The Martini Mindset: Employment Law Considerations

Enjoy a martini “Any time, any place, anywhere”

As we begin to delve deeper into the Martini Mindset, this blog focuses on some of the key employment law implications of allowing your employees to work from home abroad.

Which law applies?

The first, and most important, question to ask when an employee wants to work from home abroad is whether the host country’s employment laws govern the employment relationship. If they do, then you will need to understand what obligations these laws place on you and what rights they afford the employee. The application of a different law could have very significant implications, especially on termination of the employment, with some jurisdictions affording protection to employees which is far more generous than the UK regime.

Determining which laws govern an employment relationship is complicated. The general rule of thumb with employment contracts is that the laws of the country where the contract is “habitually performed” will apply. Where there is no habitual place of performance, the contract will be governed by the laws of the country in which the employer is situated. However, in both cases, this can be overridden if it appears from the circumstances as a whole that the contract is more closely connected with a different country. In such, cases the laws of that other country will apply.

So, if I happen to be on holiday in another country and log into my work emails from that country or take a call from a client, my employment contract remains governed by UK laws, because the UK is still the habitual place where I perform the contract and I am unlikely to have any other particularly strong connections with the country where I am on holiday.

Conversely, if I decide to emigrate but continue working for my UK employer, it seems highly likely that the laws of the country to which I emigrate will govern my employment contract, as that will be my habitual place of work. However, I may still be able to point to a close connection with the UK, in which case the possibility of UK employment laws applying cannot be ruled out. Ultimately, this will turn on an analysis of how strong my connection with the UK remains.

But what happens if I decide to spend an extended period overseas, perhaps because I have a second home abroad? European case law suggests that where I ‘habitually’ work is the place where I carry out the majority of my activities. This would appear to point to a percentage of time test such that UK laws will continue to apply if I spend more than 50% of my time each year performing my work activities in the UK. However, it is difficult to draw any firm conclusions, because I may still be able to point to a closer connection with the overseas country, especially if I have a second home there and am largely left to my own devices whilst overseas. Specific advice would need to be taken in each case.

Does an employee need permission to work from abroad?

The next consideration is whether the employee is obliged to inform their employer that they are intending to work from overseas. It seems to me that employees are increasingly taking these decisions into their own hands, banking on the fact that their employer will not notice given how seamless remote working can be. However, unilaterally changing the place of work is likely to be a breach of the employment contract. Covertly doing so risks breaching the implied duty of trust and confidence. Given the potential employment law implications, as well as the immigration and tax issues which we will address in subsequent blogs, it is arguably an act of misconduct which has the potential to bring the employer into disrepute. Furthermore, leaving aside any legal considerations, any such arrangements are likely to be wholly impractical if those working from home are required to attend the UK workplace in person on a regular basis and/or at short notice, as is often the case. A failure to attend the UK workplace when required would, again, be an act of misconduct. So, an employee who secretly begins working from overseas risks disciplinary action and potential dismissal. However, rather than wait to address these issues reactively, it’s my recommendation that employers tackle them up front and explain as part of any home working arrangements that the employee must notify them in advance and seek approval if they are considering working from home abroad.

Other considerations

If contemplating allowing an employee to work from home abroad, it’s also worth bearing in mind some of the broader legal issues which overlap with employment law, especially health and safety obligations and data protection issues. In respect of health and safety, you will need to take local advice if the laws of the host country apply. If UK law applies, then it will be important to take proportional steps to ensure a safe place of work and issue appropriate guidance (for example on the use of display screen equipment). If the arrangement is not temporary, then you would need to conduct a risk assessment and may be obliged to provide suitable equipment to facilitate homeworking and minimise any associated risks. This will give rise to practical difficulties, because any local health and safety consultant that you engage would need an understanding of UK laws.  From a data protection perspective, you will need to consider carefully what personal data is being transferred in and out of the UK. If the data is being transferred outside the EEA, additional factors will come into play to ensure that the data is protected. Again, specific advice should be obtained. Finally, it will be important to establish with your ELI insurer that your employee remains covered by your insurance policy whilst working overseas and, if not, ensure that appropriate cover is put in place.

So, the Martini Mindset presents challenges from an employment law perspective, but they are not insurmountable. However, don’t forget to weigh up the immigration and tax implications as well before making any final decisions. Allowing your employees to work from home abroad may sound like a great way to retain staff and improve morale but, in the same way as drinking too many Martinis, it could leave you with a nasty hangover.

You can register for our remote working roundtable HERE.