Workation “on your own”

Many companies assume that simply approving a remote work request is enough. However, various legal aspects must be examined. Each request comes with unique requirements and must be assessed individually.

When legally implementing a workation, the following five factors must be carefully reviewed within the context of the laws of the employee's home country, the company's registered location, and the destination country:

• Tax Law & Permanent Establishment: Even short work stays abroad can trigger tax liabilities and necessitate the establishment of a permanent establishment.
• Labor Law & Social Security: Foreign labor laws apply when employees work in another country. These vary significantly and require individual review.
• Entry Regulations & Visa Requirements: Working on a tourist visa may be illegal and lead to legal consequences.
• Data Protection & IT Security: GDPR-compliant remote work abroad can be challenging. Cybersecurity risks increase significantly.
• Work Accidents & Insurance Coverage: Not every insurance plan covers accidents during a workation abroad.

For these five points, it’s essential to remember that workations can only deliver their full potential in employer branding, recruiting, and employee retention if both employees and employers work together to ensure legal compliance.

However, legal requirements are only half the battle. For workations to be truly effective, internal organization and communication must also be well-structured.

Beyond legal considerations, internal organization and communication are critical for the success of a company’s workation strategy. Workation policies should be transparent and clearly defined, ensuring equal opportunities for all employees.

This is why it makes sense to establish a remote work policy and make it accessible to all employees.

Without clear guidelines, uncertainty arises among employees and managers, reducing workation adoption and missing out on employer branding and recruiting opportunities. Additionally, companies may misjudge the benefits of workations and fail to maximize their potential.

If these five points are overlooked, workations might not function as planned — or even create more harm than good:

• Transparent Workation Guidelines: Who is eligible for a workation? What destinations are permitted? What costs does the company cover? What is the approval process?
• Discrimination Risk: Companies must set clear rules to ensure equal opportunities for all employees.
• Working Hours: Different time zones can create challenges for meetings and project management.
• Collaboration Tools & Team Culture: Employees need access to the right tools to maintain team cohesion.
• Monitoring & Performance Measurement: Implementing feedback systems, performance management, and long-term assessments to evaluate whether workations benefit the company.

Workations offer companies the opportunity to enable flexible work while strengthening employer branding. However, without a solid strategy, they can lead to unexpected consequences — financial, operational, and cultural.

This is particularly critical when companies implement workations without clear compliance and security measures. Potential consequences include:

Unforeseen Tax and Legal Consequences

Even short work stays abroad can make companies or employees liable for taxation. In some cases, businesses might need to register a permanent establishment abroad, leading to high costs and bureaucratic hurdles. Additionally, local labor laws may impose additional employer obligations.

Data and IT Security Risks

Remote work from abroad can significantly jeopardize IT security. Unsecured networks, unencrypted connections, or inadequate access controls increase the risk of cyberattacks and data breaches. Violations of the GDPR or other data protection laws can result in severe fines.

Loss of Control and Team Structure

Lack of guidelines regarding availability and time zone coordination can lead to inefficient collaboration and misunderstandings within the team. Without clear policies, remote work can devolve into an unstructured workflow, impacting productivity and team dynamics.

Employee Frustration and Reputational Damage

Unclear policies or inconsistencies in approving workations can lead to employee frustration. If some teams benefit from workations while others do not, workplace tensions may arise. Furthermore, negative publicity can occur if workation programs fail or legal issues arise.

Workations have become a key innovation in employer branding and recruiting while playing a crucial role in employee retention.

The good news? All these risks can be avoided. With the right strategy, workations don’t have to be a compliance headache or a burden for HR teams—they can become a valuable opportunity for companies.

However, businesses that plan workations or allow remote work abroad must develop a legally secure workation strategy. Ignoring compliance requirements puts companies at risk of high costs, security breaches, and employee dissatisfaction.

Want to learn how your company can implement workation concepts or remote work securely and efficiently? Or do you have specific questions about this topic? Book a non-binding consultation now!