The bells are jingling (1) – can employees work from another jurisdiction?

The European Commission ('the Commission') published on Wednesday a communication that recommends strategies for member states on helping people stay safe from COVID-19 during the winter. The communication addresses a variety of issues that concern a wide audience, including global employers.

With the holiday season approaching, global employers – whose employees come from different geographies – are facing increased numbers of requests by employees to work remotely from another jurisdiction (where they intend to visit family for the end-of-year holidays). 

The Commission recommends that member states encourage employers to allow working from home or from the place where employees intend to spend the holidays for around seven days prior to and seven days after festivities, whenever possible. This is to encourage travellers to self-quarantine before engaging in social activities and/or returning to their usual place of residence and work (where this is still allowed or where remote work is not possible).

The communication, which makes a lot of sense from both a mental health and an infection risk management point of view, may appeal to employees wanting to visit family, including abroad. But the communication is non-binding and there is no guarantee for employees that they will be able to have an extended period of remote working. The employee and employer will have to agree to any such arrangements and, even if the employer does in principle agree for some of the time off spent to be considered as home working and not annual leave, other considerations will apply if the family the employee is visiting is in another jurisdiction.

Employers should be aware of the tax and regulatory issues that may arise if an employee chooses to work from a jurisdiction different to their usual place of work. From a tax perspective, if the employer does not have regular business in that jurisdiction, the presence of employees performing work there may create a permanent establishment and lead to the payment of local corporate or employment taxes. Similarly, some regulated positions (eg in the financial industry) may only be carried out in a particular territory. For example, traders may not be able to sell financial products outside of the market in which the employer has regulatory clearance.

Employers should also consider the risks that may arise from an employment perspective of an individual working in another jurisdiction. For example, could the employee resign and claim employment protections under the laws of the jurisdiction in which they are temporarily working?

Additionally, working remotely from another jurisdiction may trigger prospectus and/or other filing requirements according to local laws on securities, employment, etc for employees with equity-based awards that have been granted by the employer. Cross-border remittance of funds to settle the awards may apply.

Moreover, employers in a jurisdiction that imposes strict data privacy laws (in particular on data export) must be very cautious with data accessible by an employee who will be or has been teleworking outside of this territory, as remote access to data may be viewed as data export and subject to restrictions or prior approvals.

Where the employer must ensure that the employee's remote workplace complies with health and safety requirements, working from somewhere other than their main residence (eg a holiday home) may give rise to additional requirements regarding safety at the workplace. For instance, in France employees generally self-declare that their house is compliant, in particular regarding the electrical installation. If the employee will be working from a remote location that is not their usual home, the employer should make sure that a new declaration is issued in order to mitigate any risk that the employer would be liable for any accidents that may occur in that location. It is also recommended to remind employees that health and safety policies (in particular as regards screen time and ergonomics) must still be respected if they are working from somewhere other than their main home.

Please read more about the hybrid workplace, including on working from home where that home is in a different jurisdiction, in our new Q&A. Please also visit our WorkLife2.0 website.