Our series of top tips will help you and your team get the most out of homeworking
Q: Do I have to tell my staff to work from home again?
Yes; the current government advice in England is that if an employee can carry out their normal duties from home they should do so until further announcements. This is being made a compulsory legal obligation. People who cannot work from home should go to their place of work. This includes people who work in critical national infrastructure, construction, or manufacturing and public sector employees working in essential services, including childcare or education, and those working in other people’s homes such as nannies, cleaners or tradespeople.For further guidance see our FAQ on planning continued home working below.
Q: How do I plan for my staff to continue to work from home?
Employers, especially those with office-based staff, should plan for remote working for at least the first few weeks of 2021. Currently, UK government advice is that employees who can carry out their normal duties from home must do so, while those who cannot reasonably work from home can go into their place of work.
Employers should revisit their risk assessments and review their return to office and working from home arrangements. Whilst UK government guidance gives some leeway, employers need to revisit risk assessments given the new advice and increased virus transmissibility rates. For example, different regions and different employees may have varying risk factors. Employers should usually conduct risk assessments of all the work activities carried out by employees, including those working from home. Undertaking physical risk assessments of each employee’s home are preferable but there is a COVID risk with physical attendance so this may or may not be feasible. Some home working risk assessments may be conducted using electronic risk assessment questions and providing employees with guidance to follow at home.
Employers must consult with employees individually. In many cases both parties will agree to resume home working. However, some employees may want to continue attend the workplace. If the employee can carry out their normal duties effectively from home, then the employers must encourage compliance with the government guidance that they should do so. Enjoying the social side of the office environment is insufficient reason to continue in the workplace.
Employees may prefer the workplace for a number of reasons such as domestic violence at home, lack of heating or distractions of young children. However, employers must not allow employees to remain in the workplace if they can work from home. It is only those who cannot reasonably work from home who can travel to the workplace.
For staff remaining in the office, employers will have to follow COVID-Secure government guidelines including social distancing, screens and other measures. Extra consideration should be given to those people at higher risk.
Conversely some employers may prefer employees’ continuance in the workplace and it is the employees who want to return home. The emphasis is different to the previous lockdown when employees were told to work from home if they could do so effectively; now people may only leave home for work if they cannot reasonably work from home. Therefore, it will only be permissible for certain sectors to remain in the workplace.
Employees have extra protection from detriment or dismissal if the workplace poses a serious and imminent risk to health (see below) so employees may threaten claims if they are not allowed to return home. Employers should consult with employees on an individual basis, taking account of any risk factors and concerns they raise.
Home working policy
There are many practical and legal matters to address including:
- Selection of staff
- Monitor performance and output
- Guidance for line managers
- Video conferencing software
- Motivation techniques
- Working time
- Health and safety
- Salary and expenses
- Data protection
- Employees who work from other homes or overseas.
For further information on all of these aspects see our series on getting the most from remote working.
Employers with confidence in their COVID-secure measures who can show that staff can’t work effectively from home, may insist that employees return to the workplace and theoretically can take disciplinary action if they fail to do so. However, the government’s advice means that there are many arguments in favour of resuming home working and the safest course of action is to accommodate this.
For employees where home working is not possible, alternatives such as unpaid leave, the furlough scheme if applicable and the further government schemes should at least be considered as options until the end of the year.
Clinically extremely vulnerable employees
The government’s advice on shielding for the clinically extremely vulnerable which ended at the beginning of August 2020 has been reinstated and these people must work from home. Clinically vulnerable employees should not attend work, school, college or university, and limit the time spent outside the home. They should only go out for medical appointments, limited exercise or if it is essential.
Work in people’s homes
Specific government guidance covers people who carry out work in other people’s homes for example plumbers, social workers, carers, cleaners or nannies. If any of these visits are not absolutely necessary, alternative means of carrying them out should be considered, for example, an online meeting with a social worker. The normal rule of six does not apply to such visits which fall within the work exemption. Risk assessments and COVID-secure requirements will need to be followed.
