“Digitalisation of the working world” – a recent buzzword, that has been used so often it hardly seems new anymore. Most times, this means digital forms of work for employees, such as working from home or remote working. Yet other areas also yield new digital solutions.
Risks when working remotely in another country
While working from home and remote working were the exception in many sectors until not so long ago, these working forms have become part of everyday life after one and a half years of the pandemic. Thanks to the technical conditions that have been created, employees – provided their position allows – can work from anywhere. Within a brief period, it’s almost become standard for employees to perform (part) of their work not just from home, but from anywhere they please. Employees are happy to use this freedom and have become even more creative about where they perform their work. Once the technical conditions were created and working from home was firmly established during the pandemic, there was a rapid increase in the number of employees who not only wanted to work from home but also wanted to work remotely in other countries, or who had already done so without authorisation. The reasons are numerous: the employee may not want to use additional leave to comply with quarantine obligations existing abroad, unless they are spending a longer period there with their family, or they may simply wish to work from a nice location in the south.
Few know and many overlook the fact that working from another country for a short period can have risks for the employer. In principle, remote working in another country raises the same issues as business trips and foreign postings. The most common issue is the application for and use of Form A1 for trips abroad but within the EU. It is often concluded that – in contrast to business trips or foreign postings - Form A1 is not necessary for remote working in another EU Member State because the travel is not at the initiative of the employer, but at the request of the employee.
The National Association of Statutory Health Insurance Funds (GKV Spitzenverband) and the German Liaison Agency Health Insurance – International (DVKA) provided clarity in a position paper issued in July 2021. Remote working in another company could constitute a posting under the European Regulation on the Coordination of Social Security Systems (Article 12 (1) of Regulation (EC) 883/2004). Simply the fact that the performance of activities in another country was at the initiative of the employee does not exclude a possible posting within the meaning of this Regulation if the criteria are fulfilled. As a rule, this will be the case with remote working in another country. For a posting to be assumed, the employee must have an employment relationship with the company in the home state and must still be subject to the German employer’s right to issue instruction. In the view of the National Association, this will be fulfilled in the case of remote work abroad whenever the employer agrees to the employee’s temporary stay in another country, accepts performance of the work by the employee and continues to pay the employee’s salary for the work. Ultimately, it does not matter whether the employer posts the employer to another country or whether the employee is (remote) working in another country at their own request.
In general, Form A1 will still be needed where the employee is voluntarily working remotely in another Member State of the EU.
Intensification through the Directive on the posting of workers
Remote work in another country can also raise other issues that typically have to be complied with during business trips abroad. In specific cases, the “detection risk” might be lower when the employee is working on their laptop at a finca in the south rather than visiting a foreign customer or being “visible” on the foreign market. The rules based on the Directive on the posting of workers must be observed; these rules were significantly intensified with the reform of the Directive and its implementation in the Member States in July 2020. Accordingly, during the time spent in the other country, certain (minimum) employment conditions of the relevant country must be observed. As a rule, in the case of employees who are remote working in another country, there will be no problems with respect to their pay and leave entitlements. However, the provisions on working time and rest periods for the relevant location must be followed. The foreign authorities can check the compliance with and evidence of compliance with these rules. The difficulty for employees is often that they must know or find out what the rules in the relevant Member State are and demonstrably ensure that they have been followed during the time spent in that Member State by the employee.
Employees who work remotely in another country should carefully document their working time. In the case of controls, Form A1 should be provided or at least made available to the authority quickly, together with other evidence of the employment conditions (employment contract, payslips).
Other points to be observed for travel abroad
Compliance with employment conditions also often requires compliance with an obligation to register; most EU Member States have now introduced this requirement for posted workers. However, the registration requirements are not uniform throughout the EU. There is also no uniform clarification on whether exemptions from this registration requirement apply for short-term remote working. This will generally have to be examined on a case-by-case basis. While some Member States don’t require registration for just a few days of work, in many Member States it is not easy to clarify whether a short period of (voluntary) remote work within the borders requires notification. Failure to clarify the issue with the local authorities means there will always be a risk of infringement.
Remote working in another country also raises tax law issues that must be observed. In particular, there is a risk that this remote work will result in a permanent establishment in another country. Further issues can arise, such as when the employee uses certain programs for their work, while the agreed licence for use is restricted to use in a specific country or area. Residency law issues might arise too, such as for third-country nationals, who are working in another country temporarily on the strength of a German work permit or visa, but also for German nationals who are working remotely in a country outside of the EU.
Challenges in practice
These topics are not new but just have a “new look”. Foreign travel for employees has always involved complex issues and high levels of energy and expense when preparing and implementing travel plans, especially when numerous employees within the company were concerned. Employers had to know the requirements in the relevant country and implement them. In some countries, it is difficult to simply establish what the legal requirements are. In addition, business trips and postings to another country often need to take place without much notice. Employers must also maintain an overview of any foreign travel. Even employees working remotely from another country will pose similarly large challenges for companies. Many companies often don’t know whether the employee is at home in Germany or working from another country for them. The administrative burden is high and often difficult to define.
Relief through legal tech solutions
This is where the further advantages of digitalisation of the working world become clear. Everyone is talking about legal tech solutions, which are designed to automate work processes and make them more efficient. Why not meet new (digital) challenges with new digital solutions? Given the significant administrative effort for companies, the issue of foreign travel for employees is primed for a digital solution, perhaps more than any other issue.
Since last Autumn, the legal tech product “BBGO” (www.bb-go.de) has offered companies support when preparing and implementing business trips in and postings to another country. It allows companies to neatly administer and organise employee trips abroad. After entering posting data into the system for a specific employee, the user completes a list of questions tailored to the target destination. They then receive a checklist with the necessary To-Dos for the international trip. The product was recently awarded first place in the PMN Awards in the category “Legal Tech”.
It will be exciting to see how the digitalisation of the working world continues to develop in the future. While digitalisation can be a challenge for companies, it also yields new digital solutions that can significantly facilitate working processes.
By: Dr Martina Schlamp