At the latest since the corona pandemic, home offices and mobile working have become an integral part of everyday working life. “Workations" are also becoming increasingly popular among employees - all the more so as the temperatures in Germany drop and energy prices rapidly rise. Now in particular, many employees are therefore considering spending the winter months in warmer climes in order to work from there. This understandable wish of employees presents companies with legal problems, however. We summarise the most important points for employers below.

No claim to mobile working from abroad

Unless explicitly agreed, employees generally do not have a claim to mobile working. This was unsurprisingly confirmed by the Labour Court [Arbeitsgericht, ArbG] of Munich (decision dated 27 August 2021 - docket No. 12 Ga 62/ 21). Pursuant to Sec.106 German Industrial Code [Gewerbeordnung, GewO], the employer can, at its reasonable discretion, specify the content, place and time of the work, unless contractual or statutory provisions stipulate working conditions to the contrary. The decision on whether to enable employees to perform work from abroad lies with the company.

Once such decision has been made, there are several legal questions that need answering that only few think about

Applicable law?

If an employee performs his work on a mobile basis from abroad, the first question that arises is the applicable law. Which working time regulations or which occupational health and safety regulations apply? Is there a minimum wage and if so, how much?

If an employee's employment relationship is governed by German law, nothing usually changes in the case of a temporary workation. The free choice of lawof the parties to the employment contractis, however, subject to the restriction that, as a matter of principle, the employment contract may not contract out any provisions protecting employees that are deemed to be mandatory (Art. 8 (1) sentence 2 Rome I Regulation) or which serve to protect the general interest (Art. 9 (1) Rome I Regulation).

In order to enable a legally secure work arrangement from abroad - in terms of labour law - it is advisable in the case of longer stays to first contractually agree on a choice of law. This does not constitute a release from the obligation to ascertain the mandatory labour law provisions at the foreign place of work before commencement of the workation.

As a rule, directives on the posting of workers do not apply to workations, as a posting requires that an employee is sent abroad on the instructions and in the interests of the employer in order to perform his work there. In the case of a workation, however, the activity abroad takes place at the instigation and request of the employee and by definition therefore does not constitute a posting in the legal sense. 

Social security status during stays abroad

Workations become problematic when it comes to the social security status: employees who plan a corresponding stay abroad naturally do not want to lose their social security coverage in Germany. Within the EU, Switzerland and the EEA, a regulation governs which social security law applies in the case of mobile work from outside the EU (Regulation (EC) No. 883/2004 of the European Parliament and of the Council of 29 April 2004 on the Coordination of Social Security Systems ("Regulation (EC) 883/2004")). The aim of the regulation is to prevent employees from being subjected to double social security contributions.

Accordingly, a person is always only subject to social security contributions where he performs his employment (so-called principle of the place of work). However, both employer and employee are interested in the exclusive application of the German social security statute in the case of a workation. Even if workation does not constitute a posting by definition, a joint announcement on the assessment of posted employees under insurance law by the German National Association of Health Insurance Funds (GKV Spitzenverband), the Federation of German Pension Insurance Institutions (Deutsche Rentenversicherung Bund), the German Federal Employment Agency (Bundesagentur für Arbeit Berlin) and the German Social Accident Insurance (Gesetzliche Unfallversicherung Berlin) of 18 March 2020 indicates that the social insurance institutions do not currently interpret the term strictly due to the lack of concrete legal regulations. Stays abroad initiated by employees should not per se prevent a posting in the sense of social insurance law.

However, in order to find a legally secure solution, the only option is to contact the German Liaison Office for Health Insurance Abroad [Deutsche Verbindungsstelle Krankenversicherung Ausland, DVKA] at an early stage in order to discuss existing arrangement options, such as obtaining an exemption pursuant to Art. 16 of Regulation (EC) 883/2004. The lead time required in these cases should not be underestimated, especially if employees approach their employer at short notice with their request for a workation due to the energy crisis.

If the German social security system is still possible for mobile work within the EU in the particular constellation, the question also arises as to whether an application must also be made for a so-called A1 certificate for this period. While this is partly regarded as dispensable because the DVKA has already been officially notified, the DVKA and other voices in the literature nevertheless advocate submissions of an A1 certificate. This should therefore also be applied for before starting work abroad and should be carried by the employee during his stay abroad, as the employer may otherwise also be threatened with heavy fines.

Tax consequences of a workation

The employee initially remains liable to pay taxes in Germany also in the case of mobile work elsewhere in Europe for a period of less than six months (183 days), (cf. Sec. 1 (1) sentence 1 German Income Tax Act [Einkommensteuergesetz, EStG]. The so-called "183-day rule" (Art. 15 (2) OECD-MA) provides that the right of taxation exceptionally remains with the employee's state of residence if the employee (i) has not stayed in the other member state for more than 183 days, (ii) the remuneration is not paid by or for an employer domiciled abroad, and (iii) the remuneration is not borne by a permanent establishment of the company abroad.

However, it is being considered at international level (OECD-commentary on the model) that a home office should be regarded as a permanent establishment if the employee is not provided with a workplace or if he regularly or continuously uses the home office on the instructions of the company. Furthermore, employees can establish a foreign permanent establishment if they are entitled to conclude contracts on behalf of the company and habitually exercise this authority in the other country. Hence, this matter also definitely requires attention in the run-up to a corresponding arrangement in order to avoid serious consequences on the employer's side.

Employer is responsible for data protection

The employer remains responsible for data protection when its employee works abroad. It cannot shift this responsibility to the employee. In case of mobile work, especially from abroad, the risk of data loss and attack is significantly higher than in the case of work conducted exclusively at the workplace.

Employers must implement appropriate technical and organisational measures and IT security systems to ensure data security (cf. Art. 24 (1) GDPR). Due to the increasing dangers posed by cyber-crime, this risk should not be underestimated in practice.

Application for residence and work permit

Outside the EU, a residence permit and, if necessary, an additional work permit must be applied for. One should bear in mind that it is not easy for employees to obtain a residence permit for the respective vacation country. Most residence titles require employment at a company in the host country, which will regularly not apply in the classic case of a workation.

Written proof of working conditions

Once all legal hurdles have been cleared and nothing further stands in the way of the employee's workation, the employer must inform the employee in writing about the essential working conditions of his job. In this regard, reference should be made to the requirements under Sec. 2 (1) and (2) of the German Act on Proof of Working Conditions in an Employment Relationship [Nachweisgesetz, NachwG], which are subject to fines, in the case of a planned stay abroad of longer than one month.

In practice, it is advisable to make a written agreement with the employee on the rights and obligations during the workation.

Co-determination rights of the works council

Another point for consideration is that works councils have a right of co-determination concerning the arrangement of mobile work (Sec. 87 (1) No. 14 German Shop Constitution Act [Betriebsverfassungsgesetz, BetrVG]). This means: if the company generally grants its employees the possibility to work on a mobile basis from abroad, the works council has a right of co-determination concerning the arrangement of the mobile work from abroad due to the collective reference.

The simple fact that the employee no longer works at the company in Germany does not mean that the works council is no longer responsible. Regulations on working hours or on the availability of employees during their work abroad can also trigger co-determination rights of the works council.

Conclusion

Offering a workation can be attractive for companies: it enables them to create an additional incentive for recruiting skilled workers. However, employers definitely need to ensure that they create a legally secure arrangement. In practice, this always means - in the absence of statutory regulations - an intensive case-by-case examination, which should not be underestimated.

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