by Bhagyashree Pancholy, Owner, AllRemotely and Sami Bouremoum, CEO, Hofy
The change in attitude towards remote work over the past year has been profound. Almost every week, a new multinational – the former embodiment of the corporate office – announces a more permanent shift to hybrid working.
Even how we work remotely seems to have been revolutionised over the past year. The phrase “work from home” has been firmly booted from the social lexicon in favour of the flashier “work from anywhere” (WFA).
But is work from anywhere actually a viable concept? Legally – no.
WFA implies an employee could work from a coffee shop, a bar, a beach, the street – wherever they fancied – in whatever city or country they pleased. WFA also arguably implies an employee could change their workstation location as often as they wanted, on their own terms. In other words, total flexibility over, and freedom to dictate, workstation location.
But employment law relating to remote work requires a remote worker – anyone who works outside of the company’s established office – to have a fixed place of work. This is to ensure companies do not use the remote worker status to wriggle out of their health and safety (H&S) and tax obligations.
The location must be fixed for health and safety reasons
Employers have the same H&S obligations to home workers as they do office workers.
The extent of an employer’s responsibilities will vary by jurisdiction. In the UK, for instance, an employer’s duty of care to provide a safe working environment includes carrying out Display Screen Equipment (DSE) risks assessments; other jurisdictions require employers to insure home office set-ups.
Employment law requires remote workers to have a fixed place of work so employers cannot avoid carrying out their duties for people who work outside of the office.
If this were not the case (e.g. in a true WFA scenario), an employer would need to reassess an employee’s workstation every time they changed location – such as every new hostel along a backpacking route – or assess the multiple locations an employee chooses to work in regularly – like their local coffee shop, library etc.
The admin of doing that properly aside, an employer cannot realistically say that such locations do meet H&S standards.
Loophole – mobile working
Some countries have created a category of remote worker that does not have a fixed location – and it may be that more local laws differentiate remote workers more explicitly in the next year or so.
Germany, for instance, differentiates “home office” from “mobile working”. Both refer to work done remotely outside of a company’s work premises (e.g. offices). Home office working is when the employer has defined a fixed place of work in the employment contract, which is outside of the company premises. Mobile working, on the other hand, is when the place of work is not fixed. This may cover a consultant who needs to travel to client sites where it is not reasonable to expect the employer to take an assessment in each site.
The location must be fixed for tax reasons
To return to the language in question – the term ‘anywhere’ implies that an employee could work from whatever country they wanted, outside of their main country of residence.
There are two key considerations for businesses regarding employees working from a different country. Both of which relate to that person being treated as an employee of your business in the country they are working, by the tax authorities in that country.
Each country has its own set of rules, but obligations are often triggered when an employee exceeds a maximum number of days working in that country – which could be as little as a few weeks or months,
If one of your employees is deemed to be employed in another country, there are (a) payroll and tax implications for both the employee and the business, and (b) corporation tax implications for the business.
Payroll and employment tax implications
If one of your employees is deemed to be employed in another country, that employee may be required to pay local taxes, and may have social security or other payroll related obligations.
You, the employer, may have to adhere with local employment laws, withhold tax from the employees’ payroll on behalf of the local tax authorities, and be liable for employee social security, in addition to being liable to the employee for all statutory allowances.
Corporation tax implications
An employer may also be liable to corporation tax as a result of an employee working remotely overseas.
Broadly speaking, any activity that a business carried out in another country that results in the generation of revenue – such as having an office, employees, directors, or other assets – may lead to a local tax authority deeming that the business has a “Permanent Establishment” in that geography. Thus an employee working remotely overseas for a period of longer than a few weeks risks the creation of a PE for your business.
If you have a PE in another country, you may need to pay corporation tax on any revenue that is directly related to your presence there. You will also need to abide by the local laws in respect to all your activities carried out in that country, often including H&S.
So in theory, a business could support their employees working from any country. But the gain of allowing this freedom would be offset by the legal administration and financial consequences.
What about legislation enacted recently, in the “WFA era”?
The same rules apply. Spain, Germany and Russia are just a few of the countries that have enacted legislation since October 2020 – all of which requires a remote employee to have a fixed location for work.
So until laws old and new are amended, WFA is not legally possible.
What about companies that have announced “work from anywhere” policies?
It’s all clickbait, really. Noticeably, companies that were once proudly advocating WFA initiatives seem to have dampened their tone.
Take Spotify, for example. Spotify caused a social media stir in February when it announced it’s Work from Anywhere program on it’s HR blog. But note the actual wording in the announcement.
“Our employees will be able to work full time from home, from the office, or a combination of the two”.
So the location must be fixed.
“We will also introduce more flexibility when it comes to what country and city each employee works from (with some limitations to address time zone difficulties, and regional entity laws in the initial rollout of this program)”.
Note the cautionary tone: “more flexibility… some limitations”.
Work from anywhere is legally unsound. But ensuring legally sound work from home is not without its complications. Employers must take all the necessary steps to ensure they are meeting their compliance duties surrounding remote workers.
That means designing a remote work policy that is airtight and in accordance with remote work and employment laws.
That means both providing employees with fully compliant home working set-ups, and ensuring that that equipment is set up properly so employees do not injure themselves during the process.
That means properly risk assessing employees’ home workstations. UK employers cannot rely on distributing DSE assessments designed for office spaces; they need source assessments specifically designed for homes.
That means working with a certified ergonomist where support is needed.
The good news is that you don’t have to overcome these hurdles alone. There are plenty of consultancies and tools out there to support your efforts. But that also means there’s no excuse.
The author would like to acknowledge the contribution of Sami Bouremoum, CEO– Hofy to this article.