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In brief

The onset of COVID-19 has led to an unprecedented need and demand for remote working. In light of the current situation, some employees are now asking whether it is possible to conduct their work remotely for an extended period in another country. This guide covers the key legal issues that employers should bear in mind when considering such requests.


  1. Dual employment / additional employment rights
  2. Immigration
  3. Employee registration requirements
  4. Regulated roles
  5. Income tax and social security
  6. Risk of permanent establishment finding
  7. Benefits and allowances
  8. Data protection implications
  9. Health and safety
  10. Return to home country

Dual employment / additional employment rights

  • Employees working abroad may benefit from the mandatory employment protections of the host country. Each country has its own rules as to when local employment rights apply, but common considerations include length of time lived and worked in the host country and where/how the employment relationship is managed on a day-to-day basis.
  • These rights could potentially be more favorable to employees working abroad than those in Hong Kong, but even if not, the application of two different sets of employment laws can give rise to practical challenges, such as when conducting any disciplinary or dismissal procedure.


  • Employers need to ensure that employees working abroad are doing so legally. Breach of immigration requirements can have severe consequences for the individual as well as the company. Employees could be barred from entering a country, detained or even imprisoned. The company can have its operations restricted or gains derived from the “illegal employees” confiscated, and its executives could be personally liable via fines or imprisonment. An adverse immigration record will affect both the employee and the company’s future visa applications.
  • Employees subject to immigration controls in their “home” country should also check to ensure that their temporary departure does not affect their eligibility to return to their home country or their eligibility to apply for other types of work authorization or permanent residency in the future.
  • Some countries have implemented emergency COVID-19 legislation that will affect the normal immigration position, so it is worth checking the position.

Employee registration requirements

  • Some countries have obligations to register those working remotely and employed by a foreign legal entity with a state authority (which are separate from immigration requirements). Such requirements can also apply to local nationals working temporarily in another location.

Regulated roles

  • If an employee is working in a regulated role, there may be additional restrictions on that employee carrying out work abroad as well as controls the employer needs to apply.

Income tax and social security

  • Tax advice should be sought in order to understand where and how the employee will be taxed when working abroad (and what the employer’s obligations are in this regard). In general terms, where the employee remains as tax resident in his or her home country, the employee may remain subject to tax in the home country. However, the employee could also find that he or she is subject to tax in the host country, resulting in potential double taxation. In such case, the employee may need to seek relief under an applicable double tax treaty and/or through the recognition of foreign tax credits in his or her home country.
  • Similar considerations apply in respect of social security obligations. Employers may find themselves subject to penalties for failure to make the relevant social security payments. The longer the employee works in the host country, the greater the risk.

Risk of permanent establishment finding

  • Employees working in another country may create a “permanent establishment” (PE) for their employer in that host country, resulting in the employer’s profits being subject to corporation tax in that host country. Broadly speaking, the longer the employee works in that country, the greater the risk. This means that employees’ working in another country necessitated by the COVID-19 pandemic could result in a heightened PE risk for their employers.
  • To address the PE and other cross-border tax issues related to employees temporarily working in a country other than their normal work location during the COVID-19 crisis, the Organization for Economic Co-operation and Development has published guidance on the PE risk arising therefrom. Across the globe, many countries have also noted the PE risk resulting from the extraordinary working arrangement during the pandemic and have issued their own country-specific guidance on the same. For further information, please click here for the Bloomberg Tax & Accounting and Baker McKenzie Special Report on Transfer Pricing Considerations for Remote Workforces.
  • For example, in the People’s Republic of China (PRC), the PRC State Taxation Administration has provided guidance, in the form of an online Q&A, as to when a PE would not be regarded as having been created during the “COVID-19 period,” including the following:
    • Employees temporarily working from home in the PRC for a non-resident entity would generally not result in the creation of PE by virtue of having a fixed place of business, provided that the employees’ working from home arrangement is intermittent or occasional.
    • Employees temporarily working from home in the PRC who sign contracts on behalf of a non-resident entity would generally not be regarded as constituting a dependent agent PE for their employers due to the occasional nature of such signing.
  • The Q&A does not define the COVID-19 period in respect of which the above guidance is applicable. However, we understand that it generally refers to the period when travel restrictions are in place.

Benefits and allowances

  • In some countries, there may be obligations on the employer to enroll the employee in local statutory benefit plans (e.g., pension, retirement or medical plans). Employees may also be entitled to receive specific allowances based on their work location.
  • Employees are also likely to only be covered by full medical plans in their home country of employment. Coverage outside of that is often limited to emergency and limited “new” issues.
  • Employers should also review the terms of any insurance policies they provide the employee to check whether they are still covered when working in a host country.

Data protection implications

  • In general, employers should stay vigilant and be mindful of the heightened cybersecurity risks as there will be more frequent telecommunications, such as online video conferences, while the employees are working overseas.
  • If an employee’s role involves processing personal data, careful consideration should be given to whether additional safeguards need to be put in place to ensure data protection compliance.
  • Separately, before rolling out any digital measures to monitor employees’ work and attendance while working overseas, or to conduct contact tracing, employers should ensure that they understand and observe local data privacy laws.

Health and safety

  • Employers should ensure that they understand and observe local health and safety laws. For example, the company may find that it is under an obligation to provide homeworking equipment in certain countries. Also, failure to comply with occupational health and safety obligations may be a criminal offense in some jurisdictions.
  • Employers may still be bound by health and safety laws that apply to employees in the home country even when these employees are sent to work abroad.

Return to home country

  • Employees temporarily working overseas may refuse to return to their home countries after the end of the alternative work arrangement. For prudence, employers should ensure that there is a policy in place to address such risk. For instance, employers should make clear to the employees that a refusal to return may result in disciplinary actions in accordance with the policy.
  • During the COVID-19 pandemic, employees may be required to undergo mandatory quarantine after travelling from another country, subject to any travel bubbles or schemes. Employers should consider the leave arrangement (e.g., annual leave, unpaid leave or sick leave if an employee contracts COVID-19) in advance and notify the employees prior to their travel. Employers should bear in mind that directing an employee to take statutory annual leave will require 14 days’ advance notice, unless the employee agrees to a shorter period.

Vivien Yu is a registered foreign lawyer in the Firm’s Employment practice group based in Hong Kong. She has over 11 years of immigration law experience in Hong Kong and overseas. Vivien is a qualified solicitor and a Registered Migration Agent in Australia. She has been with Baker McKenzie for over 8 years, leading the Greater China Immigration practice since 2013. Vivien is a registered Migration Agent with the Australian Government's Office of the Migration Agents Registration Authority.


Ken Ng is a Senior Associate in Baker McKenzie, Hong Kong office.


Katherine Tong is an Associate in Baker McKenzie Hong Kong office.