Thanks to digitalisation, there are increasingly flexible working time models for employees. The home office has established itself in many companies as an alternative to working in the office. However, there is also the option of setting up a home office abroad. However, a number of things must be taken into account with this workation.

What does workation mean? - A definition

Workation is a portmanteau of the English words "work" and "holiday". Literally translated, workation is the combination of holiday and work.

In practice, workation is a sub-form of mobile working in which the home office is relocated abroad. Since these locations are usually holiday destinations, the term "workation" has become established for the home office abroad.

Workation is also often mentioned in connection with "digital nomads". This is the term used for employees or self-employed people who take their workplace with them on holiday. They usually choose dream destinations and thus combine the freedom of travel with their job.

Important: Workers do not have the right to workation.

Those who are employed cannot claim the right to workation. However, arrangements can be made with the employer to enable a home office abroad. It is important that all labour law requirements are covered.

Workation and labour law: What to bear in mind

In principle, German labour law can be applied to a workation if employees work abroad for a maximum of four weeks. Those who work longer in a home office abroad must also take into account the labour law conditions of their destination.

If employees stay abroad for more than 50 per cent of the year, i.e. more than 183 days per year, and work remotely for a German company there, they are liable to pay tax not only in their home country but also in the holiday country.

Therefore, it may be advisable to use the workation principle for less than 183 days per year due to tax liability.

Compulsory social insurance usually also applies to the home office abroad

If you are employed in Germany, you are covered by social insurance and pay the corresponding contributions through your salary. During a work placement, additional regulations may apply with regard to social insurance. However, this depends on the duration of the work placement and the destination country.

If the work assignment takes place within the EU and the employee only works in another EU country for a short period of time, there are no special social security rules to consider. This also applies to work in the EEA area, which includes Switzerland, Iceland, Norway and Liechtenstein.

In principle, German social security law applies if employees perform at least one fifth of their annual work for a company in Germany. It is important that the employer is based in Germany and that the employee is also registered in Germany.

However, it can be useful to ask your health insurance fund about different regulations regarding workation, especially because it is still a relatively new form of work.

When it comes to work outside the EU, the social security obligation is influenced by the agreements between the home country and the "workation" country.

Therefore, employees should always inform themselves in advance about social security contributions if they plan to work outside the EU.

Important: A work permit may also be required outside the EU.

What are the appealing features of workation? The advantages at a glance

Like other flexible working models, workation can bring many benefits. For example, employees can broaden their horizons abroad, get new input and perfect a foreign language. At the same time, working on a dream destination can increase motivation or boost creativity.

"Workation" not yet clearly defined in labour law

Even though the home office is already firmly established in the world of work, there is still no clear definition of workation under labour law. Accordingly, it is important that companies and their employees make clear arrangements for workation. This concerns both the working hours and the duration of the workation. Precise agreements must be made, especially for stays longer than four weeks. This is because different labour law principles then apply and, for example, the place of work must be changed in the employment contract.

Workation as a working model possible for many areas

Like the home office, workation seemed to be mostly reserved for freelancers or the solo self-employed. However, with the further development of mobile working for employees, new opportunities are also emerging in the area of workation.

Provided employers allow it, workation is basically an option for all employees who were previously able to do their work in a home office in Germany. Accountants, marketing managers and project managers can all use the Workation model.

Just as in the home office in Germany, all data protection and compliance requirements must of course be checked.

Important prerequisites for workation

For the workation to work properly, the following conditions should be met:

  • There is no serious time difference between the holiday destination and the home location, as this could affect the workflow in the team and also make the stay more stressful for employees.
  • There is a fast and stable internet connection in the destination country.
  • All work equipment is available at the holiday destination that is also available at home or in the office, e.g. scanner, printer, an ergonomic workstation.
  • Insurance cover is guaranteed. This applies to both health and accident insurance.
  • All formalities concerning working abroad have been clarified with the employer. This includes the scope of work or availability.

Employee benefits also available with workation

With Circula, companies can also offer their employees employee benefits in the workstation. For example, the meal allowance for meals abroad or the mobility budget for the flight to the holiday destination can be activated and used via the Circula app.

In this way, companies have the opportunity to additionally support their employees in flexibly organising their work.

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