Overseas Working

SUMMARY

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This policy is designed to support University staff working internationally and ensure that the risks that cross-border working poses can be mitigated. The policy also supports departments/faculties and divisions in making informed decisions when sending employees overseas or choosing to support employees working internationally. Cross-border working must be planned and carried out in a compliant and cost-effective manner.

Due to the complex nature of compliance obligations for employees working overseas, departments/faculties or divisions must ensure that all the relevant legal/financial obligations and costs have been considered at the planning stage, that advice is sought where required, before the proposed overseas arrangement is approved and agreed with the employee.

This policy is for employees, line managers, heads of administration and finance (or similar), HR contacts, heads of department/faculty board chairs and heads of division.

The policy applies to University of Oxford employees who meet one or more of the following conditions. Please note that a ‘day’ is counted as a day during any part of which, however brief or for whatever reason (including travel time), the taxpayer is present in a country.

  1. Permanently Overseas
    They are permanently based overseas and do not work in the UK aside from a limited number of days, if any.
     
  2. Overseas New Starter
    They started their University employment outside of the UK and will spend more than 90 days outside of the UK in any 12-month period once the employment has commenced.
     
  3. Multi-State Worker in Europe
    They spend between 25 - 95% of their working time in an EEA member state that they consider to be their place of habitual residence.
     
  4. 183-day Countries
    They spend more than 183 days cumulatively in any 12 month period in any one country of the following countries: any EEA member state, Switzerland, USA, Canada, Japan, Israel, Philippines, South Korea, or Turkey
     
  5. 90-day Countries
    They spend more than 90 days cumulatively in any single non-UK country other than the 183-day countries above, during the tax year.

High-risk countries include Australia, China, and India due to their tax systems. Please contact the Tax Team if time spent in any of these locations exceeds 30 days in the tax year.

Please note that the above criteria apply uniformly to time spent overseas for fieldwork, sabbaticals, remote work, secondments, conferences, and trips for any other reasons. The Travelling for Work guidance should also be referred to, as there are a number of risk mitigation steps that must be followed.

https://staff.admin.ox.ac.uk/travelling-for-work/planning-a-trip

The policy is in place to ensure that the employee and the University have a clear understanding of any risks or increased costs and that all relevant legal and financial obligations are met.

Under the Corporate Criminal Offences (CCO) legislation, Criminal Finances Act 2017, the University would be strictly liable were any of their associated persons (including employees) to criminally facilitate the evasion of tax in the UK or overseas.

The University could face unlimited fines if a person associated with it has, even unwittingly, enabled or facilitated tax evasion. A successful prosecution could also lead to a public record of the conviction resulting in significant reputational damage and adverse publicity.

https://finance.web.ox.ac.uk/criminal-finances-act

POLICY

Before any international working arrangement can commence, approval must be sought and granted from the head of department/faculty board chair, as directed by the policy. The International Working Arrangement Approval Form must be used when obtaining approval as it ensures the relevant compliance and cost implications of the arrangement have been fully considered.

Approval should be obtained 60 days before the arrangement is due to commence in order to allow the department to take the necessary steps to ensure compliance.

The approval form is split into an assessment page and three sections:

  • Assessment – The assessment page includes a flowchart which provides an overview of the policy steps and also brings in other policies which may be relevant to the case.
     
  • Section 1 – Summarises the employee’s basic personal details and the practical details of the proposed arrangement. This should be completed by the employee or the department administrator/HR manager but must be signed by both to ensure joint understanding of the arrangement.
     
  • Section 2 – Addresses the legal and financial requirements associated with the proposed arrangement, including a full analysis of any additional costs.
     
  • Section 3 – This is the approval section of the form. The form must be approved by the head of department / faculty board chair before the arrangement can commence.

If the employee has requested a sabbatical overseas and meets the criteria set out above, the employee should complete a Sabbatical Leave Application. If the employee has requested to work overseas for personal reasons, the employee should complete a Flexible Working Request. The International Working Arrangement Approval Form must be attached to these forms.

A decision is normally required within 3 months of receipt of a Flexible Working Request, in certain instances an extension may need to be agreed with the employee if there are complex additional steps that require completion with respect to moving overseas, before the request can be considered for approval. The outcome would be communicated to the employee as soon as possible but no later than 28 days after the request was approved.

https://www.gov.uk/flexible-working/after-the-application

The head of department / faculty board chair will only grant permission for the overseas arrangement if they are assured that all risks and liabilities can be appropriately managed and all associated costs can be justified.

As noted above, if the trip is for less than 90 days and does not constitute a period of travel greater than 90 days within the tax year, this will normally be considered business travel. Please refer to the Travelling for Work Policy.

