What employers and their employees need to know before working overseas
DOING your job in an exotic location sounds tempting. However, as with most things that seem too good to be true, there are many factors employers need to consider if their workforce is to become global, and globally compliant.
Before saying yes, make sure you consider the practical implications outlined in this article.
The prospect of being able to work from anywhere across the world is an appealing one for many people.
A recent PwC survey found 75pc of employees would like to work remotely some of the time after the pandemic.
Of course, the office will still have a crucial role to play post-pandemic, particularly in terms of collaboration and socialisation. But the future of work is likely to see a blend between office and remote working.
Working remotely brings a number of opportunities and benefits for employers and employees alike.
These benefits can include attracting and retaining talent, fostering a happier, healthier workforce, increased productivity, fewer commutes, enhanced organisational reputation and the potential to reduce costs.
But as lockdown restrictions ease and travel opens up again, what happens when employees take the “work from anywhere” message literally and opt to work in another country?
Developing a framework
Once employees cross borders they can trigger multiple risks. With so many countries worldwide and a workforce that can work anywhere, how can you ensure compliance with all the local regulations?
The first step is to find out where your employees are, where they want to work in the future and where you may want to hire talent.
Once you have this data, you can start working through a matrix of the issues you need to consider.
Considerations include payroll taxes, social security, immigration, corporate and personal taxes, and employment rights.
You need to map these against the countries where your employees want to work.
This can be a big challenge. Employers are considering putting limits around this.
Such limits include the locations employees can work in. Many employers are considering limiting remote working to locations where they already have a presence.
The length of time employees can spend in the other location is also a consideration. Organisations may consider allowing a ‘working holiday’ period of, say, up to 30 days working abroad.
In regulated industries, certain roles may be required to be performed in the home location. Once the limits are established, employers have a framework around which they can build an approval and monitoring process for remote working requests.
Specific risks include:
Taxation
Companies may find their people have created a corporate or indirect taxable presence, or have triggered employment tax-withholding obligations.
These, in turn, can entail registering overseas, paying taxes and staying up-to-date with local compliance and reporting obligations. Similarly, employees may have more complex personal tax affairs, such as incurring higher rates of taxation.
Social security
Social security costs can be very expensive and employers will need to be aware of the system they are paying into.
For employees temporarily away from their home location, it may be possible to keep the employee paying home-country social security. In other cases, social contributions relevant to the host country may be due.
Immigration
Employees will need to confirm that they can work in the host country through nationality, citizenship, or permission such as a visa or work permit.
“Working” is defined differently across jurisdictions. Many countries have their own visa rules and requirements, so each case will need to be considered based on the facts.
Employment law
If an employee works from abroad for an extended period of time, they may be subject to more stringent employment laws in the remote-work location.
For example, it is considerably harder to terminate an employment contract in, say, France than in some other jurisdictions.
Overcome the obstacles
There are three main areas for businesses to focus on to manage the risks:
Policy: Clarity is needed on what you will allow, what support the organisation may offer, whether the policy will be flexed by reference to different personnel, roles, seniority or location.
Process: Agreement will be needed on the steps to work through for each case. You need to assess the risk and cost, seek approval, document decisions, implement and monitor them.
Infrastructure: To implement global-remote-working effectively, consider what team you need to own this employee population, who the stakeholders are, and how it will fit with company culture.
Prospect of being able to work from anywhere appeals
Employees must confirm they can work in host country