Q: What are the legal implications employees working from home on a short-term basis? Is the employer liable for employees’ health and safety at home?
The Government has advised that people who can work from home should continue to do so. Employers can refer to the CIPD's series on getting the most from remote working to manage a widespread move to working from home.
Home working has many practical and legal implications including health and safety at home. Having a home working or remote working policy is always a good idea, the policy can then be relied upon if a temporary period of home working becomes necessary.
There are many practical and legal matters to address including:
- Supervision: Check the home working policy addresses how to supervise staff, communicate with them and monitor performance and output. Provide guidance for line managers as reporting in at regular times can help combat isolation and stress. Employers might need to install video conferencing software such as Skype, Teams or Zoom so that meetings can occur remotely. Staff must easily be able to communicate with the employer, and other people they work with. Managers should be aware that different motivation techniques may be needed for home workers.
- Equipment: Think about equipment requirements such as laptops, couriers, stationery, photocopying, printing etc. Will the employee require specific equipment? How will this be funded, installed and insured and who is permitted to access it? Employers should consider computer virus protection and other security measures and whether there is someone available by telephone to help with IT issues. There is no obligation on an employer to provide computer or other equipment necessary for working at home but, given government advice, employers should do what they can to enable homeworking.
- Working time: Employers may need to specify any changes to hours of work. Will the employee need to be available for work during strict office hours or work a specified set number of hours per day? There may be more flexibility over working hours in a working from home arrangement, but the Working Time Regulations 1998 should still be complied with, including the working week and daily rest break.
- Health and safety: Employers are responsible for an employee’s health, safety and welfare both when working in the employer’s premises and when working from home. This means that employers should usually conduct risk assessments of all the work activities carried out by employees, including those working from home. Undertaking physical risk assessments of each employee’s home may not be feasible. As the risks of being at work will have been deemed higher than working from home, employers may decide that home working risk assessments for short periods of home working may be conducted using some electronic risk assessment questions and providing employees with guidance to follow at home. You may wish to refer to the homeworking questionnaire to get you started.
- Salary and expenses: Salary and benefits should obviously remain the same during a period of home working although changes to expenses may be appropriate if normal travel expenses and allowances are no longer needed.
- Data protection: Employers should make sure data protection obligations are maintained. An employee using their own computer should still process information in compliance with data protection principles. Employers may need to include express terms reserving a right to monitor work communications on home-based devices and set out a reminder about home security, confidential information, passwords, shredding etc. How data is transferred between home and the workplace also needs careful consideration. The ICO has produced guidance on data protection and working from home.
You can also refer to the FAQ on insurance for employees working from home below for more information.
Q: What should an employer consider if an employee is reluctant to work from home?
Since 5 January 2021 people may only leave home for work if they cannot reasonably work from home. (The discretion employers had from 1 August 2020 to decide how the workforce can operate safely ended with the imposition of the Tier system anyway.)
Employers have made varied decisions, some anticipated the second wave and had continued working from home until December 2020 and some postponing the decision into 2021 anyway.
Some employees may be reluctant to continue home working for a number of reasons; they may live alone and struggle with mental health due to the length of time away from colleagues. Alternatively, they may live in a small flat or struggle to work productively due to interruptions at home. Alternatively they may not have a suitable working environment or may suffer from stress or abuse at home and wish to escape the home environment.
Employers should consult and explain the lockdown rules and reasons fully; those who feel they have homeworking forced on them but who may see others in certain sectors attending the workplace, are unlikely to be as motivated as staff who understand the reasons and agree. Employers should bear the following in mind:
- Generally work location is set out in the original contract. Enforced change from office to home is technically a fundamental change to employees’ contractual terms. However, when the government have imposed home working both employers and employees should comply. Mutual agreement is preferable and in some cases trade union involvement may arise.
- The pandemic is exceptional and many employees have already been working from home and have expressly or impliedly agreed to this change.
