Introduction
The island of Ireland offers a unique environment for employers and employees involved in cross border work. It consists of two distinct legal jurisdictions: Northern Ireland (often called the North or NI), which is part of the United Kingdom (UK), and the Republic of Ireland (often called the South or ROI) which is an independent sovereign nation. The two jurisdictions share an invisible border.
Under the Good Friday Agreement, individuals born in NI can identify as Irish, British, or both. This dual identity facilitates not only a fluidity of movement in terms of spirit and identity but also physical mobility between the two regions. Coupled with the modern, remote-friendly workplace, many individuals find themselves living in one jurisdiction and employed in another, or working across both, either in-office or remotely.
Operating across two legal systems introduces specific compliance considerations. This note will explore the main compliance areas for employers and employees across these two jurisdictions.
Terminology
There are many different types of cross border working that can exist, however, this note will focus on the following as these are the scenarios which we come across most often:
- Cross Border Worker (also known as commuting employees or 'frontier workers') – employees travelling from one jurisdiction to another to work and returning to the country they live in at least once a week. For example, Oliver lives in Newry, Co. Down (NI) but works for an Irish entity and travels to work in the Dundalk, Co. Louth (ROI) office every day. In this scenario NI would be the 'Home' country and the ROI would be the 'Host' country.
- Remote working employees – employees remote working from one jurisdiction for the benefit of an entity in another jurisdiction. For example, Aoife lives in Derry/Londonderry (NI) and works remotely full time for an Irish entity, based in Letterkenny, Donegal (ROI). In this scenario, again NI would be the 'Home' country and the ROI would be the 'Host' country.
- Employees working in both jurisdictions – employees who physically split their work between jurisdictions. For example, Tobias lives in Cavan, Co. Cavan (ROI) and is employed by a company based in Enniskillen, Co. Fermanagh (NI). He splits his week by working three days 'remote working' at home in the South (ROI) and spends two days each week at his employer's office the North (NI). In this example ROI would be the 'Home' country and NI would be the 'Host' country. Employees working in both jurisdictions are still Cross Border Workers as they also caught under that definition in point 1.
For Cross Border Workers (scenario 1) working in one jurisdiction but living in another, we don't expect many issues to arise, as no work will be undertaken from their Home country as they commute across the border to undertake work. The main focus of this note is on employees who are remote working from another jurisdiction (scenario 2) and/or splitting their working between the North and the South (scenario 3)
Global Mobility Considerations
Immigration
Working in both jurisdictions
The Common Travel Area (CTA) continues to be a cornerstone of the relationship between ROI and NI. The CTA arrangement pre-existed the foundation of the European Union and provides reciprocal rights for Irish and British citizens between the two jurisdictions. In response to Brexit, the Government of Ireland and the UK signed a Memorandum of Understanding, reaffirming their commitment to maintaining the CTA in all circumstances. Accordingly, the Irish legislature enacted the Withdrawal of the United Kingdom from the European Union (Consequential Provisions) Act 2020 (the Act). There is provision within the Act to maintain the integrity and operation of the CTA and to ensure that the rights associated with the CTA continue. These include the right to work, study and vote, and access to social welfare benefits and health services without the need for further permission.
Due to Brexit, Northern Ireland is now in a unique situation where it is the only part of the UK which is physically connected to an EU member state (ROI). Due to its complex history, there is no hard border between NI and ROI. That means that EEA (excluding Irish) and Swiss citizens residing in Ireland, but working in Northern Ireland, before January 1, 2021, need to have obtained the relevant Frontier Worker permit to maintain their employment status after July 1, 2021. EEA citizens (again excluding Irish) who wish to commence employment in Northern Ireland for the first time (after 2020) are now required to apply through the UK points based immigration system.
For citizens on both sides of the border, the CTA ensures that the process of taking up residence or employment remains straightforward. This dual arrangement is a testament to the historical and ongoing commitment to maintaining an open border for people and opportunities.
Permanent establishment risk
When employees split their working time between NI and the ROI, entities must be mindful of the potential Permanent Establishment (PE) risks that may arise. A PE is generally defined as a fixed place of business through which the business of an enterprise is wholly or partly carried on, subjecting the entity to tax in that jurisdiction. This can include offices, branches, factories, and other fixed places of business. A PE can also be created if a person who works cross border is acting on behalf of the employer entity and has, and uses, the authority to conclude contracts in the name of the entity in the jurisdiction where the employer doesn't have an entity – this can create a PE with or without the business having a physical presence in that jurisdiction.
