Here is how Encode takes care of the utf8 flag.

    * When you encode, the resulting utf8 flag is always off.
    * When you decode, the resulting utf8 flag is on unless you can
      unambiguously represent data. Here is the definition of
      dis-ambiguity.

      After $utf8 = decode('foo', $octet);,

        When $octet is...   The utf8 flag in $utf8 is
        ---------------------------------------------
        In ASCII only (or EBCDIC only)            OFF
        In ISO-8859-1                              ON
        In any other Encoding                      ON
        ---------------------------------------------