- Employment contracts usually include mobility clauses which allow employers to make changes to staff work location, usually after consulting employees. These clauses may give employers’ the ability to change locations as agreement was given at the outset.
- Employers should check original terms and any variations carefully, including mobility clauses to verify what the employee has already agreed to.
- Employers should still act reasonably and consult. Employers could breach the fundamental implied duty of mutual trust and confidence which applies to every employment contract if they behave unreasonably.
- If employers have tactically decided to reduce office space to save costs then it is reasonable to seek consent to continued home-working.
Employers in certain sectors who do not plan to reopen the workplace more widely may be able to allow limited numbers of employees who wish to return if they cannot work from home and if COVID-19 secure measures can be put in place. In some cases, the premises property insurance may require checking in case the workplace should not be empty for a prolonged period.
The situation becomes more complex if there is a functioning and open workplace within the rules but only some employees are asked to work from home. If employers are implementing changes to work location for some staff, they must select fairly without discrimination against women or those of a certain age or disability. They must also make reasonable adjustments for disabled staff who may be mentally or physically adversely affected by an extended homeworking arrangement.
Employees’ views, physical and mental health requirements, vulnerable workers and those with caring responsibilities must be taken into account. Employers making such decisions may be protected by directors' and officers' insurance.
If home working is the only option and employees cannot agree to this, this is likely to create either a redundancy situation, or a justified some other substantial reason (SOSR) for dismissal for those unable to work from home. They could be offered a redundancy payment if the employee has sufficient length of service and appropriate procedures are followed.
Q: Should employers alter employees’ pay to take into account reduced commuting costs or increased electricity and heating bills?
Many employers have staff working from home at least in the medium term as a result of the pandemic. Employees may be in a better financial position with reduced transport and ancillary costs of attending the workplace, such as coffees and lunches. At the same time though, employees may find that their utility bills increase as a result of working from home. Employers may wish to change an employee’s pay because of these changes and the legal starting point is always that changes to an employment contract cannot be made unilaterally. Most alterations of terms and conditions require employees’ consent and altering pay without this will be a breach of contract leading to claims including unfair dismissal.
A beneficial change such as a pay increase to cover increased utility bills, or more likely allowing specific expenses claims, is a change most employees will agree to (and by accepting and taking the payment the contractual change is deemed accepted by the employee’s conduct, so the change becomes incorporated into the ongoing agreement without the need for express agreement). Deciding to reimburse staff for utility expenses is entirely at the employer’s discretion. Due to the economic pressures on many employers they can decline any requests to reimburse employees for these home expenses. If employers do reimburse heating and lighting etc for staff working regularly from home, then they can pay a set sum is payable tax-free to help with these expenses (see below).
By contrast, a pay cut due to reduced transport costs is a significant negative change to an employee’s terms and employees may refuse consent. In the current situation employees may feel that they have little alternative but to agree as it may be difficult for them to find employment elsewhere. Express written agreement to changes is always the safest option. There will need to be consultation with employees, explaining the rationale behind the reduction.
Absence of consent
If employees don’t consent to a pay cut the options for employers are the usual options regarding unliteral changes to contractual terms:
- Relying on a contractual flexibility clause: some contracts have flexibility clauses purporting to give the employer the right to vary terms unilaterally. These clauses are often seen as being invalid and are unlikely to cover a pay cut.
- Impose the pay cut anyway: Employers can make the change unilaterally, informing employees of the reduction and wait to see what happens. If employees continue to work without objecting, the employer can argue that the pay reduction has been impliedly accepted. This approach is high risk. As employees can bring claims for breach of contract saying they did not accept the change despite continuing to work. Alternatively, there may be constructive unfair dismissal claims.
- Dismissal and re-engagement: The most extreme option is to terminate employees’ contracts (with proper notice, to avoid wrongful dismissal claims) and then re-engage them on the reduced terms. This is a risky approach and may lead to unfair dismissal claims. The employees can choose to accept or reject employment on the reduced pay. Those who refuse and have at least two years’ service may have unfair dismissal claims. If the employer is proposing to dismiss and re-engage 20 or more employees there needs to be collective consultation with elected employee representatives, and in all cases a fair process and consultation.
