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New forms of working – ‘Remote Work’ and the ‘Workation’ (Part I)

Advances in technology have made it possible for employees in various professional fields to work remotely – from virtually anywhere in the world – for their employers. The ‘workation’ and ‘remote work’ are forms of working that are found more and more frequently in the world of work ever since the Coronavirus (COVID-19) pandemic. In the following section we first define these concepts and consider the relevant aspects of employment law and data protection law. In the second part of this series, in the next issue of our newsletter, the focus will be on the consequences in respect of tax and social security regulations.

Conceptual basics

The term ‘remote work’ means working from a freely chosen location in the world. The term ‘workation’ blends work and a vacation and is characterised by working in a location where others go on holiday, or by combining work with a vacation.

In this report, in view of the various international agreements with individual states, our discussion of the legal specificities and risks will provide a closer examination solely of an employee’s work performed from a foreign EU state for a German company.

To begin with, it should be noted that an employee basically has no entitlement to a workation or nor a right to work remotely from abroad. Such entitlement can only arise from an agreement, company practice or the right to equal treatment.

Employment law aspects 

Contract law/place of jurisdiction

In cross-border situations, a question that usually arises is which law should be applied to the employment contract. Under the so-called Rome I Regulation, individual employment contracts shall be governed by the law chosen by the parties. Although, the freedom to choose the applicable law may not lead to the circumvention of the mandatory applicable employment protection provisions (e.g. protection against dismissal, leave entitlement, minimum wage, or maximum working time) of the country where the employee habitually carries out their work. The habitual place of work is the one where an employee performs the essential part of their work, thus, where they work for more than half their working time. Agreements that differ from this may be made only after a dispute has arisen.

Please note: Furthermore, it should be noted that in the case of a workation the employer can also be sued in the country where the place of work is (thus, e.g., Spain). However, legal actions against employees may only be brought before a court in the Member State where the employee is domiciled.

Working time and occupational health and safety

The Working Time Act (Arbeitszeitgesetz, ArbZG) and Occupational Health and Safety Act (Arbeitsschutzgesetz, ArbSchG) are not applicable to work activities outside of Germany. Instead, the law of the county from which the employee performs their work shall apply (= country where the work is performed). Although it would be possible to contractually agree a higher level of protection than is afforded under the law of the country where the work is performed.

(1) Recording working time – Even if the German Working Time Act (ArbZG) is not applicable, nevertheless, the Health and Safety at Work Directive will apply within the EU. National regulations are not allowed to set up lower levels of protection. Ultimately, it is likely that the respective national laws will differ only slightly from the German Working Time Act. Moreover, working time has to be recorded according to the requirements of supreme court rulings (ECJ, judgement of 14.5.2019, case reference: C-55/18; Federal Labour Court decision of 13.9.2022, case reference: 1 ABR 22/21). As regards what is deemed to be working time, it is likely that there is hardly any difference between national regulations in this respect and those of the ArbZG.

(2) Occupational health and safety – In the case of occupational health and safety, the law of the country from which the employee performs their work for the German company likewise has to be complied with. Insofar as there are lower occupational health and safety standards in the country where the work is performed, it would be possible to contractually agree that the German ArbSchG will apply. 

However, the health and safety standards of the country where the work is performed may not be undercut.

Recommendations: Consequently, the employer will have to check what requirements with respect to both working time as well as occupational health and safety are imposed by the respective law of the country where the work is performed and then comply with these requirements. Any obligation to cooperate that results from this should be contractually agreed with the employee if necessary. It would also be possible to specify in the employment contract that the German working time regulations and occupational health and safety regulations will apply if these requirements set standards that are at least as high as the respective regulations of the country where the work is performed.

Requirements under the German Act on the Notification of Conditions Governing the Employment Relationship and data protection law

If employees are to perform their work outside of Germany for a period longer than four consecutive weeks then, prior to the start of any activity abroad, under the German Act on the Notification of Conditions Governing the Employment Relationship, employers would have to send a document to employees with the following information:

  • the country and duration of the planned stay,
  • the currency in which the compensation will be paid,
  • cash payments and benefits in kind related to the stay abroad (foreign posting allowance, reimbursement of expenses for travel, meals and accommodation) 
  • as well as information as to whether or not it is anticipated that the employee will return and, if yes, under what conditions this would take place.

Communication with employees working abroad would, in all likelihood, take place to a considerable extent via video conferencing, e-mails, etc. In doing so, the parties should refrain from recording the conferences for reasons of data privacy. Moreover, employees should be instructed to organise their backgrounds in such a way that no sensitive information would be included. 

Please note: Working across state borders constitutes an even bigger challenge for IT security. Under data protection law, employers are responsible for the personal data of customers and employees (Art. 4 No. 7 GDPR). Employers are responsible for these data even in a third country (Art. 44 sentence 1 GDPR).

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