Essential Points to Consider
The large-scale shift to remote working has many benefits to both the employer and employee. This model of working opens up even more opportunities, as employers who facilitate employees to work remotely can now access the global labour market, that helps them to source certain skills and experience that will benefit the company. In terms of the employee, they can now compete with other potential candidates for interesting jobs and greater opportunities outside of the state, that until now were unavailable to them. We know that preparing for remote working takes time and planning in order for it to be a successful and positive experience for the company and employee. This is even more important where a company is considering employing workers remotely, who do not live in Ireland. Before deciding to employ remote workers in another jurisdiction be aware of the following issues and how they will impact the business financially and operationally.
- Jurisdiction and Employment Law
You can enter into an employment contract with a non-national residing outside of Ireland and specify that the employment contract is subject to Irish law and the jurisdiction of the Irish Courts, and specifically the WRC. However, where the employee lives in a country that has signed up to the Brussels of Rome Conventions, and that country provides more favourable employment provisions for employees than Irish Law, the employee can seek to have these more favourable conditions applied to them. For example, in Ireland the statutory annual leave entitlement is 20 days, whereas in France it is 25 days.
Where there is a difference between employee entitlements in the host country and the terms and conditions within the contract of employment, a dispute may arise between the employer and employee. Where a contract states it is governed by Irish law, (meaning all complaints will be dealt with by the Workplace Relations Commission in Ireland) this provides some protection. However, the company may still have to defend the right for the matter to be dealt with by the WRC and this will incur some costs.
Once the company is aware of the differences in entitlements between countries, there is an opportunity to match these entitlements in the contract, where possible, and making the company a more attractive place to work.
- Financial and Tax Considerations
There are specific rules concerning taxation of non-nationals working abroad for an Irish company. In brief, where an employee is working remotely in another jurisdiction, the Irish company has additional tax compliance and social security obligations. Your accountant will advise on the tax reporting requirements for Ireland and the country in which the employee lives. This may become increasingly challenging and costly in terms of tax compliance where you have many employees working for your Irish company in several jurisdictions.
In some situations, Revenue may issue a PAYE Exclusion Order, so income tax and USC are not deducted from the employees pay. This decision depends on whether the employee is resident in Ireland and paying tax, and how much they will be based outside of Ireland.
Where an employee of an Irish company carries out their work outside of Ireland, the company may have a ‘Permanent Establishment’ in that country, requiring the company to comply with tax reporting obligations of both countries and exposing the company a tax liability in both countries. You need an accountant to advise you on this.
- Employee Income Tax
An employee who is working outside of Ireland remotely, may also be liable for tax in the host country. Where the employee is working in both Ireland and another host country, a double taxation agreement may apply. Tax residency rules differ in each jurisdiction, so it is important to get advice from your accountant on this issue. The employee or potential employee should also get local advice on tax issues to ensure they are aware of the liability they may be exposed to in their particular circumstances. They should also get advice on how other benefits they receive such as share options, benefits-in-kind or subsistence payments are treated differently for tax purposes in the jurisdiction of the host country.
- Employee Liability Insurance
Where your Irish company plans to employee someone to work for you remotely, particularly if they reside outside of Ireland, you should inform your insurance broker and give them details of the particular circumstances. This is important as not all policies provide employee liability cover for employees who are working remotely or in another jurisdiction.
- Health and Safety
In terms of Health & Safety, as an employer you have the same obligations to your employee irrespective of where they work. Under the Safety, Health & Welfare at Work Act (1989-2005) you must take all steps to protect the health & safety of employees while at work, as far as ‘reasonably practicable’. It is important to have a risk assessment carried out, identify hazards and controls measures. These will be reflected in the safety statement.
- Data Protection
Employers are obliged to ensure that information in have is processed and held in line with the obligations set out in the Data Protection legislation. A policy is required that specifies how information will be processed, managed, stored, shared, accessed, and protected. When employee is working outside of the EU there may be GDPR issues that need attention. Depending on the circumstances and nature of the business and information, you may also need to put Cyber Security systems in place. It is important to get advice on Data Protection. GDPR and Cyber Security issues.
- Right to Disconnect
When working remotely, it is important that the company has a policy that explains the right to the employee to disconnect from work outside of their normal working hours. This is particularly important when employees are working in different jurisdictions. The policy should be based on the new Code of Practice on the Right to Disconnect, issued by the Workplace relations Commission, and should specify the practical measures in place to ensure that this right is adhered to.
- Communication and Engagement
Arrangements need to be put in place to overcome the challenges that arise when employees are working remotely. This includes ensuring that an appropriate employee engagement process is planned and adhered to. In addition, the company will have a clear communication policy in place, clearly indicating how management, employees, colleagues, and teams will communicate with each other and when. This will consider the various time zones employees and clients may be operating in, and how this will be managed.
The level of engagement will also have an impact on employee motivation, job satisfaction, sense of purpose and performance. For optimal outcomes, attendance and performance should be managed irrespective of whether the employee is on site or working remotely. With remote working this means putting structures and systems in place to accommodate this and involving employees I the process. Engaging with employees in a meaningful way means communicating, collaborating, and working in partnership with the workforce for the benefit of the company. This not only improves employee attendance, it reduces presenteeism (present but not productive) and turnover, both of which have financial implications for the company.
Remote working has many benefits and can be a great advantage to a company and their employees. Whether considering remote working for your workforce within Ireland or seeking to capitalise on what the global labour market has to offer, you need to plan. At Irwin HR we will assist and give you advice on both scenarios and develop a remote working policy appropriate for your organisation. Contact [email protected] or phone (01) 513 4740.