In brief
- Cross-border remote working - where an employee works from a country other than the one in which they are contractually engaged - has become increasingly common in the UAE. While it offers significant opportunities, it also creates genuine legal complexity across employment law, immigration, tax, insurance and health and safety.
- Employment contracts should clearly address governing law, dispute resolution and place of work, but practical compliance is just as important as the drafting.
- Remote working from abroad can affect visa validity, create tax risk and expose gaps in insurance coverage.
- Employers owe a duty of care to employees when they are abroad, including in relation to health, safety and wellbeing.
- A structured, well-documented approach, which includes clear policies, defined approval processes and proactive monitoring, is essential.
Why is this important now?
Against a backdrop of ongoing regional instability, including the conflict in the Gulf and its broader impact on business confidence and workforce mobility, the ability to operate flexibly across borders has become an operational necessity, and not merely a matter of convenience.
Remote and hybrid working has proved to be one of the most effective tools available to employers seeking to maintain business continuity during periods of disruption. Beyond that, flexibility in working arrangements is no longer a 'nice to have' for employees but rather a bare minimum expectation. However, the legal risks of cross-border arrangements should not be underestimated, and given the expatriate demographic in the UAE, employers in the region are at the forefront of attempting to address those risks in a meaningful and sustainable manner.
Informal arrangements that drift on without clear parameters, or that are accommodated on an ad hoc basis without proper consideration of the consequences, can give rise to significant liabilities across multiple legal frameworks simultaneously. For the employer to be properly protected, it is vital that any cross-border remote working arrangements are clearly documented, defined as temporary (assuming that is the intention), and subject to clear approval and reasonable review processes.
What should your employment contracts cover?
A well-drafted employment contract is the starting point for any cross-border working arrangement. Where employees work across jurisdictions, questions of which country's law governs the relationship - and where disputes are to be resolved - can quickly become contentious. Employers should ensure that their contracts clearly address governing law, the mechanism for resolving disputes and the employee's designated place of work, but more is also needed on the practical aspects of this. A well drafted governing law and jurisdiction clause is largely irrelevant if the facts of a matter can undermine the intention entirely. This matters in practice because many jurisdictions will apply their own mandatory employment law protections to individuals physically working within their territory, regardless of what the contract provides. Taking advice at the outset is considerably less costly than resolving a jurisdictional dispute once it has arisen.
How does remote working affect visa and immigration status?
UAE residence and work authorisation is typically tied to a specific employer and location, and working from abroad can raise questions about the validity of an employee's arrangements in both the UAE and the country from which they are working. At present, immigration systems across the UAE and the wider Gulf continue to operate broadly as normal, though employers should monitor developments closely, including in relation to documentation requirements, which continue to evolve.
Employers should also be aware of the UAE Remote Work Visa, which enables foreign nationals to live in the UAE whilst remaining employed by a company based outside the country. Whilst this does not resolve every cross-border complexity, it is a genuinely useful mechanism, both for attracting internationally mobile talent to the region and for retaining valuable employees with ties to the UAE who may wish to relocate due to regional instability.
A particularly common and challenging scenario for employers is one in which an employee has relocated temporarily and is reluctant, or unwilling, to return. The legal position is generally unambiguous: employees remain contractually bound to work from their contractual place of employment, and an employer may, subject to the particular circumstances and with appropriate advice, require them to return, or impose penalties up to and including termination of employment. Managing such situations sensitively but firmly, with clear written communications and thorough documentation, is essential. Employers should also be alive to the implications of extended absences on employees' UAE residency status, and should review the position proactively (as well as having clear policies in place) rather than waiting for a problem to materialise.
Are there corporate tax risks with cross-border remote working?
Cross-border remote working can have significant tax consequences that many employers may not have fully considered. Where a senior or client-facing employee works from another jurisdiction for a sustained period, there is a material risk that their presence creates a taxable foothold for the employer in that country - commonly referred to as a "permanent establishment" risk. In such scenarios, UAE payroll obligations should continue to be met as normal, and any variations should be carefully documented with local authorities. However, seeking early tax advice regarding senior individuals - before a remote working arrangement begins - is always the preferable course.
Does your employer's duty of care extend overseas?
An employer's duty of care to its employees does not stop at the office door - or, indeed, at the UAE border. Health and safety obligations are inherent to the employment relationship and apply wherever an employee is working, whether from a home office in another country, during work-related travel or in the course of a temporary relocation. Employers can remain exposed to liability for incidents occurring in the course of employment, even in a remote setting, and should ensure that their health and safety frameworks explicitly address overseas and remote working scenarios. Where employees are working from locations affected by regional instability, additional risk assessments and clear employee communications are advisable.
Employee wellbeing deserves equal attention. Where employees are working in isolation or under personal stress, maintaining clear lines of communication and providing appropriate support is not simply good practice, but forms part of the employer's broader duty of care. There are, however, potential options around passing obligations back to employees contractually, using appropriate warranties and indemnities. While this is not always appropriate, it is a consideration which can be explored and utilised in certain circumstances.
Insurance: where liability and coverage diverge
One of the most important yet frequently overlooked risks in cross-border remote working is the gap between legal liability and insurance coverage. The two do not always align, and employers can find themselves exposed in circumstances where they assumed a policy would protect them.
Employers' liability and general liability policies commonly contain territorial restrictions that could leave an employer unprotected if an incident occurs abroad. Moreover, there are often inherent assumptions built into insurance policies around an employee's place of residence and other factors. Medical insurance will typically cover treatment within the UAE but may be limited or subject to specific exclusions where an employee is working overseas, particularly in higher-risk locations. In the current regional environment, war and political risk exclusions deserve particular scrutiny: standard policies may not respond to incidents arising from or connected to conflict, which can leave both the employer and the employee in a vulnerable position. This is a particularly important factor where government advice or instruction is clear in respect of travel to or from certain locations.
Employers should review their relevant policies with these questions in mind and should not assume that coverage follows liability.
How Mishcon de Reya can help
Our employment team advises employers across the UAE and the wider region on the full range of workforce challenges arising from cross-border and remote working arrangements.
If you would like to discuss any of the issues raised in this article, or would like us to review your existing arrangements, please do not hesitate to contact a member of our Employment team.