If an employer requires employees to work from home tax relief can be given for the additional cost of working from home. This does not apply if the employee is working from home through choice. The rules mean that effectively a tax-free payment equivalent to about £300 per year can be made to cover increased costs for working from home. HMRC guidelines allow employers to offer tax free payments to workers who regularly work from home - it has been confirmed by HMRC that this applies to those working from home during the pandemic.
The rules cover:
- additional gas and electricity used while the room is being used for work
- metered costs of water used (a few cups of coffee is unlikely to be substantial)
- cost of work related telephone calls.
The extra costs listed above must solely used for work purposes. Items such as rent or internet costs cannot be claimed as they are for both private and business use. Because establishing these expenses is difficult, HMRC accept a flat rate allowance of £6 per week or £26 per month without evidence to support the actual real costs. Employees with provable higher costs can claim more if they have evidence of the actual costs incurred.
This means that:
- Basic rate taxpayer claiming an expenses allowance will pay about £1.20 per week less tax.
- Higher rate tax payers claiming an expenses allowance will pay about £2.40 per week less tax.
The expenses must be wholly, exclusively, and necessarily in the performance of the duties of the employment to be deducted from their employment income. Employees can notify HMRC of the utility related expenses they will be claiming before the end of the tax year and their tax coding notice can then be amended to reduce the PAYE deducted from their salary which increases take home pay.
Although employers decide whether or not they wish to make the payment workers can bypass the employer and claim the tax relief directly from HMRC for the additional household costs incurred. The employees must be prepared to show evidence of their claim by keeping record of their costs. There is a a P87 form available online or self-assessment can be used.
By contrast the self-employed can claim more than employees including a proportion of lighting, heating, cleaning, insurance, mortgage interest, council tax, water rates and general maintenance costs. These expenses arising from working from home are deducted, reducing the final bill. Expenses are worked out by assessing the amount of time the home for work, and how much of the home is being used. There is also an HMRC’s simplified expenses system.
Q: What are an employer’s obligations regarding employees smoking, vaping and eating whilst working from home?
Since 2007, it has been illegal to smoke in enclosed public places and workplaces in England and Wales and on public transport. Employers must display ‘no smoking’ signs in the workplace and in vehicles and make sure people don’t smoke in work premises.
However, these rules (and the applicable fines which range from £1,000 to £2,500) do not apply to those working from home. Home workers are generally free to choose if their house is smoke free or not. However, if more than one person is working from the premises, or members of the public visit in the course of the work, the dwelling should be smoke free during working hours, or while open to the public.
Whilst statute law does not prevent most employees from smoking when working at home employers can contractually agree or adopt a policy which states that employees should not smoke or vape during working hours, or at least during online meetings when they are visible to other staff.
Realistically, a blanket ban during the hours of work is very hard to enforce when the employees are not visible. Employees are entitled to one ‘rest break’ of at least 20 minutes for every six hours worked.
Whilst it may be difficult for employers to ban employees from smoking at home entirely, in order to honour their health and safety duties a compromise may be to periodically remind employees of the health risks of smoking during the working day combined with restrictions during online meetings.
The smoke free workplace rules generally do not apply to vaping or e-cigarettes but employers can choose if they are contractually banned from the workplace. At home, the same rules apply.
Eating and drinking
With respect to eating during the working day, employees can of course eat and drink during their lunch or other breaks. Employees must be properly fed and hydrated during the day. However, eating and drinking at their desks gives rise to many potential issues, including tiny pieces of food breaking off and falling into computer keyboards.
There are many variations on a ‘food at desks’ policy and ultimately the choice is one for employers to take. Employers can ban eating any hot and cold food at the actual desks, but permit hot and cold drinks or light snacks, or sports-style bottles can be encouraged for water. Employees can also be encouraged to restrict eating to their lunch breaks or their 20 minute rest break for every six hours worked.