STEP BY STEP GUIDE

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The first step when assessing an International Working Arrangement request is to understand any additional costs that may be incurred. The department may choose not to provide the individual with any financial support to undertake the arrangement, but they could still incur additional costs through overseas employer’s social security or in administering overseas compliance actions. There may be costs associated with each of the subsequent steps in this process, the department should document these and ensure they form part of section 2 of the International Working Arrangements approval form.

If the employee is requesting an international working arrangement for personal reasons, they will typically be expected to cover all related travel and relocation costs, unless otherwise agreed with the department.

Where the University has requested that the employee work overseas, reasonable relocation expenses may be reimbursed at the discretion of the department. All relocation costs must be agreed in advance by the head of department/faculty board chair. All costs and allowances should be listed on the International Working Arrangement Approval form. This may include costs relating to:

  • Relocation to the overseas location (e.g. flights, shipping);
  • Insurance costs or registration fees;
  • External advice on tax, social security, or immigration obligations;
  • Cost of living allowances
Expenses and allowances

Any expenses and allowances whilst working abroad should be agreed between the department and the employee before travel. For further guidance see the Expenses guide. If the department agrees to pay the individual a supplementary allowance then the implications of doing so should be fully understood. The payment of such an allowance may constitute a taxable benefit in the UK or in the overseas location and may lead to additional tax and/or social security costs for the individual or the University.

An overseas working arrangement can incur additional costs to a department. It is therefore critically important that the funding of such an arrangement is understood at the outset.

If the funding has not yet been obtained then please ensure that section 2 of the approval form is completed and that this is included in the funding request. If funding has been obtained then please ensure that any incremental costs from working overseas are understood and budgeted accordingly. The terms of the funding should also be reviewed, funders may insist that the research is conducted in Oxford or put restrictions on what the funding can be used for.

High Risk Example: The project or research does not specifically require the individual to work overseas. However, the funder may require the individual to be based in Oxford. The terms of the funding should be reviewed and a suitable course of action taken if there are restrictions on work location.

Low Risk Example: The project is location specific and the funder understands that travel to a particular country is required to undertake research.

It is essential that the department or division undertakes the appropriate risk assessment(s) for the proposed overseas work. The requirements for undertaking a risk assessment for overseas travel are set out at:

http://www.admin.ox.ac.uk/safety/policy-statements/s3-07/

If the employee proposes to undertake fieldwork, a further risk assessment must be carried out. Guidance on the planning and conduct of fieldwork, including the requirements for undertaking a risk assessment, are set out at:

http://www.admin.ox.ac.uk/safety/policy-statements/s5-07/

University employment contracts are based on UK employment law. However, an individual may be entitled to rights and protection under mandatory foreign employment law if they habitually spend more of their time working there. Listed below are several areas that may need to be considered where a member of staff works overseas. Please note that this is not an exhaustive list, the Legal Services Office or the Tax Team should be consulted if the individual habitually works more of their time overseas.

Annual leave and public holidays

This section may not apply to academics. The individual should retain their UK contractual entitlement to annual leave. However, in some cases the annual holiday entitlement may need to be adjusted, for example, to account for any different bank holidays in the country of work. Where a country has significantly different public holidays or statutory holiday requirements to those in the UK, the department or division should be made aware so that they can consider any adjustments to the holiday entitlement.

Annual leave must be authorised in advance in accordance with normal staff policy.

https://www.admin.ox.ac.uk/personnel/staffinfo/handbook_support/section3/

Minimum Wage & Working Hours

There may be the equivalent of National Minimum Wage implications in the destination country if that country’s rate is higher than the individual’s pay, regardless of whether it complies with UK regulations. There may also be restrictions on the number of working hours the individual may undertake in a certain period, the department would have responsibility for monitoring this and ensuring compliance with local laws.

Parental and Sick Leave

Parental and sick leave rights often differ between countries. Though the length of maternity may be shorter than under UK employment law, there may be an entitlement to higher pay or to joint leave. If the individual is not subject to UK National Insurance, then the department may not be able to claim reclaim employees’ Statutory Maternity (SMP), Paternity, Adoption or Shared Parental Pay.

Termination

The destination country may have different rules regarding termination of employment. This may also apply to fixed term contracts that end. The individual may be entitled to certain payments or benefits due to the contract ending.

High Risk Example: The individual was employed directly overseas and habitually works in that location with minimal travel to the UK. The department should work with LSO or the Tax Team to understand if there is existing information on this country. Alternatively, external advice may need to be obtained.

Low Risk Example: The individual works part-time overseas or for a fixed duration before returning to the UK.

