Manager's Guide

The requirement for an employee to pay income tax or make social security contributions in the overseas location will depend on local legislation in the country concerned and the terms of any tax/social security treaties in place between the overseas country and the employee’s country of origin. 

The employee is fully responsible for ensuring their tax liabilities are settled, whether in the UK, the overseas location or both.  This doesn’t therefore represent an additional cost to the Institution.   However, as confirmed in Compensation and Payroll Arrangements, the University may need to register as an employer or establish an overseas payroll to facilitate the payments, which may incur a cost. 

As tax and social security regimes and arrangements vary significantly from country to country, external advice will normally be required from a specialist firm to assess the University’s legal obligations.  It should be noted that, this can be costly and may take time.

With regards to social security, if a liability is created, this will almost certainly require a contribution from the University (the employer’s contribution).  This employer social security contribution could be in lieu of the UK national insurance contribution, or in addition to it.  The overseas contribution may be higher than UK national insurance, resulting in an additional cost to the Institution, or be lower than UK national insurance, resulting in a salary saving.

This section will confirm in which country the employee is expected to create a tax and social security liability and the necessary steps which are required as a result, for example informing HMRC of their intention to leave the UK (via the P85 form), applying for the necessary social security certificates.

Please note that overseas assignments can create a taxable presence for other taxes such as VAT and corporation tax through the creation of a Permanent Establishment (PE).  This could lead to significant additional costs for the University and should therefore be avoided, unless the overseas assignment is of proven strategic importance.  If there is a risk of creating a Permanent Establishment in the overseas location, this will be discussed with the relevant Institution before proceeding any further.

In most cases, the University's liability and other insurances will continue to cover any work that is undertaken for the University.   However where the employee is under the care and control of another institution, through a Secondment Agreement, the Institution should ensure that Collaboration Agreement or Memorandum of Understanding confirms that the employee is covered by the receiving organisation’s insurance programme. 

Where the overseas assignment involves human volunteer studies and clinical trials, the normal application for insurance should be submitted. Should legislation require additional local insurance be arranged, the cost for this will be charged to the Institution.

In some instances, there may be a legal requirement for the employer to arrange local medical insurance or contribute to government schemes (such as accident or workers insurance).  Insurance is often arranged via payroll and/or social security and tax contributions in the overseas location, where there would normally be an employee and employer contribution.  However, if medical or work place insurance needs to be arranged through an alternative provider, the Insurance section or the employee may be able to organise this through a local broker. Any local policies arranged through a broker will incur costs and the annual premium and annual broker placement fee would be chargeable to the Institution.

This section will confirm if any additional insurance is required, and where possible the cost for that insurance.

If an employee intends to work or live overseas for more than a total of 183 days, approximately 6 months, in any 12-month period, this will be classed as an ‘overseas assignment’.   

Overseas assignments will all need to be assessed for tax, legal, pension, insurance and payroll compliance. A fully authorised Global Mobility Form: HR56 will need to be completed to signify that the manager, Institution, School and HR Schools Team are all in agreement that the overseas assignment should go ahead and that all advised actions will be taken.

Further information on processes and procedures applicable for overseas assignments can be found in the Global Mobility Policy.

There are four types of overseas assignment commonly used within the University:

Dual Country

Where an employee regularly carries out work on behalf of the University in the UK and one or more other country, such as: working overseas from Monday-Friday and returning to the UK at weekends, working a split week between the UK and another country, or for more extended periods such as working 3 weeks overseas and 1 week in the UK on a rotational basis.

Examples:

• Employee living in the Netherlands, working 20% of their contract in the UK and the remaining 80% from their home location.
• UK based employee working on projects in the USA for several months at a time on a regular basis over a 2-year period.
• UK based employee working 2 days a week in the UK, 3 days a week in France, using the facilities of a local Institution.

Permanent

Permanent relocation of an existing UK based employee to live and work overseas.  The employee may maintain a full-time role for the University working remotely, or maintain a part-time role whilst also working part-time for an external organisation/institution overseas.

Examples:

• Permanent move to France for personal reasons, maintaining a FT contract to be carried out remotely.
• Permanent move to Norway to work PT for the UoC remotely and PT for an external Institute.