Employers should be careful not to discriminate against employees on health grounds. Certain medical conditions such as diabetes may dictate certain eating and drinking patterns and so reasonable adjustments should be made for these employees.
An eating at desks ban is hard to enforce during remote working anyway but it can help avoid unprofessionalism and encourage staff to take a break and move to alleviate muscular and skeletal issues from being at a desk.
Q: What steps should employers take regarding insurance for employees working from home?
The transition to home or remote working from March 2020 onwards happened very quickly. As employers and employees continue to adapt to their new normal, some matters which may have been overlooked previously need to be addressed. This includes remote working insurance that is needed to ensure adequate protection.
Working from home or other remote locations such as a relative’s house may mean that existing insurance policies are inadequate. The policies may not cover the employees themselves or their own or the employers’ equipment.
The types of risk to cover include:
- personal injury in the new working location
- damage or theft of company equipment
- cyber related breaches
- motor insurance possible company vehicle accidents traveling to and from the remote working location.
These items may be covered by the employer or employee’s existing policies, but this should be verified. Some employees may not even have home insurance.
Employers could request a copy of the employee's current homeowners’ policy to check that there is no significant uninsured liability for either employer or employee, and if they feel it is inadequate they may offer to pay for increasing coverage. Employers must also verify that their business insurance policies extend to home working.
It is unlikely that household insurance will cover business activities unless they have been disclosed to and agreed with the insurer. It is also unlikely that that employers’ property will be covered by an employee’s household insurance. The employee's homeowners’ insurer should be notified about business activities taking place at home, and similarly if the employee relocates elsewhere, the insurer of that property may need to be notified and add additional cover for any new equipment in the home.
Household insurance policies are usually intended to cover domestic activities and not commercial ones. As an employer you are not a contracting party on an employee’s household insurance and so cannot claim on that policy directly. Whilst some standard home insurance policies may cover working from home visitors for work related matters are unlikely to be covered.
Employers’ liability insurance
Employer’s liability insurance is compulsory for employers in the UK. This insurance may extend to staff in remote locations but as insurance policies differ, the policies must be checked. If an employer does not have employers’ liability insurance that adequately covers employees working from home, then:
- The Health and Safety Executive (HSE) can check to see the certificate. If there is not adequate liability insurance (for at least £5 million cover) the employer can be fined up to £2,500 for each day it is without an adequate policy. In practice, most insurers offer higher cover.
- Employers who have failed to take out the insurance, risk meeting the costs of any potentially significant claim made by injured employees.
Certificates of liability insurance must be displayed so that employees can see them, stating the minimum level of cover provided and the company or companies covered. Since 2008 certificates can be displayed electronically. There are further fines for failing to display the certificate of insurance or refusing to make it available to inspectors.
The compulsory minimum level of insurance cover must be against liability for injury or disease to employees arising out of their employment (see Employers’ Liability (Compulsory Insurance) Act 1969). This is part of employers’ duties to care for the health and safety of employees. Employers’ liability insurance must cover the cost of compensation for employees’ injuries or illness whether they are caused in the normal workplace or working from home.
Compulsory liability insurance covers employees based in England, Scotland or Wales. If employees are normally based abroad but spend more than 14 days continuously in Great Britain, employers will need liability insurance for them. Otherwise, liability insurance is not required for employees based abroad, but the law in the country where they are based may require it. Taking out comprehensive policies to protect employees is always safer.
Insurers must be authorised and the Financial Conduct Authority (FCA) maintains a register of authorised insurers which can be checked online.
Insurance does not absolve employers from their legal responsibilities for health and safety, so risk assessments etc are still essential.
Employers’ liability insurance for people working from home or in the workplace applies to those who are classed as employees - this depends upon the complex employee status tests.
