Employment and pensions

Work and Vacation become Workation: new HR trends and practical implications

Published on 8th Jun 2023

A new form of flexible working, which has emerged since the pandemic and has become increasingly popular, the workation blends work and vacation for a limited period of time. 

The workation is characterised by the performance of work on a continuous basis - without having to use holidays or other forms of paid leave and without any reduction in salary - from a holiday location where it is possible both to work and to carve out moments for relaxation. As a benchmark, companies tend to grant their employees a continuous workation period of between 1 and 4 weeks, but it is also possible to extend this to longer periods.

This form of flexible working seeks to ensure a better work–life balance and to attract new resources and improve employee retention figures.

Close up view on a man typing on a keyboard, working with a desktop and two laptops

Differences from smart-working

The main difference between the workation and smart-working concerns the context in which the work is performed. 

When smart-working, employees perform their tasks in a place other than the traditional office: usually in their own homes, or in other places such as co-working spaces or premises with an Internet connection. The main objective of smart-working is that of enabling employees to adapt their working time and location to their own needs in terms of life, family, etc. 

During a  workation, on the other hand, employees not only have greater working flexibly, but are also using their free time to explore and enjoy the location.   Therefore, with respect to smart-working, the workation adds the holiday element and almost always implies being away from the office for a continuous period of at least one week, which is different from the traditional home/office alternation present in smart-working, according to the usual 3+2 or 2+3 day scheme.

Legal implications

When considering the possible introduction of workation,  businesses should bear in mind the related legal and organisational implications, especially when dealing with cross-border destinations. Below are some issues that are frequently relevant to HR departments:

  • With reference to access into the country of destination: what visas or permits, if any, are needed?
  • With reference to the applicable regime: what are the tax and social security contribution implications, for the company and the employee?
  • With regard to occupational safety: do employees have sufficient protection in the event of an accident at work?

The answers to the above questions vary depending on the legislation of the country of origin and on the country where the workation takes place, as well as on the length of the workation period itself. 

In the case of an employee working in Italy and taking a workation in another European country (probably the most common case), we can assume the following:

With reference to entry into the country of destination, in Europe, EU citizens are allowed to move and to reside freely within the territory of the Member States. However, there may be some exceptions or specific requirements to be assessed on a case-by-case basis. That said, it will always remain the responsibility of the employee to obtain the required visa to enter the country where the work will be performed.

As regards the tax issue, an individual is considered as being tax resident in Italy if they have their habitual residence or tax domicile in Italy. However, pursuant to article 2 paragraph 2 of Presidential Decree No. 917/1986 ('Testo Unico delle Imposte sui Redditi' - TUIR), those who work in a foreign country for a continuous or fractioned period of time exceeding a total of 183 days in a calendar year, will be required to pay taxes in that foreign country. Therefore, an employee resident in Italy, who works abroad in workation mode for short periods and in any case for less than 183 days in a calendar year, will continue to be subject to the Italian tax system.

With regard to social security contributions, the topic is governed by EU regulations and bilateral conventions on social security between Italy and the host country, which may establish specific rules for determining where contributions must be paid, and which must therefore be analysed on a case-by-case basis. In any case, it is reasonable to assume that short periods of workation do not usually give rise to particular complications in terms of contributions in relation to payments due by an Italian employer to a worker normally employed in Italy.

In terms of occupational safety, there is a lack of clear instructions for the insurance protection of an employee who is injured in the course of flexible work performed in a foreign country, even if it is likely that said situation would be covered by the general insurance, which is to be considered excluded only in cases of so-called elective risks, i.e. those voluntary, abnormal and not related to force majeure behaviour, carried out by employees.

Practical tips for a workation policy

Some care must be taken, because workations and smart-working have undoubted points of contact, but remain two distinctly different work modalities.  For example, the employer might consider it opportune to:

  • prohibit workations from countries with a time difference of more than a certain number of hours with respect to Italy, so as to avoid coordination problems with the related team;
  • require that workations be carried out from a location which is fixed for the entire period, in order to avoid the risk of the employee being unavailable and occupied in continuous travel, etc;
  • provide that the locations chosen for the workation guarantee Internet connection and telephone signal reception (to avoid, for example, workations from excessively remote locations).

Finally, with regard to working hours, the management of working time and overtime will depend on company policies. 

Osborne Clarke comment

The workation, in the sense of flexible working arrangements combining work and vacation, is a trend that will become more popular in the future, and many advantages and good reasons would lead to endorse it. In particular, flexible work approaches are becoming increasingly important for attracting and/or retaining talents, especially with regard to the younger generations. 

However, it is important to consider the relevant legal implications, to analyse them on a case-by-case basis with the support of experts, and to regulate such innovative ways of working through company agreements and policies. 

Our advice is to regulate workations in a similar way to smart-working, given the proximity between the two working modes, possibly with an integration to existing policies in order to better regulate the workation's specific features. In any case, individual consent will always be needed, even by reference to the policy itself.


* 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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