KEY TAKEAWAYS
- Remote working can successfully benefit both employer and employee, but only if key legal considerations are properly addressed.
- Where the employer is a business regulated by the GFSC or the JFSC, or where the employee will be working overseas, then there are additional considerations.
- This guide provides a summary of the key legal points that an employer must bear in mind to create a successful remote working arrangement.
Remote working has become increasingly commonplace over the past few years.
For some people this means working primarily from home or hybrid
working. For others, it may mean spending a period of time working
overseas, for example to be closer to family.
The ability to work remotely is highly valued by employees.
Research shows that employees who are permitted to work flexibly
report higher job satisfaction and that the ability to work
flexibly is increasingly important to job seekers weighing up
potential roles.
We are seeing a growing willingness amongst employers in Jersey
and Guernsey to provide employees with the flexibility that they
desire or require. However, when putting in place remote working
policies and considering any requests to work remotely, it is
important that employers take steps to identify and mitigate any
legal risks.
In this article we have set out our top tips.
Remote working policy
If an employer permits its employees to work remotely, it should put in place a remote working policy. We would recommend that the policy is stated to be non-contractual, so that it can be amended or withdrawn at any time. Having a written (non-contractual) policy in place reduces the risk of employees arguing that they have developed a contractual right to work remotely on a permanent basis, through custom and practice. It also allows the employer to set out their expectations around remote working and any conditions which may apply.
Flexible working requests
Some employees may want a more formal remote working arrangement or require an arrangement that differs from the employer's standard policy in relation to remote working. In Jersey such employees are entitled to make a formal flexible working request, which can only be turned down by the employer on specific grounds. There is no equivalent right in Guernsey. However, in both islands turning down an employee's request to work remotely can give rise to discrimination risks if the reason for asking to work from home is related to a protected characteristic such as disability. It is therefore important to ensure that if an employee makes a request for a more flexible working arrangement, proper consideration is given to the request, and it is not turned down unless the business has fully considered any associated legal risks and (in Jersey) followed the correct statutory process.
Health and safety
It can sometimes come as a surprise to employers to learn that they remain responsible for taking reasonable care of the health and safety of their employees and providing a safe workplace, even when an employee is working remotely.
Employers need to ensure that they are taking reasonable steps to identify and mitigate health and safety risks. One common way of doing this is to ask employees to complete a health and safety questionnaire and for the employer to complete a virtual workstation assessment.
Employers with five or more employees are legally required to have in place a written health and safety policy. Employers who have begun to permit an increased level of homeworking in recent years should evaluate whether any changes to the health and safety policy are required; for example, to make it clear that employees' responsibilities and duties under the policy apply equally where they are working remotely, and that any accidents still need to be reported in accordance with the company's normal processes.
Confidentiality
Employers should ensure that employees who are working remotely are taking reasonable steps to keep confidential information secure and should provide clear guidance to employees about what is expected. This may include, for example, forbidding employees from allowing other members of the household to use company devices, locking their devices when not in use, using securing filing cabinets for any hard copy documents and disposing securely of such documents.
Regulatory considerations for financial services companies
If the employer is licensed by or registered with the GFSC or the JFSC, they should consider whether there are any applicable regulatory requirements that may be impacted by employees working remotely and put in place measures to mitigate any risks. For example:
- Regulated entities are required to maintain and test policies and procedures that ensure the entity is carrying out adequate supervision of all employees, and to assess and monitor the working practices, competence and probity of employees. These entities should ensure these policies and procedures (and regular testing) extend to and are appropriate for employees that work remotely; and
- Regulated entities should ensure their existing obligations to maintain and test policies and procedures in relation to business continuity, disaster recovery, cyber security, and data privacy are updated to contemplate the potential impact of employees that work remotely.
Legal and/or regulatory limitations on overseas work
If employees will be permitted to spend time working overseas, it is important to consider whether they are legally entitled to work in the relevant overseas jurisdiction. Immigration permission may be required, even if the employee is working abroad for a short length of time.