Some employers are exempt for example public organisations such as government departments and agencies, the NHS, local authorities, police authorities, nationalised industries and some other organisations which are financed through public funds, such as passenger transport executives. Some family businesses where all employees are closely related may be exempt unless they are incorporated as limited companies.
Public liability insurance
This covers employers for claims which are not made by employees, but claims made against the employer made by members of the public or other businesses. Public liability insurance is generally voluntary.
There are increased digital security threats while employees are working from home as there is likely to be reduced security in place. Staff working from home must be trained about spotting and avoiding security threats and data breaches, for example not downloading any applications on work devices that have not been authorised by the employer and identifying any suspicious emails and avoiding opening or clicking on them. Networks should be secured networks. Cyber insurance covers employers’ liability for a data breaches which may involve sensitive customer information for example credit card numbers, passwords and personally identifiable information.
If employers have supplied computer equipment in use at employees’ homes this should be covered too. Endorsements to the company's property insurance schedule should cover any equipment covered and may specify its location.
For employees who drive for work motor accidents that occur while your employees are working for you may be covered separately by your motor insurance.
Q: What are the considerations for employers if a remote working employee wants to move to a different part of the UK for a brief period?
In principle if a remote working employee suggests working from a different location for a brief period, employers can agree to this. Employers remain responsible for the health and safety of all employees, including those working from home or elsewhere and must assess any risks resulting from the move. For some employers remote working is evolving into a long-term arrangement and employers must regularly review their responsibilities.
If employees are moving around the UK employers and the employees should bear in mind that there are different coronavirus restrictions in different parts of the UK. Lockdown restrictions and the lifting of measures is regulated by the UK, Scottish and Welsh Parliaments and the Northern Ireland Assembly as well as Westminster. In the event of a localised spike in infections easing of restrictions may be halted or lockdown measures re-imposed on a local basis. If employees are working elsewhere employers need to stay informed about any local measures that may affect them.
Using different remote locations may mean that existing policies covering the employees themselves and the employers’ equipment insurance is inadequate. The employee's personal homeowner insurance and the employer's business policies should be checked to ensure there is no significant uninsured liability for either employer or employee.
Employers could request a copy of the employee's current homeowners’ and any other relevant policies to check coverage in the different location, and if they feel it is inadequate they may offer to pay for increasing coverage. The employee's homeowners’ insurer should be notified about business activities taking place at home, and similarly the insurer of the property where the employee is relocating to may need to be notified. There may also be motor insurance issues or possible company vehicle accidents travelling to and from the remote working location.
For further information on the types of risk, see our FAQ on remote working and insurance (above).
Health and safety
Employees must take reasonable care of their own health and safety. Anyone working outside of the workplace should keep in regular contact with their manager and notify them of any health and safety risks.
Employers could decide to carry out risk assessments by sending some-one to visit the proposed location. An inspection can take place subject to COVID-19 secure arrangements although this is impractical if the relocation is short term. Similarly, IT professionals can visit each remote working location and examine the connection to the company's network (see below).
If the home or other remote office space is going to be used for some time employers could send a safety consultant to produce a report. Alternatively, or additionally, remote workers can be trained in proper use of equipment. The training should be documented and updated as necessary. Employers can check with the employee that:
- employees feel their proposed location enables them to work safely be done safely
- employees have the correct equipment to work safely and that the equipment is secure
- managers keep in regular contact with the employee
- reasonable adjustments are made for any employee who has a disability
- chairs, desks, lighting etc are appropriate and designed to help prevent injuries and provide appropriate support
- electrical, phone and computer wiring is safe and secure with surge protection and avoidance of trip hazards
- smoke, fire and carbon monoxide detectors are installed and tested regularly
- locks and alarms are appropriate to secure office equipment.
