Employers should be aware that even if their employment contracts state that the terms of their employee's employment are governed by UK law, this may not be the case while their employees are working overseas, including while working in Ireland. Employees working outside of the UK will be subject to mandatory employment laws of the host country, for example laws on working time, protective leave, annual leave or minimum pay. The fact that they are working remotely for a UK employer will not be relevant.
Many of the protections conferred by Irish law will be familiar to UK employers, since they derive from EU law – for example the laws on discrimination and working time, however there are local variations within EU derived law. Elements of employment protection that derive solely from Irish local law are also different, and in some important respects may be more generous to employees than the corresponding rights under UK law.
If Irish law applies to the relationship then it is unlikely that an employee would bring proceedings in UK employment tribunal as well as the Irish Workplace Relations Commission. However in some instances it may be unclear as to whether UK or Irish law applies to the working relationship and so employees may initiate proceedings in both UK and Ireland in the event of dispute, and engage in "forum shopping" to pursue a claim in the jurisdiction with the greater employment protections.
Tax and social security
The issue of tax residency is a complex issue and requires specialist advice in each case. However,an individual is treated as being resident in Ireland if, in the tax year from 1 January to 31 December an individual is physically present in Ireland for 183 days or more or spends a combined total of 280 days or more in Ireland in both the current and preceding tax years, provided that they will not be treated as resident under this test for any tax year during which less than 30 days is spent in Ireland. Revenue have indicated that they may apply "force majeure" circumstances during the COVID 19 pandemic where employees have been unable to return to their home country.
Company law considerations
Employers should be careful when allowing employees work from home in another country as it could trigger a "permanent establishment". A "permanent establishment" is defined as a fixed place of business in the state in which the business of the enterprise is wholly or partly carried on. A permanent establishment can be created if an employee concludes contracts in another country and /or if the company is considered to have a "fixed place of business" in the other country. If this is triggered it may require the reporting and payment of taxes to the relevant authority in that country.
The arrangement envisaged above (ie the appointment of a single home-based employee) is unlikely to result in a requirement for the UK employer to register with the Irish authorities as an overseas corporate entity.
However the position would be different if the employee is conducting any business on behalf of the employer in Ireland, if more than one employee is involved, or if any office or other facilities were to be made available for them to use.
UK employees retain the right to live and work in Ireland without an employment or residence permit or visa under the long established Common Travel Agreement between the UK and Ireland which remains unaffected by Brexit.
However UK nationals' family members may be affected if they are not nationals of European Economic Area (EEA) member states and may need to apply for pre clearance or a visa. Applications for employment permits can be made by employees or employers using the online system (Employment Permits Online System). There are currently 9 types of permits and the type depends on a number of factors such as the nature and length of employment, salary level and skills requirements.
This is document is a very brief summary of complex legal provisions. Specific advice should always be sought, based on your organisation’s precise situation.
For advice on Irish law please contact Paul Gough, Associate at Beauchamps.
For advice on English law please contact David Mills, Employment partner at Mills & Reeve.