Hi Sara-Jane

If you believe you can understand the company obligations, local packages and keep abreast of the following areas, then it IS possible:

• Labour law
• Tax lax
• Social security law
• Company law (registering as a employer, potential representation delegations....)
• Operating a local payroll fir one person
• Pension interface with local security system
• Medical insurance and interface with state medical and social security systems
• .....

Also be sure tha apart from the employee, someone in the Company has a full mastery of the local language to interface with the different national administrations. Allow for a recurrent consultancy costs of £10-15k if you don't have the knowledge, plus a lot of administrative time to operate one-off processes that you probably won't understand.

If you don't think you can face this you have two "simple" solutions :

1. Ask the employee to set up their own business and act as a subcontractor, but make sure that from a local employment law point of view that you eliminate the risk of them being classed as an employee. The person will then have to make their own arrangements for pensions, medical, life insurance etc, and not be oaid during holidays. Allow for a salary mark-up of at leasr 25-30% against local market salaries to cover this.
2. They are employed through a local body shop. Most of the large international temp agencies should be able to help - for a fee.

It's probably easier to say "No"

As you will see from Ray's excellent answer, it isn't as simple as the employee thinks. If someone is resident and working for you but based in another country, that country treats them as an employee in their country. That means that both your company and them as the employer need to pay tax in that country. Because you are paying them through your payroll, the employer and employee also need to comply with UK tax legislation (there are some reciprocal agreements in place which means you don't have to pay twice, but it is quite complex. The dot.gov site has some information.

www.gov.uk/.../paying-employees-working-abroad

This is why, as Ray says, you would then really need to set up a payroll in that country and also make sure that you are complying with the relevant employment, health and safety etc of that country.

I did work for a company that naively said yes when an employee asked to be allowed to work remotely from the USA when her partner went to work there, and as she continued to have a UK bank account, they assumed that as they had the technology to enable her to work effectively etc they could just continue to pay her as normal and that was that. They ended up in a right muddle as they hadn't registered as an employer with the IRS

In reply to Teresa:

I, too, have had to sort out this kind of muddle. It took months. Coming back to the 8 reasons for turning down a flexible working request, this would create a considerable burden of additional cost - direct financial costs in setting up the necessary structures to comply with tax and other law in the UK and the other country as admirably set out by Ray and Teresa, and the cost of the work involved by HR and Finance to make it work.

Hi Sara-Jane
We had this request in a company where I used to work, and they wanted to work in France. When I started to look into it, it was really complicated for all the reasons mentioned below, they have to be registered there etc, and we couldn't just carry on paying them through our payroll (legally). So we said no in the end, she was moving to France with her partner.

Hi everyone

Thank you for your constructive, helpful and clear responses.

I can collate the responses and share with the managers.

Regards

SJ

Hello. More of a procedure question, carrying on the issue. The person is aware we cannot agree to the request.

I am keen to ensure that there is no inference that we made them resign and set up their own consultancy. We do not have the capacity or funds to set up a payroll in another country.

So my advice has been reject the request, allow for an appeal (we have viewed this as a flexible work request). They then approach us as a consultant and draw up a contract for service. I have advised my SMT that we must have at least a 7 day break from them leaving to setting up as consultant.

Thanks everyone.

SJ

In reply to Sara-Jane:

Hi Sara-Jane
To be absolutely certain that you have no problems, make sure that the consultancy service contract does not take effect until they have established themselves in the the country, and perhaps be prepared to spend a £1-2k getting an international law firm's confirmation that the proposed contract conforms legally with the legislation of the other country without creating a risk of employee status - maybe better to brief the law firm to write the contract.....
Good luck

In reply to Ray:

Thanks Ray, very helpful.

In reply to Ray:

Hi Ray,
When you mention "recurrent consultancy costs of £10-15k" - do you mean per year? Or per individual working abroad? We are trying to make a case for some external professional support for the amount of ad hoc advice, time and money we are spending on setting up individuals in other countries (those we know about....) and whilst we understand the risks of not doing it right, I'm not sure we have a handle on costs yet. It's (marginally) easier when we are aware pre-employment but very complicated and expensive where we find out after the event "(did no-one mention I was never going to be in the UK but I will spend 6 months in 3 different countries - there won't be a problem, will there?"!)
Thanks
Helen

In reply to Helen:

Hi Helen

 The costs I mention are annual costs until you have a real hr presence in these countries. They include :

• ensuring that your company (hr and managers) are made aware of any statutory or sectorial changes to employment law and practices
• guiding you through the implications of these changes
• identifying the choices available in terms any action you might be required to take
• drafting addenda to employment documents
• necessary translation of the above into and out of the local language
• organising registration of your uk company and making appropriate monthly, quarterly and annual returns (tax, social security....)
• travel to and from the country to troubleshoot
• handling ad-hoc queries from your overseas employee about their contractual conditions - for example, how does my uk social history affect my rights to a state pension in xyz country? How do I claim reimbursements of medical expenses in France? Given the 35 hour week in France, how many compensatory rest days do I have with my 37.5 hour working week?....

These are simple examples, and assume nothing complicated happens like « how do I dismiss legally »

Good luck

In reply to Ray:

Thanks Ray, that's really helpful. H.