Policy and IT
Employers may need to check that their home working policy covers other locations, setting limits and guidelines as to what is allowed. Anyone other than the employee should be prohibited from using the company computer or network. Other matters to check with the employee include the overall security of any remote desktop, laptop, tablet, mobile and other devices that have access to company servers and networks. These should be as secure as any computer in the home office. Employees should be prohibited from using laptops or other devices attached to the company's network on public Wi-Fi connections for example in a café or coffee shop. Other considerations include:
- a cyber security review of the remote working location
- robust ID and password combinations, back-ups, firewalls and other defences that are updated regularly
- protection of access to sensitive information especially if there is third party access at the home or other working location
- IT may wish to check that the internet service provider each employee uses offers the latest generation of security enhancements
- possibility of cyber insurance.
Employers should have regular discussions with employees around their remote working arrangements and ensure they support their health and wellbeing.
Q: What are the implications if employees ask to work overseas during their working from home period?
From 1 August government guidance emphasised that returning to the workplace is mainly at employers’ discretion. Employers can now decide upon the safest ways of working, in line with COVID-secure guidelines; this means some employers are not planning to return to the workplace until later in the year, others in 2021 and others not at all.
If employers decide to extend remote working arrangements some staff may request working overseas for a short or longer period. This may be to see family overseas or because they feel the other country is safer. Obviously, some roles can be performed effectively overseas, and others cannot. Until 31 December 2020 working in the EU is relatively easy but only until that date when the consequences of Brexit are fully implemented.
Ultimately the decision is one for employers to make (following discussions with employees) Below we outline some practical points, including a number of hidden issues for employers to consider.
Practical steps and policy
Larger employers who get numerous requests to work overseas may adopt a brief written policy to ensure requests are dealt with consistently and fairly and that all risks are evaluated fully. Matters to address in the policy or written agreement confirming the arrangements include:
Timing: How long may the employee work overseas for? The beginning and end date (if any) should be agreed in advance. Remember that a shorter period of working abroad may reduce some of the tax and immigration matters referred to below.
Health and safety: Employers have statutory and implied contractual duties to protect employees’ health and safety. This includes a safe home working environment. There may also be local health and safety requirements in the host country which employers may not be aware of without seeking local specialist advice. Employers can attempt to get employees to agree that they are working from home at their own risk and that the employer is absolved from responsibility for any losses suffered but such exclusion clauses are not always enforceable.
Employment rights: Employers and employees should check employment protections in the host country. There may be restrictions on working hours, rates of pay, holidays, union collective bargaining and disciplinary and grievance processes.
Until 31 December 2020, when the EU departure is complete, the Posted Workers Directive applies, affecting employees relocated from one establishment to another cross-border within the EU. Eligible employees are entitled to the same pay as comparable employees in the host country. This mainly applies to cross border secondments within an international employer rather than those temporarily working from home, but implementation of the rules may result in any country giving minimum statutory rights to all workers located there.
Tax and national insurance: Specialist local advice may also be needed on taxation in both the UK and the host country. The employer can ask the employee to shoulder responsibility for any additional local or national income taxes, registration fees or payments which may be payable. The employer can request written consent to any extra deductions from wages needed. See the separate Q&A on taxation for employees working overseas during the pandemic below.
Quarantine: Employees will also need to comply with quarantine periods which can change suddenly both in the host country and on their return to the UK. See our FAQs on quarantine.
Privacy: If employees process or store data the employer needs to ensure its data protection policies and any additional national laws are complied with. If the data being handled belongs to an EU citizen GDPR will apply.
Pensions, health care, life insurance: Consider the implications; does the employee still qualify for existing benefits or need new health cover, for example?
Choice of law and jurisdiction clauses: Most written UK contracts have a choice of law clause which specifies that UK law and jurisdiction applies if the employer and employee end up in dispute over their contract. It may be prudent to check the employment contract contains such a clause.
Immigration: UK or EU passport holders can work in any EU country until 31 December 2020. Other immigration visas and status issues depend upon the length of stay, the host country restrictions, and the employee’s nationality. Some countries, including the UK, have special COVID-19 visa extensions. EU and other nationals may have issues of settled or pre-settled status when they return to the UK which should be clarified before they travel overseas. Similar issues can arise with indefinite leave to remain, permanent residence or naturalisation. Immigration issues in the host country are similar. Shorter stays may be seen by the host country as a business visit for which permission may not be required depending upon the host. In some places any work is prohibited in any context without a visa for example, Hong Kong.
