The prospect of being able to work from anywhere across the world is an appealing one for many people. A recent PwC survey found 75 per cent of employees would like to work remotely some of the time after the pandemic, which has already had a profound effect on how and where we work. The office will still have a crucial role to play, particularly in terms of collaboration and socialisation. But the future is likely to see a blend between office and remote working.
Working from anywhere brings a number of opportunities, including attracting and retaining talent, a happier, healthier workforce, increased productivity, enhanced reputation and the potential to reduce costs.
Historically employees have always gone to work, whereas, in the new world, the work goes to the employee – but what happens when the employee decides they want to be abroad? Three-quarters of organisations are moving towards supporting international remote working.
Once employees cross borders they can trigger multiple risks. With 195 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 (employment rights, social security, immigration, corporate and personal tax, and payroll obligations) and map this against the countries where employees want to work.
This can be a significant challenge, so a lot of employers are considering putting limits around this, including:
- the locations that employees can work in – 76 per cent of employers in a recent PwC survey intended to limit remote working to locations where they already had a presence;
- the length of time they can spend (many employers are considering allowing a ‘working holiday’ period of up to 30 days working abroad); and
- certain roles – for regulated industries some roles may be required to be performed in the home location.
Once this is established, employers then have a framework around which they can build an approval and monitoring process for remote work requests.
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 (typically up to five years) it may be possible to obtain an A1 or CoC to keep the employee paying home country social security if there is a treaty between the two locations. In other cases, host country social contributions may be due.
Employees will need to confirm that they can work in the host country through nationality, citizenship or other 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.
If an employee works from abroad for an extended period, 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 the US.
Companies may find their people have created a corporate or indirect taxable presence, which in turn entails registering overseas, paying taxes and staying up to date with local compliance and reporting obligations. Similarly, employees themselves may have more complex personal tax affairs – such as incurring higher rates of taxation and costly combined foreign and resident state taxes.
Overcome the obstacles
There are three main areas for businesses to focus on to understand and manage the risks, retain their employees and remain competitive:
- Policy: clear communication is needed about company policy. This should be drafted in line with company strategy and purpose. Clarity is needed on what you will or won’t support.
- Process: agree the steps to work through for each case to assess the risk and confirm if approved or not.
- Infrastructure: to implement global remote working effectively, consider the infrastructure you need to support your organisation.
To ensure successful recovery from the disruption caused by the pandemic and move forward, agility will continue to be key. Those who can reflect on the changes brought by Covid and evolve their organisation with changing demands will be well placed to thrive post pandemic.
Adopting these new international working patterns isn’t always easy, but those that do are likely to win the war for talent in a post-pandemic world. Another trend we are likely to see is the growth of a new, important role: head of remote working – an individual who will need to bring together technology, technical compliance, reward, talent and productivity to help companies thrive in this space.
Martin Muhleder is a partner at PwC