Overseas Recruitment

The recruitment of an individual based outside the UK who will continue to work overseas for the duration, or initial part of, their contract.

Examples:

• Recruitment of an employee to carry out translation work in Denmark for fixed term 8 month contract.
• Recruitment of an employee to work remotely in Switzerland for 2 years overseas before relocating to work in the UK.
• Recruitment of an employee in Portugal who is relocating immediately to work in Israel for 1 year before relocating to the UK to complete their contract.
• Recruitment of an employee to carry out specific research for a project in China on a fixed term contract.

Temporary

A defined period of time working overseas, where the employee had been working for the University in the UK and intends to return to work for the University in the UK on the completion of their overseas assignment.  This includes fieldwork, Marie Sklodowska-Curie Global Fellowships, Sir Henry Wellcome Fellowships, sabbatical leave for more than two terms and overseas secondments.

Examples:

• Secondment of an employee to a partner Institution in the USA under a collaboration agreement.
• 2-year research project carrying out fieldwork in Panama.
• 6 months research using the facilities at the Max Plank Institute in Germany.
• Researcher working in the Brazil, with occasional fieldtrips to Austria and Poland over a 3-year period before returning to their post in the UK.
• Sabbatical leave of 3 terms to take up a temporary role at a Canadian University.

Note: Not all overseas work patterns will be classed as overseas assignments, they may be for shorter durations, however they may still need some additional consideration for tax and payroll purposes.  Please refer to the Global Mobility Decision Tree to help you identify what action needs to be taken in relation to other overseas working patterns and living arrangements.

If, having considered these initial questions, and reviewed the structure of the engagement with the Global Mobility Co-ordinator, the Institution feels there is sufficient justification to proceed with the overseas assignment, the manager should review the additional guidance below, alongside the Global Mobility Policy and ensure any necessary actions are completed.

The Employee’s Role and Responsibilities

• It might be helpful to agree and document any additional responsibilities and duties associated with the overseas assignment so these are clear for all parties.
• Where the employee’s pre-assignment or overseas assignment role involves clinical work, please refer to the Global Mobility Policy for full details on any additional documentation or processes required.
• Where the overseas assignment involves work with animals, the Institution must follow the processes set out on the Research Website.  Further details can also be found in the Global Mobility Policy.

Process / System Requirements

• For all overseas assignments the Global Mobility Form: HR56 needs to be completed (see further details in and the Global Mobility Policy).
• For overseas secondments, the normal secondment process should be followed, including completion of a CHRIS71. The secondment agreement will need be tailored to include any additional measures/provision required in relation to the overseas work.The Global Mobility Co-ordinator will assist with this.
• For any overseas work pattern requiring a change of hours, flexible working etc. the relevant CHRIS form (CHRIS 50/CHRIS 54) needs to be completed.
• For overseas recruitments, the normal web recruitment process, or CHRIS10 needs to be completed.The recruiting Institution should also ensure that all Recruitment and Equality and Diversity principles are followed when selecting the appropriate candidate for an overseas assignment (where the conditions of the overseas assignment/any applicable grant allow).
• For overseas assignments involving Human Volunteer Studies and Clinical Trials, the Institution must refer to the information on the Insurance Section webpages for full guidance and ensure that the necessary application form for insurance is submitted. Further details can also be found in the Global Mobility Policy.
• If the employee is an established academic or academic-related member of staff, it will be necessary to complete the CHRIS form (CHRIS69/CHRIS67) to apply for leave.
• In order to comply with Higher Education Statistics Agency (HESA) requirements, the employee’s current primary address needs to be recorded in Employee Self- Service.The Departmental Administrator should remind employees who are working overseas to update their address as soon as they have secured their accommodation.
• If the employee is working overseas, the position address will be updated in CHRIS by the Recruitment Administration Team when the overseas assignment paperwork is issued.This is the address which will be used for the majority of University correspondence, such as USS.

Keeping in Touch

• Effective communication with employees who are working in different time zones and locations can be complicated, so it may helpful for the manager and the employee to agree expectations from the start and set these out explicitly in writing. We recommend the use of technology, such as Skype, to enable communication.
• Mentoring arrangements should be put in place for the employee whilst they are working overseas.The manager will also need to continue to conduct 1:1 conversations and carry out annual performance appraisals (staff review and development discussions).

