Expats worried: 'Can I still go home for Christmas?

What does this mean for you as employer?

For employers of foreign expats, now is the time - both for the coming holiday period and for long term - to establish policies with regard to working from home internationally (‘international remote working’). We will discuss below the balance that can be sought in this respect and the (tax) issues to be taken into account. We also discuss the employment law consequences of returning to the country of origin.

Long-term strategy

Where earlier this year, at the start of the COVID-19 pandemic, we saw that various employers wanted to facilitate 'international remote working' (working from home across borders), we now see a more mixed image. This is partly due to the lessons learned from the obligations that international remote working can entail for employers. In this context, one can think of potential consequences for taxation and social security.

Depending on the country from which the employee carries out his work remotely, the employee may become taxable there for his income. This may mean that the employer will have to pay tax and/or social security contributions in that country. The starting point for tax and social security contributions on labour income is taxation in the country where the employee actually works. There are many exceptions to this, but they vary from country to country (and the agreements made between them). This means that temporary working from home from some countries is currently possible almost without any problems, while in other countries this leads to various administrative burdens and costs for the employer. 

That is why we are seeing more and more companies working on international remote working policies, which seek to strike a balance between, on the one hand, offering flexibility to employees and, on the other hand, keeping the associated risks and costs manageable for the employer. New positions are also being created as a result of this development; for example, some multinationals have recently appointed a 'Head of International Remote Working'. This is in order to shape this way of working for the longer term as well. After all, it also provides opportunities, for example when it comes to attracting foreign talent (increasing the potential 'talent pool').

Labour law consequences of return to country of origin

In addition, a return to the country of origin can also have labour law consequences. This is because the employment contract often stipulates the location where the work must be carried out. Both the employer and the employee have to abide by this agreement and cannot simply change it unilaterally. Agreement will have to be reached on an adaptation of this employment condition. Of course, an employer cannot prohibit an employee from spending his days off or public holidays at a certain location. This is a private matter for the employee.

The question arises as to what happens if an employee travels (privately) to the country of origin during the holidays and then - after the holidays - independently decides to continue his work for the Dutch employer from abroad. Is the employee not coming back because the borders are closed? Are other employees given the freedom to work entirely from home (in the Netherlands) or are they expected to come to the office for one or two days? What (additional) costs and (administrative) burdens do employers face when working from home abroad?

Expats working for a Dutch employer generally have an employment contract governed by Dutch law. However, despite this 'choice of law' in the employment contract, there is European legislation that - in short - states that one cannot deviate from the mandatory provisions that apply in the country where (or from where) the employee 'habitually' carries out work. Assuming that a French expat continues to work in France for a longer period of time after Christmas, he may eventually be able to successfully claim that (parts of) French labour law has become applicable to his Dutch employment contract. Finally, it is important to note that even if an employee only temporarily (i.e. not habitually) starts working in another country, foreign provisions may still apply to the Dutch employment contract. This will have to be assessed on a country-by-country basis. 

Employers will have to take these matters into account when employees ask to be allowed or even facilitated to work temporarily from abroad. Employers can prepare for this by timely formulating policies on international remote working.