For further information about some further matters which may affect employees who move overseas including insurance, health and safety and cyber security please see our FAQ on employees who relocate within the UK (above).
Q: We have agreed that some employees who are working from home and some furloughed employees can be based in another country during the pandemic - what is the taxation and national insurance position?
If furloughed or remote working employees are based overseas during the pandemic employers must consider the taxation position both here and in the host country. Generally, UK employers should continue to deduct PAYE income tax and employee national insurance contributions and pay employer contributions whilst employees work overseas. Several countries have special COVID-19 tax exemptions and relaxations but in some places normal rules apply. Employers or employees may need income tax and immigration visa advice on liabilities in the relevant location. Employers are also advised to set out the employee’s liabilities for income taxes, social security or local fee declarations in writing giving the employer ability to make any additional deductions.
In the 27 EU and some other countries the UK currently has double tax treaty agreements. If so, employees may be exempt from income tax. A short stay in countries with an agreement in place means the employee may not become a tax resident in that host country and will not qualify for income tax. However, host countries will have the ability to tax employment income earned working there if an employee becomes a tax resident or if a double tax treaty or other agreement is not in place.
Employers and employees should monitor the employee’s residence; in a double tax treaty country the number of days in the host country must not generally exceed 183 days in a year, although in some places the relevant time periods may vary. Other periods such as holidays in the host country may count towards the 183-day threshold.
On 31 December 2020 the Brexit implementation period ended. There are Double Tax Treaties between the UK and most individual EU Member State which did not depend on EU Membership so the UK should, still benefit from and be bound by the double tax treaties already in force. Although any variations should be checked depending on the specific country concerned. Previously payments such as UK national insurance contributions remain payable and similar social security payments did not need to be paid in the EU host country. The current arrangements for social security payments which may be payable in the EEA and Switzerland need to be checked. However the EU-UK Trade and Co-operation Agreement announced on 24 December 2020 includes a protocol on social security co-ordination. There is guidance on the rights of UK nationals in the EU, EEA or Switzerland to UK benefits and pensions from 1 January 2021 and an overview of the social security coordination provisions in a summary produced by the Government.
In places with no reciprocal agreement, employers must normally deduct employee national insurance contributions and pay employers’ contributions for a year. This may be in addition to the host country’s social security contributions as these obligations usually apply in the country where the employee is physically working. For example, in the USA and Japan local social security would be payable if there weren’t agreements that enable UK employees to avoid local social security contributions for up to five years.
Individual residence: If the employee is subject to tax in the host country, they can remain a UK tax resident and subject to UK income tax. Following completion of the appropriate tax declarations, they may be able to get credit for at least part of taxes paid in the host country.
Employers’ residence: Employers should assess the risk of whether an employee’s work in a host country could be seen as creating an establishment for the employer. If the remote working is short term this may not count as permanent establishment. However, an employee may be entering into contracts for the employer while in the host country and this may inadvertently count as setting up a new base, leading to local corporate taxation liabilities. Any income tax exemption in the double taxation treaty may be lost.
In addition to the above the employer and employee may have other obligations in the host country. For example, they may need to register with the local town hall, pay business rates or report on the employee’s income. Local advice may be needed.
This is a complex issue and employers are advised to seek specialist advice.
DISCLAIMER: The materials provided here are for general information purposes and do not constitute legal or other professional advice. While the information is considered to be true and correct at the date of publication, changes in circumstances may impact the accuracy and validity of the information. The CIPD is not responsible for any errors or omissions, or for any action or decision taken as a result of using the guidance. You should consult the government website for the very latest information or contact a professional adviser for legal or other advice where appropriate.
If you have other queries about COVID-19 not covered above, please contact the CIPD member employment law helpline on 03330 431 217 or visit the Community pages
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