During the pandemic it was inevitable that some employees were grounded abroad and had to work remotely from their location.   Somehow it worked in many cases and authorities turned a blind eye to those not paying tax in the country where they were located.

However, we are now several years on and with the increase in hybrid working, a number of workers are still working from other locations outside the UK.  A recent Gallagher survey showed that a third of employees who are planning to work in another country are doing so against their organisation’s rules, while 14% intend to keep their working overseas a secret.   Some may, of course, assume they have the right to work overseas and are working in ignorant bliss!

This situation poses some legal risks for employers – data protection, health and safety, as well as the issue of tax.  It will, of course, depend in which country the employee is intending to work and indeed whether their organisation has a subsidiary or affiliate organisation that might be able to take the employee onto its books.

What are the possible solutions for a scenario, for example, where a French national with the right to work in the UK wishes to work from Greece?   Let’s assume the employee’s original contract was issued in the UK where they had the right to work.

1. The employee returns to the UK and works as per the original contract.

This option is straightforward and while the employee may argue that through custom and practice, they have been ‘permitted’ to work from Greece, this option was only granted under exceptional circumstances due to the pandemic.

2. The employee is permitted to work from Greece.

In this case you are likely to have to set up a local payroll which can be done through a payroll company.   This is likely to be costly.

3. The employee becomes self-employed.

This way the employee would be independent with no employee benefits.  The employee would pay local tax in Greece with no tax obligations in the UK.  However, under IR35 rules an employee who works solely for one company, may be unlikely to qualify for self-employed status.

4. The employee is seconded through an affiliate organisation.

If the organisation has a subsidiary or affiliate organisation in Greece, it may be possible to employ the individual from that location while they work fully for the UK office.  Again, the employee would pay local tax.  Again, it would be important to look at resident status from the host country’s perspective.

If your organisation wants to talk through its option with employees in similar please contact Hafton for a free consultation at info@haftonconsultancy.com  giving your name, business and contact number.