Employment and pensions

Home and away: working across borders

Published on 19th Jan 2022

With more employees working remotely in other countries during the pandemic, businesses need to keep an eye on social security, tax, employment and immigration law implications

During the Covid-19 pandemic, businesses have gained forced experience of employees working remotely – with some even working from other countries – and many employers are now faced with requests from their employees to continue to work from abroad on a permanent basis.

For employees, this new approach can open up the attractive opportunity to work from "their place in the sun"; for employers, this option can be an ideal way to retain or attract qualified labour and talent.

Before agreeing on this type of regular, cross-border remote work, both parties should consider the legal issues surrounding social security, employment and immigration law, and taxation.

Social security

The parties will have to check whether the employee intends to work in another European Union (EU) or European Economic Area (EEA) Member State, in a country that has a bilateral agreement on social security with their home country, or from a country where an international agreement on social security does not exist.

The employee will become subject to the social security regime of the country they are working in, unless certain exemptions apply (such as secondment, or simultaneous work in several EU or EEA countries). The employee will not be covered by their home country's social security system any longer, because of not being posted "on behalf" of the employer to the other country (instead being there "on their own initiative"). In these circumstances, health insurers are not obliged to issue a certificate of coverage to prove that the home country's social security regime continues to have effect. Even though they have been quite flexible and issued certificates of coverage for employees working from abroad in the first couple of years of the pandemic, there is no guarantee that the same approach will be taken in 2022.

Certain countries do not have a national healthcare system in place, such as India. In these jurisdictions, separate benefits may need to be applied for and provided by the company for the employee.

For the purposes of overseas social security contributions, it will usually be sufficient to have a payroll service abroad where the employee works instead of involving an employer of record (EOR) or professional employer organisation (PEO). However, this should be checked in the individual country.

Employment law and compliance

Generally, the employment law of the employee's domicile will continue to apply, if the employee is employed in another country only temporarily. However, jurisdiction is likely to change if the parties agree that the employee is allowed to work permanently from another country. The question of jurisdiction is a complicated one involving analysis of which jurisdiction the employee has a strong connection to.

Employers also need to be aware that, in a number of jurisdictions, there are mandatory employment laws that apply regardless of the governing law of the employment contract.

The revision of the Posting of Workers Directive (2018/957/EC) and the national implementation of it in the respective host EU Member State might be applicable, if the employee is working for 12 months (on application after 18 months) from abroad, even if the employee was not posted by the employer to the other EU Member State.

In some EU countries the implementation of the Posting of Workers Directive might be applicable even if there is no real "posting by the employer" and no real cross-border provision of services to the host EU Member State. The initiative of the employee to work from another EU Member State for his/her employer – without any "service recipient" in the host EU member state – might suffice.

Where multinational companies do not have a business presence in the jurisdiction there may be a requirement to establish a formal legal presence there – depending on the nature of the business activity undertaken and work to be performed by the employee (including whether they will be engaging with the local market). The employer would have to obtain appropriate registrations and licenses under local labour laws and have a registered place of business in the country.

Immigration law

It is imperative that businesses confirm that the employee in question has the right to work in the prospective host country.

For a foreign national to work remotely from a host country, appropriate entry visas or a work permit requiring a local sponsor may be necessary. Additional immigration requirements may also apply in the form of a minimum salary threshold and/or registration with local authorities in the host country upon arrival. A foreign national may be prohibited from working from the host country while on a tourist visa.

If a visa, work permit, and/or residence permit are required, allow enough time to make sure these are obtained before the employee starts working remotely. In case of exemption, keep track of how many days the employee spends in the country/zone (for example, Schengen) to ensure compliance with the terms of the exemption. This is also necessary from a tax perspective.


Companies should check whether there is a realistic possibility that the employee who is working abroad from home will create a permanent establishment. This very much depends on the individual facts of the case and especially on the position and authority of the employee.

The employee might even become liable to pay tax in the host country and the employer should clarify its own obligations to tax the employee.

In times of significant talent shortage and the "Great Resignation", an economic trend where employees voluntarily resign their posts in large numbers, employers will have to be prepared for these challenging scenarios.


* This article is current as of the date of its publication and does not necessarily reflect the present state of the law or relevant regulation.

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