This interview is taken from the Remote Working volume of Lexology discussing topics including post Covid-19 work policies, remote working trends, employer's tax obligations and more with Partner Niall Pelly.
Q1) What are the most consequential issues that an employer should consider when determining its post Covid-19 remote work policies?
The first is location of work. Employees working remotely outside Ireland may create expensive tax, employment or immigration liabilities for themselves and their employers. It’s important to be aware of these before any long-term decisions are made.
The second is health and safety. Employers have an ongoing legal duty to maintain a safe working place and environment. Responsibility for health and safety at work rests with the employer, whether or not that work is being done at an employer’s premises or the worker’s home.
Employers need to consult with their employees to assure themselves that:
The Irish Health and Safety Authority has produced helpful guidance and information on the health and safety issues relating to remote working
The third is allowances and work equipment. Unless provided for in an employment contract, there is no mandatory obligation on an employer to provide particular work equipment (save as part of its ongoing health and safety obligations), to pay a working-from-home allowance or to reimburse employees for costs associated with remote working.
The Irish tax authorities permit an employer to pay an allowance of up to €3.20 per working day tax-free to employees who are working from home to cover expenses such as heat, electricity and broadband. Any amount paid over and above this permitted limit of €3.20 is fully taxable as income.
Where no allowance is paid, an employee may recover a proportion of the costs of their broadband, electricity and heating directly from Revenue, the Irish taxation agency. However, only costs that are attributable to days that are spent working remotely are recoverable.
Equipment that is provided by an employer to enable an employee to carry out his or her work (eg, a laptop or monitor), and which is used by the employee primarily for work purposes, is not taxable as a benefit-in-kind. Vouched expenses that are incurred wholly and exclusively in the course of an employee’s duties are not generally subject to tax, but this exemption is applied on an extremely limited basis.
Q2) Pragmatically speaking, is there a threshold to determine when working remotely (from home or otherwise) requires local rules to apply?
There is no applicable threshold at which an employee is considered to be working remotely in Ireland. Where allowances or tax rebates are available to remote workers, these are based on the number of days that are worked remotely and there is no minimum qualifying requirement.
On a more general level, international employees who choose to work remotely in Ireland can trigger an obligation to withhold Irish income tax after as little as 30 days, while non-EEA nationals must have a work permit or an immigration permission to work in Ireland for more than 14 days.
Q3) If employees voluntarily move away from their main work location, can employers unilaterally impose locally appropriate compensation packages?
Any unilateral reduction of salary or benefits by an employer without the consent of an employee can be challenged by way of a breach of contract claim, an unlawful deduction of wages claim, or a constructive dismissal claim on the part of an employee. However, such a reduction could be agreed upon between the parties as part of an agreement, for example to permit the employee to work remotely permanently.
Q4) Do you anticipate a rising trend of employers hiring remote workers as opposed to managing office-based employees who subsequently go remote? What practical issues should employers bear in mind when considering remote hiring?
Yes. The Irish government announced in March 2021, as part of its National Remote Work Strategy, that it plans to provide employees with the right to request remote working. This right is likely to be introduced in early 2022. In line with most Irish employment protections, it is anticipated that this right will be limited to employees only, and so will not extend to independent contractors or ‘gig’ workers who are not employees.
This new right will likely limit when an employer can refuse a request to work remotely and may also give employees a right of action against their employer where such a request is unreasonably refused. Details of the grounds on which an employer may refuse a request for remote work have not yet been announced, nor have the potential consequences for refusing the request. However, it is expected that a similar approach will be taken to that in the UK, where the right to request flexible working – and the grounds on which such a request can be refused – has been in place since 2003.
It is not clear whether this right will be a ‘day one’ right, meaning that job applicants can request to work remotely from commencement of employment, or whether a minimum amount of service will be required before an employee can make such a request (eg, 26 weeks, as is currently the case in the UK).
In terms of practical issues to consider, in April 2021, the Code of Practice for Employers and Employees on the Right to Disconnect was released by the Workplace Relations Commission, which created a new right to disconnect comprised of three elements: the right of an employee to not routinely perform work outside normal working hours; the right to not be penalised for refusing to attend to work matters outside of normal working hours; and a duty to respect another person’s right to disconnect. This right was introduced partly to combat an ‘always on’ working mentality that can arise when there is no clear distinction between the workplace and home life – a mentality that can be more pronounced when employees are working remotely.
