Working from home abroad: what you need to know as an employer

The home office model is playing an increasingly important role, so it stands to reason that home offices abroad might also be of interest to some employees. However, the legal framework conditions here are very diverse and we therefore summarize everything you need to know as an employer.

The basics of working from home abroad

Time and again, employees are demanding more flexibility from their employers and these are giving in to their wishes. You will certainly already have some colleagues who work from abroad because they want to be somewhere else for a while or simply because they live near the border and are commuters.

Another very popular program is a so-called workation. This involves companies taking a team or all of their colleagues abroad, where they work, attend workshops and enjoy their free time together.

There are different reasons, but there are a few legal framework conditions to consider for all of them. We have summarized 4 constellations below that give rise to the desire to work from home abroad:

• Cross-border commuters who are employed in several countries & are now working from home.
• Employees who wish to work from home temporarily abroad due to the pandemic (e.g. to be with their family)
• Employees from abroad who are unable to take up their post.
• Team colleagues who move their center of life and place of work exclusively abroad.

Special features of employment law for working from home abroad

If employees want to temporarily relocate their home office abroad, you as the HR manager need to clarify a few things. First and foremost, the employment law of the country in which the “usual place of work” is located applies.

The time aspect is particularly important in this case, which you as an employer must take into account. It is therefore important whether someone is only working from home temporarily or permanently abroad.

There is a 183-day rule in tax law that applies accordingly.

Companies must be careful when working from home abroad on a permanent basis

There are always employees who emigrate abroad for personal reasons and then work from home for a German company.

This is a more complex case for you as an employer. As the main focus of the employment relationship and the usual place of work is abroad, this entails legal changes.
A choice of law and a supplementary agreement under German employment law is no longer sufficient here.

You can minimize the effort with the help of an independent contractor agreement. In this case, the employees in question are considered freelancers and are no longer employees.

In this case, however, you as a company no longer have any rights to issue instructions. Likewise, the freelancer’s activities must always be considered under the provisions of the country of employment regarding bogus self-employment.

You should also find out what obligations arise for you in this constellation.

Is there a general right to work from home abroad?

There is no general entitlement to work outside the company headquarters. However, if you as an employer grant this type of employment, you must determine together with the employee whether the work is temporary.

As a general rule, German employment law is less critical if your employees are only working abroad for a short period of time and the focus of the employment relationship therefore remains in Germany.

There are also tax implications that you as an employer need to be aware of. The special rules of the respective double taxation agreement are particularly important here.

In any case, the following applies: plan your home office project abroad in advance. There may be new developments and changes in circumstances at any time that you and your employees need to take into account.

Differences: Home office inside or outside the EU

You need to consider not only the time aspect, but also the location. There are regulations within the EU, EEA and Switzerland. There are also some tax consultation agreements for cross-border commuters that have not been concluded with all of Germany’s neighboring countries.

Another important point to consider as an employer is the employee’s nationality. This may need to be taken into account.

In the worst-case scenario, employees working from home may be working abroad illegally. For this reason, it is extremely important to consider everything in advance.

A residence and work permit can be obtained quite easily if there is a local subsidiary and an intragroup secondment is used.

Mobile working abroad: How to regulate it as an employer

As described above, the home office abroad should be well thought out and planned in advance. We have put together some important factors for you to pay particular attention to:

• Accessibility despite time difference
• Is there a time limit
• Cost reimbursements
• Social security & tax law aspects
• Return

Please note: If your company has a works council, it must be involved and conclude a corresponding works agreement.

“Workation” versus “mobile working abroad”

The term “workation” has been cropping up again and again for some years now. This is a new form of vacation that combines work and vacation. The term is made up of the two English words “work” and “vacation”.

This is more or less working on vacation. It is important to note that this term does not yet exist in German labor law. For this reason, you as a company should define clear contractual rules for your workation.

At the beginning, it is important to record the duration of the workation. If it is shorter than 4 weeks, it does not result in any action under labor law.

If a workation is to take place abroad, you must check in advance whether it is legal for your employees to work in the vacation country. You may need a work permit for this.

However, if the place of work is within the EU, there should be no problem for EU citizens. In this case, however, you must clarify in advance which labor law requirements apply. Find out about working hours and break regulations as well as remuneration regulations.