Since the pandemic, remote and hybrid working models have become the new normal. While many employers are still figuring out how many days their employees should be allowed to work from abroad in order to attract and retain talent, the advent of the metaverse raises further questions still. Immigration, social security, employment and tax laws all tend to focus on a person’s physical presence in a particular place. Employers with employees who work internationally face various compliance issues. Often, however, solutions can be found by applying private international law and international agreements such as social security or tax treaties. In EU member states, EU regulations determine which country’s social security and employment laws apply in cross-border situations.
How will all this work in the metaverse? Employees all around the world will no longer need to cross borders but will be able to work together in a common, virtual workplace. One worker could log in from Thailand to work as a cashier in a shop in the metaverse, another colleague from France and yet another from the US, on a rota that would ensure twenty-four hour service. Will the same laws apply to employees completing the same tasks in the same virtual workplace?
Work authorisation is normally required in order to work while physically present in a foreign country (or, for EU citizens, outside of the EU). In Belgium, for example, most non-EU nationals need a Belgian work permit to work on Belgian territory, but would not need a Belgian work permit to work for the same Belgian company outside of Belgium. Instead, they would likely need a work permit issued by another state. Likewise, the same Belgian company does not need its EU-national employees to hold work authorisation to have those same employees work in France, but those EU-national employees may need to apply for a work permit to work for the same employer from outside the EU.
But where exactly is an employee working in the metaverse and which immigration laws apply? Is it the law of the country where the company that owns the platform is based? Or could it be the law of the place where the servers are located, or the law of the place where the employee is logging on?
At time of writing, it is the law of the place the employee is physically working that determines the employee’s need for work authorisation: the place where the employee logs on. And this will be true even when employees are working virtually, in the metaverse.
In the EU, the Rome I Regulation determines which employment law applies to a cross-border employment situation, like where an employee works in one country (e.g. Italy) for an employer located in another (e.g. the Netherlands). The basic principle is that the parties are free to choose the law that will apply to an employment contact. However, that choice cannot deprive an employee of the more beneficial, mandatory employment laws that apply in the employee’s habitual place of work (or the employer’s place of business, if there is no habitual place of work) unless the employment contract is more closely connected to another country. In addition, whatever law governs the employment relationship, some local, overriding provisions may still apply.
Similar criteria apply outside the EU. The applicable employment law is often the law of the place where the employee usually works, or, the law of another place where there is a ‘sufficient’ connection.
How can we apply these criteria to work performed in the metaverse? Does it still make sense to talk about a ‘place of habitual employment’ or a ‘place of work’ if employees work in a virtual world without borders? And which country would have the strongest connection to the employment contract?
The answers to these questions are crucial as they will determine the minimum wage, working time, paid holidays, sick pay, employee well-being obligations, disciplinary procedures and dismissal laws that apply to work done in the metaverse.
And what about non-compete clauses? Many countries require these to include geographical limitations. The geography of virtual reality is, however, difficult to define.
If the metaverse does become a new workplace it will, for the foreseeable future, be on a hybrid basis, alongside physical workplaces. This means that solutions can still be found in the same way as they are today for employees working remotely on different platforms or interacting on the internet. These solutions are based on the law chosen by the parties, and the law of the place where the employee is usually physically working. However, this implies that the rights, terms and conditions of the workers logging on from Thailand, France, and the US, mentioned in the example above, will be governed by Thai, French and US law respectively, even though they are doing the same job in the same virtual workplace.
Social Security laws
A similar conclusion applies, for now at least, when it comes to determining the applicable social security law. Solutions are to be found in national social security laws and in social security treaties,which usually focus on the place the employee is physically working. In the EEA and Switzerland, the basic principle is that employees are subject to the social security laws of one country only: the place where they physically work. This means that an employee working in Italy for an employer in Germany is covered by Italian, rather than German, social security law. There are exceptions that apply to secondments and multi-state employment.
At present, solutions to all these problems can still be found in existing national and global mobility rules. For now, employees willmost likely work only partially or occasionally in the metaverse, continuing to work in a physical workplace as well. It still makes sense, therefore, to apply existing rules. Looking ahead, however,we may wonder if this approach will remain appropriate ifemployees start working more, or even exclusively, in the metaverse: a borderless, virtual workplace with colleagues logging in from all over the world.