WORKING FROM HOME – IS THIS THE NEW NORM?
For most employees working remotely full-time has now been replaced by a hybrid arrangement with a mix of remote and in office working. Many clients have put in place transition arrangements and will be starting to think about how they want to operate in 2022. We believe that very few employers will insist on working full-time in the office, unless the role is one which is not well suited to remote working such as office manager, receptionist, and other roles where in-person support is a major constituent.
We are starting to see a number of clients with employees seeking to formalise remote working arrangements, many of them seeking to work from other countries. We thought it would be useful to summarise some of the considerations, before agreeing to such requests.
- If you agree an arrangement, put in place a trial period of up to 13 weeks, and if it isn’t working you can call a halt. Note that 13 weeks is the maximum term allowed within the UK’s flexible working legislation.
- What you agree to, you should follow up with a contract amendment letter because the terms of employment are permanently changed by this process.
- You might struggle to get your employees to attend work in London as contractually agreed if they have to commute for a significant distance or reside overseas and have different holidays where travel may be impacted. You need to deal with these issues quickly to avoid accepting further variation by custom and practice.
- They will need to maintain their right to work in the UK, but if they seek to reclaim UK taxes, and National Insurance (NI), in favour of paying taxes and social charges in the home country, they risk losing their right to live and work in the UK. There may be a challenge to EU settled status if they no longer have an official residence and/or a record of Tax and NI contributions here. This also has a detrimental impact on pension arrangements (see below).
- Similarly, if they are overseas you may need to think about what quarantine, travel or isolation rules may be in place in future, and the challenges that those may present to international commuters. You also need to think about who pays for their travel and accommodation in the UK, noting that HMRC will seek tax expenses to and from the normal workplace.
- You may want to review pay – if you were paying a ‘London premium’ to have the employee work in your London office, you might want to negotiate a lower salary for remote workers, as they no longer have the cost or time burden of their previous commute. Also, bear in mind that the opportunities in alternative asset management and financial services are generally not as plentiful outside of London. This is especially relevant for those seeking to work in much lower cost locations in the EU.
Compared to London: -
- Amsterdam salaries are typically 11-15% lower
- Prague salaries are typically 50-60% lower
- Berlin salaries are typically 30-35% lower
- Budapest salaries are typically 65-70% lower
- Madrid salaries are typically 20-25% lower
- Geneva/Zurich are the only European locations where salaries are likely to be higher, by around 10-15%
- We have also been alerted to a couple of considerations for those making their residence outside of the UK in relation to benefits and pensions:
- If the employee is on UK payroll paying Tax and NI, employers are legally required to include them in Pensions Auto Enrolment, however many pension providers are refusing to make UK pensions available where the individual has no UK residence. The providers are not being unreasonable, they are simply unable to offer the pensions as they are no longer authorised for EU business. If your employee changes their address or seeks to amend their existing arrangements, it is likely they will no longer be able to contribute to the scheme. This immediately puts the employer in breach of auto enrolment rules and there is no solution in sight.
- If the employee seeks to have their UK Tax and NI refunded, as described above, then they will no longer meet the Auto Enrolment conditions and should be removed for the pension scheme as they may only receive the beneficial tax treatment if they are UK taxpayer.
- Similarly, if you offer private medical or dental cover, your employee should consider whether the benefit provides good value for them.