Increasingly staff employed by entities in the UK work overseas. Where this happens, it is important to note that the statutory employment rules in the country where the employee works will be likely to apply and bind the UK based entity. These will often be different to those applicable in the UK and could be more onerous.
It is also possible that UK statutory employment law will continue to apply to overseas workers, but only if there is a connection with the UK which is sufficiently strong. Two examples of where this might be the case are peripatetic or expatriate employees.
A variety of factors may be taken into account when deciding whether there is a sufficiently strong connection with the UK, for UK statutory employment law to apply including the location of the employee’s home. It will also be appropriate to consider any other countries which the employment has connection. The fact that someone is employed by a foreign company is not fatal to the employee having the protections of UK law but, on the other hand, the fact that an employment relationship is forged in the UK, with an entity based in the UK, is not sufficient. It is, however, a relevant factor.
Choice of applicable law in the employment contract
If an employee’s contract expresses a choice of law then the chosen law will apply to that contract, but that does not either displace any mandatory local law that applies to that employee on the basis of their work location, nor can it import statutory obligations from the country of the chosen law that have a limited territorial scope. For example, an employee working in India, with a contract that is expressed to be governed by UK law would still be covered by mandatory local employment law in India, and would not be able to rely on UK statutory protections such as unfair dismissal that are limited in territorial scope to the UK, unless he/she had a sufficiently strong connection to the UK as described previously.
Other factors to consider when employing staff outside of the UK
The following should be considered:
- Will the employee’s partner or family accompany them? It should be borne in mind that civil partnerships, same sex partnerships and co-habitation may create challenges in some jurisdictions.
- Will any children accompany the employee? What schooling arrangements will need to be made?
- Are there any special circumstances such as special health, education or other family needs to be accommodated?
- Right to work issues.
- Local rules on working time.
- Payroll arrangements, for instance any 13th month payment or compulsory bonus or holiday pay.
- Exchange rates impacting on pay, if paid in local currency – who bears the risk?
- Tax equalisation or protection and tax returns.
- Whether the employee will be given any formal powers
- Line management and reporting lines, including how time differences will be factored in if line management is in a different location, and how appraisals and supervision will take place.
- Outward and inward relocation allowances and arrangements.
- Transport and other expenses
- Any additional insurances required.
- Whether a branch or office will need to be established in the relevant country, and what the implications of that are in that country.
- Health and safety issues (see Health and Safety)
Posted on 24/08/2016 in Legal UpdatesBack to Knowledge