Remote Working From Abroad
Remote working overseas is a complex situation and may create social insurance issues for the both the employer and employee. There is no legal entitlement to work remotely, including from another country, either temporarily or permanently. An employee cannot work overseas in another country under an Irish contract of employment.
There are many factors that need to be taken into consideration:
The first consideration is the country that the individual is going to be carrying out work. Individuals working in a foreign jurisdiction cannot contract out of the mandatory employment laws of the country in which they work and the individual may automatically assume employment rights in that country. Many countries have strict employment laws around the classification of employees v contractors and it is important that these are fully understood.
Employer Taxation Issues
While many authorities turned a blind eye during COVID, it must be assumed that normal taxation laws are now back in force. Employers will need to be mindful of the tax reporting requirements of both the foreign country and Ireland, particularly where an employee may become resident or non-resident in each country over a period of time.
Employee Taxation Issues
In addition, employees working remotely abroad may encounter unanticipated tax liabilities under the laws of their host country. With tax residency rules being specific to each jurisdiction, an employee moving abroad may inadvertently expose themselves to negative tax consequences not only in respect of their employment income, but also potentially on other events, such as capital disposals made. Other benefits provided to an employee by their employer (such as share options, benefits-in-kind or subsistence payments) may also be treated differently for tax purposes in the foreign jurisdiction than in Ireland.
Where an Irish entity’s employees perform their employment duties outside of the State, this may create a foreign corporate tax presence and a “permanent establishment” (PE). Where a company has a PE in a foreign jurisdiction, the profits attributable to the foreign PE may be taxed in the other country and the Irish entity may have to comply with the tax reporting obligations of both Ireland and that jurisdiction.
In broad terms, a PE may be created where an employee concludes contracts in another jurisdiction and/or if the employer is considered to have a “fixed place of business” in the other jurisdiction. In certain cases, a home office may be a fixed place of business, depending on the specific arrangements and the length of the WFH arrangement. It is therefore very important that employers carefully consider the role occupied by the employee working in a foreign jurisdiction and the working arrangements so as to ensure that allowing an employee to work abroad does not have the effect of unwittingly creating a PE in that country
Work Permit/VISA Issues
A another important (and often overlooked) consideration is the nationality of the employee. A non EU citizen may have had the right to work in Ireland but this does not automatically give them the right to work in another EU country (regardless of marital status etc). It is important to check the work permit/visa arrangements for the country to which they intend to move to.
Health and Safety
While there is no specific legislation in place specifically outlining an employer’s responsibilities to employees working abroad, the Safety, Health and Welfare at Work Act, 1989 – 2005 defines an employer’s obligations to employees, irrespective of where they are in the world the employees are based, as: “Every employer shall ensure, in so far as is reasonably practicable, the safety, health and welfare at work of [its] employees”. The above duty includes “managing and conducting work activities” in such a way as to ensure every employee’s health and safety. “Work activities” extends beyond the office in those circumstances.
Data Protection/Security Concerns
The need to facilitate employees using personal devices or work devices in a home or shared setting has naturally created some concern for employers as to how they can maintain the high level of data protection they have implemented in the workplace with respect to their data protection obligations. Working from outside the country would also raise the same concerns. Working outside the EU may also give rise to issues from a GDPR perspective.
Not all insurance policies cover employees working from abroad so policies will need to be examined to confirm there are no prohibition or exclusions on having employees working from abroad from an insurance perspective. Health insurance and access to local healthcare services is another consideration and again will depend on the country the employee is working from and any applicable local laws.
Irish Contract Issues
Employers may not be able to fulfil all Irish contractual terms for employees working from abroad. For example, access to insurance policies and healthcare polices may require employees to be resident to make a claim under the policy. There could be potential cost consequences falling to the employer in the case of a claim.