Digital nomadism – working remotely from outside the UK – is on the rise. Some estimates suggest 165,000 British citizens are living and working abroad as digital nomads for on average seven months of the year. But allowing staff to work overseas, even temporarily, can trigger a complex mix of immigration, tax, and employment law issues. In this blog, Daniel Zona outlines the key risks and responsibilities for employers, and why early legal advice is essential to avoid costly pitfalls.
Many cite the rising cost of living in the UK as a major factor in their decision to live and work abroad in countries where their UK salary can stretch further. While others cite pull factors, such as better standards of living in their host country, even better weather, as the reason for working remotely for a significant period of the year.
Whatever the reason, it appears digital nomadism is on the rise globally, with many countries now offering digital nomad visas permitting workers to lawfully work remotely in their country.
But its not all plain sailing, being a digital nomad brings with it a sometimes-complex web of immigration, tax and employment issues.
Key considerations for employers with digital employees:
- Nomads must firstly make sure they have, and retain, the right to work in their host country. Often digital nomad visas come with certain restrictions and limitations, are valid for a fixed period (sometimes with the possibility of extension) and require you to meet minimum eligibility criteria, for example around income. These visas can also take several months to be granted so it is not necessarily a quick process.
- Even if an individual thinks they have the right to work in the host country by some other means, for example if they have dual-citizenship with their country of origin and host country, they should still check that they have the right to work in their particular circumstances.
- Tax can also be a very difficult area to navigate. Each country will have its own rules of where tax and social security should be paid, and nomads (and their employers) should take due care to confirm where such tax and social security payments need to be made. Often countries will have bilateral treaties dealing with how and where tax and social security payments should be paid, but not always.
- Generally speaking, most (although not all) countries will apply their own employment law and standards to both nationals and non-citizens working within their territory. This means an employer may need to comply with two sets of employment law and standards. Sometimes local variances in employment law can create tricky situations, for example if the country hosting their nomad employee offers workers more generous minimum holiday entitlements, or different or more public holidays, or laws restricting contacting staff outside of working hours.
- Other difficulties may arise if an employer seeks to terminate the individual’s employment, which may be lawful in one country, but unlawful or more difficult in the other.
- Another layer of complexity arises where the employer in the country of origin has a local branch or subsidiary in the country hosting their nomad employee. It is generally advisable to ensure that the individual’s employment contract states clearly which law and jurisdiction is applicable to the contract, while still ensuring to comply with more generous employment laws and standards of the other.
- Employers will also need to consider cultural differences between the two countries which, while possibly unlikely to create too much of a problem with a sole employee working abroad for a short period of time, could develop into an issue as the individual becomes more accustomed to their host country. For example, its common in Spain and Italy for businesses to ‘slow down’ or even close for most, if not all of August, which is not a cultural norm in the UK where employees will usually take at most two weeks off at a time (and are often prohibited from taking more at one time in their contract).
Conclusion
We would always suggest that employers take advice before allowing employees to work from abroad, even for short periods, and certainly if an employee is looking to relocate abroad. The employer will likely also need advice from a lawyer in the country that will host their employee.
However, evidently it is possible to navigate all these issues if an employer does want to retain a relocating employee. The key is to be prepared.
Further information
If you have any questions regarding this blog, please contact Daniel Zona in our Employment team.
About the author
Daniel Zona is an Associate in the Employment team. Daniel enjoys a broad and busy employment law practice, acting for employers and individuals on both contentious and non-contentious matters. Daniel has acted for clients in a wide range of industries and sectors, with particular experience of acting for those in regulated and professional spheres, including financial services, healthcare and legal.
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