The immigration and entry visa requirements for the relevant country of travel and/or work should be ascertained in advance of travel. The employee must have or obtain the right to work in the destination country, it may not be sufficient to be permitted to enter the country to work there. Failure to obtain the correct visa could lead to deportation, travel restrictions, or a prison sentence.

For UK nationals, the entry and immigration requirements are listed by country on the government’s foreign travel advice web pages:

https://www.gov.uk/foreign-travel-advice

For non-UK nationals, the entry and immigration requirements needed to be checked with the destination country.

Sponsored migrant workers in the UK often have restrictive clauses attached to their visas. The Staff Immigration Team (http://www.admin.ox.ac.uk/personnel/permits/) should be contacted for advice where the employee proposing to work overseas is a sponsored migrant as the Home Office may need to be informed.

High Risk Example: The individual is a US national and permitted to work in the UK through the Tier-2 visa system, they intend to work in China for 12 months. The department should ensure that the individual has obtained the correct visa before overseas work commences. It should also be clarified that the period of work overseas does not impact the individual’s current UK visa status.

Low Risk Example: The individual is a British national and intends to work in Ireland. Under the Common Travel Area agreement, they are permitted to work in Ireland without a visa or work permit.

In ALL instances when an international working arrangement is planned, the employee must arrange appropriate insurance for themselves. The department will be responsible for obtaining the appropriate insurance for the University in consultation with the Insurance team (insurance@admin.ox.ac.uk).

All aspects of insurance must be considered before the international working arrangement commences. This includes travel insurance but may also include workers compensation, medical and public liability insurance.

Travel Insurance

All travel overseas must be registered with the Travel Insurance Application and Travel Registration System (TIRS). Travel applications are then managed and reviewed by Travel Administrators and approved by Travel Managers through CRM Dynamics.

https://finance.admin.ox.ac.uk/tirs-information

Liability and Other Insurance

When carrying out University business overseas, additional insurances may be required, such as Workers Compensation Insurance, Public Liability Insurance and Medical Insurance. Legal requirements for liability insurances differ for staff based overseas and in different jurisdictions. The Insurance team can explain what additional insurance may be required or provide support for obtaining external advice where necessary.

High Risk Example: The individual spends 12 months in Denmark, additional private insurance is required as UK’s workers compensation insurance cannot be extended there and insurance is separate to the social security system.

Low Risk Example: The individual spends 12 months in Belgium, insurance is part of the social security system so no further action is required as UK national insurance contributions continue and an A1 certificate is in place.

The University is legally obligated to be tax compliant in the overseas location, this may take the form of corporate tax, VAT, or withholding tax. The overseas working arrangement may create a ‘Permanent Establishment’ for tax purposes in the overseas location which could lead to additional taxes or compliance obligations being due. The University’s obligations should be fully documented and understood as part of the approval process and captured in the relevant approval form. It may be necessary to obtain advice from an external provider, this should be coordinated through the Tax Team.

Please also liaise with the Tax Team when considering any overseas working arrangement, irrespective of the purpose, as there may be other University staff in the overseas destination country you are considering. As such, the University may already be registered in that location and a payroll may already be operational.

High Risk Example: The individual is subject to tax and social security in a particular country. The University would be required to withhold this from the individual and pay it to the overseas authority. An overseas payroll may therefore need to be setup to facilitate this.

Low Risk Example: The individual is exempt from tax and social security in the destination country, the University should not be required to operate an overseas payroll.
Note: there may other compliance actions to undertake to confirm this status to the overseas authority

The employee is responsible for any personal tax that arises on their income during the period of overseas work. They must also ensure that their overseas and UK tax filings are in order and they are complying with all applicable deadlines.

The rules and practicalities on income and employment tax liabilities are complex and country-specific. HMRC has issued country specific guidance on living overseas.

https://www.gov.uk/topic/help-british-nationals-overseas

Whilst working overseas, the employee should also consider the tax implications on any other sources of income, examples of which are below. Please note that this is not an exhaustive list and the individual may wish to obtain professional tax advice to fully understand their tax position before commencing work overseas:

  • Income from another employer;
  • Income from investments, savings, ISAs (these may not be tax free in an overseas territory);
  • Rental income
  • Dividend income
  • Royalty income

https://www.gov.uk/tax-uk-income-live-abroad

The UK has entered into agreements with a significant number of countries to prevent individuals from being doubly taxed on their income whilst located in another country, either through exemption from overseas tax or credit against taxes paid in the UK. These are called 'Double Taxation Agreements' (DTAs).

https://www.gov.uk/tax-uk-income-live-abroad/taxed-twice

The University will ensure that it remains compliant from a tax withholding perspective (as set out in section 4). It may therefore be necessary to pay withholding tax each month in the overseas location. As the overseas tax is the individual’s responsibility, this would need to be charged to them, for example as a deduction through UK payroll. The exact mechanism of reconciling the overseas tax paid by the University will be agreed with the department with the support of the Tax Team.

