As travel returns almost to pre-pandemic levels, we look at the immigration questions this raises both for those travelling into and out of the UK.
What do employers need to consider when non-UK resident employees travel into the UK on business? And what are the the immigration, employment and tax implications for UK-based employees working while abroad?
This carries with it a number of possible risks for the traveller, and possible far-reaching implications for they and their employers.
Travelling to the UK for business generally means seeking entry as a business visitor. Nationals of many states (including the US, Canada and the EU) are not required to obtain pre-entry authorisation before they depart: they can gain entry as a business visitor upon arrival.
However, nationals of some countries (including India, China and the UAE) will need to apply for and obtain permission to enter as a business visitor from the British authorities in their country of residence before travelling to the UK.
What is a business visitor visa?
Business visitors, like tourists, can apply to visit the UK for permitted business-related activities for a short period of time, and will usually be issued with leave to enter and remain for up to six months.
It’s very important to understand what a business visitor is and is not able to do upon arrival in the UK – certainly it is not unheard of for visitors to be turned away at the UK border if the authorities suspect that their visit does not fall within the very defined parameters of the Immigration Rules governing this area.
What are the permitted business activities?
The definition is fairly broad, and general business activities can include:
What activities are prohibited?
Most importantly, business visitors cannot work or intend to work while they are in the UK in this capacity. They cannot undertake tasks that amount to taking on employment or filing a role (or providing short-term cover for a role) within a UK based organisation. That would include doing a brief work placement or internship, or establishing and running a business as a self-employed person.
Importantly, working at home remotely from inside the UK for an organisation based outside of the UK would amount to work. So, anyone seeking entry to the UK to, for example, work remotely for their overseas employer could be refused entry on the basis that they do not have permission to work in the UK.
Only those people from abroad with the required work visa are permitted to work remotely in the UK, even if it is only for a very brief period of time. This is something to bear in mind for those who are coming to the UK as standard visitors – for leisure, or to visit family.
Also, very importantly, a business visitor must not receive payment from a UK source, and there are very few exceptions to this rule. Where a business visitor is paid and employed outside of the UK, they must remain so.
What do employers and employees need to think about?
Since the pandemic, many employees who were previously based in the UK have chosen to return to their country of origin, or make successive and longer visits there, working remotely, often from home.
Working from home abroad however, does raise certain questions for both the UK-based employer and their employee.
First, it must be determined whether the employee is eligible to work abroad and what rules employers may need to consider.
Employees seeking to work outside of their country of origin or nationality will need to consider the relevant immigration rules and permissions of the intended host country. These will vary on a country-by-country basis and will depend on the domestic laws and the existence of any bi-lateral agreements made with the UK.
For example, a visitor’s entry permit may not permit an individual to work whilst in the host country. The employee may fall under the ‘business visitor’ category, but this becomes less likely if the employee intends on staying for a longer period of time.
The employer needs to consider how they can ensure that the employee continues to meet the eligibility requirements throughout the time in which they are working from abroad.
For example, it should not be assumed that an employee can go on holiday for two weeks to a country and then work remotely there for an additional two weeks to extend their time abroad. This could have consequences, depending on where they travel, and for how long. It is always best to take advice before travelling abroad to work, to ensure any requirements around remote working are met.
Secondly, might employees gain host country employment rights during the time they will be working in that country, albeit for a UK based company?
This is primarily an employment law related question, but it is likely that an employee resident abroad (even if just for a certain period of time) will be offered protection by employment laws in the host country. These could include benefits such as minimum wage, paid annual leave and rights relating to termination. Certain jurisdictions have certain minimum legal rights from day one.
The laws around consultancy and employment status also vary significantly from one jurisdiction to another. In some countries, it is enough to simply call someone a consultant. In others, giving the “consultant” a business card and company email account is likely to turn them into employees.
It is important to be aware of these protections, as they may influence an employer’s wish to have employees working in those host nations. For example, certain jurisdictions impose a requirement to have personal injury insurance for all home workers (and failure to have a suitable insurance policy results in the employer essentially self-insuring) while others limit the validity of restrictive covenants.
For this reason, we would always recommend taking advice to understand these obligations and risk areas at an early stage.
Tax and Social Security considerations
If the employee’s residence is in the host country, income tax may become payable in that country and an employer may need to consider setting up a payroll to accommodate this.
The UK has a double tax treaty in place with most countries, including those in the EU, but it’s worth remembering that social security obligations generally arise in the country where the employee is physically present, so these will also need to be considered.
In general, as long as the employee does not spend a significant amount of time abroad (whether working or simply visiting) then the employer’s responsibility for paying operating PAYE and deducting income tax and National Insurance contributions will continue.
In order to lose UK tax residence, the employee must either meet one of the automatic non-residence tests, such as the full-time working overseas test, or not meet any of the UK automatic residency tests, including spending less than 183 days in the UK and having no home in the UK, and not having sufficient ties (depending on how many days they spend in the UK in the tax year).
It is always worth taking specialist tax advice should any issue arise. Generally, however, where the employee loses their UK tax residence, they will then be considered tax resident in their host country, and this could have implications for their UK based employer.
If the employee is employed at a UK company but works abroad and is considered tax resident in their host country, then they will only be liable to pay UK income tax on their earnings made whilst working in the UK.
A company may also be liable for corporation tax where an employee is found to be working from abroad in a country where the company does not have a permanent establishment (i.e. there is not already an office established in that country).
This is a particular risk where the employee working abroad has decision-making authority or the authority to conclude contracts in the name of the company. Employers will need to consider the host country’s rules and definitions relating to permanent establishment – in general, the host country authorities may look at whether a company undertakes enough business in the country to create a taxable entity.
Think about insurance too
UK-based employers will need to consider their own employer’s liability insurance and whether this covers employees in these particular jurisdictions. Typically, employers’ liability insurance will cover employees working on business trips, but may not extend to more permanent relocations.
Employers should contact their insurance broker or provider to find out whether cover extends on an international basis and if so, for what length of time, and check its other benefits, schemes and insurances to see if they are applicable to employees working abroad. Where they are not, consider how and whether to replicate the schemes in the host country.
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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