Does your employee need a work permit?
EU nationals and their families will be free to live and work in the UK until it formally leaves the EU, which is likely to take up to two years. The earliest that these freedoms will end for EU citizens in the UK is likely to be 2019.
It is likely there will be a cut-off date when those EU nationals and their family members who can establish they have been resident in the UK for a specified period of time will be accorded a permanent right to stay. For those who cannot obtain a permanent right to stay, they may come under transitional arrangements or be given time-limited permission to remain.
Changes to the UK immigration system to accommodate transitional arrangements and to put new systems in place will be required, but it is still unclear what new regime will be adopted.
It may be that the current points-based system for migrants from outside the EEA will be rolled out for EU nationals following Brexit, which would have a significant administrative and financial impact for UK employers wanting to employ staff from the EU who don't have a permanent right to stay. They would need to apply for a sponsor licence and get to grips with the points-based employer sponsorship management system (often referred to as PBS) and onerous compliance, reporting and recording duties and fees. There would also likely be sizeable additional fees for each employee sponsored, one of which is the new immigration skills charge, which came into force on 6 April.
Is your employee liable for taxes in the UK?
The key question to consider is whether the employee will be UK resident. The UK has a statutory residence test that depends on the number of days spent in the UK in any tax year, which runs from 6 April to 5 April of the following calendar year. This is of particular concern to employees who split their duties between the UK and another country or countries.
If the employee becomes UK resident they will generally be liable for UK tax on their worldwide income, including the earnings from their employer.
A non-UK resident employee working in the UK will generally only be subject to UK tax on any income earned from duties carried out in the UK.
The tax position will be more complicated for employees who have income that risks being taxed in more than one country, especially where they carry out duties both inside and outside the UK, or are only in the UK on a short secondment. Employees who have non-UK capital gains or capital gains not related to their UK employment should also take UK tax advice if they are likely to become UK resident, even if only on a short secondment.
Which specific mandatory employment conditions apply?
In general, employees ordinarily working in or based in the UK benefit from UK statutory employment rights. These include:
- the national minimum wage (from 1 April 2017 this is £7.50 per hour for workers aged 25 and over, but rates are usually reviewed at least annually);
- 5.6 weeks paid annual holiday (including eight UK public holidays);
- statutory sick pay;
- protection against discrimination in employment;
- protection for whistleblowers;
- family-related rights, including maternity and paternity leave and pay, and shared parental leave;
- protection against unfair dismissal (for employees with at least two years' service subject to a few limited exceptions); and
- protections related to business transfers and collective redundancies.
The fact that the contract of employment may not be governed by UK law would not prevent these statutory protections applying.
Employers should also be mindful of certain guaranteed minimum rights under the Posted Workers Directive if they have a contract with an EU company for the provision of services that involve the temporary posting of workers to the UK.
Moving staff from overseas to the UK, and vice versa, is complex, raising many employment, immigration and tax issues. Expert advice should always be sought.
Susie Al-Qassab is a senior associate in the employment and international mobility team at law firm Howard Kennedy