High Risk Example: The individual is working temporarily in Brazil – there is no double taxation agreement between the UK and Brazil and both countries are entitled to tax the individual’s income. The individual may be able to claim Unilateral Double Tax Relief in the UK, however this is a complicated area.

Low Risk Example: The individual is working in France for a period of 5 months and will not undertake any further travel to France outside of this. Under the terms of the UK/France double taxation treaty, the individual’s employment income is not subject to French tax.

Social security in the UK takes the form of National Insurance Contributions (NICs), these contributions provide entitlement to certain state benefits, including the UK state pension. The actual entitlement to such benefits and the amount payable can depend on the individual’s NICs record (accrual of payments). The social security position differs based on the overseas work location and the exact circumstances of the individual working overseas.

HMRC has issued guidance on paying social security payments for overseas workers. The arrangements are country specific:

https://www.gov.uk/national-insurance-if-you-go-abroad

If an individual works permanently in an overseas location then typically social security would only be due in that location and not in the UK. There are separate regulations for individual who work temporarily overseas, listed below.

Social Security payments abroad
1.    Within the European Economic Area (EEA)  and Switzerland

If the employee temporarily works in a country within the EEA or Switzerland, they may be able to maintain their UK National Insurance contributions under EU regulation 883/04 and avoid paying social security in the host location. If the regulations are applicable, the individual would need to apply for a ‘Portable Document A1’.

Note: It can take up to 4 months for the Portable Document A1 to be authorised by HMRC, the application should therefore be submitted as soon as possible to ensure compliance, although this does not restrict the individual from working overseas.

https://www.gov.uk/government/publications/national-insurance-employees-going-to-work-in-the-european-economic-area-ca3822

It should be noted that individuals who are not working temporarily in another member state, for example those who were living in the overseas location prior to their employment with the University, will not be covered by the posted worker regulations and it is highly likely that social security will be due in the overseas location.

2.    Working in countries with bilateral Social Security agreements

If the employee is going to live in a country outside of the EEA and Switzerland but with which a Reciprocal Social Security Agreement (or ‘Totalisation’ agreement) is in place with the UK, they should be able to maintain contributions to UK National Insurance and avoid paying social security in the overseas locations. This can be checked by completing form CA9107, a ‘Certificate of Coverage’ would then be issued by HMRC which evidences that the terms of the agreement apply to the individual.

Countries with reciprocal social security agreements with the UK are:

Barbados, Bermuda, Bosnia-Herzegovina, Canada, Chile, Croatia, Guernsey, Israel, Jamaica, Japan, Jersey, Mauritius, Montenegro, New Zealand, North Macedonia, Philippines, Republic of Korea, Serbia, Turkey, USA.

https://www.gov.uk/government/publications/national-insurance-certificate-of-continuing-liability-working-abroad-ca9107

3.    Rest of the world

For individuals working temporarily in a country outside of the EEA and Switzerland and reciprocal agreement countries, typically they will be required to pay National Insurance for the first 52 weeks of the period spent working overseas provided they meet the below conditions:

  • the employer has a place of business in the UK; and
  • the employee is ordinarily resident in the UK; and
  • the employee was living in the UK immediately before starting work abroad.

Once the initial 52 week period has elapsed, mandatory National Insurance contributions (class 1) should cease. It is possible for the individual’s National Insurance record to be maintained by making voluntary class 2 contributions. Please refer to the below guidance:

https://www.gov.uk/government/publications/social-security-abroad-ni38

The employee may also be liable for Social Security payments in the country of work/residence. The rules regarding Social Security liabilities are entirely separate from income/employment tax in most countries. Payment of overseas social security will be the individual’s responsibility and, as with income tax, the mechanism of the individual paying this should be agreed with the department with the support of the Tax Team.

High Risk Example: The individual is working in China for a period of 12 months, Chinese social security will be due and UK National Insurance continues for the initial 52 week period. The individual and the University are liability to dual contributions.

Low Risk Example: The individual is working in the US for a period of 12 months, having worked in the UK immediately prior to this. They are able to obtain a Certificate of Coverage and are exempt from paying US social security – UK national insurance contributions continue as normal.

