‘“Is remote working abroad illegal?” – that’s a question I heard a few weeks ago during a consulting call about a workation. My first reaction was that I gasped with disbelief, but I eventually responded with a straight “NO, it’s not”. My client was an HR employee of an international company that has released inspiring statements about being remote-first and allowing team members to work from anywhere. To everyone’s surprise, she was caught by her supervisor while working from the Canary Islands and asked to return home immediately. The reasoning behind this behaviour was that it’s not possible to work from another country because the law is clearly against it. Needless to say… I’ve heard such nonsense many times before.
I started digging into the context of the whole misunderstanding and the following concern was raised: “Working remotely from another country will automatically cause being subject to foreign labor laws”. Well, I must say that there is indeed a reason behind such a way of thinking but let’s not get too pessimistic! As a matter of fact, many international companies offer a “workation” or short-term working abroad policies. This has even become a highly valued employee perk and data proves that it increases retention. Luckily, I happened to be designing several of such policies, so I’ll share some basic principles below.
Remote working abroad vs. local laws
Here comes the tricky part. Most labor laws say nothing precisely about working abroad. There are indeed legal provisions concerning “employee posting” but situations related to taking a laptop and just leaving the country on your own aren’t the case here. Let’s face it – when labor laws were designed (about 100 years ago), absolutely nothing was indicating that the concept of “work” would start shifting from being location-based to results-based. Of course, we must keep in mind that the situation is slightly different for contractors who aren’t subject to labor laws, so they have much more flexibility in this case. We’re now just evaluating the employment relationship.
To make sure that employees remain in the same jurisdiction when they work abroad requires a complex analysis. The goal will be to find out if there are any risks associated to physically working from another country so that an employment contract could switch into being subject to another country’s law. Luckily, there are many legal resources that help to solve this matter without much trouble.
One of the major concerns are also taxes. Why? Let me make is simple. Neither employees want to pay double tax, nor do employers. It’s necessary to maintain the same tax residence. In most countries, the rule is 183 days meaning that if an individual resides there for longer than this number of days, they will owe income tax that certain location. Needless to say – there can be exceptions so it’s always worth checking if your country has a tax agreement with the country where you want to go. The good news is that things are relatively straightforward for EU residents who want to lead a part-time nomadic lifestyle there. However, you must know that the situation is slightly different for companies as they must make sure that they don’t run into a foreign tax obligation caused by for example a “permanent establishment”. So before you happily announce your new workation policy, you should definitely check these things out!
Health & safety abroad
When we think about a workation, we immediately imagine all the fun and excitement that awaits us on the other side. Ooooh, it will be so much fun to choose a cool spot to enjoy the sun and work a bit at the same time, right? But what about social security and health insurance? What about accidents? Obviously, we never want anything to go wrong but… we should always keep our best interests in mind. That’s why it’s necessary to dig into our local laws to make sure that we’ll keep the same rights even if we leave the country for some time. Moreover, purchasing additional insurance is going to help employees feel much more secure in this case. The good news is that there are currently companies such as Safety Wing, offering global health insurance to cover both employees and contractors worldwide under one plan, regardless of where they live.
When I think about safety… I automatically must mention the aspect of IT security as well. Just “allowing” people to work and travel without proper guidelines can lead to a disaster. Yes, you hear me! Anything from data leakage, through theft, malware and phishing happens to many on a daily basis.
Basically, as much as remote work is growing – so is cyber crime!
If you’re part of a company that also stores sensitive client information and you don’t have any IT security policies in place… You’d better roll up your sleeves now! It’s also worth mentioning that such guidelines should address the topic of GDPR that is very important in the EU.
It’s easier than you think
I know that I’ve shared a lot and this may seem quite overwhelming. No worries. Check with your IT, legal and compliance department – they’ll definitely have some knowledge that can help you move on. There’s a reason why implementing a short-term working abroad policy seems complicated. It’s because there is no “single source of truth “that would point out everything. You need to do a lot of research. Start with your objectives by evaluating how a workation policy would add value in your company. Engage employees to find out if they’d like to use such a benefit. If the response is “yes” then it’s definitely worth doing it! I can share from my personal experience that a research, action plan and policy preparation take approximately 6 to 8 weeks depending on each company’s input.
Some aspects that you start digging into today:
Are all roles fit to work abroad? Or just some?
What does your local labor law say about remote working? Or is there just the option to work from home? Maybe just “telework”?
Are there any additional documents to be signed between an employer and employee to ensure flexible working?
Does your country have tax treaties with other countries? …Yes, for sure – prepare a list!
What’s needed to maintain the employer’s and employee’s tax residence?
Do you need an “A1 form” for social insurance? Maybe you don’t? Check your local guidelines.
Are you willing to offer additional travel insurance?
Do you have an IT security policy in place?
Does your company process sensitive data? Is this subject to GDPR regulations?
Have fun and feel free to check out my video for more details. I’m sure these will help you succeed in designing your workation policy! You can also follow me on LinkedIn.
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