While a failure to follow the Code will not be an offence, it will be admissible in evidence in determining whether other employment rights have been breached – for example, working time limits. As the Code is not directly enforceable, it is more akin to guidance that employers ought to be aware of, as opposed to a statutory prohibition on working outside normal working hours.
Q5) Do local laws provide remote employees with more generous leave entitlements, such as sick leave? Can employees avail themselves of leave entitlements in both the primary work location and the remote work location?
There is no distinction between remote employees and site-based employees when it comes to employment rights in Ireland, including in relation to leave entitlements. It is possible that employees who are working remotely outside Ireland could accrue employment law rights based on local law that exceed Irish entitlements, but this will depend on the applicable law in the relevant jurisdiction.
Q6) What are some best practices for protecting confidential and proprietary information in a remote work environment?
The Irish Data Protection Commissioner has issued useful guidance on the protection of personal data when working remotely. The key risks identified relate to: protecting and preventing access to laptops, USBs, phones, tablets and other devices, and emails; using unsecured networks to transmit data or to access company networks; and ensuring the security and confidentiality of hard-copy documents.
Employers should update data protection policies to take account of remote working and should also consider any data protection issues that may arise from an employee moving to work outside Ireland.
Q7) How does a remote employee affect the employer’s tax obligations? Do the employee’s activities render the employer to be ‘doing business’ in the remote location? Will these activities create a taxable presence for the foreign employer in the local jurisdiction?
Employees working remotely outside Ireland may create expensive tax liabilities for themselves and their employers. It’s important to be aware of these before any long-term decisions are made.
The foreign country in which the employee is working may seek to tax some or all of that employee’s income from the employment. This is based either on the fact that a substantial number of days have been worked in that other country or, in some cases, on the basis that the employee has become a tax resident there under local law. Further, social security liability may accrue (which is generally assessed separately from income tax).
The main concerns for employers will be whether there is an obligation to operate local payroll withholding and whether local social security rules add significantly to the wage bill. The rules vary widely between countries and, unfortunately, there is no one-size-fits-all approach to managing this issue across multiple jurisdictions.
Employers will also need to consider two corporate tax risks. First, an employee working abroad may, in some circumstances, constitute a permanent establishment of the employer in that other country, exposing part of its profit to corporate taxes there. Second, if an Irish company has directors based abroad, there is a risk of the company also acquiring corporate residence in another country.
Q8) What are some best practices for tracking remote work arrangements?
In general, principally as a result of the General Data Protection Regulation (GDPR), a more conservative approach is taken to tracing remote work arrangements in Ireland than might be the case in other jurisdictions. Employers must have regard to an employee’s right to privacy and data protection rights. They must have a legal basis under the GDPR for processing an employee’s personal data in that manner and must also be able to demonstrate that the monitoring in question is a necessary and proportionate action to achieve a legitimate aim and that there is no less intrusive alternative way of achieving that purpose.
Guidance from the Irish Data Protection Commissioner has focused on employers being transparent regarding the measures they adopt, including the purpose of collecting any personal data, minimising the amount of data that is processed and preserving the confidentiality of any such data.
What do you think are the most exciting and promising opportunities of remote working? How do you think it will affect the future of work?
Provided the necessary infrastructure is put in place and maintained, remote working creates the opportunity for a far greater decentralisation of work. While employees have typically been forced to relocate to urban areas, or face long commutes, remote working offers a greater opportunity for employees to work where they live rather than live where they work. In the medium to long term, this could result in a reduced pressure on housing and public transport in urban areas, less traffic and pollution, and make it more viable to live and work in rural areas.
In your view, what are the most difficult challenges raised by the rise of remote working? How do you think employers should tackle these challenges and adapt accordingly?
Creating a workplace that provides equality of opportunity for remote workers will be a challenge in circumstances where the most visible employees will likely to be those who are site-based. The demographic make-up of site-based employees is likely to skew towards a younger, male, non-disabled workforce. When it comes to issues such as work allocation and promotion, employers will need to de-emphasise the distinction between site-based and remote workers to avoid creating (or embedding) a potentially discriminatory workplace culture.
What do you enjoy most about practising and advising in this area?
The quick pace at which things change, and the agility of thought that is needed to adapt to, and advise upon, those changes. Even the simplest changes can have unintended consequences down the line. Trying to identify practical solutions to potential problems before they even arise is stimulating, while the variety of work (and the different risk appetite of clients) means that no two cases, or two days of work, are ever the same.
The full article can be found here.