Hi Rosie
By and large there are two simple solutions, when you only have a single person in a country where your company has no representation.

1) the person resigns and sets themself up as self employed in the other country, agreeing a contract for services with the UK company. Here they accept total responsibility for conformity with local legislation (tax, social security, immigration, employment law) as well as organising their own life insurance, medical cover, pension etc.

2) You identify a local "body shop" which employs the person and sets up a contract for services with the UK company. All employment issues are now with the body shop and no longer with you.

Any other solution will be hellishly complicated to organise out of the UK and will almost certainly lead to an expensive disaster in one or more of the following areas employment law, tax law (company and individual), social security law, company law......... Similarly failure to correctly operate statutory reporting and withholding processes without an intimate understanding of national processes is a near certainty.

In reply to Ray:

Hi Ray,

Thank you for your advice that is really helpful.

Currently we do have former employees working overseas as Contractors (this is an option also used at other companies I have worked at). In fact ,we have one individual in Japan whose 1 year contract comes to an end shortly and we are going to be reviewing the arrangements with an in country lawyer to ensure we can continue in this way.

Regarding Contractors some of the concerns we have in terms of using this as an option is that the individual is only going to be working for us and given that they have previously working for us as an employee (in some cases many years) would this not pose a big problem in your experience and if so, how could we reduce/remove this risk?

In addition, would it make any difference on the type of role they are performing (i.e if it is a Sales or a Developer role?) and the work they are producing?

You also mention a local "body shop" - what do you mean by this and how would you go about sourcing this overseas? Do you have any experience of using this as an option yourself and did it work?

Apologies, one last question, would your approach be different if someone where moving within Europe to moving say, the US?

Many thanks for your help

In reply to Rosie:

Hi Rosie and sorry for not responding earlier
By a "body shop" I mean an intermediary company who becomes the legal employer of the person, and puts them at your disposal by an intercompany agreement. A fairly common practice worldwide in the engineering world for example.
Many of the larger temp agencies or recruitment firms in the target country will be happy to do this for a price - it costs to be sure, but in the long run it is less expensive than major tax, social security or employment law issues. The key thing is to make sure that the company in question services other companies as well as your own.
If I went down this route, I wouldn't act differently between Europe and the US.
Another solution I should have mentioned would be to use a quality payroll bureau with company-law related services to set up a local branch of your UK company and ensure local compliance. Most of the biggies (ADP, SD Worx for example) can do this for you, but it will not be cheap. Google "Country name" and "hr and payroll providers"....

In reply to Ray:

Hi Ray,

No need to apologise and thank you for your advice, it has been really helpful.

Many thanks, Rosie

[Moderator note: I have edited this post as it was self-promotional / advertising... but have not removed it entirely as I deem it useful]

Hi Rosie

The answer to your question differs by country the employee is relocating to and depends on the current structure of your company. 

1.    Employing directly

If your company is registered as a European Company then you can employ directly and your main challenges becomes issuing a locally compliant contract and payroll.

If your company is registered as a UK LLC and you want to employ across the EU, many European countries allow foreign companies to only register as an employer with no need to set up a local legal entity. For example, here is the government guide for France. Again, you will need to issue a locally compliant contract and payroll.

For other countries around the world – some will indeed mandate a local legal entity (like Brazil) and some will have more relaxed laws.

2.    Using an Umbrella Company/Professional Employment Organization (PEO)

To add on Ray’s excellent response:

An Umbrella company / Professional Employment Organization (PEO) /  "body shop" is a company that employees your employees for you. They manage local compliance, payroll, employee benefits and any HR related issue that arises. It’s an excellent option if you don’t want the headache of dealing with it yourself. However, they are expensive and you can expect to pay %15-25 of the employee salary for this service.

3.    The employee becomes a contractor

Depends on both tax and labour laws of the country and how the contractor has set himself up (LLC or a sole trader).

As for your employee in Japan, a recent revision of labour contract law in April 2018 started forcing companies to provide permanent status for temporary workers who have served more than five years, if the workers request it.

In reply to leetal:

Hi there

Apologies for the delay in responding and thank you (both) for your advice, that is really helpful.

In my experience, some of the issues that HR come up against is a lack of real understanding from Managers of what is truly involved when sending an employee overseas. There is an expectation that it is straightforward and wont take very long to set up which couldn't be further from the truth!

Thanks again, Rosie

In reply to Rosie:

Hi Rosie
You might be done with this thread but just to add that we have done this successfully with a number of staff who wanted to relocate (usually heading home after working in the UK) but whom we didn't want to lose. We have ended up using the contractor/service company approach, particularly after one of our staff got stung for a large local tax bill from spending too much time in another country. It seems to work well and although we don't go looking for these situations I think that companies need to be open to this if they don't want to lose increasingly mobile/global skilled staff.
I'm about to post a question about global HR advice - the merits of using this locally in each country or at a UK based global specialists so perhaps you have thoughts on that?

In reply to Rebecca:

Hi Rebecca,

Thank you that is really helpful. This is an area we are continually reviewing, as it comes up regularly and to be honest I do think remote working, whether it be in the UK or overseas, is an approach employers will need to seriously consider/offer to stay competitive and attract/retain the best talent.

Can I ask, how would you go about finding service companies? Is it via recommendations and do you use a UK based global company that provides this service or would you find providers, in each country?

Would be happy to have a telephone conversation or for you to drop me an email directly if that would be of help? Please do let me know.

Thanks