The University manages contributions to two pension schemes, the Universities Superannuation Scheme (USS) and the Oxford Staff Pension Scheme (OSPS). Contributions to the relevant pension scheme may continue during the period of overseas work provided that certain conditions are met, however it should not be automatically assumed that contributions can continue. The employee must check their position as it may impact their scheme benefits.

The Universities Superannuation Scheme (USS) Working Overseas fact sheet explains how your pension membership may be impacted by working overseas.

https://www.uss.co.uk/~/media/document-libraries/uss/member/factsheets/working-overseas.pdf

The USS Application Procedure explains who is eligible to be in the scheme and the impact of changes in location during employment.

If you work overseas and stop your contributions to the pension scheme, your benefits will be affected.

https://www.uss.co.uk/~/media/document-libraries/uss/member/factsheets/absence.pdf

If you are working in the EEA or Switzerland for personal reasons, please contact the pensions team (uss@admin.ox.ac.uk).

High Risk Example: The individual was employed directly in Germany and continues to work there full-time. They are not eligible to participate in the USS pension scheme and the department should request them to submit the opt-out form.

Low Risk Example: The individual is temporarily working in Germany for a period of 6 months, as this is a temporary period of overseas working, they are entitled to remain in the USS pension scheme.

Joint Appointments

It is commonplace for University staff to have a joint appointment with a college and undertake tuition. The Arrangement approval form requires sign-off from the individual’s college to ensure that they are aware of the arrangement and ensure that it does not conflict with their college obligations. The terms of the individual’s contract may require the department to ‘buy out’ the individual’s tuition obligations, this must be agreed at the discretion of the department and the college before the arrangement is approved.

The department will not be required to support any obligations that may arise for the college as a result of the working arrangement.

Health Matters

For all health matters refer to the Overseas Travel Policy

https://www.admin.ox.ac.uk/safety/policy-statements/s3-07/

Local laws and customs

The government’s foreign travel advice web pages provide the latest information on matters such as safety and security, local laws and customs and health by country. You should read this information before travel.

https://www.gov.uk/foreign-travel-advice

European Posted Workers Directive

EU law defines a set of mandatory rules regarding the terms and conditions of employment to be applied to posted workers. You are a ‘posted worker’ if your employer temporarily sends you from one European Economic Area (EEA) country to another. These rules establish that, even though workers posted to another Member State are still employed by the sending company and subject to the law of that Member State, they are entitled to a set of core rights in force in the host Member State.

https://www.gov.uk/working-abroad/posted-workers

FAQs

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Approval for the arrangement should be obtained at least 60 days in advance of the arrangement commencing. This should allow the department to take the necessary steps to ensure compliance for the University and the individual.

Yes, this policy is intended to ensure the University and employee’s overseas compliance and should be adhered to even if an arrangement is already in place. Furthermore, overseas working arrangements should be reviewed every 3 years if a defined end date is not in place.

No, if they are an existing member of staff then they cannot be moved to a consultancy agreement as most countries will recognise them as an employee and it will not absolve the University of its overseas obligations.

If the individual is not an existing member of staff, then a consultancy agreement may be used if there is a genuine consultancy and the individual is not a disguised employee. Please note that other countries may take a different approach to employment status than the UK.

No, the University will continue to pay salary through the UK payroll. The University will only make payments in an overseas location where obligated by local legislation. It is possible for monthly payslips to be posted to an overseas location. 

Any additional costs or allowances relating to the arrangement must be agreed and approved by the department prior to the arrangement taking effect. The full implications of paying additional allowances must be fully understood as they may lead to incremental tax or social security costs for the individual or the University.

The HR representative for the department should be consulted as each case will differ.

If the University has agreed to support the cost of relocation to the overseas work location then it should be agreed and approved at the outset of the arrangement as to whether any repatriation support will be provided to the individual.

This should be discussed and agreed with the department. The Tax Team should also be consulted in case this has implications for the University and its employer obligations.

It may be possible to alter to overseas working arrangement and for the individual to work in a different overseas location. However, this should go through the same approval process as with a new arrangement. It may be necessary for the individual to return to the UK prior to moving to the new location for immigration or social security purposes. The Tax Team should be able to provide guidance on this.

The HR representative for the department should be consulted as each case will differ. However, it should be noted that certain locations may have limitations on visas and work permits, it may therefore be necessary for the individual to return to the UK in order to reapply for an extended stay in a particular location.

Yes, provided that the college has approved the arrangement and it does not conflict with the individual’s contractual obligations to the college.

Contact Us


 : Finance Division
       University of Oxford
       23-38 Hythe Bridge Street
       Oxford OX1 2JD

  : overseasworking@admin.ox.ac.uk

Reference


Tax Glossary