Deciding whether an individual working from home in one jurisdiction can create a PE for an employer in a different jurisdiction requires close analysis of the facts, and will take into account factors like whether the remote working specifically benefits the employer (e.g. because it gives the employee a base to physically meet customers in the region) and whether they are compensating the individual for working from home. Tax authority attitudes to this sort of arrangement are also evolving, given the substantial rise of remote working post pandemic.
If a PE is created, the profits attributable to the PE may be subject to tax in the jurisdiction where the PE is located. This requires a careful analysis of the functions, assets, and risks associated with the PE. The profits attributable to any PE must be determined in accordance with the arm's length principle (i.e. on the hypothetical basis that the PE is a separate, independent business, and assessing what profit a business would be expected to make).
Entities must comply with the tax filing and payment obligations in each jurisdiction where a PE is created. This includes maintaining proper documentation to support the attribution of profits to the PE.
Income tax
Employees
An employee is liable to income tax on their worldwide income in the country in which they are tax resident.
In addition, generally, the country in which the employee physically performs the duties of their employment has primary taxing rights over the employment income which the employee earns for performing duties in that country. This means that an employee who is working both in NI and the ROI (whether as a Cross Border Worker or because their employment duties require them to work in both NI and ROI) may be liable to income tax in both countries.
There is an exception to the general rule under the Double Taxation Agreement between the ROI and the UK (DTA). The DTA ensures that an employee who is tax resident in the ROI will not be subject to income tax in NI on the income they earn for the employment duties they physically carry out in NI if all the following conditions are satisfied:
- The employee is not present in NI (for any reason and however briefly so including holidays, weekends and days of arrival and departure) for more than 183 days in the relevant tax year (which runs from 6 April to 5 April);
- The employee's remuneration is not paid by or on behalf of an employer who is tax resident in NI. For these purposes the NI tax authorities (HMRC) look at the tax residence of the legal and, if different, the economic employer. The economic employer is the entity which takes the benefit/risk of the employee's activities and ultimately bears the costs.
- The employee's remuneration is not borne by a permanent establishment which the employer has in NI.
Similarly, the DTA also protects an employee who is tax resident in NI from income tax in the ROI on the income they earn for the duties they physically carry out in NI if all the following conditions are satisfied:
- The employee is not present in the ROI for more than 183 days in the relevant tax year (which runs from 1 January to 31 December);
- The employee's remuneration is not paid by or on behalf of an employer who is tax resident in the ROI; and
- The employee's remuneration is not borne by a permanent establishment which the employer has in NI.
If the employee does not benefit from the DTA exemption, the employee should be able to claim double tax relief in the country in which they are tax resident. For example, an employee who is tax resident in NI should be able to claim a credit for the tax that the employee paid in the ROI on their ROI employment income against their UK income tax liability on that income.
It is a requirement for a Cross Border Worker living in ROI but working in NI to complete an annual self-assessment to the Revenue Commissioners of Ireland. The DTA allows for a tax credit on the tax paid in the UK, although they may need to pay extra tax in ROI if there is a difference in tax rates between the two jurisdictions. This ensures they do not pay tax twice.
Employers
Both NI and the ROI employers have an obligation to withhold income tax on an employee's earnings under the Pay As You Earn (PAYE) system. Irrespective of whether the employee is a commuter, a remote worker or working in both countries, employers will need to consider whether they have PAYE obligations in NI and/or ROI.
For example, an NI employer has an obligation to withhold NI PAYE on 100% of its employees' earnings notwithstanding that the employee may be working in the ROI. Depending on the circumstances, however, an NI employer with an employee who is resident in the ROI, may be able to obtain advance clearance from HMRC to only operate PAYE on a proportion of the ROI employee's income (broadly the proportion of time that the employee spends physically working in NI subject from April 2025 to broadly a limit of 30%) or not operate NI PAYE at all if the employee works (and will continue to work) exclusively from the ROI and has never been tax resident in the UK.
It is important for the employee and the employer to maintain detailed records of the days worked in each jurisdiction and the corresponding income earned to ensure accurate tax reporting and compliance. If the employer has a withholding obligation both in NI and the ROI, the employer may need to run dual payrolls.
Social security
Generally, employee and employer social security is due in the country in which the employee physically carries out their duties. However, where an employee is working both in NI and the ROI, international agreements ensure that social security only arises in one country.
