Employing digital nomads: navigating the legal and practical considerations

The movement towards remote working, accelerated by the pandemic, has allowed some employees to take it one step further by exploring ways of working from anywhere in the world for their UK based employers - the 'digital nomad'.

For anyone dealing with requests from employees to work remotely from overseas, this blog highlights three key areas to think about, as discussed at our recent webinar on Employing digital nomads: navigating the legal and practical considerations.

Immigration

Employees considering working in another country should ensure that they obtain the correct visa permissions and abide by any restrictions imposed by that visa type. Employers should (i) be careful not to incur liability for inducing a breach of another country's laws or visa requirements; (ii) ensure that they do not require employees to do work which would breach their visa; and (iii) be mindful of any 'right to work checks' required to be undertaken overseas.

Visa conditions will vary depending on where the employee is going to work, with over 50 countries worldwide now offering digital nomad visas. Some key themes can be drawn out about these types of visa:

Standard work visas	Digital nomad visas
Can often be longer term and may lead to more permanent settlement rights	Are usually temporary and often short term
Typically permit visa holders to work in a local job in that country, often for a company based / established in that country	Tend to permit visa holders to complete their overseas job remotely from that country
Employers usually need to have a legal entity in that location	Typically there will be no requirement to act as a sponsor or have a corporate presence in that location
Employers may need to conduct a labour market test, showing that a specialist skillset was required or that a resident worker was not available	Typically does not require any labour market test but may require the visa holder to have an overseas employer
There are often requirements regarding the nature of work that the visa holder can undertake	There may be more flexibility on what type of work the individual does for their overseas employer
There are usually conditions regarding criminal record checks, a requirement to obtain private health insurance or otherwise contribute towards the country's health system, and often require evidence that the applicant can financially support themselves	There are usually conditions regarding criminal record checks, a requirement to obtain private health insurance or otherwise contribute towards the country's health system, and often require evidence that the applicant can financially support themselves

Before allowing an employee to work overseas for you, consider whether you require local advice. Brodies has a network of international law firm partners, so please get in touch if you require an introduction.

United Kingdom visas

There is no specific digital nomad visa in the UK. Anyone coming to work as a digital nomad in the UK will, therefore, need to decide which of the various visa options is most suitable. The following visas do not require an overseas employer to have a presence in the UK and permit self-employment:

Global Talent visa - for those endorsed as leaders or potential leaders in certain fields, including digital technology.
Graduate visa - for those who are currently in the UK with a Student visa, and who typically are finishing their eligible undergraduate or postgraduate studies. There are no immigration specific restrictions on the type of work or the minimum salary that must be paid under the visa (subject to the standard UK legal minimums).
High Potential Individual visa - for those who have been awarded an eligible qualification from a qualifying overseas university within the last five years. Again, there are no specific restrictions on the type of work or minimum salary requirements.
Youth Mobility Scheme visa - available to nationals of certain countries who wish to live and work in the UK, are aged 18 to 30 (or 18-35 for those of New Zealand nationality), and fulfil certain financial and nationality requirements.

Employment law

Which law applies?

It will be important to (i) understand which employment law applies (whether it is UK law or the law of the jurisdiction where the employee will be working will depend on the country in question and often where the work is performed); (ii) be clear about the choice of jurisdiction (in other words where disputes will be resolved); and (iii) ensure that the contract of employment is suitable in the circumstances. Be aware, however, that sometimes local employment rights and protections will trump what the contract says (where the local laws are more favourable to the employee).

Knowledge of local employment laws and requirements is vital when deciding whether to grant an employee's request to work overseas, and to ensure that you are not in breach of your obligations as an employer. Engaging with advisers in the UK and locally will allow you to obtain the necessary support.

Contracts, policies and benefits

You will need to consider - with appropriate advice - how best to document overseas working arrangements:

You could update or supplement a UK contract of employment or enter into a local contract of employment / consultancy type agreement.
You might need to update your HR policies or introduce a new set of policies tailored to the country in question.
Are there any employee benefits (e.g. insurance or pension) which you will need to change? Are there any benefits you do not provide that are mandatory in the overseas country?

The practicalities

There are clear benefits in having digital nomads within a workforce especially if it leads to a higher retention rate / allows you to retain certain key members of staff. However, when deciding whether to allow workers to work from overseas, as well as the immigration and employment issues, you should also consider the practical implications including:

Potential costs
Time difference
Differences in local holidays
How best to effectively manage overseas employees
Any discrimination or other legal risks
Whether you are establishing a precedent.

Employer of record (EOR)

Some jurisdictions allow employees who want to be based abroad to contract directly with an overseas entity, rather than with a company based in the UK. This can be a cost-effective solution (the EOR handling the employees' payroll taxes via a re-charge back to the business) particularly if you want to employ a small number of employees in one country. Before using an EOR you should, however, take advice on who bears responsibility for key matters such as handling employment related claims and disciplinary and grievance issues.

Tax & regulatory

Tax

When setting a digital nomads policy, tax is a necessary consideration (alongside social security contributions and the corporate presence). Tax systems are usually designed for permanent residence, and many have not been updated in line with the move towards remote overseas working. Although some countries align their regimes to reduce the impact on personal and employer tax liabilities, most of the digital nomad visas available globally do not cater for tax issues.

As there may be tax implications in one or both jurisdictions (often bespoke between the two countries in question), it is advisable to get both local and UK tax advice.

Regulatory issues

Regulatory issues vary by country to country and some key areas of focus might include:

Qualifications – Are the employee's qualifications recognised overseas? Do they need any particular regulatory authorisation?
Data protection – Is it likely that data, including sensitive data, will be transferred overseas? What are the data protection rules in the overseas country and what does the UK law say about transferring data to that country?
Cybersecurity – What internal policies govern the protection of confidential information? What arrangements are in place to protect the business and your workers?
Health and safety – Do your policies deal with the implications for overseas employees? What rules and requirements are there in the country where the employee will be working?

More information

For more information about how Brodies can help with employment and immigration matters, including the increase of digital nomads, please contact a member of the Employment and Immigration team. Workbox by Brodies users can also find information on key immigration and employment topics, such as visa routes, right to work checks, and contractual arrangements.