For many employees, working from home and work from anywhere has become a new normal. Something that was once an exclusive benefit offered only to the few, quickly became par for the course for the many, as a result of the Covid pandemic.
Many will not have enjoyed the experience: working from a cramped apartment, stuck in a noisy or overcrowded city, turning the kitchen table into a makeshift desk. They will, no doubt, have considered how to better their situation, and reassessing where they live will have been an obvious option.
There are already many examples from around the world where employees have already taken advantage of remote working to improve their living conditions, lifestyle or work-life balance. In the UK, for example, London is expected to experience its first population decline since 1988. Similarly, in the US, the Bay Area has seen migration changes, with states like Florida reportedly proving a popular destination for those fleeing from the expense of living in California, with a view to securing a lower cost of living or rate of income tax.
While the lure of working from somewhere more peaceful or exotic, of attending meetings remotely from the countryside or responding to emails on the beach, might be irresistible for employees, for employers, allowing employees free reign of where they choose to work could entail a number of serious pitfalls.
Are employers prepared for this?
Whether or not employers are already prepared for this scenario will depend very much on the company in question, and whether it already had flexible working policies or processes in place.
At a relatively early stage in the pandemic, a number of big tech companies made declarations on a remote working future that reverberated around the world. Facebook admitted that the pandemic accelerated its thinking on working arrangements, and is now considering allowing around 50% of its workforce to go remote over the next 10 years. Similarly, Twitter, who already had a flexible working policy in place, has stated that allowing its employees to work from anywhere has long been a key business objective.
For many other companies, their thinking may not have been along similar lines. Those organisations that did not previously have policies, a flexible working culture or the infrastructure, to deal with remote working will have been forced to adapt quickly, to what in many countries was a government mandated instruction for employees to work from anywhere. Other organisations may already have trouble brewing; for instance, where a manager may have unwittingly signed off on remote working arrangements, without knowing that they could lead to regulatory breaches.
In any case, it seems likely that many companies will have to engage with remote or flexible working arrangements in the longer term. In order to do so, those that didn’t already have policies or procedures in place will have to get a handle on the situation – or enlist help to do so.
On top of procedural issues related to applying for and approving requests to work flexibly, companies will have to ensure that they consider contractual amendments, changes to individual or corporate tax status, or maybe even establishing entities in new locations. In addition, they’ll need to put robust internal governance mechanisms in place to keep track of where staff are working, and that they are actually working where they say they are.
Cross-border considerations
The situation becomes more complicated for employers, if an employee chooses to relocate to a different country altogether.
Companies may have a responsibility to ensure that employees have the right to work in the jurisdiction they plan to relocate to, if they plan to remain there indefinitely. If the relocation is only temporary, employers will have to get a handle on the local immigration law to establish just how long they can remain before their tax resident status changes. In many countries, this period is typically around six months, or 183 days. However, the interpretation of the rules should always be reviewed against any applicable tax treaties between countries and the individual circumstances. Furthermore, companies should also consider any social security implications by working outside the country of employment, as typically it doesn’t follow the overall tax position. A lack of familiarity with these regulations could result in liabilities or penalties for employers and employees.
As a result of Covid-related travel restrictions, this may be a scenario that employers are already having to deal with, should a worker have found themselves unable to return to their home country. In those instances, stranded employees may have already inadvertently outstayed their visa allowance and worked in a foreign jurisdiction for longer than the local immigration laws would normally permit. However, authorities will consider any situation that arises along with current or long-term government travel guidelines, e.g. restrictions on travel, advise against leisure travel or only essential travel.
There are other risks that companies can be exposed to with workers moving to foreign climes. For example, the types or number of benefits that employers would be legally obliged to provide will vary, dependent on location. There may also be compliance issues to take into account, particularly if the work being undertaken is sensitive or subject to specific rules that may be compromised by relocating. Organisations may also be obliged to provide training or guidance on local culture and customs, or even protection if there are any specific security concerns.
In certain cases, an employer may even be legally required to establish a presence in the jurisdiction where an employee wants to work. Registering an entity in certain locations can be a complex, lengthy or expensive process, notably if incorporation procedures are complicated by requirements around locally appointing directors or the establishment of physical premises.
How can employers turn this to their advantage?
While there are clearly risks involved, many of these risks can be mitigated. But is it worth the time and effort to create or update policies around remote working?
Without doubt, some workers will be keen to return to the office full time. Others will be interested in continuing to work from anywhere or home in the longer term, or at least shifting to a hybrid working arrangement whereby they work remotely part of the time.
Those who are instructed to return to the office could be put off by their employer’s lack of flexibility. Not only allowing employees to work where they want, but offering flexibility on how and when they work, sends a clear message to employees that you are an employer that cares about their wellbeing and their choices.
Those companies that do not offer flexibility to any degree are therefore putting themselves at risk of losing talent; companies that embrace this change not only strengthen their position in terms of employee retention, but also make their organisation a more attractive proposition for potential new hires, thereby gaining a competitive advantage.
Another positive for companies, is that a more flexible approach could broaden the scope of where they can look to find the right people to fill vacancies. Rather than limiting the search to those who live within commutable distance of an office or company headquarters, or paying to relocate the right candidate, opting to recruit remote workers effectively means that you can consider sourcing flexible talent from anywhere in the world.
As well as giving companies a greater talent pool to choose from, hiring workers in countries where salaries are typically lower could also represent an opportunity for significant cost savings.
Talk to us
If you are considering offering flexible or remote working to your employees in the longer term, you’ll need to ensure that you have robust policies and procedures in place to mitigate any potential risks.
Similarly, if remote working arrangements implemented in a hurry during the pandemic may have exposed you to risk, enlisting help to assess and address any issues would be a prudent move.
At TMF Group, our HR and payroll experts’ combination of global reach and local knowledge means that we are ideally placed to assist you with challenges wherever you do business, or wherever you have a workforce to manage.
Whether it’s assistance with immigration rules, benefits provision or HR and payroll compliance, talk to us.
This post was written TMF Group on their website here. Check out more posts written about work from anywhere on our blog here.