If the employee spends at least 25% of their working time in the country in which they are habitually resident, social security will arise in that country. If the employee spends less than 25% of their working time in the country in which they are habitually resident and the employee only has one employer, social security will arise in the country in which the employer is based. The rules are more complex where the employee has two or more employers.
The employee (or the employer on behalf of the employee) should confirm the social security position by applying for an A1 certificate from the social security authorities in the country in which the employee is habitually resident. The A1 certificate confirms the country in which social security is payable and prevents social security arising in the other country.
Again, it is important for the employee and the employer to maintain detailed records of the days worked in each jurisdiction.
Employment law
Employers with employees splitting their time between NI and ROI, or remote workers operating between these jurisdictions, must consider several employment law obligations including; the type of written statement of employment terms required by law, sick leave entitlement, family leave entitlements, minimum wage requirements, equality and discrimination laws (which include fair employment laws in NI), statutory redundancy protections, flexible working and well as wider employer obligations such as those relating to sexual harassment and gender pay reporting. Lewis Silkin has an excellent comparative table which highlights the differences and similarities between GB, NI and ROI employment law.
When an employee splits their working time between NI and ROI, one tricky area can be the question of which jurisdiction's laws will take precedence? The primary consideration when determining this is often the place where the employee performs their work. If the employee spends more time working in one jurisdiction than the other, the laws of that jurisdiction may take precedence.
The terms of the employment contract also play a significant role. The contract may specify which jurisdiction's laws govern the employment relationship, which is particularly important for remote workers who may not have a fixed place of work. Additionally, the location of the employer's business can influence which laws apply. If the employer is based in NI, NI laws may be more relevant, and vice versa for ROI.
The nature of the work and where it is primarily carried out can affect the applicable laws. For example, if the work is project-based and the projects are mainly in one jurisdiction, the laws of that jurisdiction may be more applicable. The employee's place of residence can also be a factor, especially for tax and social security purposes. An employee residing in ROI may be subject to ROI tax laws, even if they work part of the time in NI.
The employer and employee can mutually agree on which jurisdiction's laws will govern the employment relationship, provided that the chosen laws do not deprive the employee of the minimum protections afforded by the laws of the jurisdiction where they work. Certain mandatory provisions of employment law, such as minimum wage, working time, parental leave and non-discrimination, may apply regardless of the choice of law in the contract, based on public policy considerations.
In the event of a dispute, courts will apply conflict of laws rules to determine which jurisdiction's laws apply. This can involve considering where the employee habitually carries out their work or where the employment relationship is centred. In practice, unhappy employees will often 'cherry pick' jurisdictions in which to sue and bring claims in whichever jurisdiction offers the strongest protection in their particular situation. Discussing and documenting this issue at an early stage, and keeping the situation under review as the working relationship evolves over time is essential.
Health and safety
When employees split their working time between NI and ROI, employers and employees must navigate the health and safety regulations of both jurisdictions.
Employers' Obligations:
- Risk Assessments: Employers must conduct risk assessments to identify potential hazards and implement measures to mitigate risks in both locations.
- Health and Safety Policies: A comprehensive health and safety policy must be in place, which includes arrangements for employees.
- Training and Information: Employers are required to provide adequate training and information to employees about the health and safety risks and the measures in place to control these risks.
- Safe Work Environment: Ensure that the work environment, whether in NI or the ROI, is safe and without risks to health.
- Reporting Incidents: Serious incidents must be reported to the relevant health and safety authorities, such as the Health and Safety Executive for Northern Ireland (HSENI) or the Health and Safety Authority (HSA) in the South.
Employees' Obligations:
- Reasonable Care: Employees must take reasonable care of their own health and safety and that of others who may be affected by their actions.
- Cooperation: Employees should cooperate with their employer's health and safety measures and report any hazards or incidents.
- Use of Equipment: Proper use of work items provided by the employer in accordance with the training and instructions given.
Remote Workers:
- Home Office Assessments: Employers should assess the suitability of the home office environment and provide guidance on setting up a safe workspace.
- Mental Health Support: Offer support for mental health and well-being, as remote working can lead to isolation and stress.
Both employers and employees must be aware of the health and safety legislation in each jurisdiction and ensure compliance. The Health and Safety at Work (Northern Ireland) Order 1978 and the Safety, Health and Welfare at Work Act 2005 in ROI are the primary pieces of legislation governing work-related health and safety.
