Legal risks of taking employees abroad

2023 has seen a surge in company sponsored retreats, including ski trips and short and long-haul breaks. Many employers view such perks as a vital tool in the war for talent since they retain, engage and reward their workforce.

However, while such trips can be an opportunity for team bonding and facilitate greater cohesion, they are not without legal and tax risks. Where such trips are endorsed or financially sponsored by the employer, there can be a nasty liability hangover.

Travel safety should fall under HR umbrella

Protecting and supporting travelling teams

Employers have a duty of care to make business travel stress-free for employees

Defining the trip status

Issues can arise where there is blurring of the status of the trip: is it a work event or not? This is clear cut where colleagues have independently booked a purely recreational trip; here employees are expected to use their annual leave entitlement, obtain their own travel insurance and expenses are irrecoverable.

However, many employers will encourage colleague socialising and part sponsor the trip or some elements of it, for example pay for dinners or accommodation.

In these circumstances, tax liability can arise quite quickly, with any personal expenses that are reimbursed by the employer likely to fall within scope of a benefit in kind and therefore be taxable.

Inconsistencies and ambiguity in reclaiming expenses can be divisive; for example, if senior management are recovering expenses, where others are expected to shoulder their costs.

Ambiguity about the status of the trip may also lead to a gap in insurance cover, with employees assuming that they are covered by the company’s group travel insurance policy, which may have exclusions for winter sports or other activities.

Clarity on the trip’s status and a clear process for authorisation of expenses is key.

Where a trip is part sponsored or endorsed by an employer, it should clearly communicate expected behaviours and conduct of those attending.

Employers can be vicariously liable for the acts of employees, such as harassment, which occur in the course of employment or are closely connected to employment; so events sponsored or part sponsored by the employer would be captured, and possibly also social gatherings of work colleagues.

This can be particularly problematic where employees are in a relaxed social environment, where alcohol is free flowing and boundaries between work and personal life become harder to define.

Prior to the trip, the attention of those attending should be drawn to company policies, such as anti-harassment, and drugs and alcohol, and to contractual obligations not to bring the company into disrepute; making it clear that breaches of these rules will be treated in the same way as if the conduct occurred in the UK and applied consistently, regardless of seniority.

Questionable conduct during even a purely social trip among colleagues could still pose a reputational risk to their employer, if a connection can be made.

What are the necessary precautions?

Employers should safeguard business continuity by assessing the impact of delayed flights or other travel disruption, and consider requiring teams to travel in separate groups.

Depending on the location of the trip, visas or other immigration permissions may be required, and these may take some time and cost to obtain.

Careful analysis should be undertaken of the impact of an overseas trip on non-UK nationals based in the UK, who need to monitor their absences overseas to avoid prejudicing their ability to apply for settlement in the future.

British nationals who travel a lot for business or personal reasons, or work remotely from abroad for part of the year, should also be wary of exceeding the maximum number of days permitted for visitors to certain locations, such as the Schengen area.

And, while the aim of the trip may be to increase cohesion amongst colleagues, care needs to be taken to avoid an ‘own goal’ in relation to inclusivity. For example, if the trip or its activities exclude certain groups, alternative benefits should be offered to those not attending.

Businesses should avoid marginalising certain groups by sponsoring activities that predominantly appeal to a particular gender or age group, and others that may be inaccessible to those with disabilities, caring responsibilities or certain religious beliefs. Staff polls or pulse checks can be very useful to ensure that the chosen activity is reflective of the workforce’s wishes.

Hannah Ford is partner at Stevens & Bolton