The ‘work from home’ experiment of the pandemic has been a success for many companies in the FI sector.

Permanent remote working brings many potential benefits to employers including: savings in real estate, access to a wider talent pool, increased productivity, and increased retention. Of course, it also brings challenges including how to maintain culture, collaboration and engagement as well as preventing remote workers feeling isolated and digitally fatigued. There are a wide variety of legal issues to navigate with a permanently remote workforce, including employment, benefits, share-based awards, immigration, corporate tax, general corporate matters and, data privacy.

Putting a blueprint in place for both re-opening and remote working now will increase operational resilience, position employers at the forefront of the future of work, and attract and retain key talent.

What you need to think about

  • Keep abreast of ongoing changes in regulation around telework. Myriad employment laws impact how companies structure and implement remote work. It is important to always check compliance with local laws and stay up-to-date on changes.
  • Assess whether redesign of remote working policies and new procedures around implementation are required. The policy must be applied in an objective and consistent way to help avoid discrimination claims. Implementation globally may include notice, consultation, signature and translation requirements.
  • Manage working time as well as health and safety risks. Be alive to digital isolation in permanent remote working as well as the widespread struggle to separate work life from personal life. Consider virtual induction and training programs and integration with other employees.
  • Consider any adjustments to benefits/terms that result. Review compensation packages and grade scales. Do they need to be changed/ supplemented for new working locations? Are there additional statutory costs such as sickness, pension or redundancy costs?
  • Do the new remote working arrangements involve a transfer to a new employing entity in a new jurisdiction? If so, are termination and re-hire arrangements required? Are there any changes to employee retirement benefits to take into account? Immigration rules may require employees to obtain a work permit or special visa before they can work in a different country.
  • Consider privacy-compliant employee monitoring. Employers must strike the right balance between advancing business interests while protecting employee (or contractor) privacy rights. For example, intelligently managing productivity whilst minimizing data collection via employee monitoring technology to avoid disproportionately affecting employees and non-employees in the remote location.
  • Provision of home working equipment where applicable. If an employer reimburses or provides office equipment and/or other facilities to employees who work from home, this may qualify as taxable wages. As such, employers may be required to withhold and remit wage tax and social security contributions. In some cases, it may be possible to reimburse, provide or grant this equipment and/or facility tax-free to the employees concerned, provided that the relevant conditions are met.
  • Manage data privacy and cyber security risks; protecting trade secrets and confidential information. As employees work remotely, it is essential to adapt and reinforce policies on data privacy & security as well as company trade secret/ confidential information and ensure adequate protection of such information in a remote environment. Be aware of any changes to data flows across jurisdictions and the appropriate privacy law requirements that apply.
  • Consider what permanent remote working means for future stock option grants. Are the size of grants location-based for example? Should changes to future grants be communicated to employees who apply for remote working in advance?
  • Comply with Doing Business Registration Requirements. Employees working from home could trigger the Doing Business Registration Requirements in certain jurisdictions. Consider whether registering a local corporate presence is appropriate in such circumstances.
  • Explore rationalizing and restructuring the real estate footprint. Optimizing real estate space, providing alternative remote work places, negotiating early termination or amendments of leases and other real estate related contracts, reviewing and restructuring loan guarantees and disposing of distressed assets may all be critically important in reducing costs or maintaining cash flow.
  • Evaluate potential employment tax implications due to remote working. Where working remotely results in employees working for extended periods in a different jurisdiction (compared to where the employer is tax resident), this could potentially create permanent establishment risks or have an impact on a company’s place of effective management. Similarly, this may result in the employee becoming subject to income tax in the other country or result in wage tax or social security contribution obligations for the employer. These risks would be less prevalent if the arrangement is for a short period only.

Picture of Rhristian Reichel

Dr. Christian Reichel is active in the area of pension and employment law. He is a partner in Baker McKenzie's Frankfurt office.


Monica Kurnatowska advises clients from the financial services sector on the employment aspects of strategic projects. She is a partner Baker McKenzie’s London office.