Insurance
When an employer has employees dividing their working time between NI and ROI, it is crucial to have the appropriate insurance coverage in place to manage the risks associated with cross border employment. Employers' Liability Insurance is a legal requirement in both jurisdictions, providing coverage for claims made by employees for injuries or illnesses sustained during the course of their employment.
In addition to the mandatory Employers' Liability Insurance, there are several other insurances that are recommended for employees who work remotely and/or across both regions. Public Liability Insurance is advisable as it covers claims made by third parties for injuries or damages that occur as a result of the business activities. Professional Indemnity Insurance is also recommended, especially for businesses that provide professional services or advice, as it can protect against claims of negligence or mistakes.
For employees who travel frequently between the two jurisdictions, Travel Insurance is beneficial as it provides coverage for medical expenses, and trip cancellations. Furthermore, offering private Health Insurance can be a valuable benefit for employees, providing access to medical treatment and reducing downtime due to illness.
It is important for employers to review their insurance policies regularly to ensure they have adequate coverage for their specific business activities and the jurisdictions in which they operate.
Benefits
When an employer has an employee working across two countries, it will be key to ensure that the benefits the employer is offering will still apply to an employee who is working in another country. For example, private medical insurance and life assurance. Often these policies will only cover the country in which the employer is based or that has been named in the policy. As such, it is important to ensure this is considered to avoid any potential costly errors.
Pensions
In ROI, the Government Pensions Auto Enrolment Act 2024 was enacted and will come into effect on 30th September 2025. This legislation mandates that employees aged between 23 and 60, who earn a gross salary exceeding €20,000, must be automatically enrolled in a pension scheme. Contributions will be calculated based on gross earnings up to €80,000, which will be in phased over 10 years.. The employer will be required to match the contributions of employees with the State also contributing to the pension at a ratio of 3:3:1 providing an additional boost to the pension pots. As there is a government contribution to the employee's auto-enrolment pension, there will be no tax relief on employee contributions (unlike contributions to a private pension). Employees are permitted to opt out during the 7th and 8th months of enrolment, but if they continue to meet the eligibility criteria, they will be automatically re-enrolled after a period of two years.
In NI, employers are required automatically to enrol workers (not just employees) who are aged between 22 and the state pension age, who earn a minimum of £10,000 annually, and who are employed in the UK.
The criterion of "ordinarily working" in the UK or ROI is utilised to assess eligibility for auto-enrolment in both regions. Consequently, if an employee is deemed to be ordinarily working in either the UK or ROI, they will be subject to the respective auto-enrolment regulations.
Further guidance on the position in NI is available here Workplace pensions: Joining a workplace pension - GOV.UK.
Data
When employees work across the border between NI and ROI, data protection considerations are also important. Employers must ensure they comply with both the UK legislation for Northern Ireland, e.g. the UK GDPR and the Data Protection Act 2018, and the GDPR and the Irish Data Protection Act 2018.
While the UK GDPR and GDPR are currently for all intents and purposes the same, there are some nuances in how data protection laws are applied and enforced in each jurisdiction, e.g. in relation to data subject access requests. The UK's Data (Use and Access) Bill is currently making its way through the Parliamentary process but it is not envisaged to make changes that lower the level of protection for personal data from the EU standard so the UK's adequacy decision from the EU should remain unaffected. This is important as it allows the seamless flow of personal data across the border, eliminating the need for additional safeguards to be put in place.
fOne key consideration is what happens if there is a data breach. If applicable both the Information Commissioner's Office in the UK and the Irish Data Protection Commission would need to be notified. Timely notification is essential for both regulators so it is important to think about this up front and detail it in your Incident Response Plan. Both regulators emphasise the protection of personal data and the rights of individuals so providing clear communication and support to affected individuals is essential.
Data retention is also something to bear in mind and a clear retention policy should be in place. Employers should only retain personal data for as long as necessary for the purposes for which it was collected. Familiarity with the retention periods in both jurisdictions is essential to ensure compliance.
Employers must navigate these laws and their nuances to lawfully process employee data, ensure compliance, and perhaps most importantly foster trust in their data handling practices.
Conclusion
Cross border working arrangements on the island of Ireland provide unique opportunities and benefits for employers and employees alike. By proactively addressing the relevant risks and obligations, and reviewing practical arrangements from time to time, businesses can create compliant and flexible cross border work environments across two closely linked jurisdictions in a single, unique island.
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.
