Contractors' Questions: What if my UK company wants to set up in the EU, and send a worker there?
Contractor’s Question: Does the UK-EU Brexit deal cover the steps I need to take if my UK business proposes to set up an office in the EU, or further afield, and wants to send one of our people to support or work in that new office?
Expert’s Answer: Such UK businesses are going to have to consider a number of issues and these issues fall into four main areas of consideration.
The individual worker may have employment law rights, both in the UK and in the overseas jurisdiction, depending on the arrangements.
The business will need to understand any statutory rights that arise either in the UK or overseas as a result of their proposals, and carefully consider how they document the arrangements in view of this.
This is really important. For example, in the UK there is often a grey area over employment status i.e. whether someone is an employee or a worker. And we’re used to having discussions in the UK about what points to being an employee or worker or being genuinely self-employed.
In some jurisdictions, however, it is even more vital to get this right – it can be a criminal offence to treat someone as self-employed if they are in fact an employee. In France for instance, if a business gets it wrong, the French administration would require the employer to pay three calendar years of backdated employer and employee contributions. And if the client has been found to have committed the criminal offence of concealed employment, the Labour administration can require a fine to be paid of up to EUR225,000.
Your UK business will need to understand the immigration requirements for working overseas, notably what visa will be required. This will depend on the nationality of the individual in question, where they are travelling to and what they intend to do when they get there. They will need to take local advice on this, and it’s not necessarily as simple as saying there is one rule for the entirety of the EU. Instead, businesses are likely to need advice in each EU Member State. They will also need to consider UK immigration requirements, should the individuals need to return to the UK for any reason.
Social security/tax issues
The UK business will need to understand the tax/social security implications of its proposed arrangement, both in the UK and abroad. Depending on what you are proposing, and (very often) how long the arrangements last, the business might trigger a tax/social security liability overseas, or in the UK. So you might need to set up an overseas branch or operate payroll in the overseas jurisdiction. So the business will need to take both local and UK advice on this subject as well.
Other issues (includes paperwork)
There is also the practical question of how to document the relationship to take into account these issues, dealing with time differences, travel (back to the UK or overseas), dealing with data security or GDPR, and dealing with potential liabilities/tax bills.
All of the above means setting up overseas requires specific advice and careful consideration. With the end of free movement, these many hoops to jump through now apply to setting up in Europe as well as the rest of the world. Importantly, UK businesses need to look at this on a country-by-country basis -- although the areas where they need advice are the same, it’s impossible to provide a one-size-fits-all answer for how to go about doing this. Good luck with your UK business’s expansion!
The expert was Laura Darnley, legal director at law firm Brabners LLP.