Blue-Sky (Employment) Thinking - Essential Considerations For Those Working & Commuting Internationally & Their Bosses
By Elaine Aarons & Lisa Lewinsohn
Posted: 24th January 2013 10:14
The Rise of the High Fliers
Senior roles increasingly involve a significant international dimension and require considerable amounts of travel and time abroad. Technology has smoothed many rough edges associated with such a lifestyle and made working ‘on the move’ achievable and easier.
Additionally, soaring house prices and living expenses in some locations, availability of cheap flights and an increased focus on flexible working and ‘work-life balance’ have tempted many to live in one location and work (wholly or partly) in another. The appeal of maintaining a higher salary combined with a cheaper cost of living (often in a sun-soaked destination) is clear and the ability, through technological developments, to have a ‘portable office’ has fuelled the trend.
If you are one of these international workers, or are employing or advising them, what are the key things to consider? This article highlights some important issues for consideration. Although written from an English employment law perspective, points raised are likely to have resonance and relevance on a general and global basis.
Is It Legal...?
The international worker can take many forms including those splitting their time between destinations, employees working remotely from home-offices abroad and those commuting internationally. Whether intended working patterns are permissible, including associated immigration issues, needs to be addressed before such patterns commence.
Failing to address immigration issues can lead to criminal and civil penalties. Each situation needs to be carefully assessed to ensure requisite procedures are followed and, if necessary, correct permits and visas are in place. Arrangements must be kept up to date particularly if circumstances change. Indeed, employers may have the right to terminate engagements if legal requirements are no longer met.
Often international arrangements are simply treated as ‘secondments’. Secondments are generally legally much more complicated arrangements than people anticipate and need careful review.
With that in mind, all involved should liaise and consult with relevant advisers early to avoid falling foul of requirements. Further, contact should be maintained with advisers and the situation should be kept under review to ensure continued compliance.
Which Law Applies…?
The international worker can pose a legal conundrum and create tricky questions about which law governs contracts of employment and which legal rights are engaged. Each situation needs to be considered individually.
Whilst it is helpful if policies and contracts state which country’s laws apply, some jurisdictions (including England) have mandatory rights that employees can rely on regardless. There are also restrictions on an employer’s ability to choose which law applies to the contract. Different rules determine which country’s courts will have jurisdiction to resolve disputes. These rules can have considerable impact upon rights and responsibilities of both parties but determining whether mandatory local rights apply can be very complex. Legal advice will always be needed.
Money, Money, Money…
Tax, social security, exchange rates, pensions... International working creates a need to tread very carefully as the impact of working patterns upon remuneration and associated charges can be significant, particularly given cost of living and taxation differences between locations.
Legal and practical advice is needed. Often companies provide or cover the cost of specialist financial advice, particularly if the company’s requirements have led to the international working arrangement.
Not only is it vital to ensure that tax, pensions and social security requirements and laws are complied with in all relevant countries but it is important to consider potential risks and address them at the outset. For example, it may be appropriate to agree provisions ensuring that if two jurisdictions impose tax the company will ensure that, overall, the worker does not suffer a loss (usually called tax equalisation). Further, it may be sensible to restructure arrangements or payment structures to improve tax efficiency.
All aspects should be considered and appropriately documented at an early stage. For example, terms relating to exchange rates should be detailed, clear and take adequate account of the potential for currency fluctuations.
The Benefit of Benefits
Companies with a diverse workforce, at least some of whom spend time abroad, often offer flexible benefits packages. In such cases, it is sensible to check the small print of providers’ terms and conditions to ensure that international working practices do not compromise the provision of benefits and that the benefits selected remain available and useful.
If current benefits are not relevant, or international working patterns will prevent benefit being derived from some entitlements, it may be sensible to arrange/request a tailored package that is relevant and beneficial in the circumstances.
Organisations differ in the expenses that they will reimburse. Assumptions should be avoided. If existing rules are unclear it is best to clarify in writing in advance the parameters of provisions.
For example, whilst home working is permitted by many employers, the question of whether and to what extent costs of working from a home office abroad will be covered is often unclear. Similarly, whilst work related travel expenses may be recoverable, the question of whether costs associated with international commuting are recoverable is rarely explicitly explained in standard company provisions.
Flexible & Remote Working Practices with an International Dimension
There is a growing trend for companies to institute general policies about flexible and remote working practices. It is less common for such policies to take account of potential international dimensions.
Whilst some provisions included in generic policies are of relevance (for example relating to equipment and confidentiality), it is often best for individual arrangements to be detailed in separate updates to individual contracts where international working is relevant. This is particularly so for senior roles where general rules are often inappropriately restrictive and/or ungenerous.
International workers travelling with documents and property and accessing resources worldwide creates considerable confidentiality risks for businesses.
Company policies should be carefully drafted to take account of increased risks to confidential information arising from international working. Polices should clearly explain what is required in terms of security, as well as the consequences of failure to comply with guidelines. Taking all practical steps to lessen risks may seem obvious but should be clearly set out as express obligations. Companies should act consistently with individuals who breach such policies.
Those working internationally should make sure that they have read the rules and fully understand what is required.
The international working lifestyle may sound glamorous, but the toll of frequent flying and lengthy commutes on physical and emotional health and family life and safety issues should not be overlooked.
It is sensible to arrange regular medical check-ups and appropriate insurance cover which is suitable for the relevant jurisdiction(s) and activities. On a practical note, the cost of such measures often falls with the party responsible for the working practice.
Where work is carried out remotely/internationally, employers should also be carrying out appropriate health and safety checks and risk assessments for workplaces wherever they may be.
Forward planning, maintaining a regular dialogue with financial and legal advisers, keeping ahead of changes and generally being pro-active and thorough when considering issuing arising from international working is invaluable for all parties. Such actions ultimately save time and cost and help to keep high fliers soaring….
Elaine Aarons is a partner at international law firm Withers LLP based in their London office. With over 30 years experience in employment law, Elaine currently focuses on acting for senior executives and frequently represents a wide range of executives including FTSE 100 and FTSE 250 directors. Elaine has been noted for having a superb reputation for senior executive work and is regarded as being 'amongst the best individual employment lawyers in the London market' (Insider's Guides to Legal Services). She is also very experienced in advising executives joining or exiting businesses backed by private equity.
Elaine can be contacted at firstname.lastname@example.org or on +44(0) 207 597 6523.
Lisa Lewinsohn is a senior associate solicitor in the international employment group at Withers LLP. Based in London, Lisa’s practice encompasses a broad range of contentious and non-contentious employment work on behalf of both employees and employers. In particular, she frequently represents senior executives and professionals working in the financial and other sectors. Lisa also acts for a range of companies, owner managed businesses, charities and luxury brands and is well equipped to assist clients through employment litigation, having had considerable experience of such claims. Lisa’s sound advice and responsiveness are frequently complimented by her clients.
Lisa can be contacted at email@example.com or on +44(0) 207 597 6659