For those of you that missed our last AMA (‘Ask Me Anything’), here are some of the questions that were asked on our LinkedIn feed:
Q: Is it true that you can’t terminate an employee in France?
A: Oui! That is true… in part! French law does not recognise the concept of employment ‘at will’ – meaning that you can’t let go of an employee at any time for any reason. But you can still terminate the employment on personal grounds (consistent negligence, poor performance of the employee, etc) or economic grounds (company going through significant economic difficulties). And redundancy is also a possibility. All very strict, so getting advice is a must!
Q: Can I work remotely in Portugal if I’m an American?
A: Yes! But you will need a visa. Portugal does not yet offer an easy ‘digital nomad visa’ route, but it is very welcoming of freelancers and foreign employed workers. There are plenty of options for temporary residence. If you’re moving in permanently and you are an employee of a foreign company, you may want to consider getting in touch with a professional employer organisation (PEO).
Please remember that even if you are residing temporarily, you (or your employer) may still have to account for taxes locally. Now go enjoy beautiful beaches and amazing food!
Q: How likely is the Digital Nomad Visa to come into play in Spain this year? What is the basic premise on which you would qualify? I’ve seen the reply for Portugal so assume it’s the same as it’s Schengen?
A:Very likely! There is a new draft law called ‘Startups Law’ (Ley de Startups) proposed by the government and currently going through the Spanish Parliament. It is intended to cut the red tape for small businesses/startups, but it will also also cover ‘Digital Nomad Visas’ allowing residence and work from Spain.
So far, some of the main requirements are (they may change as the law may still be amended): a) proof of at least 1 year of employment with your current foreign employer/self-employment abroad; b) at least 3 years of work experience; c) proof that you can actually work remotely; d) be a highly skilled professional.
No, not really the same as Portugal. Countries in the Schengen area are free to establish their own conditions for residency permits within the framework of the treaty, so they can and will vary.
Q: What is a PAYE worker in the UK?! I tried googling it but could not get a straight answer!
A: ‘PAYE worker’ is a term used in the UK recruitment/payrolling industry to refer to a category of individuals providing labour simply commonly defined as ‘workers’. They are not employees or independent contractors. They perform their tasks under supervision, direction and control of the company hiring them (or an end-user) and is entitled to some employment rights but not all. This is usual for casual or irregular work.
Think of it this way, ‘worker’ is a category of contracting that sits between an independent contractor and an employee. They get some flexibility and some employment rights.
PAYE means pay-as-you-earn – withholding of taxes on income payments to employees. PAYE is due on all payments made to ‘workers’ because they perform their work as if they were employees (under supervision, direction and control), hence, PAYE workers.
Q: I do have a question about taxes in UK. There is 52 weeks tax exemption for individuals from specific countries. Is such exemption different of the Totalization Agreement set forth by countries about Social Security?
I see this exemption as a ‘last resort’ measure to avoid double contribution much like we see with the principles of double taxation. When there is no reciprocal agreement, it is highly likely that the individual (and the employer) would still have to pay for their social insurance contributions in their home country regardless of where they are working – otherwise, there would probably be a gap in the contributions and the individual would have been ‘penalised’ by going on an assignment abroad.
Without getting into the actual text of the law, you can find this info here: https://www.gov.uk/hmrc-internal-manuals/national-insurance-manual/nim33430 or here https://www.gov.uk/hmrc-internal-manuals/national-insurance-manual/nim33515
The first link is very useful as it is a flowchart showing you all the options.
If you want a less technical reference, you can access https://www.gov.uk/guidance/new-employee-coming-to-work-from-abroad
Scroll down to National Insurance Contributions - there you will find 3 categories: a) those coming from the EU, Iceland, Switzerland, Lichtenstein and Norway; b) those that do not come from the EU, Iceland, Switzerland, Lichtenstein and Norway but which the UK has a reciprocal agreement; and finally c) those coming from any other country (not listed above) - this is where you will find the exemption. These categories are mutually exclusive.
At PEO Legal, we provide legal and compliance advice for professional employer organisations and staffing companies around the world. For advice about any point of cross-border employment law – whether in the EU or elsewhere - contact us, today.