If the employee is working in the Channel Islands under an employment permit and/or work permit, the employer will also need to ensure that spending time abroad does not breach the conditions of the relevant permit(s).
If the employee is working for a regulated entity, care will also need to be taken to ensure that allowing certain employees to work overseas does not give rise to regulatory issues. For example:
- From a Jersey perspective:
- certain regulated entities are required to maintain an adequate regulatory span of control comprising of two or three appropriately qualified and experienced people. Normally, an individual cannot comprise the span of control if they are not actively involved in the business or Jersey-based. In circumstances where the span of control will not be maintained for a substantial period of time (for example, a period longer than two months) the JFSC will need to be notified and it may be necessary to seek a temporary derogation from regulatory requirements. Accordingly, regulated entities should be cognisant of the impact requests to work remotely overseas could have on existing span of control arrangements; and
- key persons of regulated entities (ie the compliance officer, money laundering compliance officer and money laundering reporting officer ) must ordinarily reside in Jersey (subject to certain narrow exceptions and, in the case of compliance officers, depending on the size, licence classification and geographic location of the business, noting that such variances for compliance officers are dealt with by the JFSC on a case by case basis). Any future changes to this provision will be considered as part of the Government of Jersey's financial services competitiveness programme.
- From a Guernsey perspective, certain regulated entities are required to maintain a level of regulatory substance in Guernsey, for example having the business directed by at least two resident individuals. Regulated entities should be cognisant of the impact that requests to work remotely overseas could have on these requirements; and
- The employer should also check whether the activities of the employee working remotely overseas trigger any regulatory issues, such as licensing or registration requirements, in the overseas jurisdiction in which they are working.
Tax
If an employee is working abroad they could become liable for tax and/or social security contributions in the jurisdiction in which they are working.
Employers should also be mindful as to whether having an employee working abroad could trigger tax consequences for the employer in the relevant jurisdiction, such as causing the employer to have a taxable "permanent establishment" or to have to register for local payroll taxes in that jurisdiction.
In many cases, there will be no tax consequences provided that the employee is only working abroad for a short period of time. However, in some jurisdictions, non-residents are subject to income tax on any wages paid for services performed in the jurisdiction. Tax advice should be obtained as to the impact or consequences of working abroad.
Where a double tax agreement is in place, this may assist the employee by ensuring that liability to tax and/or social security only arises in the employee's "home" jurisdiction. It may also assist the employer in avoiding any liability for overseas taxes.
Where the employer is subject to economic substance requirements, it will also need to make sure that the employee working abroad does not cause it to fail those requirements due to, for example, the employee conducting "core income generating activities" outside the employer's jurisdiction of tax residence, or the employee's time abroad not counting towards the employer's adequate "full time equivalent employee" total (as generally only time in the jurisdiction of residence counts).
Impact on employee rights
In most jurisdictions there are statutory employment protections and/or statutory benefits which must be provided to employees. If an employee is working overseas, they may become entitled to these employment protections and benefits. If an employee will be working in a different country for any significant length of time, it would therefore be prudent to seek local legal advice on any local laws which will apply. This is particularly important if the employer decides to terminate the employee's employment whilst they are working overseas, as it may be necessary to ensure that termination is carried out in accordance with the applicable laws of the host country.
Information security and data privacy
Overseas working is likely to result in the international
transfer and processing of personal data. Employers will need to
check that there is a lawful basis for such transfer, adequate
safeguards are in place and privacy notices are updated as
appropriate. Employers should also consider and identify any
additional information security challenges relating to overseas
remote working, for example, insecure networks and cyber
fraud.
As noted above, regulated entities should ensure their policies
and procedures and testing adequately contemplate the impact of
employees working remotely in relation to business resumption,
disaster recovery, cyber security, and data privacy.
Insurance
Employers should check whether any insurance schemes that they have in place will continue to cover employees whilst they are working abroad. For example, the employer may need to take out more extensive cover in relation to work-related accidents or insurance of company property.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
