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useful information for employers and employees regarding new “worktation” and smartworking regulations on German soil or from other countries, both inside and outside of the European Union.

During the global pandemic the amount of employees working for their German company outside German national territory has spiked and many border workers decided to work from their place of residence. The majority of legal issues concerning this particular situation have yet to be clarified but at least, the categories of workers affected have been defined: cross-border commuters, employees who now have the opportunity to work temporarily in an office abroad (e.g. with family or in a holiday home), employees abroad who do not want to or cannot get to their place of work, and employees who choose to move abroad on a non-temporary basis.

New official communication
The German Liaison Office for Health Insurance Abroad (DVKA) has clarified the legal situation under social insurance law with the Circular No. 167/2020 of 17 March 2020. The Circular fromalizes that no change has been brought on social security law in relation to the Covid-19 pandemic. Cross-border workers within the EU, the European Economic Area (EEA) and from Switzerland are now allowed to work from their home country for up to 24 months.

If the employers decide to work from a foreign country in order to be closer to their family for a certain amount of time, there is nothing that prevents employers from making it possible. The duration of this situation must be clarified with the employer and a supplementary agreement is strongly advised as soon as it is clear that the employees will be absent from the original place of work for more than a month.

Differences between “worktation” and smartworking
This new definition, born during the pandemic from the combination of “work” and “vacation”, stands for the condition that allows one to work remotely while on vacation or leave from work. The term has yet to be recognised by German labor law and it is therefore recommended to specify the new contractual rules with your company, regarding worktation. It is to be expected that there will be some court decisions on this issue in the near future.

If the duration of the stay does not exceed four weeks, there is no need to intervene in labor law matters and it won’t be necessary to change the place of work on the contract.

The tax issue also needs to be addressed: depending on the duration of the work assignment and the type of activity issues such as tax stabilization or tax liability abroad still need to be addressed.

Work taxation
If employers choose to move abroad temporarily, HR managers must clarify in which nation the workers are moving because of the differences in labor law from country to country. The labor law of the country where the ‘usual place of work’ is located is mainly applicable. In the case of only temporary work in a foreign office, this is usually less problematic, as time aspects are not relevant, in connection with the 183-day rule in tax law (employees who work for less than 183 days in another country and receive their salary from Germany are still required to pay taxes in Germany).