As an employer, you have a duty of care towards any of your employees working abroad, which applies to both short-term and long-term assignments. In addition, you are responsible for making the appropriate tax and National Insurance deductions from your employees’ earnings while they are working overseas.
In this guide, we discuss both these responsibilities to ensure you know how to meet your obligations as an employer when deploying an employee on an overseas assignment.
Business travel & short-term assignments
Organisations should provide support for international business travellers, for example, workers who are travelling overseas for a short period to attend a conference or business meeting, or to scope out commercial premises. Business travellers bring a specific set of risks, which have become further complicated post-pandemic, as countries now operate with different and changing travel rules and requirements.
Factors such as visas and permission to travel, complying with COVID travel requirements
Duty of care towards employees working abroad
UK employers have a legal obligation to take reasonable care of UK-based employees working for them overseas. You must seek to evaluate and mitigate any risks to your employee’s health, safety and security associated with travel arrangements, location, accommodation and the nature of the work being conducted, just as you would for employees engaged in assignments in the UK.
When assessing the risks involved in sending an employee to work abroad, you may have to consider serious threats such as:
- Extreme climate
- Infectious diseases
- Political unrest
- Natural disasters
Furthermore, your duty of care extends to cover more subtle threats to your employee’s mental, emotional and physical well-being which could arise during the assignment. For instance:
- Will they have easy local access to important amenities? (e.g. Places to buy food or seek medical assistance).
Are they likely to face any language barriers? (E.g. Will they require a translator at work? Could the inability to speak the local language prevent them finding their way around?)
- Will they have the means to communicate freely and effectively with you – their employer – and their support system in the UK? (E.g. Will they have mobile phone reception and access to the internet?)
- Will they be required to work in an environment with a culture radically different to that of the UK? (E.g. where manners are different, or where women are expected to cover their hair).
Considering these factors and implementing a relocation and risk-management plan is beneficial for your business, as well as the employee themselves. Ensuring your duty of care responsibilities are fulfilled will protect your organisation from liability, should a negligence case be raised against you. In addition, while planning for an employee’s time abroad can be a complex and time-consuming process, it is ultimately cost-effective. Any action you take to prevent harm to your employee’s health, security and well-being will likely be cheaper than the emergency intervention you would have to make should something go wrong. To put it simply: prevention is better than cure.
Develop a risk-management strategy
An effective risk management strategy begins with identifying the specific tasks which must be undertaken to protect employees working abroad. Depending on the size of your organisation and the number of employees in your workforce who travel overseas, these tasks may be assigned to one person or managed by an entire team.
The essential tasks you should consider will vary based on the circumstances but may include:
- Conducting a thorough assessment of all risks associated with the assignment (including the likelihood that each risk will occur, and strategies for preventing and dealing with that risk).
- Deciding whether the employee will require training for any aspect of their assignment and arranging that training, where applicable.
- Developing a system through which the employee can keep you informed of changing risks in their overseas environment and access 24-hour help during an emergency.
- Considering whether external organisations will play a role in maintaining the employee’s safety (i.e. travel providers, security agencies, translators and guides).
Where multiple personnel are involved in creating a risk-management strategy, one person should have the responsibility of managing the process and ensuring everything fits together to form a cohesive and comprehensive plan. While every situation is different, a risk-management plan for employees working abroad must always:
- Be explained in full to the employee (ensuring that the employee understands their responsibilities)
- Include clear contingency plans relating to specific risks (e.g. what the employee must do in the event of a forest fire)
- Acknowledge the fact that not all adverse events can be anticipated, stating a general contingency plan for unexpected emergencies.
Employees working abroad on long-term assignments
There are further duty of care responsibilities to consider when sending an employee to work abroad on a long-term assignment which would demand partial or full relocation. By ensuring your employee’s ultimate happiness, safety and health with a comprehensive relocation plan, you can protect your organisation’s business outcomes and make sure their assignment is a success. Your strategy should include preparing for the relocation itself and taking steps to help the employee assimilate into their new community and working environment.
To support employees working abroad on long-term assignments, you may wish to consider:
- Language and cultural education
- Moving services
- Access to schools (if the employee is relocating with children)
- Health and travel insurance
- Laws and societal rules in the new location
- Introductions to other expatriates living in the area
One of the best ways to ensure a smooth and successful relocation is to arrange for your employee to visit the new location, prior to their moving date. This will help the employee to mentally prepare for the upcoming change while allowing for certain practical advantages, like visiting potential homes and schools.
You should also consider the financial implications of your employee relocating abroad. This will involve investigating the cost of living in the new country, assisting with budgeting and finding out whether your employee’s tax and National Insurance obligations will be affected by the move.
PAYE for employees working abroad
When your employee goes to work overseas, you must make sure you understand their tax and National Insurance (NI) liabilities. This is something you must consider carefully, as the rules are invariably complex.
Generally, PAYE tax and National Insurance must still be paid for employees working abroad. Where and for how long your employees are working abroad will determine how you work out and pay their tax and National Insurance contributions. There are some instances in which your employees may have to pay tax to the country in which they are working. For instance, this would likely be the case if your employee is engaged in an overseas contract for the duration of their work abroad.
As their employer, you have a responsibility to ascertain what their financial obligations are in the UK and abroad, and to ensure these obligations are fulfilled.
Employees working abroad in a European Economic Area (EEA) country are not usually required to pay tax abroad, unless they are likely to work there for more than two years. Where overseas taxes do not apply, the employee would need to continue making tax and National Insurance contributions to the UK.
If your employee is due to be working in a non-EEA country, their tax obligations will depend on whether that country has a social security agreement with the UK. The countries which currently do have a social security agreement with the UK are: Barbados, Bermuda, Bosnia-Herzegovina, Canada, Chile, Croatia, Guernsey, Israel, Jamaica, Japan, Jersey, North Macedonia, Mauritius, Montenegro, New Zealand, Philippines, Republic of Korea, Serbia, Turkey and the USA. Employees working abroad in these countries will probably still need to pay tax and NI in the UK for the duration of their work overseas. In all other non-EEA countries which do not have a social security agreement with the UK, your employee will still be liable to pay NI to the UK for the first 52 weeks of their work abroad but must pay income tax to the country in which they are based. As their employer, you will be responsible for organising these deductions.
When an employee is due to spend most of their time abroad for 12 months or longer, they may be entitled to UK tax relief on their income. This would likely be the case if:
- The employee’s absence from the UK will last an entire tax year (from before April 6 to beyond April 5 of the following year)
- The employee’s visits back the UK do not exceed 182 days within the tax year
To make an application for tax relief, your employee must fill out a P85 form and return it to HMRC. For further advice and relevant forms, employers should contact the UK government employer helpline.
Pension entitlement for employees working abroad
You should make your employee aware that continuing to make National Insurance contributions to the UK can be advantageous, even when they are no longer liable to do so. Paying National Insurance increases your entitlement to many state benefits, including a state pension. To qualify for a full state pension, the employee must have paid National Insurance for a minimum of 30 years. If their time working abroad could jeopardise their chances of hitting this threshold, making voluntary contributions may be wise.
DavidsonMorris are experienced global mobility specialists offering strategic guidance and implementation support with all aspects of managing an international workforce. If you have a question or need help with overseas workforce management and support, contact us.
Last updated: 21 October 2021