon as a request to work from abroad is received and remember that employees who are EU nationals are now also subject to the same immigration requirements as other foreign nationals.
Our immigration team provides more detailed information on immigration issues relating to working from abroad here.
3. Tax and social security
Time spent working abroad can engage the tax and social security systems of the country in which UK employees are based. Whether the employer ends up having to deduct and account for tax and social security contributions locally will depend on various factors, including the duration of the working time in that country, the local tax rules, and the way in which such rules interact with the UK tax regime, including any tax treaty that applies.
An additional consideration is whether the employee’s working arrangements could be regarded as creating a permanent establishment for the employer in the country in which the employee is working. If so, this would impact the taxation of the profits relevant to such establishment. It is therefore important to seek bespoke UK and local tax advice on all relevant aspects.
4. Local labour laws
An employee working from home abroad may become subject to the local employment laws of the relevant country. This may depend on the duration of working time in that country, but could result in significant employment rights and protections which could be more beneficial than those that apply in the UK. For example, the employee may gain rights to additional holiday, termination of employment payments, and be covered by industry wide collective and consultation agreements.
Unless there is an employment dispute, this issue may never become relevant, but employers should understand their position in this regard, rather than play catch up.
Similarly, the local health and safety laws for employees may impose stringent requirements on employers to ensure a safe working environment, which may be difficult if the employer has little practical control over this.
In any event, best practice would be to conduct a remote risk assessments and take steps to ensure that such employees do have access to relevant equipment and an appropriate workplace.
Employers’ insurance policies should also be checked and extended where necessary. Foreign business travel policies are unlikely to cover extended periods of working abroad.
The lifestyle benefits for employees of working remotely from abroad are obvious, particularly if it facilitates extended time with family and friends. However, the practical realities should not be forgotten.
As well as the obvious need for a reliable internet connection, a respondent to our survey flagged the requirement that employees adhere to UK working hours.
In reality, this may be difficult depending on the relevant time zone, and employees are unlikely to deliver peak performance if they are required to work during the middle of the night, for example.
A broad time difference may also reduce opportunities for collaboration amongst colleagues and would make adequate supervision of junior staff more difficult.
Rather than a blanket ban, or a “work from anywhere” policy such as that operated by Airbnb, employers may decide to consider each employee request on its own merit, taking account of the underlying parameters of the employee’s proposal.
In any event, any remote working policy should be applied consistently to avoid adverse consequences, such as allegations of discrimination and/or breach of the implied term of mutual trust and confidence.
Ultimately, a request to work from home abroad is a temporary flexible working request, even though it is outside of the statutory regime. The usual principles of fairness and good employment practice should therefore be followed.
If you have any questions about these issues in relation to your own organisation, please contact a member of the team or speak with your usual Fox Williams contact.
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