Future UK workforces could consist of international employees scattered around the globe who never set foot in the UK. The scenario, which is legally feasible thanks to ambiguous rules, could be an attractive option for struggling businesses looking for novel cost-saving solutions, says one of the UK’s top immigration experts.
Yash Dubal, director of A Y & J Solicitors, predicts that some cash-strapped firms hit by skills shortages will increasingly be forced to look beyond UK shores to find employees. And new home working practices will present more opportunities for overseas workers to work in the UK, virtually.
While many businesses that employ migrant workers struggle to navigate the new points-based immigration system that became law this month, others will be able to circumvent the system, having gained confidence and experience in using remote working technology during the pandemic.
Employers in the UK can freely employ remote staff in other countries without having to adhere to any of the new rules as long as the employees are not based in the UK. Theoretically this could mean companies which work in sectors where staff do not need to be present in offices, such as IT and marketing, can bolster their workforces with cheaper or more skilled foreign labour who never have to set foot in the UK.
Mr Dubal said: “We could see a complete new culture in workplaces in some sectors where recruitment is no longer bound by geography. There are many positions in many sectors where presenteeism is not required. Many employers have been forced to make changes to their working practices during the pandemic and many are predicted to maintain work-from-home practices permanently for certain positions. Advances in platforms such as Microsoft Teams and Zoom have given them confidence. Theoretically, for these businesses, there is nothing stopping them recruiting in India or China, rather than domestically. “The pandemic has disrupted many elements of business. Recruitment could well be one of them.”
Legally, in cases where businesses employ overseas based workers, the normal practice is to offer the worker the choice of jurisdiction. However, if no choice of jurisdiction is specified in the contract, then the contract is governed by the law of the country in which the work is generally carried out.
Many countries in Eastern Europe, South America and the Far East have highly skilled staff looking for jobs and these prospective employees come at a fraction of the cost of someone in the UK. Remote employees are particularly attractive for companies seeking workers with skills in data processing, IT support, telesales, product support, software and web technologies.
According to HR consultants TimelessTime, regulations are vague.
It states: “Fundamentally, UK firms can’t employ foreign workers directly, without local registration and (in most cases) presence. Nonetheless, conceptually, a UK firm could issue a UK employment contract to a worker in Bratislava and call them an employee – even though the concept would be meaningless. Because such foreign ‘employees’ will never visit the UK, there is possibly no UK tax liability either for the company or the ‘employees’ despite the fact that their efforts will generate income for the British ‘employer’. Under this arrangement it seems possible to run monthly payroll and pay these foreign workers as if they are employees on an NT (No Tax) code. They are then paid gross. We are aware of some UK firms doing this.”
Foreign workers employed in this way have no locally enforceable employment rights and would effectively be self-employed in their own country. Tax liabilities falling on the UK employer remain unclear.
Mr Dubal concludes: “The pandemic has disrupted many elements of business. Recruitment could well be one of them.”