It is nowadays quite common that an employee who is used to working remotely in Finland to want to work remotely abroad for a certain period. For example, remote work abroad might be combined with a vacation or, alternatively, the employee escapes the Finnish winter to work remotely abroad. In addition to the employee’s own preparations, a certain amount of advance preparation is also required from the employer when an employee moves outside the borders of Finland and works remotely abroad.
This article discusses some of the important matters that the employer should review and consider when preparing for the employee’s remote work abroad. The employee’s country of destination will have a significant impact on the number of advance preparations required before the employee goes abroad to work remotely.
It is advisable to draw up a separate remote work agreement that will be attached to the employment contract. The remote work agreement sets forth the conditions applicable to remote work carried out abroad.
Finnish social security
An employee who is working remotely abroad is not automatically covered by Finnish social security. The main rule is that the employer must insure remote working in Finland under the Finnish legislation and remote working abroad under the legislation of the destination country. However, the EU regulation on the coordination of social security systems and Finland’s separate social security agreements with various countries, under which it has been agreed that an employee will be insured under the legislation of only one country at a time, create an exception to this main rule. In the case of a so-called “non-agreement country”, however, a situation may arise where the employee is either double insured (the employer must pay the employer’s contributions to both Finland and the country of destination) or not insured at all.
To avoid having to separately research the legislation of the employee’s destination country, the employer may apply for a certificate for an employee working abroad to prove that the employee is covered by Finnish social security also during the period of work abroad (“A1 certificate”). An A1 certificate can only be obtained if the work is carried out in an EU/EEA country, Switzerland, or a country with which Finland has concluded a social security agreement. To obtain an A1 certificate, the remote work abroad must also be temporary (lasting no longer than two years), the work must be for a Finnish employer, and the employee must be covered by Finnish social security when going abroad to work remotely.
It is advisable to apply for an A1 certificate well before the start of the remote work abroad. The application is made by the employer via the e-service of the Finnish Centre for Pensions. Once the A1 certificate has been issued, the employer pays the employee’s social security contributions to Finland as usual. The A1 certificate covers the entire Finnish social security solution, i.e., all social insurance contributions of the employee are paid to Finland. The A1 certificate holder is normally entitled to Finnish employment pension benefits, occupational accident insurance benefits, sickness benefits, family benefits, and other social security benefits. By showing the A1 certificate, the employee can prove that he or she is still covered by Finnish social security during a stay abroad.
If the employee goes to work remotely in a country where there is no social security agreement, the employer must take care of the employer’s statutory insurance in accordance with the laws of the country of destination and pay the insurance premiums in that country. In such situations, the regulations of each country of destination must be examined on a case-by-case basis.
The employer’s statutory occupational accident insurance only covers a limited number of accidents, and these must have occurred specifically in the course of work. The employer may have purchased additional insurance coverage for its employees through various insurance products (for example, leisure accident insurance, remote work insurance, or travel insurance that includes leisure time). When drawing up a remote work agreement, it is worth finding out whether the employer has any additional insurance for its employees and how the terms and conditions of any such insurance apply to remote work abroad.
In general, a situation where an employee goes abroad to work remotely of his or her own free will is not covered by the employer’s travel insurance, even if the employer has taken out travel insurance for its employees. This is because if the employee’s departure for remote work abroad is at his or her own initiative, it is not considered a business trip or a post abroad to which the employee has been sent to work by the employer. It is therefore important to stipulate in the remote work agreement that the employee is responsible for his or her own travel insurance during the period of remote work abroad.
Health, well-being, and safety at work
When working remotely, the employee has a greater responsibility for many aspects of their well-being at work than when working on the employer’s premises. Firstly, the employer is not obliged to provide occupational health care services abroad for an employee who has gone abroad for remote work. Before the employee goes abroad for remote work, the employer should check the coverage of its own occupational health care contract. If the employer’s occupational health care contract includes a range of remote services for occupational health care, these may also be available to the employee who is working abroad remotely.
It is worth noting that, in principle, the Finnish Occupational Safety and Health Act does not apply to remote work abroad. However, this does not mean that the employer’s obligation to ensure occupational health care and safety for employees working remotely abroad is completely removed, but that this employer’s obligation is more limited for employees working remotely abroad than for employees working in Finland at premises provided by the employer. The employee therefore has a greater responsibility to take care of his or her own safety, ergonomics, and other working conditions in the country of destination.
As the employer does not have the same control over an employee working remotely abroad as it does over an employee working on the employer’s premises, the responsibility for ensuring safety and well-being at work in the workplace transfers to the employee. Employers should ensure that they have clear and comprehensive guidelines on the policies that apply to remote work abroad. This will prevent unpleasant ex-post clarifications on the division of responsibilities in the event of problems related to remote work abroad.
Tax matters and employment legislation of the country of destination
For short periods of remote work abroad, the employee’s income tax liability remains generally in Finland. However, in certain cases of remote work, the country of employment may have a right to tax the employee under its own local legislation. For this reason, when going abroad to work remotely, it is always advisable to check the local legislation of the country of destination and the provisions of any tax treaty as to whether the employee’s salary is subject to an obligation to report the earned income to the country of destination, even though the earned income is taxed in Finland.
Under certain conditions, an employee’s remote work abroad may constitute a permanent establishment for the employer in the country of destination. Whether a permanent establishment is established is determined on a case-by-case basis by local legislation in the country of destination and tax treaties, taking into account the specific circumstances of the employee and the employer company. If the employer establishes a permanent establishment in the country of remote work, the Finnish employer may be subject to certain administrative, tax, and reporting obligations in the country of destination.
The employer should also study the main features of the employment legislation of the country of destination, as remote work abroad requires compliance with the mandatory employment legislation of the country of destination. This may, for example, be the case if the country of destination has stricter legal obligations for the employer than Finland, which the Finnish employer should comply with when the employee works remotely abroad.
Other issues to consider
From an employee’s perspective, working abroad remotely also involves several issues that depend on the country of destination and that should be clarified when going abroad to work remotely. In principle, EU citizens do not need to apply for a residence document for the first three months of their stay in another EU country, but if the stay exceeds this period, the country of destination may require the employee to register his or her stay in the country of destination. In addition, if the employee is going to a third country, the employee will have to clarify any visa, work permit, etc. issues with the country of destination separately for each country.
The remote work agreement that will be attached to the employment contract should state that the employee will ensure that the employer’s data protection and information security policies are complied with during the period of remote work abroad. Further, the employee will ensure in the remote work agreement, at his/her own expense, that he or she has access to a functioning network connection while working abroad. The remote work agreement may also include a condition that the employee is obliged to return to Finland at his or her own expense if the remote work connection is not functioning or if the employer otherwise requires the employee’s presence at important meetings or events. It is also noteworthy that a termination clause can be included in the remote work agreement, allowing the employer to terminate the remote work agreement (without terminating the employment contract itself) after a certain period of notice, thereby obliging the employee to return to work at the employer’s premises.
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