Employee Health and Wellbeing

• The manager should ensure that the employee has read the Global Mobility Policy, Global Mobility Guidance: Employee Guide and that they have completed the Overseas Travel and Work Checklist within that guidance.
• The manager should ensure that the employee arranges their travel through the University’s preferred travel provider, Key Travel, who have a 24 hour emergency helpline available for the employee’s use.
• The manager should ensure that the employee has arranged University Group Business Travel Insurance to cover their travel to and from the overseas location.  Please note that Travel Insurance will not cover regular cross border travel between countries (commuting) with a few exceptions e.g. CERN.
• The University’s Travel Insurance is not a substitute for health or private medical insurance which the manager should advise the employee to obtain, ensuring that it is valid in the assignment country and that it includes repatriation.
• The Departmental Administrator should hold copies of the employee’s passport, travel itinerary and any specific medical needs so that the Institution can act quickly and efficiently in the event of an emergency.Administrators receiving such information should hold it securely whilst the employee is overseas, destroying it on their return to protect the employee’s personal data.
• The manager should prepare an emergency protocol with the employee confirming what actions will be taken and by whom in certain emergency situations and complete the necessary risk assessment with them.
• If the employee is under or will require Health Surveillance, Occupational Health should be notified of any overseas working pattern.
• If the employee or any member of their accompanying family is pregnant or becomes pregnant whilst working overseas, the manager will need to explore the following aspects in discussion with the employee, seeking further expert advice as appropriate through their HR Schools Team:

The implications and regulations for immigration and nationality in the event that a child is born overseas;

The nature of the pre- and post-natal and medical facilities in the overseas location, compared with the UK.

Proximity to other family members during and after confinement;

The implications for tax residency should the employee return to the UK earlier than expected, or remain overseas longer than originally planned;

The maternity benefits available in the overseas location, compared with the UK.Please note that the employee might not qualify for Maternity pay or benefits in the overseas location, and may no longer qualify for Statutory Maternity Pay from the UK.Each case will need to be assessed to confirm eligibility.

It is likely that, whilst undertaking an overseas assignment, the employee will trigger a tax or social security liability in the overseas location. 

In some cases, the overseas tax liability can be settled directly by the employee via advance tax payments or end of year self-assessment, in this case, as the employee remains entirely responsible for reporting and settling their personal income tax, no further action would be required by the University.

Should an overseas social security liability be created, this will in most cases, require a contribution from the employer (i.e. the UoC) as well as the employee (see ‘tax and security’). In some countries, it is possible for the employee to arrange payment of both the employer and employee liability directly, claiming reimbursement for the employer contribution.  Alternatively, some authorities are able to invoice the University directly for the liability. 

However, these arrangements, whereby tax and social security is settled by the employee, or upon submission invoice, are not always possible, or straightforward.  In many countries, there is a legal requirement for the University to register as an employer in the overseas location to allow the employee to report their income taxes/social security and in some cases, it may be necessary to establish an overseas payroll for tax/social security to be withheld from the employee.

Section 2 of the HR56 form will confirm if an overseas payroll is required and if so, if this can be facilitated through Cambridge University Press (CUP) or by our tax specialists (BDO, Grant Thornton for example), or another external payroll provider.  The costs and process for setting up any overseas payroll would also be confirmed.  All such costs would need to be borne by the Institution, either directly or through external funding.

If Section 1 of the HR56 form states that expenses will be reimbursed or allowances paid, this Section will also confirm how these should be delivered to the employee.

Please note that back-dating overseas payroll arrangements for payment of tax and social security after an overseas assignment has started is not always possible, and would be very time-consuming, costly (in terms of fines/penalties and re-opening closed payrolls, resubmitting yearly returns etc.) and potentially damaging to the University’s reputation.  It is therefore very important that the HR56 form is completed in advance of the relocation so that compliance can be assured for the duration of the overseas assignment.  Where this has not been possible, the Institution will have to accept the risk of tax and social security fines or late payment penalties arising from previous non-compliance.