B
eing able to work from anywhere has become part of the employee value proposition – employers have begun to report that it has become diffi cult to attract and retain staff
without off ering them the opportunity to work away from their contractual employment location. As a result cross-border remote working has become a feature of employment off ers – either by design or by accident. For employees, working from anywhere as ‘digital
nomads’ provides a large degree of freedom and fl exibility, enabling them to spend time in their home, host or a third country as suits their personal and family circumstances. For employers allowing and/or enabling employees to work from anywhere also presents a number of advantages. These include access to an extended global talent pool, workplace agility, work-life balance as an employer benefi t leading to higher productivity, and reduced offi ce/property costs.
DIGITAL NOMADS: THE LEGAL IMPLICATIONS? The advantages of working from anywhere sit at the top of an ‘iceberg’, visible above the water-line. But lying below the surface are a number of implications – legal, compensation and benefi ts, and taxation. In addition, there are a number of resourcing implications. These must all be considered carefully before employees are permitted to work cross-border/remotely. The legal implications of working from anywhere are wide-ranging. First, employers need to consider labour laws. Employees may be able to acquire employment rights locally such as termination and consultation rights. Regulatory requirements may limit what employees are legally able to do – for instance can lawyers practice without registration in the location? Immigration is also an issue – are people legally able to work in the country where they are living and working? There are also data protection implications – is it compliant for employees to access and store data where they are living and working? There are also a number of compensation and benefi ts
issues to consider. Living and working in a diff erent country from where employees are contracted to work can have pension ramifi cations as well as implications for mandatory benefi ts. The tax treatment of employee salaries/benefi ts may also require attention linked to the tax regime locally. Employers may also wish to consider implications for their company’s pay structures – role-based compensation may be less appropriate that location-based compensation (especially if employees have opted to live in locations where salaries and cost of living are considerably lower for example). This may result in organisations needing to revisit benchmarking of salary data and rethinking pay reviews, giving consideration to alternative peer groups.
REMOTE WORKING: TAXATION IS A CRUCIAL ISSUE Taxation implications must also be taken into consideration, including any obligations for payroll taxes and whether social security payments have been triggered. Income tax rules must be adhered to and tax treatment implications for any expenses paid locally also need to be considered. The presence of an employee may also generate a permanent establishment risk but, even if the organisation has a permanent establishment locally, the nature of the work performed by the employee may
not align with the business thereby generating risk. With respect to resourcing, it is important to consider
how talent will be managed. Employees who work virtually may not be seen frequently and thus how to instil company culture, ensure safety and security, deliver training and development, facilitate career progression, manage performance, and develop future leadership cadres becomes more challenging. It is also important to ensure that the person employed is actually carrying out the work and that s/he does not carry out work for other employers.
RECOMMENDATIONS To deal with these issues, Santa Fe recommends that organisations make use of business travel trackers and involve global mobility professionals. A work from anywhere policy should be devised to apply either universally (such as limited by time where the individuals work for a little longer in the location following a vacation for example) or tailored as necessary (with the length of the time spent in any country varying country by country). Bespoke case assessments are also considered helpful whereby the role and the person fi t is assessed before working from anywhere is approved. Employers might also wish to review an employee’s performance before approving a work from anywhere arrangement (only off ering these to highly performing personnel). Finally, the use of secondments and/or contractors might prove a useful tool.
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