This is actually an IP500v1 bug. As per IP office R8 licensing either there should be IP office essential edition license OR the UPG lic5 BUT with IP500v1 unit even if you have the UPG lic 5 you still need the essential edition license to make the remote worker up and running.
It has not been mentioned anywhere in the AVAYA IP office documentation as engineering is not going to provide any fixes based on IP500v1 unit.
So the only possible solution/workaround to get this working is to apply the essential edition license to the customer IP500v1 system.
As this is a product bug therefore AVAYA is providing a free of cost essential edition license for the same.