As businesses expand internationally and workforces become more mobile, employee relocation across borders has become a routine part of workforce management. However, international moves can create a range of legal, tax and compliance considerations for employers.
Understanding Cross-Border Employment
Cross-border employment occurs when an employee works in a different country from the one in which their employer is based or where their employment contract was originally established.
Relocation may seem straightforward from an operational perspective, but it can significantly alter the legal framework governing the employment relationship.
Which Employment Laws Apply?
One of the most common challenges following an international relocation is determining which country’s employment laws apply. For employers, this is not just a contract drafting point: it can affect day-to-day compliance, payroll, benefits, employee relations and the process required if the assignment ends or the employee is dismissed.
An English or Welsh governing-law clause is helpful, but it is not conclusive. It may determine the contractual law between the parties, but it will not necessarily prevent the employee acquiring statutory rights in the country where they work. Nor can the parties simply “contract in” or “contract out” of the territorial reach of UK employment statutes. For example, the right not to be unfairly dismissed under Employment Rights Act 1996, s 94(1) may apply to some overseas working arrangements, but only where the employment has a sufficiently strong connection with Great Britain and British employment law.
The starting point is usually the employee’s actual place of work. However, the assessment is fact-sensitive. This means that a relocated employee may, depending on the facts, have rights under more than one legal system at the same time. Local labour laws may apply because the employee is physically working in the host country, particularly in relation to mandatory matters such as minimum pay, working time, paid leave, health and safety, social security, immigration-linked employment conditions, and termination procedure. UK rights may also remain relevant where the employer is UK-based, the employee remains UK-resident or UK-paid, the assignment is temporary or rotational, HR decisions are made in the UK, the employee remains on UK terms and benefits, or the work is closely connected with the employer’s UK business.
For employers, the practical risk is overlap. An employee may be able to rely on mandatory protections in the host country while also arguing that UK employment rights continue to apply.
This can affect:
- Working time and rest breaks
- Holiday entitlement and public holidays
- Family leave and sick leave rights
- Minimum wage and payroll requirements
- Tax, social security and pension arrangements
- Employee benefits and allowances
- Data protection and monitoring rules
- Workplace health and safety obligations
- Disciplinary, grievance, dismissal and redundancy procedures
- Post-termination restrictions and enforcement
Before the relocation starts, employers should carry out a jurisdictional risk assessment and document the intended arrangement clearly.
This should include:
The legal status of the move — whether it is a short-term business trip, temporary secondment, long-term assignment, permanent transfer or remote-working arrangement.
The employee’s base — where the employee will actually work from, where their duties begin and end, and whether they will remain UK-based for operational purposes.
The employer entity — whether the employee remains employed by the UK employer or transfers to a local group company.
Applicable law and forum — the governing law of the contract, any jurisdiction clause, and any limits on what those clauses can achieve.
Mandatory local protections — which host-country rules apply regardless of the contract’s chosen law.
UK connection factors — whether salary, benefits, tax, national insurance, pension, HR management, disciplinary processes and reporting lines remain linked to the UK.
Termination planning — whether both UK and local procedures may need to be followed before dismissal, redundancy or repatriation.
Employers should also review the employment contract and consider putting in place an assignment letter or secondment agreement before the employee relocates. This should address the duration of the assignment, reporting lines, host-country policies, benefits, tax equalisation or tax support, immigration obligations, expenses, insurance, confidentiality, data protection, repatriation, and what happens if the assignment ends early. The documentation should be consistent with how the arrangement will operate in practice, because tribunals will look beyond the wording of the contract and consider the real connection between the employment relationship, Great Britain and the overseas jurisdiction.
How IMD Corporate Can Help
International employee relocations require careful planning and specialist advice. At IMD Corporate, we advise employers on the employment law, immigration and compliance issues arising from cross-border working arrangements and international relocations.
Our business employment solicitors support businesses in managing global mobility, international assignments and workforce relocation projects, helping employers remain compliant while supporting their employees across borders.
